Southern Power 10-Q 7 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
In Billions, except Share data	3 Months Ended Mar. 31, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	SOUTHERN CO
Entity Central Index Key	0000092122
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		24.8
Entity Common Stock, Shares Outstanding	824,535,663

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating Revenues:
Retail revenues	$3,458,920	$3,064,659
Wholesale revenues	541,587	451,414
Other electric revenues	135,435	122,798
Other revenues	21,375	27,436
Total operating revenues	4,157,317	3,666,307
Operating Expenses:
Fuel	1,645,158	1,406,267
Purchased power	126,566	107,644
Other operations and maintenance	908,024	871,081
MC Asset Recovery litigation settlement		202,000
Depreciation and amortization	343,380	389,758
Taxes other than income taxes	212,195	199,880
Total operating expenses	3,235,323	3,176,630
Operating Income	921,994	489,677
Other Income and (Expense):
Allowance for equity funds used during construction	49,391	42,612
Interest income	4,787	6,908
Leveraged lease income (losses)	6,131	9,441
Interest expense, net of amounts capitalized	(222,482)	(225,727)
Other income (expense), net	(13,437)	(13,826)
Total other income and (expense)	(175,610)	(180,592)
Earnings Before Income Taxes	746,384	309,085
Income taxes	235,681	167,169
Consolidated Net Income	510,703	141,916
Dividends on Preferred and Preference Stock of Subsidiaries	16,195	16,195
Consolidated Net Income After Dividends on Preferred and Preference Stock of Subsidiaries	$494,508	$125,721
Earnings per share (EPS) -
Basic EPS	0.6	0.16
Diluted EPS	0.6	0.16
Average number of shares of common stock outstanding (in thousands)
Basic	822,526	779,858
Diluted	824,787	781,645
Cash dividends paid per share of common stock	0.4375	0.42

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating Activities:
Consolidated net income	$510,703	$141,916
Adjustments to reconcile consolidated net income to net cash provided from operating activities --
Depreciation and amortization, total	421,568	456,833
Deferred income taxes	107,374	(30,386)
Deferred revenues	(19,846)	(10,732)
Allowance for equity funds used during construction	(49,391)	(42,612)
Leveraged lease income (losses)	(6,131)	(9,441)
Pension, postretirement, and other employee benefits	4,627	7,974
Stock based compensation expense	18,973	16,955
Hedge settlements		(16,167)
MC Asset Recovery litigation settlement		202,000
Other, net	(48,531)	8,550
Changes in certain current assets and liabilities --
-Receivables	43,402	292,162
-Fossil fuel stock	133,275	(160,992)
-Materials and supplies	696	(12,648)
-Other current assets	(94,609)	(67,717)
-Accounts payable	(99,951)	80,995
-Accrued taxes	(72,598)	(185,215)
-Accrued compensation	(112,453)	(319,715)
-Other current liabilities	1,852	49,371
Net cash provided from operating activities	738,960	401,131
Investing Activities:
Property additions	(1,054,040)	(1,136,212)
Investment in restricted cash from pollution control revenue bonds	(1)	(49,348)
Distribution of restricted cash from pollution control revenue bonds	7,582	23,079
Nuclear decommissioning trust fund purchases	(238,302)	(379,332)
Nuclear decommissioning trust fund sales	189,445	381,280
Cost of removal, net of salvage	(28,241)	(30,231)
Change in construction payables	28,199	116,003
Other investing activities	7,170	(47,269)
Net cash used for investing activities	(1,088,188)	(1,122,030)
Financing Activities:
Increase in notes payable, net	132,211	121,274
Proceeds --
Long-term debt issuances	350,000	1,255,925
Common stock issuances	147,345	151,379
Redemptions --
Long-term debt	(255,562)	(193,417)
Payment of common stock dividends	(359,144)	(326,780)
Payment of dividends on preferred and preference stock of subsidiaries	(16,194)	(16,265)
Other financing activities	(100)	(15,618)
Net cash provided from (used for) financing activities	(1,444)	976,498
Net Change in Cash and Cash Equivalents	(350,672)	255,599
Cash and Cash Equivalents at Beginning of Period	689,722	416,581
Cash and Cash Equivalents at End of Period	339,050	672,180
Cash paid during the period for --
Interest (net of $20,828 and $18,298 capitalized for 2010 and 2009, respectively)	181,934	178,560
Income taxes (net of refunds)	$5,610	$172,517

