Document:

Exhibit 4.8

                               GUARANTEE AGREEMENT

                                     Between

                               Gulf Power Company

                                 (as Guarantor)

                                       and

                               JPMorgan Chase Bank

                                  (as Trustee)

                                   dated as of

                                November 1, 2001

<PAGE>

                             CROSS-REFERENCE TABLE1

Section of                                     Section of
Trust Indenture Act                            Guarantee
of 1939, as amended                            Agreement
-------------------                            ---------

310(a)...........................................4.01(a)
310(b).....................................4.01(c), 2.08
310(c)......................................Inapplicable
311(a)...........................................2.02(b)
311(b)...........................................2.02(b)
311(c)......................................Inapplicable
312(a)...........................................2.02(a)
312(b)...........................................2.02(b)
313.................................................2.03
314(a)..............................................2.04
314(b)......................................Inapplicable
314(c)..............................................2.05
314(d)......................................Inapplicable
314(e)..................................1.01, 2.05, 3.02
314(f)........................................2.01, 3.02
315(a)...........................................3.01(d)
315(b)..............................................2.07
315(c)..............................................3.01
315(d)...........................................3.01(d)
315(e)......................................Inapplicable
316(a).....................................5.04(i), 2.06
316(b)..............................................5.03
316(c)..............................................2.02
317(a)......................................Inapplicable
317(b)......................................Inapplicable
318(a)...........................................2.01(b)
318(b)..............................................2.01
318(c)...........................................2.01(a)

<PAGE>

                                TABLE OF CONTENTS

                                                                         Page

ARTICLE I..................................................................1
         SECTION 1.01.              Definitions............................1

ARTICLE II.................................................................4
         SECTION 2.01.              Trust Indenture Act;
                  Application       .......................................4
         SECTION 2.02.              Lists of Holders of Securities..........
                  4
         SECTION 2.03.              Reports by the Trustee.................4
         SECTION 2.04.              Periodic Reports to Trustee............4
         SECTION 2.05.              Evidence of Compliance with
                  Conditions Precedent.....................................5
         SECTION 2.06.              Events of Default; Waiver..............5
         SECTION 2.07.              Event of Default; Notice...............5
         SECTION 2.08.              Conflicting Interests..................5

ARTICLE III................................................................6
         SECTION 3.01.              Powers and Duties of the
                  Trustee           6
         SECTION 3.02.              Certain Rights of Trustee..............7
         SECTION 3.03.              Compensation; Fees; Indemnity..........9

ARTICLE IV.................................................................9
         SECTION 4.01.              Trustee; Eligibility...................9
         SECTION 4.02.              Appointment, Removal and
                  Resignation ofTrustee...................................10

ARTICLE V.................................................................10
         SECTION 5.01.              Guarantee.............................10
         SECTION 5.02.              Waiver of Notice and Demand...........11
         SECTION 5.03.              Obligations Not Affected..............11
         SECTION 5.04.              Rights of Holders.....................12
         SECTION 5.05.              Guarantee of Payment..................12
         SECTION 5.06.              Subrogation...........................12
         SECTION 5.07.              Independent Obligations...............12

ARTICLE VI................................................................13
         SECTION 6.01.              Subordination.........................13

ARTICLE VII...............................................................13
         SECTION 7.01.              Termination...........................13

ARTICLE VIII..............................................................13
         SECTION 8.01.              Successors and Assigns................13
         SECTION 8.02.              Amendments............................13
         SECTION 8.03.              Notices...............................14
         SECTION 8.04.              Benefit...............................15
         SECTION 8.05.              Interpretation........................15
         SECTION 8.06.              Governing Law.........................15

---------------------
    1This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.

<PAGE>

                               GUARANTEE AGREEMENT

         This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of November
1, 2001, between GULF POWER COMPANY, a Maine corporation (the "Guarantor"), and
JPMORGAN CHASE BANK, a New York banking corporation, as trustee (the "Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of GULF POWER CAPITAL TRUST III, a
Delaware statutory business trust (the "Trust").

         WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of November 1, 2001, among the Trustee, the other
Trustees named therein, Gulf Power Company, as Depositor, and the holders of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
as of November 16, 2001 $30,000,000 aggregate liquidation amount of its 7.375%
Trust Preferred Securities (the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Trust and having the terms
set forth in the Trust Agreement;

         WHEREAS, the Preferred Securities will be issued by the Trust and the
proceeds thereof will be used to purchase the Junior Subordinated Notes (as
defined in the Trust Agreement) of the Guarantor, which will be held by the
Trust as trust assets; and

         WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.

