UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~ EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-Q~~ D.C. 20549

~~þ QUARTERLY~~FORM ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~10-Q

~~For~~þ ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~March 31,~~SECTION ~~2009~~13 OR 15(d)

OROF THE SECURITIES EXCHANGE ACT OF 1934

oFor ~~TRANSITION~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~March 31, ~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~ 2016

~~For the transition period from to~~ OR

Commission	Registrant, State of Incorporation,	I.R.S. Employer
File Number	Address and Telephone Number	Identification No.
1-3526	The Southern Company (A Delaware Corporation)	58-0690070
	30 Ivan Allen Jr. Boulevard, N.W.
	Atlanta, Georgia 30308
	(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 Florida 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
333-98553	Southern Power Company	58-2598670
	(A Delaware Corporation)
	30 Ivan Allen Jr. Boulevard, N.W.
	Atlanta, Georgia 30308
	(404) 506-5000

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

~~Table~~OF ofTHE ~~Contents~~SECURITIES EXCHANGE ACT OF 1934

~~Indicate~~For ~~by check mark whether~~ the ~~registrants~~transition ~~(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~~ from 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 registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). Yes o No o



Commission File Number	Registrant, State of Incorporation, Address and Telephone Number	I.R.S. Employer Identification No.
1-3526	The Southern Company (A Delaware Corporation) 30 Ivan Allen Jr. Boulevard, N.W. Atlanta, Georgia 30308 (404) 506-5000	58-0690070

1-3164	Alabama Power Company (An Alabama Corporation) 600 North 18^th Street Birmingham, Alabama 35203 (205) 257-1000	63-0004250

1-6468	Georgia Power Company (A Georgia Corporation) 241 Ralph McGill Boulevard, N.E. Atlanta, Georgia 30308 (404) 506-6526	58-0257110

001-31737	Gulf Power Company (A Florida Corporation) One Energy Place Pensacola, Florida 32520 (850) 444-6111	59-0276810

001-11229	Mississippi Power Company (A Mississippi Corporation) 2992 West Beach Boulevard Gulfport, Mississippi 39501 (228) 864-1211	64-0205820

333-98553	Southern Power Company (A Delaware Corporation) 30 Ivan Allen Jr. Boulevard, N.W. Atlanta, Georgia 30308 (404) 506-5000	58-2598670

~~Indicate~~Table ~~by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions~~ of ~~“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):~~ Contents

~~Large~~Indicate ~~Smaller~~by ~~Accelerated~~check ~~Accelerated~~mark ~~Non-accelerated~~whether ~~Reporting~~the ~~Registrant~~registrants ~~Filer~~(1) have ~~Filer~~filed ~~Filer~~all ~~Company~~reports ~~The~~required ~~Southern~~to ~~Company~~be Xfiled ~~Alabama~~by ~~Power~~Section 13 ~~Company~~or X15(d) ~~Georgia~~of ~~Power~~the ~~Company~~Securities XExchange ~~Gulf~~Act ~~Power~~of ~~Company~~1934 Xduring ~~Mississippi~~the ~~Power~~preceding ~~Company~~12 Xmonths ~~Southern~~(or ~~Power~~for ~~Company~~such Xshorter 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 ¨

Indicate by check mark whether the ~~registrant~~registrants ishave asubmitted ~~shell~~electronically ~~company~~and ~~(as~~posted ~~defined~~on intheir corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule ~~12b-2~~ 405 of ~~the~~ ~~Exchange~~Regulation ~~Act.)~~S-T ~~Yes o~~during ~~No þ~~ the preceding 12 months (~~Response~~or ~~applicable~~for tosuch ~~all~~shorter period that the registrants. were required to submit and post such files) . Yes þ No ¨

	Description of	Shares Outstanding
Registrant	Common Stock	at March 31, 2009
The Southern Company	Par Value $5 Per Share		782,433,682
Alabama Power Company	Par Value $40 Per Share		25,475,000
Georgia Power Company	Without Par Value		9,261,500
Gulf Power Company	Without Par Value		3,142,717
Mississippi Power Company	Without Par Value		1,121,000
Southern Power Company	Par Value $0.01 Per Share		1,000

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

~~This~~Registrant ~~combined~~LargeAcceleratedFiler ~~Form~~AcceleratedFiler 10Non-QacceleratedFiler isSmallerReportingCompany ~~separately filed by~~ The Southern Company, X Alabama Power Company, X Georgia Power Company, X Gulf Power Company, X Mississippi Power Company, ~~and~~X Southern Power Company~~. Information~~ ~~contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.~~ X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ (Response applicable to all registrants.)

INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 2009



Registrant	Description of Common Stock	Shares Outstanding at March 31, 2016
The Southern Company	Par Value $5 Per Share	918,258,425
Alabama Power Company	Par Value $40 Per Share	30,537,500
Georgia Power Company	Without Par Value	9,261,500
Gulf Power Company	Without Par Value	5,642,717
Mississippi Power Company	Without Par Value	1,121,000
Southern Power Company	Par Value $0.01 Per Share	1,000

		Page
		Number
DEFINITIONS			5
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION			7
	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		9
	Condensed Consolidated Statements of Cash Flows		10
	Condensed Consolidated Balance Sheets		11
	Condensed Consolidated Statements of Comprehensive Income		13
	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
	Alabama Power Company
	Condensed Statements of Income		30
	Condensed Statements of Comprehensive Income		30
	Condensed Statements of Cash Flows		31
	Condensed Balance Sheets		32
	Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
	Georgia Power Company
	Condensed Statements of Income		47
	Condensed Statements of Comprehensive Income		47
	Condensed Statements of Cash Flows		48
	Condensed Balance Sheets		49
	Management’s Discussion and Analysis of Financial Condition and Results of Operations		51
	Gulf Power Company
	Condensed Statements of Income		64
	Condensed Statements of Comprehensive Income		64
	Condensed Statements of Cash Flows		65
	Condensed Balance Sheets		66
	Management’s Discussion and Analysis of Financial Condition and Results of Operations		68
	Mississippi Power Company
	Condensed Statements of Income		82
	Condensed Statements of Comprehensive Income		82
	Condensed Statements of Cash Flows		83
	Condensed Balance Sheets		84
	Management’s Discussion and Analysis of Financial Condition and Results of Operations		86
	Southern Power Company and Subsidiary Companies
	Condensed Consolidated Statements of Income		100
	Condensed Consolidated Statements of Comprehensive Income		100
	Condensed Consolidated Statements of Cash Flows		101
	Condensed Consolidated Balance Sheets		102
	Management’s Discussion and Analysis of Financial Condition and Results of Operations		104
	Notes to the Condensed Financial Statements		115
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.		28
Item 4.	Controls and Procedures.		28
Item 4T.	Controls and Procedures.		28

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

3 2

~~Table~~INDEX ofTO ~~Contents~~QUARTERLY REPORT ON FORM 10-Q

~~INDEX TO QUARTERLY REPORT ON FORM 10-Q~~ March 31, ~~2009~~ 2016

			Page
		PageNumber
			Number
DEFINITIONS		5
		PART II — OTHER INFORMATION
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION		7
Item 1.		Legal Proceedings	141
	PART I—FINANCIAL INFORMATION
Item 1A.		Risk Factors	141
Item 1.	Financial Statements (Unaudited)
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	~~Inapplicable~~
Item 3.		Defaults Upon Senior Securities	Inapplicable
	The Southern Company and Subsidiary Companies
Item 4.		Submission of Matters to a Vote of Security Holders	Inapplicable
	Condensed Consolidated Statements of Income	10
Item 5.		Other Information	Inapplicable
	Condensed Consolidated Statements of Comprehensive Income	11
Item 6.		Exhibits	142
	Condensed Consolidated Statements of Cash Flows	12
		Signatures	145
	Condensed Consolidated Balance Sheets	13
	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
	Alabama Power Company
	Condensed Statements of Income	36
	Condensed Statements of Comprehensive Income	36
	Condensed Statements of Cash Flows	37
	Condensed Balance Sheets	38
	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
	Georgia Power Company
	Condensed Statements of Income	51
	Condensed Statements of Comprehensive Income	51
	Condensed Statements of Cash Flows	52
	Condensed Balance Sheets	53
	Management's Discussion and Analysis of Financial Condition and Results of Operations	55
	Gulf Power Company
	Condensed Statements of Income	69
	Condensed Statements of Comprehensive Income	69
	Condensed Statements of Cash Flows	70
	Condensed Balance Sheets	71
	Management's Discussion and Analysis of Financial Condition and Results of Operations	73
	Mississippi Power Company
	Condensed Statements of Income	85
	Condensed Statements of Comprehensive Income	85
	Condensed Statements of Cash Flows	86
	Condensed Balance Sheets	87
	Management's Discussion and Analysis of Financial Condition and Results of Operations	89
	Southern Power Company and Subsidiary Companies
	Condensed Consolidated Statements of Income	110
	Condensed Consolidated Statements of Comprehensive Income	110
	Condensed Consolidated Statements of Cash Flows	111
	Condensed Consolidated Balance Sheets	112
	Management's Discussion and Analysis of Financial Condition and Results of Operations	114
	Notes to the Condensed Financial Statements	124
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34

