GEORGIA POWER CO - Quarter Report: 2005 June (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission		Registrant, State of Incorporation,		I.R.S. Employer
File Number		Address and Telephone Number		Identification No.
1-3526		The Southern Company		58-0690070
		(A Delaware Corporation)
		270 Peachtree Street, N.W.
		Atlanta, Georgia 30303
		(404) 506-5000
1-3164		Alabama Power Company		63-0004250
		(An Alabama Corporation)
		600 North 18th Street
		Birmingham, Alabama 35291
		(205) 257-1000
1-6468		Georgia Power Company		58-0257110
		(A Georgia Corporation)
		241 Ralph McGill Boulevard, N.E.
		Atlanta, Georgia 30308
		(404) 506-6526
0-2429		Gulf Power Company		59-0276810
		(A Maine Corporation)
		One Energy Place
		Pensacola, Florida 32520
		(850) 444-6111
001-11229		Mississippi Power Company		64-0205820
		(A Mississippi Corporation)
		2992 West Beach
		Gulfport, Mississippi 39501
		(228) 864-1211
1-5072		Savannah Electric and Power Company		58-0418070
		(A Georgia Corporation)
		600 East Bay Street
		Savannah, Georgia 31401
		(912) 644-7171
333-98553		Southern Power Company		58-2598670
		(A Delaware Corporation)
		270 Peachtree Street, N.W.
		Atlanta, Georgia 30303
		(404) 506-5000

     Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act of 1934).

Registrant		Yes				No
The Southern Company			x
Alabama Power Company							x
Georgia Power Company							x
Gulf Power Company							x
Mississippi Power Company							x
Savannah Electric and Power Company							x
Southern Power Company							x

		Description of		Shares Outstanding
Registrant		Common Stock		at June 30, 2005
The Southern Company		Par Value $5 Per Share			746,811,645
Alabama Power Company		Par Value $40 Per Share			9,250,000
Georgia Power Company		Without Par Value			7,761,500
Gulf Power Company		Without Par Value			992,717
Mississippi Power Company		Without Par Value			1,121,000
Savannah Electric and Power Company		Par Value $5 Per Share			10,844,635
Southern Power Company		Par Value $0.01 Per Share			1,000

     This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, and Southern Power Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes no representation as to information relating to the other companies.

 

 

INDEX TO QUARTERLY REPORT ON FORM 10-Q

		Page
		Number
DEFINITIONS			5
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION			6
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Southern Company and Subsidiary Companies
Condensed Consolidated Statements of Income			8
Condensed Consolidated Statements of Cash Flows			9
Condensed Consolidated Balance Sheets			10
Condensed Consolidated Statements of Comprehensive Income			12
Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Alabama Power Company
Condensed Statements of Income			29
Condensed Statements of Comprehensive Income			29
Condensed Statements of Cash Flows			30
Condensed Balance Sheets			31
Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Georgia Power Company
Condensed Statements of Income			46
Condensed Statements of Comprehensive Income			46
Condensed Statements of Cash Flows			47
Condensed Balance Sheets			48
Management’s Discussion and Analysis of Financial Condition and Results of Operations			50
Gulf Power Company
Condensed Statements of Income			62
Condensed Statements of Comprehensive Income			62
Condensed Statements of Cash Flows			63
Condensed Balance Sheets			64
Management’s Discussion and Analysis of Financial Condition and Results of Operations			66
Mississippi Power Company
Condensed Statements of Income			76
Condensed Statements of Comprehensive Income			76
Condensed Statements of Cash Flows			77
Condensed Balance Sheets			78
Management’s Discussion and Analysis of Financial Condition and Results of Operations			80
Savannah Electric and Power Company
Condensed Statements of Income			90
Condensed Statements of Comprehensive Income			90
Condensed Statements of Cash Flows			91
Condensed Balance Sheets			92
Management’s Discussion and Analysis of Financial Condition and Results of Operations			94
Southern Power Company
Condensed Statements of Income			104
Condensed Statements of Comprehensive Income			104
Condensed Statements of Cash Flows			105
Condensed Balance Sheets			106
Management’s Discussion and Analysis of Financial Condition and Results of Operations			108
Notes to the Condensed Financial Statements			114
Item 3. Quantitative and Qualitative Disclosures about Market Risk			27
Item 4. Controls and Procedures			27

INDEX TO QUARTERLY REPORT ON FORM 10-Q

		Page
		Number
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			129
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			129
Item 3. Defaults Upon Senior Securities		Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders			130
Item 5. Other Information		Inapplicable
Item 6. Exhibits			132
Signatures			137

DEFINITIONS

TERM		MEANING
Alabama Power		Alabama Power Company
AFUDC		Allowance for funds used during construction
BMA		Bond Market Association
Clean Air Act		Clean Air Act Amendments of 1990
DOE		U.S. Department of Energy
ECO Plan		Environmental Compliance Overview Plan
EPA		U.S. Environmental Protection Agency
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
Form 10-K		Combined Annual Report on Form 10-K of Southern Company,
		Alabama Power, Georgia Power, Gulf Power, Mississippi Power,
		Savannah Electric, and Southern Power for the year ended
		December 31, 2004
Georgia Power		Georgia Power Company
Gulf Power		Gulf Power Company
IIC		Intercompany Interchange Contract
IRC		Internal Revenue Code of 1986, as amended
IRS		Internal Revenue Service
LIBOR		London Interbank Offered Rate
Mirant		Mirant Corporation
Mississippi Power		Mississippi Power Company
Moody’s		Moody’s Investors Service, Inc.
MW		Megawatts
NRC		Nuclear Regulatory Commission
PEP		Performance Evaluation Plan
PPA		Purchase Power Agreement
PSC		Public Service Commission
PUHCA		Public Utility Holding Company Act of 1935, as amended
retail operating companies		Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric
RTO		Regional Transmission Organization
S&P		Standard and Poor’s, a division of The McGraw-Hill Companies, Inc.
Savannah Electric		Savannah Electric and Power Company
SCS		Southern Company Services, Inc.
SEC		Securities and Exchange Commission
Southern Company		The Southern Company
Southern Company GAS		Southern Company Gas LLC
Southern Company system		Southern Company, the retail operating companies, Southern Power, and other subsidiaries
Southern Power		Southern Power Company
Super Southeast		Southern Company’s traditional service territory, Alabama, Florida, Georgia, and Mississippi, plus the surrounding states of Kentucky, Louisiana, North Carolina, South Carolina, Tennessee, and Virginia

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning the strategic goals for Southern Company’s wholesale business, retail sales growth, storm damage cost recovery, environmental regulations and expenditures, financing activities, completion of construction projects, impacts of adoption of new accounting rules, and estimated construction and other expenditures. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar terminology. There are various factors that could cause actual results to differ materially from those suggested by the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include:

•		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 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 and gas, 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;
•		the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities;
•		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, 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;
•		the effect of accounting pronouncements issued periodically by standard setting bodies; and
•		other factors discussed elsewhere herein and in other reports filed by the registrants from time to time with the SEC.

The registrants expressly disclaim any obligation to update any forward-looking statements.

