Coal as a Future Generation Fuel Chris M. Hobson S enior Vice President and Chief Environmental Officer December 3, 2009

Southern Company Overview 42,600 MW 303 generating units 160,000,000 tons coal/yr Generation 27,000 line miles 3,300 substations Transmission 156,000 line miles 3.8 million poles Environmental $48 B total assets $17 B revenues $1.74 B Net Income Financial Fuel Mix as of December 2008 Distribution $6.3 B completed projects $3.1B new projects

Today and Tomorrow – Coal as a U.S. Generation Fuel Affordable and reliable energy Dominant energy source for U.S. economy Emissions down; demand for energy up Extensive infrastructure for mining, transport and fuel use No low-cost, short-term, viable alternative Coal reserves in 38 U.S. states – 1/4 th the world reserve Diverse, well-established, and competitive markets Capture and confinement technologies developing rapidly Coal Natural Gas Nuclear Current U.S. Generation Mix Other

Southern Company Advanced Coal Programs Mississippi Saline Test Mississippi Power’s Plant Daniel Barry 25 MW CCS Demo Alabama Power’s Plant Barry Gorgas Geological Suitables Study Alabama Power’s Plant Gorgas Citronelle Oil Field Study Southern Company Service Territory Mississippi Saline Test Mississippi Power’s Plant Daniel Citronelle Oil Field Study Gorgas Geologic Suitability Studies Alabama Power’s Plant Gorgas Barry CCS 25-MW Demo Alabama Power’s Plant Barry National Carbon Capture Center Wilsonville, Al Kemper County IGCC TRIG TM (65% CO 2 Removal w/ EOR) Mississippi Power Company

Dongguan City, China ─50 miles northwest of Hong Kong ─Existing 100-MW diesel CC ─Repowered for Indonesian lignite ─113 MW (net) facility ─May 2011 Dongguan City & Kemper County IGCC Kemper County, MS ─Mine mouth lignite ─582 MW ─65% CO 2 capture ─Gray Water System ─May 2014

Future Power Generation Options, $/MWh Source: Energy Information Administration, Annual Energy Outlook 2009, April 2009, SR-OIAF/ $/MWh U.S. Average Levelized Cost for Plants Entering Service in 2016 Intermittent

Economic and Market Consideration for Coal-Fired Generation Coal provides stability in fuel/pricing mix. Natural gas cannot meet projected increases in energy demand. New nuclear generation is limited by construction timelines and financing. Most renewables are intermittent, regional, costly and need major development. Cost reductions and technology developments are expected for CCS. Significant market exist for resale of CO 2 for EOR. Markets for products associated with IGCC must be developed.

Challenges for Coal Scientific and Technological –CCS –Water and Waste Issues –Further Emission Reductions Regulatory –Permitting –Monitoring/Certification –Site Closure –Remediation Social-Political –Political/Public Confidence Legal –Liability –Ownership

Next Generation Coal Permitting Longer application preparation and agency review process More external and regulatory involvement in process Air −Close scrutiny on every proposed limit −BACT/MACT −PM 2.5 / Ozone - NAAQS −CO 2 Water (the new Air?) −More difficult water supply permitting −Changing discharge standards −Regional / local water planning boards Coal Combustion Byproduct disposal It CAN be done – but expect litigation

Closing Thoughts Major environmental and political issues remain for coal. The current Administration, Congress, EPA and environmental groups will continue to push for reduced use of coal while providing incentives for renewable energy. Coal will provide at least 45% of the electric power generated in the United States through the next decade. Coal remains vital to the U.S. and world economies.

Chris M. Hobson Senior Vice President and Chief Environmental Officer Coal as a Future Generation Fuel