         NOW, THEREFORE, in consideration of the payment for Preferred
Securities by each Holder (as defined herein) thereof, which payment the
Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee Agreement for the benefit of the Holders from time to
time of the Preferred Securities.

                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01......Definitions. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.

         "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

         "Chase Manhattan Bank USA" means Chase Manhattan Bank USA, National
Association (formerly known as Chase Manhattan Bank Delaware), a national
banking association.

         "Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.

         "Event of Default" means a failure by the Guarantor to perform any of
its payment obligations under this Guarantee Agreement.

         "Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by or on behalf of the Trust: (i) any accrued and
unpaid distributions that are required to be paid on such Preferred Securities
but if and only if and to the extent the Trust has funds legally and immediately
available therefor to make such payment; (ii) the redemption price, including
all accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Trust but if and only if and to the extent that the Trust has funds legally and
immediately available therefor sufficient to make such payment; and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds legally and immediately available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to Holders in liquidation of the Trust (in either case, the
"Liquidation Distribution").

         "Holder" shall mean any holder, as registered on the books and records
of the Trust, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

         "Indenture" means the Subordinated Note Indenture dated as of January
1, 1997, between the Guarantor, as Subordinated Note Issuer, and JPMorgan Chase
Bank, as trustee, as heretofore supplemented and as further supplemented by the
Fourth Supplemental Indenture dated as of November 16, 2001, by and between the
Guarantor and JPMorgan Chase Bank, as Trustee.

         "JPMorgan Chase Bank" means JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), a New York banking corporation.

         "Majority in liquidation amount of Preferred Securities" means a vote
by Holder(s) of Preferred Securities, voting separately as a class, of more than
50% of the liquidation amount of all Preferred Securities outstanding at the
time of determination.

         "Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and
delivered to the Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:

                  (a) a statement that each officer signing the Officers'
         Certificate has read the covenant or condition and the definitions
         relating thereto;

                  (b) a brief statement of the nature and scope of the
         examination or investigation undertaken by each officer in rendering
         the Officers' Certificate;

                  (c) a statement that each such officer has made such
         examination or investigation as, in such officer's opinion, is
         necessary to enable such officer to express an informed opinion as to
         whether or not such covenant or condition has been complied with; and

                  (d) a statement as to whether, in the opinion of each such
         officer, such condition or covenant has been complied with.

         "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.

         "Responsible Officer" means, with respect to the Trustee, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any senior trust officer, trust officer
or assistant trust officer or any other officer of the Corporate Trust
Department of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

         "Successor Trustee" means a successor Trustee possessing the
qualifications to act as Trustee under Section 4.01.

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.

         "Trustee" means JPMorgan Chase Bank until a Successor Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Trustee.

                                   ARTICLE II

                               TRUST INDENTURE ACT

         SECTION 2.01......Trust Indenture Act; Application.

         (a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; and

         (b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

         SECTION 2.02......Lists of Holders of Securities.

         (a) The Guarantor shall furnish or cause to be furnished to the Trustee
(a) semiannually, not later than June 1 and December 1 in each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders ("List of Holders") as of a date not more than 15 days prior to the
time such list is furnished, and (b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished; provided that, the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Trustee by the Guarantor or at
any time the Trustee is the Securities Registrar under the Trust Agreement. The
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.

         (b) The Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.

         SECTION 2.03......Reports by the Trustee. Within 60 days after May 15
of each year commencing May 15, 2002, the Trustee shall provide to the Holders
of the Preferred Securities such reports as are required by Section 313(a) of
the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Trustee shall also comply with the
other requirements of Section 313 of the Trust Indenture Act.

         SECTION 2.04......Periodic Reports to Trustee. The Guarantor shall
provide to the Trustee such documents, reports and information as required by
Section 314 of the Trust Indenture Act (if any) in the form, in the manner and
at the times required by Section 314 of the Trust Indenture Act, and shall
provide, within 120 days after the end of each of its fiscal years, the
compliance certificate required by Section 314(a)(4) of the Trust Indenture Act
in the form and in the manner required by such Section.

         SECTION 2.05......Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Guarantee Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.

         SECTION 2.06......Events of Default; Waiver. The Holders of a Majority
in liquidation amount of Preferred Securities may, by vote, on behalf of all of
the Holders, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.

         SECTION 2.07......Event of Default; Notice.