4 3

~~Table~~INDEX ofTO ~~Contents~~QUARTERLY REPORT ON FORM 10-Q

~~DEFINITIONS~~ March 31, 2016

Term		Meaning
		PageNumber
2007 Retail Rate Plan		Georgia Power’s retail rate plan for the years 2008 through 2010
	PART II—OTHER INFORMATION
Alabama Power		Alabama Power Company
Item 1.	Legal Proceedings	166
Bcf		Billion cubic feet
Item 1A.	Risk Factors	166
Clean Air Act		Clean Air Act Amendments of 1990
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	Inapplicable
DOE		U.S. Department of Energy
Item 3.	Defaults Upon Senior Securities	Inapplicable
Duke Energy		Duke Energy Corporation
Item 4.	Mine Safety Disclosures	Inapplicable
ECO Plan		Mississippi Power’s Environmental Compliance Overview Plan
Item 5.	Other Information	Inapplicable
EPA		U.S. Environmental Protection Agency
Item 6.	Exhibits	166
FASB		Financial Accounting Standards Board
	Signatures	169
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, and Southern Power for the year ended December 31, 2008
Georgia Power		Georgia Power Company
Gulf Power		Gulf Power Company
IGCC		Integrated coal gasification combined cycle
IIC		Intercompany Interchange Contract
IRC		Internal Revenue Code of 1986, as amended
IRS		Internal Revenue Service
KWH		Kilowatt-hour
LIBOR		London Interbank Offered Rate
Mirant		Mirant Corporation
Mississippi Power		Mississippi Power Company
mmBtu		Million British thermal unit
MW		Megawatt
MWH		Megawatt-hour
NRC		Nuclear Regulatory Commission
NSR		New Source Review
OCI		Other Comprehensive Income
PEP		Performance Evaluation Plan
Power Pool		The operating arrangement whereby the integrated generating resources of the traditional operating companies and Southern Power are subject to joint commitment and dispatch in order to serve their combined load obligations
PPA		Power Purchase Agreement
PSC		Public Service Commission
Rate ECR		Alabama Power’s energy cost recovery rate mechanism
registrants		Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power
SCS		Southern Company Services, Inc.
SEC		Securities and Exchange Commission
SFAS No. 157		FASB Statement No. 157, “Fair Value Measurement”
Southern Company		The Southern Company
Southern Company system		Southern Company, the traditional operating companies, Southern Power, and other subsidiaries

5 4

Table of Contents

DEFINITIONS

DEFINITIONS (continued)