THE SOUTHERN COMPANY

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2005				2004				2005				2004
		(in thousands)								(in thousands)
Operating Revenues:
Retail revenues		$	2,555,091			$	2,477,856			$	4,823,900			$	4,621,945
Sales for resale			384,909				343,793				731,974				694,530
Other electric revenues			109,347				94,220				210,442				187,791
Other revenues			95,088				93,026				242,579				236,944
Total operating revenues			3,144,435				3,008,895				6,008,895				5,741,210
Operating Expenses:
Fuel			1,012,474				869,978				1,933,858				1,708,750
Purchased power			123,677				218,066				221,893				337,824
Other operations			579,452				569,443				1,105,551				1,083,458
Maintenance			259,975				268,459				554,067				505,956
Depreciation and amortization			287,879				233,449				580,488				474,103
Taxes other than income taxes			162,863				154,583				325,861				313,067
Total operating expenses			2,426,320				2,313,978				4,721,718				4,423,158
Operating Income			718,115				694,917				1,287,177				1,318,052
Other Income and (Expense):
Allowance for equity funds used during construction			14,011				9,467				30,870				17,651
Interest income			6,223				6,455				11,495				14,109
Equity in losses of unconsolidated subsidiaries			(29,574	)			(21,253	)			(52,678	)			(46,569	)
Leveraged lease income			18,677				17,005				36,925				32,932
Interest expense, net of amounts capitalized			(154,216	)			(138,613	)			(293,202	)			(269,198	)
Interest expense to affiliate trusts			(31,931	)			(31,985	)			(63,861	)			(31,985	)
Distributions on mandatorily redeemable preferred securities			—				—				—				(31,168	)
Preferred dividends of subsidiaries			(7,402	)			(9,539	)			(14,804	)			(15,011	)
Other income (expense), net			(1,895	)			(15,302	)			(7,631	)			(23,464	)
Total other income and (expense)			(186,107	)			(183,765	)			(352,886	)			(352,703	)
Earnings Before Income Taxes			532,008				511,152				934,291				965,349
Income taxes			145,187				159,020				224,510				282,075
Consolidated Net Income		$	386,821			$	352,132			$	709,781			$	683,274
Common Stock Data:
Consolidated basic earnings per share		$	0.52			$	0.48			$	0.95			$	0.93
Consolidated diluted earnings per share		$	0.52			$	0.47			$	0.95			$	0.92
Average number of basic shares of common stock outstanding (in thousands)			746,823				738,185				745,424				737,412
Average number of diluted shares of common stock outstanding (in thousands)			751,016				742,453				749,360				741,920
Cash dividends paid per share of common stock		$	0.3725			$	0.350			$	0.7300			$	0.700

The accompanying notes as they relate to Southern Company are an integral part of these condensed financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		For the Six Months
		Ended June 30,
		2005				2004
		(in thousands)
Operating Activities:
Consolidated net income		$	709,781			$	683,274
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization			687,205				569,766
Deferred income taxes and investment tax credits			175,751				325,804
Allowance for equity funds used during construction			(30,870	)			(17,651	)
Equity in losses of unconsolidated subsidiaries			52,678				46,569
Leveraged lease income			(36,925	)			(32,932	)
Pension, postretirement, and other employee benefits			25,860				8,794
Tax benefit of stock options			36,963				15,110
Hedge settlements			(19,860	)			5,548
Natural disaster reserve accounting order			45,000				—
Other, net			(48,388	)			(53,537	)
Changes in certain current assets and liabilities —
Receivables, net			(361,124	)			(282,363	)
Fossil fuel stock			(112,968	)			(7,501	)
Materials and supplies			(21,615	)			(9,699	)
Other current assets			43,757				(5,916	)
Accounts payable			(109,448	)			(24,771	)
Accrued taxes			(80,978	)			(138,495	)
Accrued compensation			(210,061	)			(199,683	)
Other current liabilities			47,384				19,158
Net cash provided from operating activities			792,142				901,475
Investing Activities:
Gross property additions			(1,183,777	)			(1,039,120	)
Investment in unconsolidated subsidiaries			(51,870	)			(49,276	)
Cost of removal net of salvage			(41,485	)			(42,078	)
Construction receivables/payables, net			(59,860	)			(20,768	)
Other			44,808				(12,566	)
Net cash used for investing activities			(1,292,184	)			(1,163,808	)
Financing Activities:
Increase in notes payable, net			510,947				170,439
Proceeds —
Long-term debt			870,695				840,122
Mandatorily redeemable preferred securities			—				200,000
Preferred stock			—				175,000
Common stock			148,609				62,059
Redemptions —
Long-term debt			(436,474	)			(493,836	)
Mandatorily redeemable preferred securities			—				(240,000	)
Preferred stock			—				(28,388	)
Common stock repurchased			(62,321	)			—
Special deposits — redemption funds			(102,481	)			—
Payment of common stock dividends			(543,637	)			(515,824	)
Other			(21,737	)			(27,348	)
Net cash provided from financing activities			363,601				142,224
Net Change in Cash and Cash Equivalents			(136,441	)			(120,109	)
Cash and Cash Equivalents at Beginning of Period			373,199				311,274
Cash and Cash Equivalents at End of Period		$	236,758			$	191,165
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $12,589 and $22,613 capitalized for 2005 and 2004, respectively)		$	312,975			$	277,681
Income taxes (net of refunds)		$	45,896			$	30,810

The accompanying notes as they relate to Southern Company are an integral part of these condensed financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

		At June 30,				At December 31,
Assets		2005				2004
		(in thousands)
Current Assets:
Cash and cash equivalents		$	236,758			$	373,199
Receivables —
Customer accounts receivable			827,910				755,436
Unbilled revenues			357,901				304,479
Under recovered regulatory clause revenues			372,617				530,898
Special deposits — redemption funds			100,005				5
Other accounts and notes receivable			306,626				310,966
Accumulated provision for uncollectible accounts			(37,316	)			(46,100	)
Fossil fuel stock, at average cost			438,338				325,370
Vacation pay			105,292				105,437
Materials and supplies, at average cost			623,434				601,820
Prepaid expenses			140,770				126,059
Other			113,662				83,665
Total current assets			3,585,997				3,471,234
Property, Plant, and Equipment:
In service			42,905,926				41,437,517
Less accumulated depreciation			15,289,111				14,950,939
			27,616,815				26,486,578
Nuclear fuel, at amortized cost			212,535				218,133
Construction work in progress			1,065,888				1,656,772
Total property, plant, and equipment			28,895,238				28,361,483
Other Property and Investments:
Nuclear decommissioning trusts, at fair value			920,020				904,828
Leveraged leases			1,041,834				976,000
Other			359,765				380,904
Total other property and investments			2,321,619				2,261,732
Deferred Charges and Other Assets:
Deferred charges related to income taxes			877,424				864,477
Prepaid pension costs			1,004,737				985,633
Unamortized debt issuance expense			164,459				153,351
Unamortized loss on reacquired debt			316,101				323,394
Deferred under recovered regulatory clause revenues			362,692				—
Other regulatory assets			199,314				246,644
Other			342,561				294,138
Total deferred charges and other assets			3,267,288				2,867,637
Total Assets		$	38,070,142			$	36,962,086

The accompanying notes as they relate to Southern Company are an integral part of these condensed financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

		At June 30,				At December 31,
Liabilities and Stockholders' Equity		2005				2004
		(in thousands)
Current Liabilities:
Securities due within one year		$	1,168,641			$	983,282
Notes payable			937,341				426,394
Accounts payable			719,928				884,240
Customer deposits			209,858				200,454
Accrued taxes —
Income taxes			113,103				47,237
Other			255,224				243,200
Accrued interest			189,946				179,301
Accrued vacation pay			137,186				137,452
Accrued compensation			221,863				431,023
Other			337,844				278,477
Total current liabilities			4,290,934				3,811,060
Long-term Debt			10,727,802				10,488,076
Long-term Debt Payable to Affiliated Trusts			1,960,644				1,960,644
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes			5,331,754				5,237,162
Deferred credits related to income taxes			327,646				372,528
Accumulated deferred investment tax credits			539,266				552,108
Employee benefit obligations			908,060				864,216
Asset retirement obligations			932,397				903,385
Other cost of removal obligations			1,317,722				1,295,871
Miscellaneous regulatory liabilities			331,926				327,710
Other			292,111				311,167
Total deferred credits and other liabilities			9,980,882				9,864,147
Total Liabilities			26,960,262				26,123,927
Preferred Stock of Subsidiaries			560,442				560,472
Common Stockholders’ Equity:
Common stock, par value $5 per share —
Authorized — 1 billion shares
Issued — June 30, 2005: 748,895,394 Shares;
— December 31, 2004: 741,734,998 Shares
Treasury — June 30, 2005: 2,083,749 Shares;
— December 31, 2004: 240,425 Shares
Par value			3,744,477				3,708,675
Paid-in capital			1,018,964				868,747
Treasury, at cost			(68,691	)			(5,557	)
Retained earnings			6,004,775				5,838,986
Accumulated other comprehensive loss			(150,087	)			(133,164	)
Total Common Stockholders’ Equity			10,549,438				10,277,687
Total Liabilities and Stockholders’ Equity		$	38,070,142			$	36,962,086