         (a) The Trustee shall, within 90 days after the occurrence of an Event
of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Trustee, unless such defaults have
been cured before the giving of such notice, provided that the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders.

         (b) The Trustee shall not be deemed to have knowledge of any Event of
Default unless the Trustee shall have received written notice, or a Responsible
Officer charged with the administration of the Trust Agreement shall have
obtained written notice, of such Event of Default.

         SECTION 2.08......Conflicting Interests. The Trust Agreement, the
amended and restated trust agreement dated as of January 1, 1997, among the
Guarantor, as Depositor, Chase Manhattan Bank USA, as Delaware Trustee, the
Administrative Trustees named therein and JPMorgan Chase Bank, as Property
Trustee, relating to Gulf Power Capital Trust I, the guarantee agreement dated
as of January 1, 1997, between the Guarantor, as guarantor, and JPMorgan Chase
Bank, as trustee, relating to Gulf Power Capital Trust I, the amended and
restated trust agreement dated as of January 1, 1998, among the Guarantor, as
Depositor, Chase Manhattan Bank USA, as Delaware Trustee, the Administrative
Trustees named therein and JPMorgan Chase Bank, as Property Trustee, relating to
Gulf Power Capital Trust II and the guarantee agreement dated as of January 1,
1998, between the Guarantor, as guarantor, and JPMorgan Chase Bank, as trustee,
relating to Gulf Power Capital Trust II shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

                                   ARTICLE III

                      POWERS, DUTIES AND RIGHTS OF TRUSTEE

         SECTION 3.01......Powers and Duties of the Trustee.

         (a) This Guarantee Agreement shall be held by the Trustee for the
benefit of the Holders, and the Trustee shall not transfer this Guarantee
Agreement to any Person except the Trustee shall assign rights hereunder to a
Holder to the extent such assignment is necessary to exercise such Holder's
rights pursuant to Section 5.04 or to a Successor Trustee upon acceptance by
such Successor Trustee of its appointment to act as Successor Trustee. The
right, title and interest of the Trustee shall automatically vest in any
Successor Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Trustee.

         (b) If an Event of Default has occurred and is continuing, the Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.

         (c) The Trustee, before the occurrence of any Event of Default and
after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

         (d) No provision of this Guarantee Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

                  (i) prior to the occurrence of any Event of Default and after
         the curing or waiving of all such Events of Default that may have
         occurred:

                           (A) the duties and obligations of the Trustee shall
                  be determined solely by the express provisions of this
                  Guarantee Agreement, and the Trustee shall not be liable
                  except for the performance of such duties and obligations as
                  are specifically set forth in this Guarantee Agreement; and

                           (B) in the absence of bad faith on the part of the
                  Trustee, the Trustee may conclusively rely, as to the truth of
                  the statements and the correctness of the opinions expressed
                  therein, upon any certificates or opinions furnished to the
                  Trustee and conforming to the requirements of this Guarantee
                  Agreement; but in the case of any such certificates or
                  opinions that by any provision hereof are specifically
                  required to be furnished to the Trustee, the Trustee shall be
                  under a duty to examine the same to determine whether or not
                  they conform to the requirements of this Guarantee Agreement;

                  (ii) the Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Officer of the Trustee, unless it
         shall be proved that the Trustee was negligent in ascertaining the
         pertinent facts upon which such judgment was made;

                  (iii) the Trustee shall not be liable with respect to any
         action taken or omitted to be taken by it in good faith in accordance
         with the direction of the Holders of a Majority in liquidation amount
         of the Preferred Securities relating to the time, method and place of
         conducting any proceeding for any remedy available to the Trustee, or
         exercising any trust or power conferred upon the Trustee under this
         Guarantee Agreement; and

                  (iv) no provision of this Guarantee Agreement shall require
         the Trustee to expend or risk its own funds or otherwise incur personal
         financial liability in the performance of any of its duties or in the
         exercise of any of its rights or powers, if the Trustee shall have
         reasonable grounds for believing that the repayment of such funds or
         liability is not reasonably assured to it under the terms of this
         Guarantee Agreement or adequate indemnity against such risk or
         liability is not reasonably assured to it.

         SECTION 3.02.     Certain Rights of Trustee.