Term	Meaning

2012 MPSC CPCN Order	A detailed order issued by the Mississippi PSC in April 2012 confirming the CPCN originally approved by the Mississippi PSC in 2010 authorizing the acquisition, construction, and operation of the Kemper IGCC
2013 ARP	Alternative Rate Plan approved by the Georgia PSC in 2013 for Georgia Power for the years 2014 through 2016 and subsequently extended through 2019
AFUDC	Allowance for funds used during construction
AGL Resources	AGL Resources Inc.
Alabama Power	Alabama Power Company
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Baseload Act	State of Mississippi legislation designed to enhance the Mississippi PSC's authority to facilitate development and construction of baseload generation in the State of Mississippi
Bridge Agreement	Senior unsecured Bridge Credit Agreement, dated as of September 30, 2015, among Southern Company, the lenders identified therein, and Citibank, N.A.
CCR	Coal combustion residuals
Clean Air Act	Clean Air Act Amendments of 1990
CO₂	Carbon dioxide
COD	Commercial operation date
Contractor	Westinghouse and its affiliate, WECTEC Global Project Services Inc. (formerly known as CB&I Stone & Webster, Inc.), formerly a subsidiary of The Shaw Group Inc. and Chicago Bridge & Iron Company N.V.
CPCN	Certificate of public convenience and necessity
CWIP	Construction work in progress
DOE	U.S. Department of Energy
ECO Plan	Mississippi Power's Environmental Compliance Overview Plan
Eligible Project Costs	Certain costs of construction relating to Plant Vogtle Units 3 and 4 that are eligible for financing under the Title XVII Loan Guarantee Program
EPA	U.S. Environmental Protection Agency
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FFB	Federal Financing Bank
Fitch	Fitch Ratings, Inc.
Form 10-K	Combined Annual Report on Form 10-K of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power for the year ended December 31, 2015
GAAP	U.S. generally accepted accounting principles
Georgia Power	Georgia Power Company
Gulf Power	Gulf Power Company
IGCC	Integrated coal gasification combined cycle
IIC	Intercompany interchange contract
Internal Revenue Code	Internal Revenue Code of 1986, as amended
IRS	Internal Revenue Service
ITC	Investment tax credit
Kemper IGCC	IGCC facility under construction by Mississippi Power in Kemper County, Mississippi
KWH	Kilowatt-hour
LIBOR	London Interbank Offered Rate
MATS rule	Mercury and Air Toxics Standards rule
Merger	The merger of Merger Sub with and into AGL Resources on the terms and subject to the conditions set forth in the Merger Agreement, with AGL Resources continuing as the surviving corporation and a wholly-owned, direct subsidiary of Southern Company

Term Meaning SouthernLINC Wireless Southern Communications Services, Inc. Southern Nuclear Southern Nuclear Operating Company, Inc. Southern Power Southern Power Company traditional operating companies Alabama Power, Georgia Power, Gulf Power, and Mississippi Power wholesale revenues revenues generated from sales for resale5

6 Table of Contents

~~Table of Contents~~DEFINITIONS

~~CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION~~ (continued)

This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning the strategic goals for the wholesale business, retail sales growth, customer growth, storm damage cost recovery and repairs, fuel cost recovery and other rate actions, environmental regulations and expenditures, earnings growth, dividend payout ratios, access to sources of capital, projections for postretirement benefit and nuclear decommissioning trust contributions, financing activities, completion of construction projects, plans and estimated costs for new generation resources, impacts of adoption of new accounting rules, unrecognized tax benefits related to leveraged lease transactions, impact of the American Recovery and Reinvestment Act of 2009, estimated sales and purchases under new power sale and purchase agreements, 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:



Term	Meaning

Merger Agreement	Agreement and Plan of Merger, dated as of August 23, 2015, among Southern Company, AGL Resources, and Merger Sub
Merger Sub	AMS Corp., a wholly-owned, direct subsidiary of Southern Company
Mirror CWIP	A regulatory liability account for use in mitigating future rate impacts for Mississippi Power customers
Mississippi Power	Mississippi Power Company
mmBtu	Million British thermal units
Moody's	Moody's Investors Service, Inc.
MW	Megawatt
NCCR	Georgia Power's Nuclear Construction Cost Recovery
NRC	U.S. Nuclear Regulatory Commission
OCI	Other comprehensive income
PEP	Mississippi Power's Performance Evaluation Plan
Plant Vogtle Units 3 and 4	Two new nuclear generating units under construction at Georgia Power's Plant Vogtle
power pool	The operating arrangement whereby the integrated generating resources of the traditional operating companies and Southern Power Company (excluding subsidiaries) are subject to joint commitment and dispatch in order to serve their combined load obligations
PPA	Power purchase agreement
PSC	Public Service Commission
PTC	Production tax credit
Rate CNP	Alabama Power's Rate Certificated New Plant
Rate CNP Compliance	Alabama Power's Rate Certificated New Plant Compliance
Rate CNP PPA	Alabama Power's Rate Certificated New Plant Power Purchase Agreement
Rate RSE	Alabama Power's Rate Stabilization and Equalization plan
registrants	Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power Company
ROE	Return on equity
S&P	Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
scrubber	Flue gas desulfurization system
SEC	U.S. Securities and Exchange Commission
SMEPA	South Mississippi Electric Power Association
Southern Company	The Southern Company
Southern Company system	Southern Company, the traditional operating companies, Southern Power, Southern Electric Generating Company, Southern Nuclear, Southern Company Services, Inc. (the Southern Company system service company), Southern Communications Services, Inc., and other subsidiaries
Southern Nuclear	Southern Nuclear Operating Company, Inc.
Southern Power	Southern Power Company and its subsidiaries
traditional operating companies	Alabama Power, Georgia Power, Gulf Power, and Mississippi Power
Vogtle Owners	Georgia Power, Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and the City of Dalton, Georgia, an incorporated municipality in the State of Georgia acting by and through its Board of Water, Light, and Sinking Fund Commissioners
Westinghouse	Westinghouse Electric Company LLC

