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Southern Company Overview

Southern Company Overview. Credit Suisse First Boston 2007 Energy Summit February 6, 2007. Cautionary Statement Regarding Forward-Looking Information.

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Southern Company Overview

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  1. Southern Company Overview Credit Suisse First Boston 2007 Energy Summit February 6, 2007

  2. Cautionary Statement Regarding Forward-Looking Information NOTE: Much of the information contained in this presentation is forward-looking information based on current expectations and plans that involve risks and uncertainties. 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; 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 Annual Report on Form 10-K for the year ended Dec 31, 2005, and subsequent securities filings, could cause results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry and implementation of the Energy Policy Act of 2005, and also changes in environmental, tax 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; current and future litigation, regulatory investigations, proceedings or inquiries, including the pending EPA civil actions against certain Southern Company subsidiaries, FERC matters, IRS audits and Mirant-related matters; the effects, extent and timing of the entry of additional competition in the markets in which Southern Company’s subsidiaries operate; variations in demand for electricity, including those relating to weather, the general economy and population and business growth (and declines); available sources and costs of fuels; ability to control costs; investment performance of Southern Company’s employee benefit plans; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate cases relating to fuel and storm restoration cost recovery; the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; fluctuations in the level of oil prices; the level of production, if any, by the synthetic fuel operations at Carbontronics Synfuels Investors LP and Alabama Fuel Products LLC for fiscal year 2007; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due; the ability to obtain new short- and long-term contracts with neighboring utilities; the direct or indirect effect on Southern Company’s business resulting from terrorist incidents and the threat of terrorist incidents; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company’s and its subsidiaries’ credit ratings; the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, pandemic health events such as avian influenza or other similar occurrences; the direct or indirect effects on Southern Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; and the effect of accounting pronouncements issued periodically by standard-setting bodies. Southern Company and its subsidiaries expressly disclaim any obligation to update any forward-looking information.

  3. Agenda for Today • 2006 results • Our focus for 2007 • Traditional Operating Companies • Southern Power • Preparing for the future • Financial metrics and performance

  4. Payout ratio: 73% 2006 Results EPS excluding synfuel Guidance: $2.03-$2.08 $2.10 Actual: EPS with synfuel: $2.12 Other Key Metrics Competitive Generation Net Income: $305M (SPC $125M) Core ROE: 13.5% Common Equity Ratio: 41% Reconciliation to GAAP numbers for 2006 in Appendix

  5. Historical EPS Performance – Excluding Synfuel 2001-2006AverageGrowth Rate5.9% $2.10 $2.10 $2.03 $1.95 $1.92 $1.90 $1.81 $1.70 $1.58 $1.50 2006 2001 2002 2003 2004 2005 Reconciliation to GAAP numbers for ’01-’06 in Appendix

  6. Original Plant1975 Scrubbers – 2005 – 2010 NOx Controls1992 – 2003 Precipitators – 1979 – 1981 Our Focus in 2007 – Near Term • Georgia Power retail rate case • Capital projects, including a $4.6 billion environmental construction program over the next three years Plant Bowen, Cartersville, Georgia

  7. ConstructiveRegulation Healthy CapitalSpending Customers High ReliabilityLow PricesHigh CustomerSatisfaction Our Focus in 2007 – On-going and Long Term • Continue industry-leading reliability and customer satisfaction, while maintaining retail prices that are below the national average • Meeting increased energy demand with the best economic and environmental choices • Continuing to deliver on our value proposition: superior risk-adjusted total shareholder return

  8. Our Focus on Low Price and Reliability Drives Strong Customer Satisfaction RELIABILITY LOW PRICE EFOR of 1.11% ranked first among electric generation companies with more than 6,000 MW Prices significantly below national average Nuclear EFOR of 0% in 4th quarter 2006 CUSTOMER SATISFACTION Number 1 among electric utilities in the American Customer Satisfaction Index for the past 7 years

  9. Our Major Businesses Exceptional Long-Term Shareholder Value Southern Power 4 Traditional Operating Companies Top Quartile Returns (13.5%) Net Income: Solid base plus Long-term growth Alabama Power Georgia Power Mississippi Power Gulf Power

  10. Traditional Operating CompaniesThe foundation of our business

  11. 33% Commercial 32% Residential 35% Industrial Customer Mix (12/31/2005) Traditional Operating Companies • Strong organic growth • 2% average long-term growth in electricity demand • 1.7% average long-term customer growth • Economies of scale • 4.3 million retail customers • 27,000 miles of transmission • Over 41,000 MW of generation • A diverse regional economy • Constructive regulatory environment