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash paid during the period for --
Cash paid for capitalized interest	$20,828	$18,298

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands	Mar. 31, 2010	Dec. 31, 2009
Current Assets:
Cash and cash equivalents	$339,050	$689,722
Restricted cash and cash equivalents	35,554	43,135
Receivables -
Customer accounts receivable	998,672	953,222
Unbilled revenues	337,865	394,492
Under recovered regulatory clause revenues	197,565	333,459
Other accounts and notes receivable	362,761	374,670
Accumulated provision for uncollectible accounts	(26,282)	(24,568)
Fossil fuel stock, at average cost	1,313,716	1,446,984
Materials and supplies, at average cost	798,024	793,847
Vacation pay	145,758	145,049
Prepaid expenses	439,414	508,338
Other regulatory assets, current	225,164	166,549
Other current assets	52,870	48,558
Total current assets	5,220,131	5,873,457
Property, Plant, and Equipment:
In service	54,909,016	53,587,853
Less accumulated depreciation	19,371,351	19,121,271
Plant in service, net of depreciation	35,537,665	34,466,582
Nuclear fuel, at amortized cost	679,368	593,119
Construction work in progress	3,781,363	4,170,596
Total property, plant, and equipment	39,998,396	39,230,297
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,167,560	1,070,117
Leveraged leases	616,394	610,252
Miscellaneous property and investments	284,984	282,974
Total other property and investments	2,068,938	1,963,343
Deferred Charges and Other Assets:
Deferred charges related to income taxes	1,133,674	1,047,452
Unamortized debt issuance expense	205,419	208,346
Unamortized loss on reacquired debt	249,785	254,936
Deferred under recovered regulatory clause revenues	501,165	373,245
Other regulatory assets, deferred	2,788,142	2,701,910
Other deferred charges and assets	414,395	392,880
Total deferred charges and other assets	5,292,580	4,978,769
Total Assets	52,580,045	52,045,866
Current Liabilities:
Securities due within one year	1,243,596	1,112,705
Notes payable	769,967	639,199
Accounts payable	1,229,108	1,329,448
Customer deposits	337,014	330,582
Accrued taxes -
Accrued income taxes	74,508	13,005
Unrecognized tax benefits	158,993	165,645
Other accrued taxes	200,072	398,384
Accrued interest	229,224	218,188
Accrued vacation pay	181,051	183,911
Accrued compensation	141,409	247,950
Liabilities from risk management activities	181,525	124,648
Other regulatory liabilities, current	408,816	528,147
Other current liabilities	360,620	292,016
Total current liabilities	5,515,903	5,583,828
Long-term Debt	18,097,952	18,131,244
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	6,635,337	6,454,822
Deferred credits related to income taxes	244,573	248,232
Accumulated deferred investment tax credits	451,155	447,650
Employee benefit obligations	2,299,778	2,304,344
Asset retirement obligations	1,217,546	1,201,343
Other cost of removal obligations	1,103,065	1,091,425
Other regulatory liabilities, deferred	325,968	277,932
Other deferred credits and liabilities	412,097	345,888
Total deferred credits and other liabilities	12,689,519	12,371,636
Total Liabilities	36,303,374	36,086,708
Redeemable Preferred Stock of Subsidiaries	374,496	374,496
Common Stockholders' Equity:
Common stock, par value $5 per share - Authorized - 1 billion shares, Issued - March 31, 2010: 825,023,621 Shares; - December 31, 2009: 820,151,801 Shares, Treasury - March 31, 2010: 487,958 Shares; - December 31, 2009: 505,116 Shares, Par value	4,125,133	4,100,742
Paid-in capital	3,141,952	2,994,245
Treasury, at cost	(15,508)	(14,797)
Retained earnings	8,021,810	7,884,922
Accumulated other comprehensive loss	(78,540)	(87,778)
Total Common Stockholders' Equity	15,194,847	14,877,334
Preferred and Preference Stock of Subsidiaries	707,328	707,328
Total Stockholders' Equity	15,902,175	15,584,662
Total Liabilities and Stockholders' Equity	$52,580,045	$52,045,866