• 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, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in 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 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, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; • available sources and costs of fuels; • effects of inflation; • ability to control costs and avoid cost overruns during the development and construction of facilities; • 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, including rate actions relating to fuel and storm restoration cost recovery; • regulatory approvals related to the potential Plant Vogtle expansion, including Georgia PSC and NRC approvals; • 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 and to perform as required; • the ability to obtain new short- and long-term contracts with neighboring utilities and other wholesale customers; • 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, droughts, pandemic health events such as an avian or other influenza, 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 (including the Form 10-K) filed by the registrants from time to time with the SEC.6

~~Each~~Table ~~registrant~~of ~~expressly disclaims any obligation to update any forward-looking statements.~~ Contents

7 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

~~Table~~This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking statements include, among other things, statements concerning retail rates, the potential financing of ~~Contents~~the Merger, the expected timing of the completion of the Merger, the strategic goals for the wholesale business, economic conditions, fuel and environmental cost recovery and other rate actions, current and proposed environmental regulations and related compliance plans and estimated expenditures, pending or potential litigation matters, access to sources of capital, financing activities, completion dates of acquisitions and construction projects, filings with state and federal regulatory authorities, federal income tax benefits, estimated sales and purchases under power sale and purchase agreements, and estimated construction and other plans and 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~~• ~~SOUTHERN~~the ~~COMPANY~~impact ~~AND~~of ~~SUBSIDIARY~~recent ~~COMPANIES~~ and future federal and state regulatory changes, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, environmental laws regulating emissions, discharges, and disposal to air, water, and land, and also changes in 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;

8 • current and future litigation, regulatory investigations, proceedings, or inquiries, including, without limitation, IRS and state tax audits;

~~Table~~• the effects, extent, and timing of ~~Contents~~the entry of additional competition in the markets in which Southern Company's subsidiaries operate;

~~THE~~• ~~SOUTHERN~~variations ~~COMPANY~~in ~~AND~~demand ~~SUBSIDIARY~~for ~~COMPANIES~~ electricity, including those relating to weather, the general economy and recovery from the last recession, population and business growth (and declines), the effects of energy conservation and efficiency measures, including from the development and deployment of alternative energy sources such as self-generation and distributed generation technologies, and any potential economic impacts resulting from federal fiscal decisions;

~~CONDENSED~~• ~~CONSOLIDATED~~available ~~STATEMENTS~~sources OFand ~~INCOME~~costs ~~(UNAUDITED)~~of fuels;