         (a)      Subject to the provisions of Section 3.01:

                  (i) the Trustee may rely and shall be fully protected in
         acting or refraining from acting upon any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture, note, other evidence of indebtedness
         or other paper or document believed by it to be genuine and to have
         been signed, sent or presented by the proper party or parties;

                  (ii) any direction or act of the Guarantor contemplated by
         this Guarantee Agreement shall be sufficiently evidenced by an
         Officers' Certificate;

                  (iii) whenever, in the administration of this Guarantee
         Agreement, the Trustee shall deem it desirable that a matter be proved
         or established before taking, suffering or omitting any action
         hereunder, the Trustee (unless other evidence is herein specifically
         prescribed) may, in the absence of bad faith on its part, request and
         rely upon an Officers' Certificate which, upon receipt of such request,
         shall be promptly delivered by the Guarantor;

                  (iv) the Trustee may consult with counsel of its choice, and
         the written advice or opinion of such counsel with respect to legal
         matters shall be full and complete authorization and protection in
         respect of any action taken, suffered or omitted by it hereunder in
         good faith and in accordance with such advice or opinion; such counsel
         may be counsel to the Guarantor or any of its Affiliates and may
         include any of its employees; the Trustee shall have the right at any
         time to seek instructions concerning the administration of this
         Guarantee Agreement from any court of competent jurisdiction;

                  (v) the Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Guarantee Agreement at the
         request or direction of any Holder, unless such Holder shall have
         provided to the Trustee such adequate security and indemnity as would
         satisfy a reasonable person in the position of the Trustee, against the
         costs, expenses (including attorneys' fees and expenses) and
         liabilities that might be incurred by it in complying with such request
         or direction, including such reasonable advances as may be requested by
         the Trustee; provided that nothing contained in this Section 3.02(a)(v)
         shall be taken to relieve the Trustee, upon the occurrence of an Event
         of Default, of its obligation to exercise the rights and powers vested
         in it by this Guarantee Agreement;

                  (vi) the Trustee shall not be bound to make any investigation
         into the facts or matters stated in any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture, note, other evidence of indebtedness
         or other paper or document, but the Trustee, in its discretion, may
         make such further inquiry or investigation into such facts or matters
         as it may see fit;

                  (vii) the Trustee may execute any of the trusts or powers
         hereunder or perform any duties hereunder either directly or by or
         through agents or attorneys, and the Trustee shall not be responsible
         for any misconduct or negligence on the part of any agent or attorney
         appointed with due care by it hereunder; and

                  (viii) whenever in the administration of this Guarantee
         Agreement the Trustee shall deem it desirable to receive instructions
         with respect to enforcing any remedy or right or taking any other
         action hereunder, the Trustee (i) may request instructions from the
         Holders, (ii) may refrain from enforcing such remedy or right or taking
         such other action until such instructions are received, and (iii) shall
         be protected in acting in accordance with such instructions.

         (b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it in any jurisdiction
in which it shall be illegal, or in which the Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Trustee shall be construed to be a duty.

         SECTION 3.03.     Compensation; Fees; Indemnity.

         The Guarantor agrees:

         (a) to pay to the Trustee from time to time reasonable compensation for
all services rendered by the Trustee hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);

         (b) except as otherwise expressly provided herein, to reimburse the
Trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Guarantee Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and

         (c) to indemnify the Trustee for, and to hold the Trustee harmless
against, any and all loss, damage, claims, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.

         The provisions of this Section 3.03 shall survive the termination of
this Guarantee Agreement.

                                   ARTICLE IV

                                     TRUSTEE

        SECTION 4.01.     Trustee; Eligibility.

         (a)      There shall at all times be a Trustee which shall:

                  (i)      not be an Affiliate of the Guarantor; and

                  (ii) be a corporation organized and doing business under the
         laws of the United States of America or any State or Territory thereof
         or of the District of Columbia, or a corporation or Person permitted by
         the Securities and Exchange Commission to act as an institutional
         trustee under the Trust Indenture Act, authorized under such laws to
         exercise corporate trust powers, having a combined capital and surplus
         of at least 50 million U.S. dollars ($50,000,000), and subject to
         supervision or examination by Federal, State, Territorial or District
         of Columbia authority. If such corporation publishes reports of
         condition at least annually, pursuant to law or to the requirements of
         the supervising or examining authority referred to above, then, for the
         purposes of this Section 4.01(a)(ii), the combined capital and surplus
         of such corporation shall be deemed to be its combined capital and
         surplus as set forth in its most recent report of condition so
         published.

         (b) If at any time the Trustee shall cease to be eligible to so act
under Section 4.01(a), the Trustee shall immediately resign in the manner and
with the effect set out in Section 4.02(c).

         (c) If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act, subject to the rights of the Trustee under the
penultimate paragraph thereof.