The accompanying notes as they relate to Southern Company are an integral part of these condensed financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2005				2004				2005				2004
		(in thousands)								(in thousands)
Consolidated Net Income		$	386,821			$	352,132			$	709,781			$	683,274
Other comprehensive income (loss):
Change in fair value of marketable securities, net of tax of $(346), $(754), $(2,075) and $3,307, respectively			(598	)			(1,721	)			(3,924	)			5,902
Changes in fair value of qualifying hedges, net of tax of $(12,769), $15,514, $(10,744) and $7,803, respectively			(20,515	)			25,274				(17,352	)			12,570
Reclassification adjustment for amounts included in net income, net of tax of $988, $2,214, $2,998 and $4,385, respectively			1,202				3,570				4,353				7,060
COMPREHENSIVE INCOME		$	366,910			$	379,255			$	692,858			$	708,806

The accompanying notes as they relate to Southern Company are an integral part of these condensed financial statements.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

SECOND QUARTER 2005 vs. SECOND QUARTER 2004
AND
YEAR-TO-DATE 2005 vs. YEAR-TO-DATE 2004

OVERVIEW

Discussion of the results of operations is focused on Southern Company’s primary business of electricity sales in the Southeast by the retail operating companies — Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric — and Southern Power. Southern Power is an electric wholesale generation subsidiary with market-based rate authority. Southern Company’s other business activities include investments in synthetic fuels and leveraged lease projects, telecommunications, energy-related services, and natural gas marketing. For additional information on these businesses, see BUSINESS — The SOUTHERN System — “Retail Operating Companies,” “Southern Power,” and “Other Business” in Item 1 of the Form 10-K. Also see Note (P) to the Condensed Financial Statements herein for information on a letter of intent signed in July 2005 to sell the assets of Southern Company GAS, the natural gas marketing business.

     Southern Company continues to focus on several key performance indicators. These indicators include customer satisfaction, peak season equivalent forced outage rate, return on equity, and earnings per share. For additional information on these indicators, see MANAGEMENT’S DISCUSSION AND ANALYSIS — OVERVIEW — “Key Performance Indicators” of Southern Company in Item 7 of the Form 10-K.

RESULTS OF OPERATIONS

Southern Company’s second quarter and year-to-date 2005 earnings were $387 million ($0.52 per share) and $710 million ($0.95 per share) compared with $352 million ($0.48 per share) and $683 million ($0.93 per share), respectively, for the corresponding periods in 2004. Increases in earnings in the second quarter and year-to-date 2005 primarily resulted from sustained economic strength and customer growth in the Southern Company service area, as well as a base rate increase at Georgia Power. These increases were partially offset by mild weather, the expiration of certain provisions of Georgia Power’s three-year retail rate plan ending December 31, 2004 (2001 Retail Rate Plan), and higher maintenance costs as compared to the corresponding periods in 2004.

     Significant income statement items appropriate for discussion include the following:

		Increase (Decrease)
		Second Quarter								Year-To-Date
		(in thousands)				%				(in thousands)				%
Retail revenues		$	77,235				3.1			$	201,955				4.4
Sales for resale			41,116				12.0				37,444				5.4
Other electric revenues			15,127				16.1				22,651				12.1
Fuel expense			142,496				16.4				225,108				13.2
Purchased power expense			(94,389	)			(43.3	)			(115,931	)			(34.3	)
Maintenance expense			(8,484	)			(3.2	)			48,111				9.5
Depreciation and amortization expense			54,430				23.3				106,385				22.4
Allowance for equity funds used during construction			4,544				48.0				13,219				74.9
Interest expense, net of amounts capitalized			15,603				11.3				24,004				8.9
Other income (expense), net			13,407				87.6				15,833				67.5
Income taxes			(13,833	)			(8.7	)			(57,565	)			(20.4	)

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

     Retail revenues. The chart below reflects the primary drivers of the 3.1% and 4.4% increases in retail revenues in the second quarter and year-to-date 2005 when compared to the prior year. Changes in revenue related to cost recovery mechanisms such as fuel and environmental have no effect on net income. In the second quarter and year-to-date 2005, retail kilowatt-hour energy sales decreased by 1.8% and 1.3%, respectively, from the same periods a year ago, primarily due to milder weather. The decrease was partially offset by continued customer and demand growth due to sustained economic growth in the Southeast. The number of retail customers increased by 1.5% and weather-adjusted average consumption by retail customers increased by 0.5% and 0.7%, respectively, in the second quarter and year-to-date 2005 when compared with the second quarter and year-to-date 2004.

     Details of retail revenues are as follows:

		Second Quarter								Year-to-Date
		2005								2005
		(in millions)				% change				(in millions)				% change
Retail — prior year		$	2,478							$	4,622
Change in —
Base rates			53				2.1				101				2.2
Sales growth			28				1.1				64				1.4
Weather			(47	)			(1.9	)			(73	)			(1.6	)
Fuel cost recovery			31				1.3				95				2.1
Other cost recovery			12				0.5				15				0.3
Retail — current year		$	2,555				3.1	%		$	4,824				4.4	%

     Sales for resale. In the second quarter and year-to-date 2005, sales for resale increased $41.1 million, or 12.0%, and $37.4 million, or 5.4%, respectively, over the same periods in 2004. The increases reflect a rise in fuel revenues due to the higher cost of fuel and new wholesale contracts between Georgia Power and 30 electric membership cooperatives (EMCs) and Flint EMC, both beginning in January 2005. In addition, Southern Power entered into new wholesale contracts with Flint EMC in January 2005 and added additional wholesale revenues through its acquisition of Oleander Power Project, L.P. (Oleander) and assumption of associated PPAs in June 2005. See FUTURE EARNINGS POTENTIAL — “Other Matters” herein for additional information on the Oleander acquisition.

     Other electric revenues. In the second quarter and year-to-date 2005, when compared to the same periods in 2004, other electric revenues increased $15.1 million, or 16.1%, and $22.7 million, or 12.1%, respectively. These increases were primarily due to higher transmission revenues of $6.1 million and $8.5 million, and increased outdoor lighting revenues of $1.7 million and $3.2 million in the second quarter and year-to-date 2005, respectively, as compared to the same periods in 2004. In addition, customer fees increased $1.3 million and $2.4 million in the second quarter and year-to-date 2005, respectively, over the corresponding periods in 2004. Other electric revenues also increased by $1.5 million in the second quarter and year-to-date 2005 when compared to the same periods in 2004 as the result of an Alabama Power customer’s early termination of a contract.

     Fuel expense. Fuel expense was higher in the second quarter and year-to-date 2005 due to increases of 19.0% and 15.0%, respectively, in the average unit cost of fuel per net kilowatt-hour generated when compared to the same periods in the prior year. Increases in fuel expense at the retail operating companies are generally offset by fuel revenues and do not affect net income. Fuel expenses incurred under Southern Power’s PPAs are generally the responsibility of the counterparties, and do not significantly affect net income.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

     Purchased power expense. The 43.3% and 34.3% decreases in purchased power expense in the second quarter and year-to-date 2005, respectively, compared with the same periods in the prior year are primarily a result of lower kilowatt-hour purchases resulting from milder weather reducing demand and a decrease in the cost of purchased power per kilowatt-hour. Since these expenses are offset by energy revenues, they generally do not have a significant impact on earnings.

     Maintenance expense. The $48.1 million increase in maintenance expense year-to-date 2005 is mainly attributable to $45 million of expenses recorded by Alabama Power in accordance with an accounting order approved by the Alabama PSC to offset the costs of Hurricane Ivan and restore the natural disaster reserve. In accordance with the accounting order, Alabama Power also returned certain regulatory liabilities related to deferred taxes to its retail customers; therefore, the combined effects of this accounting order had no impact on net income. See Note 3 to the financial statements of Southern Company under “Gulf Power and Alabama Power Storm Damage Recovery” in Item 8 of the Form 10-K and “Income taxes” below for additional information.

