Perspectives on Energy & Environmental Derivatives Markets

November, 2019
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DISCLAIMER

Certain information contained in this presentation is forward‐looking information based on current expectations and plans that involve risks 

and uncertainties. Forward‐looking information includes, among other things, statements concerning expected renewables growth. Southern 

Company cautions that there are certain factors that can cause actual results to differ materially from the forward‐looking information that has 

been provided. The reader is cautioned not to put undue reliance on this forward‐looking information, which is not a guarantee of future 

performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company and its 

subsidiaries; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those 

discussed in Southern Company’s and its subsidiaries’ Annual Reports on Form 10‐K for the year ended December 31, 2018, and subsequent 

securities filings, could cause actual results to differ materially from management expectations as suggested by such forward‐looking 

information: the impact of recent and future federal and state regulatory changes, including tax and environmental laws and regulations and 

other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and 

regulations; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries 

operate, including from the development and deployment of alternative energy sources; variations in demand for electricity and natural gas; 

available sources and costs of natural gas and other fuels; the ability to control costs and avoid cost and schedule overruns during the 

development, construction, and operation of facilities or other projects; the ability to construct facilities in accordance with the requirements of 

permits and licenses, to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to 

integrate facilities into the Southern Company system upon completion of construction; advances in technology; ongoing renewable energy 

partnerships and development agreements; state and federal rate regulations and the impact of pending and future rate cases and 

negotiations, including rate actions relating to return on equity, equity ratios, and fuel and other cost recovery mechanisms; the ability to 

successfully operate the electric utilities' generating, transmission, and distribution facilities and Southern Company Gas' natural gas 

distribution and storage facilities and the successful performance of necessary corporate functions; the ability of counterparties of Southern 

Company and its subsidiaries to make payments as and when due and to perform as required; the ability to obtain new short- and long-term 

contracts with wholesale customers; catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other 

storms, droughts, pandemic health events or other similar occurrences; and the direct or indirect effects on the Southern Company system's 

business resulting from incidents affecting the U.S. electric grid, natural gas pipeline infrastructure, or operation of generating or storage 

resources. Southern Company and its subsidiaries expressly disclaim any obligation to update any forward‐looking information.
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Southern Company 

Generation Map

~ 9 million utility customers

(4.7M electric / 4.2M gas) 

44,000 MW of generating capacity

1,500 billion cubic feet of 

combined natural gas consumption 

& throughput volume

7 regulated utilities in 6 states (3 

electric / 4 gas)

SO Profile:
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Renewable Energy Trends

• Per CRS, Green-e Energy 

certified retail sales increased 

24% from 2016 to 2017.

• Green-e Energy certified sales 

have increased at an average of 

16% over the most recent 4 

years of data (2014-2017)

• REC sales make up the majority 

of certified sales.

Source: 2017 Green-e Verification Report
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Renewable Energy Trends

• Transactions in the Commercial

sector dominate Green-e 

Certified Sales.

• Wholesale transactions grew 

16% from 2016 to 2017.

Source: 2017 Green-e Verification Report
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Southern Generation Mix

• Southern has set a long-

term goal of low-to-no-

carbon operations by 

2050.

• Southern hasa

intermediate goal of 50

percent reduction from

2007 levels in CO

2

emissions by 2030.
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Growth in Southern Company REC Sales

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2013 2014 2015 2016 2017 2018 2019

Volume of RECs Sold

Volume of RECs Sold* EOY Projection

• Southern participates in Voluntary 

REC markets.

• Transactions are bi-lateral

• Projected to reach 3 million in REC 

sales by year end.

• Less than 1/3 of the RECs 

generated by Southern assets are 

sold on the open market.

• Majority of RECs are either 

retained and used for compliance 

for state Renewable Portfolio 

Standards or transferred to the 

energy off-taker under commercial 

terms.

• Majority of REC transactions are

with aggregators.

Note: Generally, with respect to renewable energy generated or purchased by the stateregulated electric operating companies, the state-regulated operating companies retain the 

right to use the renewable energy to serve customers or to sell the energy and associated 

renewable energy credits, together or separately, to third parties for the benefit of 

customers.
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Expectations...

Regulatory Ask:

• Mitigate cost impacts to the customer.

• Recognize and account for regional differences in energy resources & energy 

market structures (e.g. vertically integrated electric utilities with wholesale bi-lateral 

transactions compared to RTOs/ISOs with bid-based markets)

• Establish flexible timetables and targets.

• Expect states to continue establishing (or increasing) environmental goals.

• Expect demand to continue for renewable energy amid falling prices.

• Expect continuing change in the generation mix towards renewables by utilities