         SECTION 4.02.     Appointment, Removal and Resignation of Trustee.

          (a) Subject to Section 4.02(b), the Trustee may be appointed or
removed without cause at any time by the Guarantor.

         (b) The Trustee shall not be removed until a Successor Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Trustee and delivered to the Guarantor.

         (c) The Trustee appointed to office shall hold office until a Successor
Trustee shall have been appointed or until its removal or resignation. The
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Trustee has
been appointed and has accepted such appointment by instrument in writing
executed by such Successor Trustee and delivered to the Guarantor and the
resigning Trustee.

         (d) If no Successor Trustee shall have been appointed and accepted
appointment as provided in this Section 4.02 within 60 days after delivery to
the Guarantor of an instrument of resignation, the resigning Trustee may
petition any court of competent jurisdiction for appointment of a Successor
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trustee.

                                    ARTICLE V

                                    GUARANTEE

         SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Guarantor
may have or assert against any Person. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders.

         SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this Guarantee Agreement and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Trust or any other Person before proceeding against
the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.

          SECTION 5.03. Obligations Not Affected. The obligation of the
Guarantor to make the Guarantee Payments under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:

         (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;

         (b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Junior Subordinated Notes permitted by the Indenture);

         (c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;

         (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;

          (e) any invalidity of, or defect or deficiency in, the Preferred
Securities;

          (f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or

         (g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.03 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

         There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

         SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges
that: (i) this Guarantee Agreement will be deposited with the Trustee to be held
for the benefit of the Holders; (ii) the Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee in respect of this Guarantee Agreement or exercising any trust or
power conferred upon the Trustee under this Guarantee Agreement, provided that
such direction shall not be in conflict with any rule of law or with this
Guarantee Agreement, and could not involve the Trustee in personal liability in
circumstances where reasonable indemnity would not be adequate; and (iv) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against or requesting or directing that action be taken by the
Trustee or any other Person; it being understood and intended that no one or
more of such Holders shall have any right in any manner whatsoever by virtue of,
or by availing of, any provision of this Guarantee Agreement to affect, disturb
or prejudice the rights of any other of such Holders or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Guarantee Agreement, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.

         SECTION 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication) or upon the distribution of Junior Subordinated Notes to the
Holders in exchange for all of the Preferred Securities.

         SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Trust in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.

         SECTION 5.07. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.

                                   ARTICLE VI

                                  SUBORDINATION

         SECTION 6.01. Subordination. This Guarantee Agreement will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, including
the Junior Subordinated Notes, except those obligations or liabilities made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference securities of any Affiliate of the Guarantor, and (iii)
senior to all common stock of the Guarantor.

                                   ARTICLE VII

                                   TERMINATION

         SECTION 7.01. Termination. This Guarantee Agreement shall terminate and
be of no further force and effect upon: (i) full payment of the Redemption Price
of all Preferred Securities, (ii) the distribution of Junior Subordinated Notes
to the Holders in exchange for all of the Preferred Securities, or (iii) full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Preferred Securities or under this Guarantee Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 8.01. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger, conveyance, transfer, or lease
involving the Guarantor that is permitted under Article Eight of the Indenture,
the Guarantor shall not assign its obligations hereunder.

         SECTION 8.02. Amendments. Except with respect to any changes which do
not materially and adversely affect the rights of Holders (in which case no
consent of Holders will be required), this Guarantee Agreement may only be
amended with the prior approval of the Holders of not less than 66-2/3% in
liquidation amount of all the outstanding Preferred Securities. The provisions
of Article Six of the Trust Agreement concerning meetings of Holders shall apply
to the giving of such approval.

         SECTION 8.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:

         (a) if given to the Guarantor by first class mail or by facsimile, to
the address set forth below or such other address as the Guarantor may give
notice of to the Trustee and the Holders:

                           Gulf Power Company
                           One Energy Place
                           Pensacola, Florida  32520-0102
                           Facsimile No.: (850) 444-6026
                           Attention:  Treasurer

                           with copy to:

                           Southern Company Services, Inc.
                           270 Peachtree Street, N.W.
                           Atlanta, Georgia 30303
                           Facsimile No.:   (404) 506-0674
                           Attention:  Corporate Finance Department

         (b) if given to the Guarantor by hand delivery, to the address set
forth below or such other address as the Guarantor may give notice of to the
Trustee and the Holders:

                           Gulf Power Company
                           500 Bayfront Parkway
                           Pensacola, Florida  32501
                           Attention:  Treasurer