     Depreciation and amortization expense. The $54.4 million and $106.4 million increases in depreciation and amortization in the second quarter and year-to-date 2005, respectively, when compared to the prior year are due to the expiration in 2004 of certain provisions in Georgia Power’s 2001 Retail Rate Plan. In accordance with the 2001 Retail Rate Plan, Georgia Power amortized an accelerated cost recovery liability equally as a credit to amortization expense and recognized new Georgia PSC-certified purchased power costs in rates evenly over the three years ended December 31, 2004. This treatment resulted in a credit to amortization expense of $47 million and $94 million during the second quarter and year-to-date 2004, respectively. See Note 3 to the financial statements of Southern Company under “Georgia Power Retail Rate Activity” in Item 8 of the Form 10-K for additional information.

     Allowance for equity funds used during construction. The $13.2 million increase in AFUDC equity year-to-date 2005 compared to the same period in the prior year relates primarily to construction of the McIntosh combined cycle units 10 and 11 by Georgia Power and Savannah Electric. See Note 3 to the financial statements of Southern Company under “Plant McIntosh Construction Project” in Item 8 of the Form 10-K for further information. AFUDC equity is non-taxable. See Note (H) to the Condensed Financial Statements herein for information on the impact on Southern Company’s 2005 annual effective tax rate.

     Interest expense, net of amounts capitalized. The $15.6 million and $24.0 million increases in interest expense, net of amounts capitalized, in the second quarter and year-to-date 2005, respectively, when compared to the same periods in 2004 are mainly attributed to an increase in the amount of senior notes outstanding and lower amounts of interest capitalized as projects have reached completion, partially offset by refinancing with lower interest-rate long-term debt. See MANAGEMENT’S DISCUSSION AND ANALYSIS — FINANCIAL CONDITION AND LIQUIDITY — “Financing Activities” of Southern Company in Item 7 of the Form 10-K and herein for additional information.

     Other income (expense), net. The increases in other income (expense), net, of $13.4 million and $15.8 million in the second quarter and year-to-date 2005, respectively, when compared to the same periods in the prior year, are a result of $5.5 million and $6.2 million increases in flat bill revenues for the second quarter and year-to-date 2005, respectively, and a $4.9 million increase for the second quarter and year-to-date 2005, related to the timing of the employee stock ownership plan contribution when compared to the prior year periods.

     Income taxes. The $13.8 million decrease in income taxes in the second quarter 2005 compared to the prior year is primarily due to a $8.8 million increase in tax benefits received related to higher production at synfuel production facilities. The $57.6 million decrease in year-to-date 2005 income taxes over the prior year is primarily the result of the impact of the Alabama PSC accounting order discussed under “Maintenance expense” above and, along with other items, is expected to result in an annual effective income tax rate of

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

approximately 27% for Southern Company in 2005. See Note 5 to the financial statements of Southern Company in Item 8 of the Form 10-K and Note (H) to the Condensed Financial Statements herein for additional information.

FUTURE EARNINGS POTENTIAL

The results of operations discussed above are not necessarily indicative of future earnings potential. The level of Southern Company’s future earnings depends on numerous factors that affect the opportunities, challenges, and risks of Southern Company’s primary business of selling electricity. These factors include the retail operating companies’ ability to maintain a stable regulatory environment, to achieve energy sales growth while containing costs, and to recover costs related to growing demand and increasingly stringent environmental standards. Another major factor is the profitability of the competitive market-based wholesale generating business and federal regulatory policy, which may impact Southern Company’s level of participation in this market. Future earnings for the electricity business in the near term will depend, in part, upon growth in energy sales, which is subject to a number of factors. These factors include weather, competition, new energy contracts with neighboring utilities, energy conservation practiced by customers, the price of electricity, the price elasticity of demand, and the rate of economic growth in the service area. For additional information relating to these issues, see BUSINESS — The SOUTHERN System — “Risk Factors” in Item 1 and MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL of Southern Company in Item 7 of the Form 10-K.

Environmental Matters

Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs cannot be recovered. For additional information, including information on certain environmental litigation, see MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “Environmental Matters” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Environmental Matters” in Item 8 of the Form 10-K.

New Source Review Actions

On June 3, 2005, the U.S. District Court for the Northern District of Alabama issued its decision in favor of Alabama Power on two primary legal issues in the case: (1) the scope of the routine maintenance repair and replacement exclusion under the New Source Review rules and (2) the proper test for calculating emissions increases under those rules. The court decided that routine maintenance repair and replacement must be defined with reference to what is routine in the industry as opposed to what is routine at an individual unit and emissions increases must be measured against the maximum hourly emission rate. The decision does not resolve the case, nor does it address other legal issues associated with the EPA’s allegations involving Plant Miller Units 3 and 4. In separate orders, the court dismissed Alabama Power’s motion for summary judgment on the other claims, stayed the entire case, and referred the parties to mediation to be completed by September 9, 2005. Alabama Power may refile its motion for summary judgment if the mediation proves unsuccessful. The Georgia Power and Savannah Electric case, which is pending in federal district court in Georgia, remains administratively closed. The ultimate outcome of these matters cannot now be determined. See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “Environmental Matters — New Source Review Actions” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Environmental Matters — New Source Review Actions” in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under “New Source Review Actions” for additional information.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

Plant Wansley Environmental Litigation

In March 2005, the U.S. Court of Appeals for the Eleventh Circuit accepted Georgia Power’s petition for review of the U.S. District Court for the Northern District of Georgia’s December 15, 2004 order related to the Plant Wansley environmental litigation. Oral argument on that appeal has not been scheduled. The ultimate outcome of this matter cannot now be determined. See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “Environmental Matters — Plant Wansley Environmental Litigation” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Environmental Matters — Plant Wansley Environmental Litigation” in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under “Plant Wansley Environmental Litigation” for additional information.

Other Environmental Matters

The EPA issued the final Clean Air Interstate Rule on March 10, 2005. The rule addresses sulfur dioxide (SO₂) and nitrogen oxide (NO_x) emissions that contribute to nonattainment of the eight-hour ozone and fine particulate matter National Ambient Air Quality Standards. Twenty-eight eastern states, including each of the states within Southern Company’s service area, are subject to the fine particulate and/or the eight-hour ozone requirements set forth within the rule. The rule may require additional reductions of NO_x and/or SO₂ to be achieved by the installation of additional controls at Southern Company facilities or through the purchase of allowances. The impact of this final rule on Southern Company will, however, depend on the outcome of legal challenges and development and implementation of applicable state regulations and therefore cannot be determined at this time.

     On March 15, 2005, the EPA announced the final Clean Air Mercury Rule, selecting a cap-and-trade approach to be implemented in two phases, 2010 and 2018. The rule sets a permanent cap on emissions at the 2018 level and provides for an emissions allowance trading market. The impact of this final rule on Southern Company will depend on the outcome of legal challenges and development and implementation of applicable state regulations and therefore cannot be determined at this time.

     On June 15, 2005, the EPA issued final rules addressing Best Available Retrofit Technology (BART) standards under the Regional Haze Program. States must develop regulations to implement the federal regional haze requirements, including BART standards, by December 17, 2007. The impact of the final BART rules on Southern Company will depend on the outcome of any litigation over the final rules and the development and implementation of the applicable state regulations and therefore cannot be determined at this time.

     On June 14 and 15, 2005, the EPA published final rules approving the redesignation of the Atlanta metro area to “attainment” under the one-hour ground-level ozone standard.

FERC and State PSC Matters

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “FERC and State PSC Matters — Market-Based Rate Authority” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Market-Based Rate Authority” in Item 8 of the Form 10-K for information on the FERC’s April 2004 order adopting a new interim analysis for measuring generation market power and a proceeding initiated by the FERC in December 2004 to assess Southern Company’s generation dominance within its retail service territory. Each of the retail operating companies and Southern Power has authorization from the FERC to sell power to non-affiliates at market-based prices. The retail operating companies and Southern Power also have FERC authority to make short-term opportunity sales at

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

market rates. Specific FERC approval must be obtained with respect to a market-based contract with an affiliate. On February 15, 2005, Southern Company submitted additional information related to generation dominance in its retail service territory. On July 8, 2005, the FERC initiated a hearing before an administrative law judge to review the generation market power issues. Any new market-based rate transactions in its retail service territory entered into after February 27, 2005 will be subject to refund to the level of the default cost-based rates, pending the outcome of the proceeding. In the event that the FERC’s default mitigation measures are ultimately applied, the retail operating companies and Southern Power may be required to charge cost-based rates for certain wholesale sales in the Southern Company retail service territory, which may be lower than negotiated market-based rates. The impact of such sales through June 30, 2005 is not material to Southern Company’s net income. The final outcome of this matter will depend on the form in which the final methodology for assessing generation market power and mitigation rules may be ultimately adopted and cannot be determined at this time.