3_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical)
	Mar. 31, 2010	Dec. 31, 2009
Common Stockholders' Equity:
Common stock, par value	5	5
Commom stock, shares authorized	1,000,000,000	1,000,000,000
Commom stock, shares issued	825,023,621	820,151,801
Treasury stock, shares	487,958	505,116

4_Condensed Consolidated Statem

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Consolidated Net Income	$510,703	$141,916
Qualifying hedges:
Changes in fair value, net of tax of $786 and $762, respectively	1,201	1,147
Reclassification adjustment for amounts included in net income, net of tax of $3,552 and $3,833, respectively	5,646	6,098
Marketable securities:
Change in fair value, net of tax of $1,144 and $91, respectively	2,026	734
Pension and other post retirement benefit plans:
Reclassification adjustment for amounts included in net income, net of tax of $230 and $222, respectively	365	350
Total other comprehensive income (loss)	9,238	8,329
Dividends on preferred and preference stock of subsidiaries	(16,195)	(16,195)
Comprehensive Income	$503,746	$134,050

5_Condensed Consolidated Statem

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Qualifying hedges:
Changes in fair value of qualifying hedges, tax	$786	$762
Reclassification adjustment for amounts of qualifying hedges included in net income, tax	3,552	3,833
Marketable securities:
Change in fair value of marketable securities, tax	1,144	91
Pension and other post retirement benefit plans:
Reclassification adjustment for amounts included in net income, tax	$230	$222

Introduction

Introduction
	3 Months Ended Mar. 31, 2010
Introduction [Abstract]
INTRODUCTION	(A) INTRODUCTION The condensed quarterly financial statements of each registrant included herein have been prepared by such registrant, without audit, pursuant to the rules and regulations of the SEC. The Condensed Balance Sheets as of December31, 2009 have been derived from the audited financial statements of each registrant. In the opinion of each registrants management, the information regarding such registrant furnished herein reflects all adjustments, which, except as otherwise disclosed, are of a normal recurring nature, necessary to present fairly the results of operations for the periods ended March31, 2010 and 2009. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although each registrant believes that the disclosures regarding such registrant are adequate to make the information presented not misleading. Disclosures which would substantially duplicate the disclosures in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are generally omitted from this Quarterly Report on Form 10-Q. Therefore, these Condensed Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Due to the seasonal variations in the demand for energy, operating results for the periods presented are not necessarily indicative of the operating results to be expected for the full year. Certain prior years data presented in the financial statements have been reclassified to conform to the current year presentation. Affiliate Transactions Gulf Power purchased a turbine rotor assembly that was jointly-owned by Southern Power and Georgia Power for approximately $11million. These affiliate transactions were in accordance with FERC and state PSC rules and guidelines. Variable Interest Entities Effective January1, 2010, the traditional operating companies and Southern Power adopted new accounting guidance which modified the consolidation model and expanded disclosures related to variable interest entities (VIE). The primary beneficiary of a VIE is required to consolidate the VIE when it has both the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The adoption of this new accounting guidance did not result in the traditional operating companies or Southern Power consolidating any VIEs that were not already consolidated under previous guidance, nor deconsolidating any VIEs. Southern Power has certain wholly-owned subsidiaries that are determined to be VIEs. Southern Power is considered the primary beneficiary of these VIEs because it controls the most significant activities of the VIEs, including operating and maintaining the respective assets, and has the obligation to absorb expected