                           with copy to:

                           Southern Company Services, Inc.
                           270 Peachtree Street, N.W.
                           Atlanta, Georgia 30303
                           Facsimile No.:   (404) 506-0674
                           Attention:  Corporate Finance Department

         (c) if given to the Trust, in care of the Trustee, or to the Trustee at
the Trust's (and the Trustee's) address set forth below or such other address as
the Trustee on behalf of the Trust may give notice to the Holders:

                           Gulf Power Capital Trust III
                           c/o JPMorgan Chase Bank
                           450 W. 33rd Street
                           New York, New York 10001
                           Attn:  Institutional Trust Services

          (d) if given to any Holder, at the address set forth on the books and
records of the Trust.

         All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

          SECTION 8.04. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.

          SECTION 8.05. Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:

          (a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.01;

          (b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;

          (c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;

          (d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;

          (e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;

          (f) a reference to the singular includes the plural and vice versa;
and

          (g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.

         SECTION 8.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY
INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURTS. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN
THIS GUARANTEE AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.

         This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

<PAGE>

         THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.

                    GULF POWER COMPANY

                    By:
                         --------------------------------------------------
                         Ronnie R. Labrato
                         Vice President, Chief Financial Officer
                         and Comptroller

                    JPMORGAN CHASE BANK

                    By:
                         ------------------------------------------------------
                         R. Lorenzen
                         ssistant Vice PresidentEXHIBIT 4.01

Number                                                                    Shares
 AEP                                                                 __________

                       ADELPHIA COMMUNICATIONS CORPORATION
              INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

7.5% SERIES E CONVERTIBLE                    CUSIP 006848  50  1
PREFERRED STOCK                              SEE REVERSE FOR CERTAIN DEFINITIONS
(LIQUIDATION PREFERENCE $25 PER SHARE)
         This is to Certify that

         is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE 7.5% SERIES E MANDATORY CONVERTIBLE
PREFERRED STOCK (LIQUIDATION PREFERENCE $25 PER SHARE) OF THE PAR VALUE OF ONE
CENT PER SHARE OF ADELPHIA COMMUNICATIONS CORPORATION transferable on the books
of the Corporation by the holder hereof, in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned and registered by the Transfer Agent and
Registrar.

WITNESS, the seal of the Corporation and the signatures of its duly authorized
officers.

DATED:

[SEAL]        /s/ MICHAEL J. RIGAS                             /s/ JOHN J. RIGAS
                  Michael J. Rigas                                 John J. Rigas
                  Executive Vice President and Secretary           President

COUNTERSIGNED AND REGISTERED:

AMERICAN STOCK TRANSFER & TRUST COMPANY
         TRANSFER AGENT AND REGISTRAR

By:      AUTHORIZED SIGNATURE

<PAGE>

ADELPHIA COMMUNICATIONS CORPORATION will furnish to any stockholder upon request
to its principal office, and without charge, a full statement of the
designations, preferences, limitations and relative rights of each class
authorized, and of the variations in the relative rights and preferences between
the shares of each preferred or special class in series, so far as the same have
been fixed and determined, and the authority of the board of directors to fix
and determine the relative rights and preferences of subsequent series.

         The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM  - as tenants in common       UNIF GIFT MIN ACT Custodian
                                                       ----------
                                                        (Cust)           (Minor)
TEN ENT  - as tenants by the entireties                 under Uniform Gifts to
                                                        Minors
JT TEN   - as joint tenants with right                  Act
                    of survivorship and not as                  (State)
                    tenants in common
     Additional abbreviations may also be used though not in the above list.

    For value received, _______________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------------------

----------------------------------------- --------------------------------------

--------------------------------------------------------------------------------
Please print or typewrite name and address including postal zip code of assignee
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                                                                          Shares
--------------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby

irrevocably constitute and appoint
                                               ---------------------------------

--------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.

Dated,
      ------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.

<PAGE>

                          NOTICE OF ELECTION TO CONVERT

         The undersigned hereby irrevocably exercise(s) the right to convert
_____ Shares of the 7.5% Series E Mandatory Convertible Preferred Stock ($25
Liquidation Preference Per Share) represented by this certificate into Class A
Common Stock of Adelphia Communications Corporation in accordance with the terms
of the 7.5% Series E Mandatory Convertible Preferred Stock ($25 Liquidation
Preference Per Share) relating thereto.

Date:                                 Signature:
     ---------------                            --------------------------------

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