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Operating Revenues:
Retail revenues	$	3,064,659		$	3,005,614
Wholesale revenues		451,414			513,662
Other electric revenues		122,798			130,190
Other revenues		27,436			33,444
Total operating revenues		3,666,307			3,682,910
Operating Expenses:
Fuel		1,406,267			1,451,943
Purchased power		107,644			92,904
Other operations and maintenance		871,081			896,817
MC Asset Recovery litigation settlement		202,000			—
Depreciation and amortization		389,758			343,885
Taxes other than income taxes		199,880			189,272
Total operating expenses		3,176,630			2,974,821
Operating Income		489,677			708,089
Other Income and (Expense):
Allowance for equity funds used during construction		42,612			40,585
Interest income		6,908			9,805
Equity in income (losses) of unconsolidated subsidiaries		(976	)		328
Leveraged lease income (losses)		9,441			10,925
Interest expense, net of amounts capitalized		(225,727	)		(217,109	)
Other income (expense), net		(12,850	)		914
Total other income and (expense)		(180,592	)		(154,552	)
Earnings Before Income Taxes		309,085			553,537
Income taxes		167,169			178,138
Consolidated Net Income		141,916			375,399
Dividends on Preferred and Preference Stock of Subsidiaries		16,195			16,195
Consolidated Net Income After Dividends on Preferred and Preference Stock of Subsidiaries	$	125,721		$	359,204
Common Stock Data:
Earnings per share—
Basic	$	0.16		$	0.47
Diluted	$	0.16		$	0.47
Average number of shares of common stock outstanding (in thousands)
Basic		779,858			766,150
Diluted		781,645			770,322
Cash dividends paid per share of common stock	$	0.4200		$	0.4025


•	effects of inflation;

~~The accompanying~~• ~~notes~~the asability ~~they~~to ~~relate~~control tocosts ~~Southern~~and ~~Company~~avoid ~~are~~cost anoverruns ~~integral~~during ~~part~~the development and construction of ~~these~~facilities, ~~condensed~~which ~~financial~~include ~~statements.~~ the development and construction of generating facilities with designs that have not been finalized or previously constructed, including changes in labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction, operating, or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by any PSC);

9 • the ability to construct facilities in accordance with the requirements of permits and licenses, to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction;

~~Table~~• investment performance of ~~Contents~~Southern Company's employee and retiree benefit plans and the Southern Company system's nuclear decommissioning trust funds;

~~THE~~• ~~SOUTHERN~~advances ~~COMPANY~~in ~~AND SUBSIDIARY COMPANIES~~ technology;

~~CONDENSED~~• ~~CONSOLIDATED~~state ~~STATEMENTS~~and OFfederal ~~CASH~~rate ~~FLOWS~~regulations ~~(UNAUDITED)~~and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms;

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Operating Activities:
Consolidated net income	$	141,916		$	375,399
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization		456,833			407,689
Deferred income taxes and investment tax credits		(30,386	)		(2,342	)
Deferred revenues		(10,732	)		33,446
Allowance for equity funds used during construction		(42,612	)		(40,585	)
Equity in income (losses) of unconsolidated subsidiaries		976			(328	)
Leveraged lease income (losses)		(9,441	)		(10,925	)
Pension, postretirement, and other employee benefits		7,974			30,916
Stock option expense		16,955			13,427
Derivative fair value adjustments		659			14,380
Hedge settlements		(16,167	)		27,180
MC Asset Recovery litigation settlement		202,000			—
Other, net		6,915			(6,372	)
Changes in certain current assets and liabilities —
Receivables		292,162			188,538
Fossil fuel stock		(160,992	)		(53,305	)
Materials and supplies		(12,648	)		(22,762	)
Other current assets		(67,717	)		(61,320	)
Accounts payable		80,995			(114,636	)
Accrued taxes		(185,215	)		13,865
Accrued compensation		(319,715	)		(265,386	)
Other current liabilities		49,371			10,212
Net cash provided from operating activities		401,131			537,091
Investing Activities:
Property additions		(1,136,212	)		(1,012,907	)
Investment in restricted cash from pollution control revenue bonds		(49,348	)		(145	)
Distribution of restricted cash from pollution control revenue bonds		23,079			35,716
Nuclear decommissioning trust fund purchases		(379,332	)		(160,752	)
Nuclear decommissioning trust fund sales		381,280			153,872
Investment in unconsolidated subsidiaries		(1,800	)		(2,780	)
Cost of removal, net of salvage		(30,231	)		(25,581	)
Other		70,534			17,336
Net cash used for investing activities		(1,122,030	)		(995,241	)
Financing Activities:
Increase (decrease) in notes payable, net		121,274			(100,215	)
Proceeds —
Long-term debt		1,255,925			930,000
Common stock		151,379			132,107
Redemptions —
Long-term debt		(193,417	)		(4,653	)
Preferred and preference stock		—			(125,000	)
Payment of common stock dividends		(326,780	)		(307,960	)
Payment of dividends on preferred and preference stock of subsidiaries		(16,265	)		(17,060	)
Other		(15,618	)		(770	)
Net cash provided from financing activities		976,498			506,449
Net Change in Cash and Cash Equivalents		255,599			48,299
Cash and Cash Equivalents at Beginning of Period		416,581			200,550
Cash and Cash Equivalents at End of Period	$	672,180		$	248,849
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $18,298 and $21,800 capitalized for 2009 and 2008, respectively)	$	178,560		$	197,570
Income taxes (net of refunds)	$	172,517		$	3,719