Contingencies and Regulatory Ma

Contingencies and Regulatory Matters
	3 Months Ended Mar. 31, 2010
Contingencies and Regulatory Matters [Abstract]
CONTINGENCIES AND REGULATORY MATTERS	(B) CONTINGENCIES AND REGULATORY MATTERS See Note 3 to the financial statements of the registrants in Item8 of the Form 10-K for information relating to various lawsuits, other contingencies, and regulatory matters. General Litigation Matters Each registrant is subject to certain claims and legal actions arising in the ordinary course of business. In addition, each registrants business activities are subject to extensive governmental regulation related to public health and the environment, such as regulation of air emissions and water discharges. Litigation over environmental issues and claims of various types, including property damage, personal injury, common law nuisance, and citizen enforcement of environmental requirements such as opacity and air and water quality standards, has increased generally throughout the United States. In particular, personal injury and other claims for damages caused by alleged exposure to hazardous materials, and common law nuisance claims for injunctive relief and property damage allegedly caused by greenhouse gas and other emissions, have become more frequent. The ultimate outcome of such pending or potential litigation against the registrants and any of their subsidiaries cannot be predicted at this time; however, for current proceedings not specifically reported herein or in Note 3 to the financial statements of each registrant in Item8 of the Form 10-K, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on such registrants financial statements. Mirant Matters Mirant was an energy company with businesses that included independent power projects and energy trading and risk management companies in the U.S. and selected other countries. It was a wholly-owned subsidiary of Southern Company until its initial public offering in October2000. In April2001, Southern Company completed a spin-off to its shareholders of its remaining ownership, and Mirant became an independent corporate entity. In July2003, Mirant and certain of its affiliates filed voluntary petitions for relief under Chapter11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas. The Bankruptcy Court entered an order confirming Mirants plan of reorganization in December2005, and Mirant announced that this plan became effective in January2006. As part of the plan, Mirant transferred substantially all of its assets and its restructured debt to a new corporation that adopted the name Mirant Corporation (Reorganized Mirant). Under the terms of the separation agreements entered into in connection with the spin-off, Mirant agreed to indemnify Southern Company for certain costs. As a result of Mirants bankruptcy, Southern Company sought reimbursement as an unsecured creditor in Mirants Chapter11 proceeding. If Southern Companys claims for indemnification with respect to these costs are allowed, then Mirants indemnity obligations to Southern Company would constitute unsecured claims against Mirant entitled to stock in Reorganized Mirant. As a result of the $202million set

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Fair Value Measurements [Abstract]
FAIR VALUE MEASUREMENTS	(C) FAIR VALUE MEASUREMENTS As of March31, 2010, assets and liabilities measured at fair value on a recurring basis during the period, together with the level of the fair value hierarchy in which they fall, are as follows: Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs As of March 31, 2010: (Level 1) (Level 2) (Level 3) Total (in millions) Southern Company Assets: Energy-related derivatives $ $ 16 $ $ 16 Interest rate derivatives 6 6 Nuclear decommissioning trusts(a)(b) 766 416 1,182 Cash equivalents and restricted cash 201 201 Other investments 22 50 19 91 Total $ 989 $ 488 $ 19 $ 1,496 Liabilities: Energy-related derivatives $ $ 288 $ $ 288 Interest rate derivatives 8 8 Total $ $ 296 $ $ 296 Alabama Power Assets: Nuclear decommissioning trusts:(a) Domestic equity $ 309 $ 51 $ $ 360 U.S. Treasury and government agency securities 13 5 18 Corporate bonds 81 81 Mortgage and asset backed securities 40 40 Other 14 14 Cash equivalents and restricted cash 115 115 Total $ 437 $ 191 $ $ 628 Liabilities: Energy-related derivatives $ $ 67 $ $ 67 Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs As of March 31, 2010: (Level 1) (Level 2) (Level 3) Total (in millions) Georgia Power Assets: Nuclear decommissioning trusts:(a) Domestic equity $ 444 $ 1 $ $ 445 U.S. Treasury and government agency securities 35 35 Municipal bonds 22 22 Corporate bonds 98 98 Mortgage and asset backed securities 43 43 Other 26 26 Total $ 444 $ 225 $ $ 669 Liabilities: Energy-related derivatives $ $ 125 $ $ 125 Interest rate derivatives 1 1 Total $ $ 126 $ $ 126 Gulf Power Assets: Interest rate derivatives $ $ 1 $ $ 1 Cash equivalents and restricted cash 16