  12. We Plan to Invest Over $11B in Our Traditional Operating Companies Over the Next 3 Years (in billions) ’07-’09 $2.4 21% All Other • Intensive environmental spending period • $3.3B of growth capital • 6-7% annual growth in invested capital • Expected annual D&A of approximately $1.3B 0.7 6% New Generation 3.8 33% Transmission & Distribution 4.6 40% Environmental $11.4 100% ’07-’09 Total “All other” includes generation maintenance, nuclear fuel, and general corporate investments

  13. 2007 Georgia Power Base Rate Case • Expect to file June 29, 2007 • Decision due December 2007 with new rates effective January 2008 • Primary driver for need for increase: • Recovering environmental capital costs • Other drivers: • Transmission and distribution • Additional capacity • Operations and maintenance

  14. Southern Power

  15. Southern Power Business Model • Long-term bilateral contracts • Financially strong counterparties • Minimal fuel risk and spark spread risk • Minimal remarketing risk through the middle of the next decade • Over 6,700 MW of nameplate capacity at Southern Power • Recent contracts provide average coverage of capacity of about 82% through 2015

  16. Southern Power Company CUSTOMERS PLANTS Franklin 3 CC 620 MW (2009) Stanton A CC 657 MW Orlando Gasifier 285MW (2010)

  17. Southern Power Business Outlook • Earnings projections through 2009 are at or slightly above 2007 projection of $115 million • Existing contracts for capacity, including new units at plants Franklin and Oleander, will add to earnings growth beyond 2009 • Expect additional growth opportunities from markets reaching equilibrium by end of decade • Maintain our strategy of a low risk business that seeks long-term contracts with solid, creditworthy counterparties

  18. Preparing for the Future

  19. Southern Company Must Continue to Meet Increasing Demand for Electricity • Plans to meet demand must include multiple technology options: • Nuclear power • Coal – both pulverized coal and integrated gasification combined cycle (IGCC) • Natural gas combined cycle • Renewable energy • Energy efficiency

  20. Nuclear Power Development • Southern is taking deliberate steps toward adding new nuclear capacity • Financial strength and scale • Filed an Early Site Permit (ESP) for two additional units at Plant Vogtle in Georgia • Proposed the Westinghouse AP1000 reactors • Only ESP to date that has referenced a specific technology • Georgia Power nuclear accounting order was approved by Georgia PSC, to allow recovery of up to $51 million in permitting costs • Working toward a COL in March 2008

  21. Advances in Coal-Fueled Generation • FutureGen – Southern Company is a founding member and a key participant with the U.S. Department of Energy • Southeast Regional Carbon Sequestration Partnership sponsored by the Department of Energy • Mississippi Power’s Plant Daniel – test site for CO2 storage project • TRansport Integrated Gasification – TRIGTM technology – developed at PSDF in Wilsonville, Alabama

  22. Wilsonville, AlabamaPower System Development Facility “America’s Advanced Coal Research Center” – U.S. Department of Energy

  23. Southern Company’s IGCC • TRansport Integrated Gasification – TRIGTM technology – developed at PSDF in Wilsonville, Alabama • Unique that this can efficiently use PRB or lignite coal • Technology to be further demonstrated at Orlando Utilities’ Stanton Energy Center • 285 MW IGCC air-blown transport gasifier • Startup expected in mid-2010 • Jointly owned by Southern and Orlando Utilities, co-funded by U.S. DOE • Mississippi Power is exploring building 600 MW facility • Received DOE certification and IRS approval of tax credits Coal Gasifier Air/ Oxygen Syngas to CC Combined Cycle

  24. Renewable Energy Investments • Southern Company is pursuing equity investments in renewable energy projects including wind, solar, biomass, and geothermal • Southern Company owns a 30 MW geothermal project that supplies 15% of the power in Hawaii • Southern Company has invested $6 million over the past five years in research and development of renewable energy • More than 20 research and development projects are in progress, including one that uses switchgrass as a biomass fuel • Our customers in the Southeast can now sign up for green energy

  25. Energy Efficiency • Southern Company’s programs have avoided the need for ~3,000 MW of peaking capacity • Programs include • Interruptible/Stand-by • Direct load control • Time of use rates, real time pricing • Energy audits • Good Cents / Good Cents Select

