2008 Southern Section A&WMA Annual Meeting & Technical Conference Biloxi, Mississippi

1. Climate Change/Greenhouse Gas Session 2008 Southern Section A&WMA Annual Meeting & Technical Conference Biloxi, Mississippi August 7, 2008 Danny Herrin, Manager Climate and Environmental Strategies Southern Company

2. Bills analyzed by CRA for Southern Company

3. Projected CO2 PriceRecently analyzed proposals Add 7¢/kwh to coal generation cost, 70 cents/gal gasoline Add 4¢/kwh to coal generation cost, 40 cents/gal gasoline Add 1.5¢/kwh to coal generation cost, 15 cents/gal gasoline Data source: CRA analysis for Southern Company, April 2008.

4. L-W Household Cost of Energy Electricity, Natural Gas and Motor Fuel at the Pump Data source: CRA analyses for National Mining Association and Edison Electric Institute, April 2008.

5. Electricity Generation Must Transform by 2050 to Meet the L-W Caps 7,000 Energy Efficiency/ 6,000 Demand Destruction 5,000 4,000 TWh 3,000 2,000 1,000 - 2010 2015 2020 2025 2030 2035 2040 2045 2050 Business as Usual Scenario L-W Scenario 8,000 7,000 6,000 5,000 Renewables TWh 4,000 Nuclear Renewables 3,000 Gas/Oil Nuclear Gas/Oil 2,000 Coal w/o CCS 1,000 Coal w/o CCS Coal w/ CCS - 2010 2015 2020 2025 2030 2035 2040 2045 2050 Data source: CRA analysis for Southern Company, April 2008.

6. U.S. Coal-Fueled Electricity Generation Lieberman-Warner Would Have Dramatic Impacts 5 4 . 3 BAU Trillion kWh S. 2191 2 1 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Data Source: Analysis of S. 2191 by CRA International for Southern Company, March 2008.

7. EPA Issues ANPR on Climate Change(F.R. Notice on July 30 - Comments due November 28) "The ANPR reflects the complexity and the magnitude of the question of whether and how greenhouse gases could be effectively controlled under the Clean Air Act. I believe the ANPR demonstrates the Clean Air Act, an outdated law originally enacted to control regional pollutants that cause direct health effects, is ill-suited for the task of regulating global greenhouse gases. Based on the analysis to date, pursuing this course of action would inevitably result in a very complicated, time-consuming and, likely, convoluted set of regulations. These rules would largely pre-empt or overlay existing programs that help control greenhouse gas emissionsand would be relatively ineffective at reducing greenhouse gas concentrationsgiven the potentially damaging effect on jobs and the U.S. economy.” EPA Administrator Stephen L. Johnson.

8. “The Real Cost of Tackling Climate Change” • U.S. population is expected to be around 420 million by 2050. • To meet the 80% below 1990 levels caps by 2050 we would have to reduce U.S. emissions to ~1 billion metric tons or go from ~20 tons per capita to ~2.5 tons per capita. • France and Switzerland -- countries that generate almost all their electricity from non-fossil fuels are at about 6.5 tons per capita. • Replacing every existing coal plant with a natural gas plant would still put us at twice the 2050 target. • If everyone drove a Toyota Prius in 2050 the equivalent transportation target would be overshot by 40%. Source: “The Real Cost of Tackling Climate Change,” Steven F. Hayward Wall Street Journal - April 28, 2008

9. Technology Development and Implementation Timeline Other Options NGCC Renewables New Nuclear 20052010201520202025 New Coal Capture & Storage Commercial Capture & Storage Demo Projects PC and IGCC Retail and Generation Energy Conservation and Efficiency Improvements

10. Summary • Legislation likely in next 1-2 years • EPA regulation a possibility as well • Legislation/regulation could result in significant shift in generating technologies with attendant cost increases • Technology development and deployment is the key to mitigating these impacts

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12. U.S. Electricity Generation by RegionHistory and projection, 1990-2030 Projected growth 2008-2030 34% 25% 34% 22% 11% History Projection Data Source: Energy Information Administration, US Department of Energy

13. Plans to Meet Demand Growth Must Include Multiple Technology Options • Coal – both pulverized coal and integrated gasification combined cycle (IGCC) • Nuclear power • Renewable energy • Natural gas combined cycle • Efficiency and conservation

14. 67% of World Fossil Energy Reserves are in Coal World Energy ReservesOil, Gas, and Coal Reserves in Joules Source: Energy Information Administration/ International Reserves Data

15. Coal Seam Project site selection pending Coal Seam Project near Tuscaloosa, Alabama Stacked Storage Project Denbury’s Cranfield Oil Field Mississippi Test Site Mississippi Power’s Plant Daniel DOE Southeast Regional Carbon Sequestration Partnership - (SECARB) Phase 1 – CO2 source and geologic sinks data collection Phase 2 – Small CO2 storage pilots • SECARB: 4 pilots • Saline reservoir (Plant Daniel) • Coal Seam (AL & VA) • Stacked EOR/saline (MS) Phase 3 – Large capacity CO2 storage demo

16. Nuclear Power • Southern Company has signed contracts for and is pursuing an Early Site Permit for two additional units at Plant Vogtle in Georgia

17. Renewables • Solar power • Biomass cofiring and conversion • Wind power