Stockholders Equity

Stockholders Equity
	3 Months Ended Mar. 31, 2010
Stockholders' Equity [Abstract]
STOCKHOLDERS' EQUITY	(D) STOCKHOLDERS EQUITY Earnings per Share For Southern Company, the only difference in computing basic and diluted earnings per share is attributable to exercised options and outstanding options under the stock option plan. See Note 8 to the financial statements of Southern Company in Item8 of the Form 10-K for further information on the stock option plan. The effect of the stock options was determined using the treasury stock method. Shares used to compute diluted earnings per share are as follows: Three Months Three Months Ended Ended March 31, 2010 March 31, 2009 (in thousands) As reported shares 822,526 779,858 Effect of options 2,261 1,787 Diluted shares 824,787 781,645 For the three months ended March31, 2010 and March31, 2009, there were 25million and 38million stock options, respectively, that were not included in the diluted earnings per share calculation because they were anti-dilutive. Assuming an average stock price of $38.01 (the highest exercise price of the anti-dilutive options outstanding), the effect of options for the three months ended March31, 2010 and March31, 2009 would have increased by 2million and 3million shares, respectively. Changes in Stockholders Equity The following table presents year-to-date changes in stockholders equity of Southern Company: Preferred and Number of Common Preference Total Common Shares Stockholders Stock of Stockholders Issued Treasury Equity Subsidiaries Equity (in thousands) (in millions) Balance at December31, 2009 820,152 (505 ) $ 14,878 $ 707 $ 15,585 Net income after dividends on preferred and preference stock 495 495 Other comprehensive income (loss) 9 9 Stock issued 4,872 171 171 Cash dividends on common stock (359 ) (359 ) Other 17 1 1 Balance at March31, 2010 825,024 (488 ) $ 15,195 $ 707 $ 15,902 Balance at December31, 2008 777,616 (424 ) $ 13,276 $ 707 $ 13,983 Net income after dividends on preferred and preference stock 126 126 Other comprehensive income (loss) 8 8 Stock issued 5,249 171 171 Cash dividends on common stock (327 ) (327 ) Other (8 ) (1 ) (1 ) Balance at March31, 2009 782,865 (432 ) $ 13,253 $ 707 $ 13,960

Financing

Financing
	3 Months Ended Mar. 31, 2010
Financing [Abstract]
FINANCING	(E) FINANCING Bank Credit Arrangements Bank credit arrangements provide liquidity support to the registrants commercial paper borrowings and the traditional operating companies variable rate pollution control revenue bonds. See Note 6 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power under Bank Credit Arrangements in Item8 of the Form 10-K for additional information. The following table outlines the credit arrangements by company as of March31, 2010: Executable Term-Loans Expires One Two Company Total Unused Year Years 2010 2011 2012 (in millions) Southern Company $ 950 $ 950 $ $ $ $ $ 950 Alabama Power 1,271 1,271 372 481 25 765 Georgia Power 1,715 1,703 95 40 465 130 1,120 Gulf Power 220 220 100 190 30 Mississippi Power 156 156 65 41 106 50 Southern Power 400 400 400 Other 60 60 60 60 Total $ 4,772 $ 4,760 $ 692 $ 81 $ 1,302 $ 235 $ 3,235 Subsequent to March31, 2010, Georgia Power renewed existing credit arrangements totaling $425 million and extended the expiration dates to 2011. Of these facilities, $125million contain provisions allowing one-year term loans executable at expiration. Subsequent to March31, 2010, Gulf Power renewed existing credit arrangements totaling $75million and extended the expiration dates to 2011. All of these facilities contain provisions allowing one-year term loans executable at expiration.