  26. Real Time Pricing Southern Is the Industry Leader in Demonstrating and Applying New Technologies Power Systems Development Facility IGCC – TRIG FutureGen CO2 Sequestration Mercury Control Research Center Energy Efficiency Chiyoda Scrubber Renewables GoodCents SELECT

  27. Southern Company’sFinancial Metrics and Performance

  28. Regular, predictable, sustainable earnings growth with attractive dividend growth The best, risk-adjusted total shareholder return (TSR)(balanced price appreciation plus dividend yield) Southern Company ValueProposition EPSGrowth DivYield TSR TSR 5% 5% 10%

  29. Historical EPS Performance – Excluding Synfuel 2001-2006AverageGrowth Rate5.9% $2.10 $2.10 $2.03 $1.95 $1.92 $1.90 $1.81 $1.70 $1.58 $1.50 2006 2001 2002 2003 2004 2005 Reconciliation to GAAP numbers for ’01-’06 in Appendix

  30. Value Line Earnings Predictability Score 100 SO SCG 90 ED EXC SRE AEE CEG ETR FPL PEG 80 MDU PGN PPL 70 D NI PNW WEC AEP FE 60 DUK DTE 50 XEL 40 30 TXU 20 10 AYE EIX PCG 0 Source: Earnings Predictability Score from Value Line as of 12/29/2006; includes all large-cap electric utilities covered by Value Line as of 12/31/06 Best Forward-Looking Earnings Predictability in the Industry Regular, predictable, sustainable

  31. Commitment to Dividend Provides Stable Income for Investors In April 2006, the Southern Company Board of Directors approved an increase to the annual dividend of 6¢, or 4.0%, to $1.55 per share 237 consecutive quarters of dividend payments Commitment to dividend is foundation of financial policy

  32. Focused on Shareholder Return Annualized returns for periods ending December 29, 2006 Source: Bloomberg, FactSet and Standard & Poor’s. Assumes all dividends are reinvested and returns are compounded daily. Exceptional returns for long-term investors

  33. Value of $1000 invested on 12/31/86 Value ($) $18,000 SO $16,023 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Source: Bloomberg; assumes all dividends are reinvested and returns are compounded daily through 12/31/06; includes all large-cap electric utilities covered by Value Line as of 12/31/06 Consistency Has Provided Exceptional Value for Our Shareholders Focused management team has delivered on its commitments

  34. Southern’s Price Performance from Spin to 1/26/07 SO 69% S&P Electric Utility Index 31% Dow Jones 28% Price performance as of 1/26/2007 from Bloomberg

  35. Southern’s Credit Rating is Among the Best in the Industry Market Cap S&P Issuer ($ billions) Credit Rating Southern Company 27.2 A FPL Group 22.7 A Consolidated Edison 12.4 A Exelon Corp 39.7 BBB+ Sempra Energy 15.0 BBB+ Constellation Energy 12.9 BBB+ Dominion 29.0 BBB Duke Energy 24.0 BBB Entergy 19.0 BBB FirstEnergy Corp 18.8 BBB American Electric Power 17.1 BBB Public Service Entrp 17.0 BBB PPL Corp 13.4 BBB Progress Energy 12.0 BBB Ameren Corp 11.0 BBB TXU Corp 24.8 BBB- Edison International 14.5 BBB- AES Corp 13.8 BB- PG&E 16.1 NR U.S. companies with electric utility operations and market capitalization over $10 BB Source: Bloomberg; data as of 1/26/2007 Strong balance sheet provides financial security

  36. Southern’s Returns Are Highest for its Credit Rating TSR since Mirant spin 30% EIX 25% ETR SRE 20% TXU FE WEC SO 15% EXC PEG FPL SCG PPL MDU AEE 10% CEG D PNW DTE ED PGN 5% AEP AYE XEL NI 0% DUK -5% CNP -10% BB+ BBB- BBB BBB+ A- A S&P Issuer Credit Rating Source: Based on annualized TSR for Mirant spin to 12/31/06 and S&P issuer credit rating as of 12/31/06 from Bloomberg; includes all large-cap electric utilities covered by Value Line as of 12/31/06 Attractive returns coupled with financial security

