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

Bills analyzed by CRA for Southern Company

Projected CO 2 Price Recently analyzed proposals Data source: CRA analysis for Southern Company, April 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

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.

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

U.S. Coal-Fueled Electricity Generation Lieberman-Warner Would Have Dramatic Impacts Data Source: Analysis of S by CRA International for Southern Company, March 2008.

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 I believe the ANPR demonstrates the Clean Air Act, an outdated law originally enacted to control regional pollutants that cause direct health effects, is ill-suited for the task of regulating global greenhouse gases.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 emissions and would be relatively ineffective at reducing greenhouse gas concentrations given the potentially damaging effect on jobs and the U.S. economy.” EPA Administrator Stephen L. Johnson.

“The Real Cost of Tackling Climate Change” U.S. population is expected to be around 420 million by 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

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

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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U.S. Electricity Generation by Region History and projection, Data Source: Energy Information Administration, US Department of Energy ProjectionHistory Projected growth % 25% 34% 22% 11%

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

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

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

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

Renewables Solar power Biomass cofiring and conversion Wind power