Retirement Benefits

Retirement Benefits
	3 Months Ended Mar. 31, 2010
Retirement Benefits [Abstract]
RETIREMENT BENEFITS	(F) RETIREMENT BENEFITS Southern Company has a defined benefit, trusteed, pension plan covering substantially all employees. The plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No contributions to the plan are expected for the year ending December31, 2010. Southern Company also provides certain defined benefit pension plans for a selected group of management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, Southern Company provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The traditional operating companies fund related trusts to the extent required by their respective regulatory commissions. See Note 2 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power in Item8 of the Form 10-K. Components of the net periodic benefit costs for the three months ended March31, 2010 and 2009 are as follows: Southern Alabama Georgia Mississippi PENSION PLANS Company Power Power Gulf Power Power (in millions) Three Months Ended March31, 2010 Service cost $ 43 $ 10 $ 14 $ 2 $ 2 Interest cost 98 24 36 4 4 Expected return on plan assets (138 ) (42 ) (55 ) (6 ) (5 ) Net amortization 11 3 4 1 1 Net cost (income) $ 14 $ (5 ) $ (1 ) $ 1 $ 2 Three Months Ended March31, 2009 Service cost $ 36 $ 8 $ 12 $ 2 $ 2 Interest cost 97 24 37 4 4 Expected return on plan assets (135 ) (41 ) (54 ) (6 ) (5 ) Net amortization 10 3 4 Net cost (income) $ 8 $ (6 ) $ (1 ) $ $ 1 Southern Alabama Georgia Mississippi POSTRETIREMENT BENEFITS Company Power Power Gulf Power Power (in millions) Three Months Ended March31, 2010 Service cost $ 6 $ 2 $ 2 $ $ Interest cost 25 6 11 1 1 Expected return on plan assets (16 ) (6 ) (8 ) Net amortization 5 2 3 Net cost (income) $ 20 $ 4 $ 8 $ 1 $ 1 Three Months Ended March31, 2009 Service cost $ 7 $ 2 $ 2 $ $ 1 Interest cost 28 7 13 1 1 Expected return on plan assets (15 ) (6 ) (8 ) Net amortization 7 2 4 Net cost (income) $ 27 $ 5 $ 11 $ 1 $ 2

Effective Tax Rate and Unrecogn

Effective Tax Rate and Unrecognized Tax Benefits
	3 Months Ended Mar. 31, 2010
Effective Tax Rate and Unrecognized Tax Benefits [Abstract]
EFFECTIVE TAX RATE AND UNRECOGNIZED TAX BENEFITS	(G) EFFECTIVE TAX RATE AND UNRECOGNIZED TAX BENEFITS Effective Tax Rate Southern Companys effective tax rate was 31.6% for the three months ended March31, 2010, as compared to 54.1% for the corresponding period in 2009. See Note 5 to the financial statements of each registrant in Item8 of the Form 10-K for information on the effective income tax rate. Southern Companys effective tax rate decreased for the three months ended March31, 2010 as compared to March31, 2009 primarily due to the $202million charge for the MC Asset Recovery litigation settlement, which occurred in the first quarter 2009. Southern Company is currently evaluating potential recovery of the settlement payment through various means including insurance, claims in U.S. Bankruptcy Court, and other avenues. The degree to which any recovery is realized will determine, in part, the final income tax treatment of the settlement payment. Additionally, Georgia Powers effective tax rate decreased for the three months ended March 31, 2010 as compared to March 31, 2009 from 33.1% to 27.8%, primarily due to the recognition of additional Georgia state tax credits and additional AFUDC equity, which is not taxable, in the first quarter 2010. Unrecognized Tax Benefits Changes during 2010 for unrecognized tax benefits are as follows: Southern Alabama Georgia Gulf Mississippi Southern Company Power Power Power Power Power (in millions) Unrecognized tax benefits as of December31, 2009 $ 199 $ 6 $ 181 $ 2 $ 3 $ Tax positions from current periods 11 11 Tax positions from prior periods (23 ) (23 ) Reductions due to settlements Reductions due to expired statute of limitations Balance as of March31, 2010 $ 187 $ 6 $ 169 $ 2 $ 3 $ All of the unrecognized tax benefits as of March31, 2010 and December31, 2009 would impact the effective tax rate of Southern Company and its subsidiaries if recognized. The tax positions increase from current periods relates primarily to the Georgia state tax credits litigation and other miscellaneous uncertain tax positions. The tax positions decrease from prior periods relates to the Georgia state tax credits litigation. See Note (B)under Income Tax Matters Georgia State Income Tax Credits herein for additional information. Accrued interest for unrecognized tax benefits was as follows: As of As of Georgia Other March 31, December 31, Power Registrants 2010 2009 (in millions) Interest accrued as of December31, 2009 $ 20 $ 1 $ 21 $ 21 Interest reclassified due to settlements Interest accrued during the period Balance as of March31, 2010 $ 20 $ 1 $ 21 $ 21 None of the registrants accrued any penalties on uncertain tax positions. It