     In addition, on May 5, 2005, the FERC issued an order expanding the generation market power proceeding initiated in December 2004 to include an investigation of whether Southern Company satisfies the other three parts of the FERC’s market-based rate analysis: transmission market power, barriers to entry, and affiliate abuse or reciprocal dealing. The FERC established a new refund period related to this expanded investigation. Any and all new market-based rate transactions involving any Southern Company subsidiary will be subject to refund to the extent the FERC orders lower rates beginning July 19, 2005. The FERC also directed that this expanded proceeding be held in abeyance pending the outcome of the proceeding on the IIC discussed below.

     Southern Company and its subsidiaries believe that there is no meritorious basis for these allegations and intend to vigorously defend themselves in the proceeding. However, the final outcome of this matter, including any remedies to be applied in the event of an adverse ruling in this proceeding, cannot now be determined.

Intercompany Interchange Contract

Also, on May 5, 2005, the FERC initiated a new proceeding to examine (1) the provisions of the IIC among Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Savannah Electric, Southern Power, and SCS, as agent, under the terms of which the power pool of Southern Company is operated, and, in particular, the propriety of the continued inclusion of Southern Power as a party to the IIC, (2) whether any parties to the IIC have violated the FERC’s standards of conduct applicable to utility companies that are transmission providers, and (3) whether Southern Company’s code of conduct defining Southern Power as a “system company” rather than a “marketing affiliate” is just and reasonable. In 2000, in connection with the formation of Southern Power, the FERC authorized Southern Power’s inclusion in the IIC. The FERC also previously approved Southern Company’s code of conduct. The FERC order directs that the administrative law judge who presided over the McIntosh PPA proceeding be assigned to preside over the hearing in this proceeding and that the testimony and exhibits presented in that proceeding be preserved to the extent appropriate. See Note 3 to the financial statements of Southern Company under “Plant McIntosh Construction Project” in Item 8 of the Form 10-K for further information on the McIntosh PPA proceeding. Effective July 19, 2005, revenues from transactions under the IIC involving any Southern Company subsidiaries will be subject to refund to the extent the FERC orders any changes to the IIC.

     Southern Company and its subsidiaries believe that there is no meritorious basis for these allegations and intend to vigorously defend themselves in the proceeding. However, the final outcome of this matter, including any remedies to be applied in the event of an adverse ruling in this proceeding, cannot now be determined.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

Generation Interconnection Agreements

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “FERC and State PSC Matters — Generation Interconnection Agreements” of Southern Company in Item 7 of the Form 10-K for information on the FERC’s Order 2003 related to standardization of generation interconnection agreements and procedures. The FERC has indicated that Order 2003, which was effective January 20, 2004, is to be applied prospectively to interconnection agreements. Subsidiaries of Tenaska, Inc., as counterparties to three previously executed interconnection agreements with subsidiaries of Southern Company, have filed complaints at the FERC requesting that the FERC modify the agreements and that Southern Company refund a total of $19 million previously paid for interconnection facilities, with interest. Southern Company has also received similar requests from other entities totaling approximately $14 million. Southern Company has opposed such relief, and the proceedings are still pending. The impact of Order 2003 and its subsequent rehearings on Southern Company and the final results of these matters cannot be determined at this time.

Retail Fuel Cost Recovery

The retail operating companies each have established fuel cost recovery rates approved by their respective state PSCs. In recent quarters, the retail operating companies have experienced higher than expected fuel costs for coal and gas. These higher fuel costs have increased the under recovered fuel costs included in the balance sheets. The retail operating companies will continue to monitor the under recovered fuel cost balance in light of these higher fuel costs.

     Alabama Power fuel costs are recovered under Rate ECR (Energy Cost Recovery), which provides for the addition of a fuel and energy cost factor to base rates. Alabama Power’s under-recovered fuel costs as of June 30, 2005 totaled $127.4 million as compared to $101.6 million at December 31, 2004. Alabama Power increased its fuel billing factor in April 2005. Alabama Power will continue to monitor the under-recovered fuel cost balance to determine if an additional adjustment to billing rates should be requested from the Alabama PSC. See Note 3 to the financial statements of Southern Company under “Alabama Power Retail Regulatory Matters” in Item 8 of the Form 10-K and Note (I) to the Condensed Financial Statements herein for additional information.

     On May 17, 2005, the Georgia PSC voted to allow Georgia Power to increase customer fuel rates to recover estimated under-recovered fuel costs of approximately $508 million as of May 31, 2005 over the period from June 1, 2005 through May 31, 2009, as well as future projected fuel costs based on a June 2005 through May 2006 test period. The new fuel rate became effective June 1, 2005 and represents an average annual increase in revenues of approximately 9.5%, or approximately $473 million. Based on the order, a portion of the under-recovered regulatory clause revenues was reclassified from current to long-term on the balance sheet. At June 30, 2005, Georgia Power’s under-recovered fuel costs totaled $516 million, of which $363 million is classified as long-term. See Note 3 to the financial statements of Southern Company under “Georgia Power Retail Rate Activity” in Item 8 of the Form 10-K and Note (J) to the Condensed Financial Statements herein for additional information.

Storm Damage Cost Recovery

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “FERC and State PSC Matters - Storm Damage Cost Recovery” of Southern Company in Item 7 and Notes 1 and 3 to the financial statements of Southern Company under “Storm Damage Reserves” and “Gulf Power and Alabama Power Storm Damage Recovery,” respectively, in Item 8 of the Form 10-K. Each retail operating company maintains a reserve for property damage to cover the cost of damages from major storms to its transmission and distribution lines and the cost of uninsured damages to its generation facilities and other property.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

     Hurricane Ivan hit Gulf Power’s service territory in September 2004. In March 2005, the Florida PSC approved a Stipulation and Settlement between Gulf Power, the Office of Public Counsel for the State of Florida, and the Florida Industrial Power Users Group which allows Gulf Power to recover the retail portion of $51.7 million, the projected reserve deficiency, plus interest and revenue taxes, from customers over a 24-month period beginning in April 2005. In connection with the Stipulation, Gulf Power has agreed that it will not seek any additional increase in its base rates and charges to become effective on or before March 1, 2007.

     On July 10, 2005, Hurricane Dennis hit Gulf Power’s service territory. Approximately 242,000, or 60%, of Gulf Power’s customers were without electrical service immediately after the hurricane struck. More than 98% of those without power had service restored in six days. Based on current projections, retail sales revenues lost as a result of power outages from Hurricane Dennis are not expected to have a material impact on the net income of Gulf Power. Gulf Power maintains an accumulated provision for property damage to cover the cost of damages from major storms and other uninsured damages to its property. Due to the damages incurred in 2004 related to Hurricane Ivan (Ivan), the accumulated reserve had a deficit balance of $42 million at June 30, 2005, including the Ivan deficit. The Ivan deficit at June 30, 2005 was $44.4 million, which is currently being recovered from retail customers through a surcharge on the customer’s bill over a two-year recovery period. The current preliminary estimate of Hurricane Dennis restoration costs are approximately $60 million. The established policy of the Florida PSC, as recently reaffirmed by its decisions following the 2004 hurricane experience of Florida’s investor owned electric utilities, provides for recovery of these costs through the mechanism of the property insurance reserve and, where necessary, through a special recovery surcharge. In 2005, the Florida legislature authorized securitized financing as an additional mechanism available to the Florida PSC and electric utilities in Florida for addressing the extraordinary costs associated with hurricanes. Based upon the additional costs related to Hurricane Dennis, this option, along with other alternatives, is being evaluated to allow a more rapid recovery of these costs. See Note (K) to the Condensed Financial Statements herein for additional information.