  37. Southern’s Returns Among Highest For Level of Risk TSR since Mirant spin 30% PCG EIX 25% TXU SRE ETR 20% FE WEC EXC Security Market Line SO FPL 15% PEG PPL AEE SCG MDU 10% ED CEG D PGN DTE 5% AEP PNW XEL NI DUK 0% -5% CNP -10% 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 Beta Sources: Security Market Line drawn using 10-year Treasury yield from Bloomberg as of 12/31/2006 and latest market risk premium from Ibbotson; utility betas from Value Line as of 12/29/06; annualized TSR from Bloomberg for Mirant spin to 12/31/06; includes all large-cap electric utilities covered by Value Line as of 12/31/06 Exceptional risk-adjusted returns

  38. Top Five Reasons to Own Southern Company • Focused management with a proven track record of delivering on commitments • Regular, predictable, sustainable earnings growth • Attractive dividend growth rate • Strong balance sheet • Exceptional risk-adjusted returns Industry-leading financial integrity

  39. Southern Company Overview Credit Suisse First Boston 2007 Energy Summit February 6, 2007

  40. Appendix

  41. Reconciliation of 2001-2006 EPS Excluding Synfuel to EPS as Reported Under GAAP *2004 synfuel earnings includes $0.05 for the recognition of synthetic fuel tax credits reserved in previous years

  42. On the Agenda for 2007: Georgia Power Company Fuel Recovery Case filed September 15, 2006 Refiled November 13, 2006 Decision expected February 2007 Base Rate Case – to be filed by July 1, 2007 4 three-year Accounting Orders since 1996 Decision expected December 2007 Accomplished in 2006: Georgia Power Company/Savannah Electric & Power Fuel Recovery Case – March 2006 Merger completed July 1, 2006 Nuclear Accounting Order Gulf Power Company Storm Damage Recovery Existing stipulation extended through 2009 Mississippi Power Company Storm Damage Recovery Mississippi PSC certified storm damage and recovery costs of approximately $302M Recovered $276M through community development block grants PSC Order for $112M Securitization Financing (remaining unrecovered, storm center, reserve) Retail Regulated Business: Regulatory Proceedings

  43. Projected Sources and Uses (billions) 2007-2009 Sources Net Operating Cash Flow $ 11.0 Common Equity 1.5 4.6 Net Debt and Preferred $ 17.1 Uses Capital Expenditures $ 13.2 Common Dividends 3.9 $ 17.1

  44. Projected Capital Expenditures by Function

  45. Projected Capital Expenditures by Subsidiary

  46. Our Environmental Strategy Will Help Preserve the Availability of Our Low Cost Generation Fleet • Over the next decade our current plans call for more than two dozen scrubbers, a dozen SCRs, and several baghouses • $4.6 billion over the next three years to further lower emissions of sulfur dioxide (S02), nitrogen oxides (NOX), and mercury Notes: Alabama Power and Georgia Power each include 50% of SEGCO; “Coastal Utilities” includes Gulf Power and Mississippi Power

  47. Developing Technologies for CO2 Capture and Storage • FutureGen – Southern Company is a founding member and a key participant with the U.S. Department of Energy • The project includes the design, construction, and operation of a gasification-based plant that will capture and sequester carbon dioxide at full-scale • We have joined the Department of Energy-sponsored Southeast Regional Carbon Sequestration Partnership • Mississippi Power’s Plant Daniel has been chosen as a test site for a carbon dioxide geological storage project

  48. Mercury Control Research • Southern Company conducted the first full-scale tests of activated carbon injection for mercury control • We designed and built the industry’s first integrated Mercury Research Center to test new power plant control technologies • We are delaying adding expensive baghouses with activated carbon injection by chemical addition at PRB units

  49. Land and Natural Resource Conservation • Power of Flight – protects birds though habitat and species restoration and environmental education • Longleaf Legacy – supports restoration of longleaf pine forests and helps sequester carbon through tree planting • Five Star Restoration – national conservation program that provides grants and technical support for riparian (land-bordering waterways), coastal, or wetlands restoration projects

  50. Ratio of Historical TSR to Standard Deviation of TSR 4.5 ED 4.0 SO 3.5 3.0 2.5 AEE 2.0 SCG EXC SRE ETR FE FPL WEC 1.5 PPL PGN 1.0 D CEG DTE MDU EIX PCG PEG 0.5 PNW TXU AEP NI AYE XEL DUK 0.0 CNP -0.5 Source: Based on annualized TSR for Mirant spin to 12/31/06 and standard deviation for 2002 - 2006 from Bloomberg; includes all large-cap electric utilities covered by Value Line as of 12/31/06 Southern’s Returns Among Highest For Level of Risk Attractive risk-adjusted returns

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