Derivatives

Derivatives
	3 Months Ended Mar. 31, 2010
Derivatives [Abstract]
DERIVATIVES	(H) DERIVATIVES Southern Company, the traditional operating companies, and Southern Power are exposed to market risks, primarily commodity price risk and interest rate risk. To manage the volatility attributable to these exposures, each company nets its exposures, where possible, to take advantage of natural offsets and enters into various derivative transactions for the remaining exposures pursuant to each companys policies in areas such as counterparty exposure and risk management practices. Each companys policy is that derivatives are to be used primarily for hedging purposes and mandates strict adherence to all applicable risk management policies. Derivative positions are monitored using techniques including, but not limited to, market valuation, value at risk, stress testing, and sensitivity analysis. Derivative instruments are recognized at fair value in the balance sheets as either assets or liabilities. Energy-Related Derivatives The traditional operating companies and Southern Power enter into energy-related derivatives to hedge exposures to electricity, gas, and other fuel price changes. However, due to cost-based rate regulations, the traditional operating companies have limited exposure to market volatility in commodity fuel prices and prices of electricity. Each of the traditional operating companies manages fuel-hedging programs, implemented per the guidelines of their respective state PSCs, through the use of financial derivative contracts. Southern Power has limited exposure to market volatility in commodity fuel prices and prices of electricity because its long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. However, Southern Power has been and may continue to be exposed to market volatility in energy-related commodity prices as a result of sales of uncontracted generating capacity. To mitigate residual risks relative to movements in electricity prices, the traditional operating companies and Southern Power may enter into physical fixed-price or heat rate contracts for the purchase and sale of electricity through the wholesale electricity market. To mitigate residual risks relative to movements in gas prices, the traditional operating companies and Southern Power may enter into fixed-price contracts for natural gas purchases; however, a significant portion of contracts are priced at market. Energy-related derivative contracts are accounted for in one of three methods: Regulatory Hedges Energy-related derivative contracts which are designated as regulatory hedges relate primarily to the traditional operating companies fuel-hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as the underlying fuel is used in operations and ultimately recovered through the respective fuel cost recovery clauses. Cash Flow Hedges Gains and losses on energy-related derivatives designated as cash flow hedges, which are mainly used by Southern Power, to hedge anticipated purchases and sales are initially deferred in OCI before being recognized

Segment and Related Information

Segment and Related Information
	3 Months Ended Mar. 31, 2010
Segment and Related Information [Abstract]
SEGMENT AND RELATED INFORMATION	(I) SEGMENT AND RELATED INFORMATION Southern Companys reportable business segments are the sale of electricity in the Southeast by the four traditional operating companies and Southern Power. Revenues from sales by Southern Power to the traditional operating companies were $102million and $135million for the three months ended March31, 2010 and March31, 2009, respectively. The All Other column includes parent Southern Company, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include investments in telecommunications, renewable energy projects, and leveraged lease projects. All other intersegment revenues are not material. Financial data for business segments and products and services are as follows: Electric Utilities Traditional Operating Southern All Companies Power Eliminations Total Other Eliminations Consolidated (in millions) Three Months Ended March31, 2010: Operating revenues $ 4,005 $ 256 $ (125 ) $ 4,136 $ 41 $ (20 ) $ 4,157 Segment net income (loss) * 481 15 496 (1 ) 495 Total assets at March31, 2010 $ 49,047 $ 3,088 $ (99 ) $ 52,036 $ 1,073 $ (529 ) $ 52,580 Three Months Ended March31, 2009: Operating revenues $ 3,557 $ 232 $ (150 ) $ 3,639 $ 44 $ (17 ) $ 3,666 Segment net income (loss)* 302 28 330 (205 ) 1 126 Total assets at December31, 2009 $ 48,403 $ 3,043 $ (143 ) $ 51,303 $ 1,223 $ (480 ) $ 52,046 * After dividends on preferred and preference stock of subsidiaries Products and Services Electric Utilities Revenues Period Retail Wholesale Other Total (in millions) Three Months Ended March31, 2010 $ 3,459 $ 542 $ 135 $ 4,136 Three Months Ended March31, 2009 $ 3,065 $ 451 $ 123 $ 3,639