     Hurricane Dennis also impacted the Gulf Coast of Alabama and continued north through the state of Alabama, causing significant damage in parts of the service territory of Alabama Power. Approximately 241,000 of Alabama Power’s 1,390,000 customer accounts were without electrical service immediately after the hurricane. The total operation and maintenance costs associated with repairing the damage to facilities and restoring service to customers are preliminarily estimated to be approximately $30 million. The June 30, 2005 balance of $4.2 million in the natural disaster reserve is not sufficient to cover these costs. Alabama Power has requested clarification from the Alabama PSC concerning an October 2004 order that allows the natural disaster reserve to carry a negative balance and to defer such costs for recovery in future periods to be determined by the Alabama PSC. If this request is not approved, Alabama Power would be required to expense the costs in excess of the reserve balance in the third quarter of 2005. See Note (I) to the Condensed Financial Statements herein for additional information.

Mirant Related Matters

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “Other Matters” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Mirant Related Matters” in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under “Mirant Related Matters.” In July 2003, Mirant filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. In June 2004, Mirant’s bankruptcy counsel notified Southern Company that it was investigating, on behalf of a committee of independent Mirant directors, potential claims against Southern Company.

     In June 2005, Mirant, as a debtor in possession, and The Official Committee of Unsecured Creditors of Mirant Corporation filed a complaint against Southern Company in the U.S. Bankruptcy Court for the Northern District of Texas and filed an amended complaint on July 6, 2005. The complaint alleges that Southern

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

Company caused Mirant to engage in certain fraudulent transfers and to pay illegal dividends to Southern Company in 1999 and 2000 with actual intent to hinder, delay or defraud creditors or, alternatively, when Southern Company knew or should have known that Mirant was allegedly insolvent, undercapitalized or unable to pay its debts. The alleged fraudulent transfers and/or illegal dividends include: (1) certain dividends from Mirant to Southern Company in the aggregate amount of $668 million, (2) the repayment of certain intercompany loans and accrued interest in an aggregate amount of $1.035 billion, and (3) the dividend distribution of one share of Series B Preferred Stock and its subsequent redemption in exchange for Mirant’s 80% interest in a holding company which owned SE Finance Capital Corporation and Southern Company Capital Funding, Inc., which transfer Mirant asserts is valued at $247.9 million. The complaint also seeks to recharacterize certain advances from Southern Company to Mirant for investments in energy facilities from debt to equity. The complaint further alleges that Southern Company is liable to Mirant’s creditors for the full amount of Mirant’s liability under an alter ego theory of liability and that Southern Company caused Mirant to breach its fiduciary duty of loyalty to its creditors. The complaint seeks monetary damages in excess of $2 billion plus interest, punitive damages, attorneys fees, and costs. Finally, Mirant objects to Southern Company’s claims against Mirant in the Bankruptcy Court (which, in the aggregate, currently total approximately $70 million) and seeks equitable subordination of Southern Company’s claims to the claims of all other creditors. Southern Company believes there is no meritorious basis for Mirant’s claims and intends to vigorously defend itself in this action.

     On July 13, 2005, The Official Committee of Unsecured Creditors of Mirant Corporation, on behalf of Mirant, as a debtor in possession, and its creditors, filed a complaint in the Bankruptcy Court against certain former officers and directors of Mirant and/or Southern Company. The complaint alleges that the defendants breached their fiduciary duties of loyalty and care owed to Mirant and its creditors by allowing Mirant to overpay for certain acquisitions of utility assets in 1997, 1998, and 1999, and by authorizing or participating in certain transfers from Mirant to Southern Company in 1999 and 2000 as described above when Mirant was allegedly insolvent, undercapitalized, or unable to pay its debts. Specifically, the complaint alleges that the defendants lacked independence in judgment and failed to act in the best interest of Mirant and its creditors when they authorized or participated in these acquisitions and transfers. The complaint seeks to recover damages in excess of $1.9 billion for such transfers. Under certain circumstances, Southern Company may be obligated under its Bylaws to indemnify the individuals named as defendants in the complaint.

     The ultimate outcome of these matters cannot be determined at this time.

     Southern Company has various other contingent liabilities associated with Mirant, including guarantees of contractual commitments, litigation, and joint and several liabilities in connection with the consolidated federal income tax return. The ultimate outcome of such contingent liabilities cannot now be determined.

Income Tax Matters

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FUTURE EARNINGS POTENTIAL — “Income Tax Matters - Leveraged Lease Transactions” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Income Tax Matters — Leveraged Lease Transactions” in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under “Income Tax Matters” for information regarding IRS challenges to Southern Company’s transactions related to international leveraged leases that could have material impacts on Southern Company’s financial statements. The ultimate outcome of these matters cannot now be determined.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

Synthetic Fuel Tax Credits

As discussed in Note 3 to the financial statements of Southern Company under “Income Tax Matters — Synthetic Fuel Tax Credits” in Item 8 of the Form 10-K, Southern Company has investments in two entities that produce synthetic fuel and receive tax credits under Section 29 of the IRC. In accordance with Section 29 of the IRC, these tax credits are subject to limitation as the annual average price of oil (as determined by the DOE) increases over a specified, inflation-adjusted dollar amount published in the spring of the subsequent year. Southern Company, along with its partners in these investments, will continue to monitor oil prices. Any indicated potential limitation on these credits could affect either the timing or the amount of the credit recognition and could also require an impairment analysis of these investments by Southern Company. In April 2005, Southern Company entered into a derivative transaction designed to reduce its exposure to the potential phase-out of these credits in 2005. The purchased option, which had an initial fair value of approximately $7 million, is being marked to market over the remainder of the year through other income (expense), net. See Note (F) to the Condensed Financial Statements herein for additional information.

Other Matters

On June 7, 2005, Southern Power, through certain of its wholly-owned subsidiaries, acquired all of the outstanding general and limited partnership interests of Oleander from Constellation Power, Inc. and certain other subsidiaries of Constellation Energy Group, Inc. Southern Power’s acquisition of the general and limited partnership interests in Oleander was pursuant to a Purchase and Sale Agreement dated April 8, 2005, for an aggregate purchase price of approximately $206 million, plus approximately $12 million of working capital and other adjustments. The purchase was for a dual-fueled generating plant in Brevard County, Florida with a nominal installed capacity of 680 MW. The entire output of the plant is sold under separate PPAs with Florida Power & Light Company and Seminole Electric Cooperative, Inc. The PPAs expire in 2007 and 2009, respectively.

     In July 2005, the U.S. Congress passed the Energy Policy Act of 2005 (Energy Act), which President Bush is expected to sign into law in early August 2005. Among other things, the Energy Act includes various tax subsidies for electric utilities and provisions repealing the PUHCA. The Energy Act also amends federal energy laws and provides the FERC with new oversight responsibilities for the electric utility industry. The implementation of the Energy Act requires proceedings at the state level and the development of regulations by the FERC, as well as other federal agencies. Southern Company is still reviewing the legislation; however, its impacts will depend on the promulgation and implementation of final rules and cannot be determined at this time.

     Southern Company is subject to certain claims and legal actions arising in the ordinary course of business. In addition, Southern Company’s business activities are subject to extensive governmental regulation related to public health and the environment. Litigation over environmental issues and claims of various types, including property damage, personal injury, and citizen enforcement of environmental requirements, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such litigation against Southern Company and its subsidiaries cannot be predicted at this time; however, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on Southern Company’s financial statements.

     See the Notes to the Condensed Financial Statements herein for discussion of various contingencies and other matters which may affect future earnings potential.

ACCOUNTING POLICIES

Southern Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States. Significant accounting policies are described in Note 1 to the financial statements of Southern Company in Item 8 of the Form 10-K. In the application of these policies,

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

certain estimates are made that may have a material impact on Southern Company’s results of operations and related disclosures. Different assumptions and measurements could produce estimates that are significantly different from those recorded in the financial statements. Also see MANAGEMENT’S DISCUSSION AND ANALYSIS — ACCOUNTING POLICIES — “Application of Critical Accounting Policies and Estimates” of Southern Company in Item 7 of the Form 10-K for a complete discussion of Southern Company’s critical accounting policies and estimates related to Electric Utility Regulation, Contingent Obligations, and Unbilled Revenues.

New Accounting Standards

FASB Statement No. 123R, Share-Based Payments, was issued in December 2004. This statement requires that compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity instruments issued. In April 2005, the SEC amended the compliance dates for FASB Statement No. 123R. For Southern Company, this statement is now effective beginning January 1, 2006. Although the compensation expense calculation required under the revised statement differs slightly, the impacts on Southern Company’s financial statements are expected to be similar to the pro forma disclosures included in Note 1 to the financial statements of Southern Company under “Stock Options” in Item 8 of the Form 10-K and in Note (C) to the Condensed Financial Statements herein.

     FASB Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligations, was issued in March 2005. This interpretation requires that asset retirement obligations be recorded when a legal obligation exists even though the timing and/or the method of settlement are conditional on a future event. For Southern Company, FIN 47 is effective no later than December 31, 2005. Southern Company is currently assessing the impact of FIN 47 on its balance sheet; however, adoption is not currently expected to have a material impact on Southern Company’s income statement.

     In December 2004, the FASB issued Staff Position No. 109-1 (FSP 109-1), Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities provided by the American Jobs Creation Act of 2004, which requires that the generation deduction for utilities be accounted for as a special tax deduction rather than as a tax rate reduction. Southern Company adopted FSP 109-1 in the first quarter of 2005 with no material impact on its financial statements.

FINANCIAL CONDITION AND LIQUIDITY

Southern Company’s financial condition continued to be strong at June 30, 2005. Net cash flow from operating activities totaled $792 million for first six months of 2005, compared to $901 million for the corresponding period in 2004. The $109 million decrease in 2005 resulted primarily from higher fuel costs at the retail operating companies. Those costs are recoverable in future periods and are reflected on the balance sheets as under recovered regulatory clause revenues. Gross property additions to utility plant were $1.2 billion in the first six months of 2005. The majority of funds needed for gross property additions since 2000 has been provided from operating activities.

     Significant balance sheet changes include a $240 million increase in long-term debt for the first half of 2005 due to the replacement of short-term financing with long-term debt, consistent with Southern Company’s finance policy, and an increase of $534 million in property, plant, and equipment.

     The market price of Southern Company’s common stock at June 30, 2005 was $34.67 per share and the book value was $14.13 per share, representing a market-to-book ratio of 245%, compared to $33.52, $13.86, and 242%, respectively, at the end of 2004. The dividend for the second quarter 2005 was $0.3725 per share compared to $0.35 per share in the second quarter 2004.

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

     The retail operating companies, Southern Power, and SCS have each maintained investment grade ratings from the major rating agencies.

Capital Requirements and Contractual Obligations

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FINANCIAL CONDITION AND LIQUIDITY —“Capital Requirements and Contractual Obligations” of Southern Company in Item 7 of the Form 10-K for a description of Southern Company’s capital requirements for its construction program and other funding requirements associated with scheduled maturities of long-term debt, as well as the related interest, preferred stock dividends, leases, trust funding requirements, and other purchase commitments. Approximately $1.2 billion will be required by June 30, 2006 for redemptions and maturities of long-term debt.

Sources of Capital

Southern Company intends to meet its future capital needs through internal cash flow and external security issuances. The amounts and timing of additional equity capital to be raised will be contingent on Southern Company’s investment opportunities. The retail operating companies and Southern Power plan to obtain the funds required for construction and other purposes from sources similar to those used in the past, which were primarily from operating cash flows, security issuances, and term loan and short-term borrowings. However, the amount, type, and timing of any financings, if needed, will depend upon market conditions and regulatory approval. See MANAGEMENT’S DISCUSSION AND ANALYSIS — FINANCIAL CONDITION AND LIQUIDITY — “Sources of Capital” of Southern Company in Item 7 of the Form 10-K for additional information.

     To meet short term cash needs and contingencies, the Southern Company system had at June 30, 2005 approximately $237 million of cash and cash equivalents and approximately $3.1 billion of unused credit arrangements with banks, of which $238 million expire in 2005 and $2.8 billion expire in 2006 and beyond. Of the facilities maturing in 2005 and 2006, $168 million contain provisions allowing two-year term loans executable at the expiration date and $275 million contain provisions allowing one-year term loans executable at the expiration date. These unused credit arrangements also provide liquidity support to variable rate pollution control bonds and commercial paper programs. Southern Company expects to renew its credit facilities, as needed, prior to expiration. The retail operating companies may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of each of the retail operating companies. At June 30, 2005, the Southern Company system had outstanding commercial paper of $893.1 million and extendible commercial notes of $24.3 million. Management believes that the need for working capital can be adequately met by utilizing commercial paper programs and lines of credit without maintaining large cash balances.

Off-Balance Sheet Financing Arrangements

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FINANCIAL CONDITION AND LIQUIDITY — “Off-Balance Sheet Financing Arrangements” of Southern Company in Item 7 and Note 7 to the financial statements of Southern Company under “Operating Leases” in Item 8 of the Form 10-K for information related to Mississippi Power’s lease of a combined cycle generating facility at Plant Daniel.

Credit Rating Risk

Southern Company does not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are certain contracts that could require collateral, but not accelerated payment, in the event of a credit rating change to BBB- or Baa3 or below. These contracts are primarily for physical electricity purchases and sales. At June 30, 2005, the

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

maximum potential collateral requirements at a BBB- or Baa3 rating were approximately $51.8 million. The maximum potential collateral requirements at a rating below BBB- or Baa3 were approximately $353.8 million. In addition, through the acquisition of Oleander, Southern Power assumed a PPA with Seminole Electric Cooperative, Inc. that could require collateral, but not accelerated payment, in the event of a credit rating change to BBB- or Baa3 or below. The amount of this collateral cannot be determined at this time. Generally, collateral may be provided for by a Southern Company guaranty, letter of credit, or cash. Southern Company is also party to certain derivative agreements that could require collateral and/or accelerated payment in the event of a credit rating change to below investment grade. These agreements are primarily for natural gas price and interest rate risk management activities. At June 30, 2005, Southern Company and its subsidiaries had no material exposure under these contracts.

Market Price Risk

Southern Company’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2004 reporting period. In addition, Southern Company is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, the retail operating companies have limited exposure to market volatility in interest rates, commodity fuel prices, and prices of electricity. In addition, Southern Power’s exposure to market volatility in commodity fuel prices and prices of electricity is limited because its long-term sales contracts shift substantially all fuel cost responsibility to the purchaser. To mitigate residual risks relative to movements in electricity prices, the retail operating companies and Southern Power enter into fixed-price contracts for the purchase and sale of electricity through the wholesale electricity market and, to a lesser extent, into similar contracts for gas purchases. The retail operating companies have implemented fuel hedging programs at the instruction of their respective state PSCs. Southern Company GAS also has in place a risk management program to substantially mitigate its exposure to price volatility for its natural gas purchases.

     The fair value of derivative energy contracts at June 30, 2005 was as follows:

		Second Quarter
		2005				Year-to-Date
		Changes				Changes
		Fair Value
		(in millions)
Contracts beginning of period		$	119.5			$	10.5
Contracts realized or settled			(45.1	)			(35.1	)
New contracts at inception			—				—
Changes in valuation techniques			—				—
Current period changes (a)			(10.4	)			88.6
Contracts at June 30, 2005		$	64.0			$	64.0

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

		Source of June 30, 2005
						Valuation Prices
		Total				Maturity
		Fair Value				Year 1				1—3 Years
						(in millions)
Actively quoted		$	64.9			$	40.1			$	24.8
External sources			(0.9	)			(0.9	)			—
Models and other methods			—				—				—
Contracts at June 30, 2005		$	64.0			$	39.2			$	24.8

     For additional information, see MANAGEMENT’S DISCUSSION AND ANALYSIS — FINANCIAL CONDITION AND LIQUIDITY — “Market Price Risk” of Southern Company in Item 7 and Notes 1 and 6 to the financial statements of Southern Company under “Financial Instruments” in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements herein.

Financing Activities

In the first six months of 2005, Southern Company and its subsidiaries issued $655 million of senior notes and $149 million of common stock through employee and director stock plans and incurred obligations in connection with the issuance of $185 million of pollution control revenue bonds. The proceeds were primarily used to refund senior notes, obligations incurred in connection with pollution control revenue bonds, and other long-term debt and to fund ongoing construction projects. The remainder was used to repay short-term indebtedness. See Southern Company’s Condensed Consolidated Statements of Cash Flows herein for further details on financing activities during the first six months of 2005.

     In June 2005, Southern Company started repurchasing shares of stock to offset issuances under the Southern Company’s stock compensation plans. The total number of shares repurchased during the first six months of 2005 was 1.8 million at a cost of $62.3 million.

     In addition to any financings that may be necessary to meet capital requirements and contractual obligations, Southern Company and its subsidiaries plan to continue, when economically feasible, a program to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.

PART I

See MANAGEMENT’S DISCUSSION AND ANALYSIS — FINANCIAL CONDITION AND LIQUIDITY — “Market Price Risk” herein for each registrant and Notes 1 and 6 to the financial statements of each registrant under “Financial Instruments” in Item 8 of the Form 10-K. Also, see Note (F) to the Condensed Financial Statements herein for information relating to derivative instruments.

Item 4. Controls and Procedures.

     (a) Evaluation of disclosure controls and procedures.

     As of the end of the period covered by this quarterly report, Southern Company, the retail operating companies, and Southern Power conducted separate evaluations under the supervision and with the participation of each company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based upon these evaluations, the Chief Executive Officer and the Chief Financial Officer, in each case, concluded that the disclosure controls and procedures are effective in alerting them in a timely manner to material information relating to their company (including its consolidated subsidiaries, if any) required to be included in periodic filings with the SEC.

     (b) Changes in internal controls.

     There have been no changes in Southern Company’s, the retail operating companies’, or Southern Power’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the second quarter of 2005 that have materially affected or are reasonably likely to materially affect Southern Company’s, the retail operating companies’, or Southern Power’s internal control over financial reporting.

ALABAMA POWER COMPANY

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2005				2004				2005				2004
		(in thousands)								(in thousands)
Operating Revenues:
Retail revenues		$	863,155			$	847,148			$	1,572,241			$	1,591,781
Sales for resale —
Non-affiliates			130,598				120,491				245,012				232,436
Affiliates			47,934				53,945				155,220				119,733
Other revenues			44,152				37,233				83,102				74,561
Total operating revenues			1,085,839				1,058,817				2,055,575				2,018,511
Operating Expenses:
Fuel			323,328				277,110				623,148				549,089
Purchased power —
Non-affiliates			34,316				65,508				58,182				94,150
Affiliates			61,487				60,400				109,785				120,332
Other operations			168,987				160,889				315,277				307,275
Maintenance			80,858				90,718				204,412				171,105
Depreciation and amortization			101,019				106,146				209,510				211,499
Taxes other than income taxes			62,985				59,328				125,534				123,775
Total operating expenses			832,980				820,099				1,645,848				1,577,225
Operating Income			252,859				238,718				409,727				441,286
Other Income and (Expense):
Allowance for equity funds used during construction			4,785				3,914				10,439				8,024
Interest income			4,001				3,890				7,569				8,329
Interest expense, net of amounts capitalized			(50,415	)			(52,367	)			(96,722	)			(102,446	)
Interest expense to affiliate trusts			(4,060	)			(4,181	)			(8,119	)			(4,181	)
Distributions on mandatorily redeemable preferred securities			—				—				—				(3,938	)
Other income (expense), net			(1,032	)			(6,415	)			(3,837	)			(10,753	)
Total other income and (expense)			(46,721	)			(55,159	)			(90,670	)			(104,965	)
Earnings Before Income Taxes			206,138				183,559				319,057				336,321
Income taxes			78,573				72,567				92,018				129,835
Net Income			127,565				110,992				227,039				206,486
Dividends on Preferred Stock			6,072				6,705				12,144				11,452
Net Income After Dividends on Preferred Stock		$	121,493			$	104,287			$	214,895			$	195,034

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2005				2004				2005				2004
		(in thousands)								(in thousands)
Net Income After Dividends on Preferred Stock		$	121,493			$	104,287			$	214,895			$	195,034
Other comprehensive income (loss):
Change in fair value of marketable securities, net of tax of $285 and $285, respectively			—				470				—				470
Changes in fair value of qualifying hedges, net of tax of $(4,490), $11,847, $(5,203) and $5,685, respectively			(7,386	)			19,486				(8,558	)			9,350
Reclassification adjustment for amounts included in net income, net of tax of $(347), $718, $(281) and $1,572, respectively			(569	)			1,180				(461	)			2,585
COMPREHENSIVE INCOME		$	113,538			$	125,423			$	205,876			$	207,439

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

		For the Six Months
		Ended June 30,
		2005				2004
		(in thousands)
Operating Activities:
Net income		$	227,039			$	206,486
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization			247,403				239,039
Deferred income taxes and investment tax credits, net			17,335				85,355
Deferred revenues			(6,689	)			(5,552	)
Allowance for equity funds used during construction			(10,439	)			(8,024	)
Pension, postretirement, and other employee benefits			(1,769	)			(19,862	)
Tax benefit of stock options			13,373				5,419
Hedge settlements			(21,445	)			5,548
Natural disaster reserve accounting order			45,000				—
Other, net			(22,001	)			(28,587	)
Changes in certain current assets and liabilities —
Receivables, net			(58,981	)			(105,447	)
Fossil fuel stock			(59,524	)			(1,631	)
Materials and supplies			(8,228	)			(3,800	)
Other current assets			7,598				11,088
Accounts payable			(73,305	)			(105,485	)
Accrued taxes			(11,344	)			33,647
Accrued compensation			(29,589	)			(32,216	)
Other current liabilities			26,527				15,875
Net cash provided from operating activities			280,961				291,853
Investing Activities:
Gross property additions			(379,655	)			(376,205	)
Cost of removal net of salvage			(25,453	)			(18,743	)
Other			9,041				14,567
Net cash used for investing activities			(396,067	)			(380,381	)
Financing Activities:
Increase in notes payable, net			—				45,978
Proceeds —
Senior notes			250,000				350,000
Preferred stock			—				100,000
Common stock			40,000				20,000
Redemptions —
Senior notes			—				(200,000	)
Other long-term debt			(4	)			(1,443	)
Payment of preferred stock dividends			(10,815	)			(9,274	)
Payment of common stock dividends			(204,950	)			(218,650	)
Other			(2,438	)			(13,035	)
Net cash provided from financing activities			71,793				73,576
Net Change in Cash and Cash Equivalents			(43,313	)			(14,952	)
Cash and Cash Equivalents at Beginning of Period			84,461				42,752
Cash and Cash Equivalents at End of Period		$	41,148			$	27,800
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $4,133 and $3,343 capitalized for 2005 and 2004, respectively)		$	81,932			$	81,471
Income taxes (net of refunds)		$	84,604			$	9,554

The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.

ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

		At June 30,				At December 31,
Assets		2005				2004
		(in thousands)
Current Assets:
Cash and cash equivalents		$	41,148			$	84,461
Receivables —
Customer accounts receivable			267,864				235,221
Unbilled revenues			109,008				96,486
Under recovered regulatory clause revenues			134,705				119,773
Other accounts and notes receivable			45,479				52,145
Affiliated companies			49,064				61,149
Accumulated provision for uncollectible accounts			(6,975	)			(5,404	)
Fossil fuel stock, at average cost			117,312				57,787
Vacation pay			36,494				36,494
Materials and supplies, at average cost			246,147				237,919
Prepaid expenses			56,400				61,897
Other			25,424				16,283
Total current assets			1,122,070				1,054,211
Property, Plant, and Equipment:
In service			15,054,722				14,636,168
Less accumulated provision for depreciation			5,218,991				5,097,930
			9,835,731				9,538,238
Nuclear fuel, at amortized cost			82,968				93,388
Construction work in progress			347,683				470,844
Total property, plant, and equipment			10,266,382				10,102,470
Other Property and Investments:
Equity investments in unconsolidated subsidiaries			45,278				45,455
Nuclear decommissioning trusts, at fair value			453,365				445,634
Other			35,451				36,192
Total other property and investments			534,094				527,281
Deferred Charges and Other Assets:
Deferred charges related to income taxes			329,514				316,528
Prepaid pension costs			501,005				489,193
Unamortized debt issuance expense			28,797				28,392
Unamortized loss on reacquired debt			105,300				109,403
Other regulatory assets			9,045				47,811
Other			112,402				108,170
Total deferred charges and other assets			1,086,063				1,099,497
Total Assets		$	13,008,609			$	12,783,459