•	legal proceedings and regulatory approvals and actions related to Plant Vogtle Units 3 and 4, including Georgia PSC approvals and NRC actions;

~~The~~• ~~accompanying~~actions ~~notes~~related asto ~~they~~cost ~~relate~~recovery for the Kemper IGCC, including the ultimate impact of the 2015 decision of the Mississippi Supreme Court, the Mississippi PSC's December 2015 rate order, and related legal or regulatory proceedings, Mississippi PSC review of the prudence of Kemper IGCC costs and approval of further permanent rate recovery plans, actions relating to ~~Southern~~proposed ~~Company~~securitization, ~~are~~satisfaction anof ~~integral~~requirements ~~part~~to utilize grants, and the ultimate impact of ~~these~~the ~~condensed~~termination ~~financial~~of ~~statements.~~ the proposed sale of an interest in the Kemper IGCC to SMEPA;

10 7

Table of Contents

~~THE~~CAUTIONARY ~~SOUTHERN~~STATEMENT ~~COMPANY~~REGARDING ~~AND~~FORWARD-LOOKING ~~SUBSIDIARY COMPANIES~~ INFORMATION

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~ (~~UNAUDITED~~continued)

	At March 31,			At December 31,
Assets	2009			2008
	(in thousands)
Current Assets:
Cash and cash equivalents	$	672,180		$	416,581
Restricted cash and cash equivalents		131,609			102,537
Receivables —
Customer accounts receivable		996,427			1,053,674
Unbilled revenues		287,126			320,439
Under recovered regulatory clause revenues		677,665			646,318
Other accounts and notes receivable		353,119			301,028
Accumulated provision for uncollectible accounts		(26,308	)		(26,326	)
Fossil fuel stock, at average cost		1,175,688			1,018,314
Materials and supplies, at average cost		768,777			756,746
Vacation pay		134,581			140,283
Prepaid expenses		337,898			301,570
Other regulatory assets		378,662			275,424
Other		61,324			51,044
Total current assets		5,948,748			5,357,632
Property, Plant, and Equipment:
In service		51,127,521			50,618,219
Less accumulated depreciation		18,517,683			18,285,800
		32,609,838			32,332,419
Nuclear fuel, at amortized cost		547,981			510,274
Construction work in progress		3,609,909			3,035,795
Total property, plant, and equipment		36,767,728			35,878,488
Other Property and Investments:
Nuclear decommissioning trusts, at fair value		809,181			864,396
Leveraged leases		906,805			897,338
Other		223,069			226,757
Total other property and investments		1,939,055			1,988,491
Deferred Charges and Other Assets:
Deferred charges related to income taxes		989,180			972,781
Unamortized debt issuance expense		215,783			207,763
Unamortized loss on reacquired debt		265,711			270,919
Deferred under recovered regulatory clause revenues		366,045			606,483
Other regulatory assets		2,670,820			2,636,217
Other		394,044			428,432
Total deferred charges and other assets		4,901,583			5,122,595
Total Assets	$	49,557,114		$	48,347,206


•	the ability to successfully operate the electric utilities' generating, transmission, and distribution facilities and the successful performance of necessary corporate functions;

~~The~~• ~~accompanying~~the ~~notes~~inherent asrisks ~~they~~involved ~~relate~~in tooperating ~~Southern~~and ~~Company~~constructing ~~are~~nuclear angenerating ~~integral~~facilities, ~~part~~including ofenvironmental, ~~these~~health, ~~condensed~~regulatory, natural disaster, terrorism, and financial ~~statements.~~ risks;

11 • the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities;

~~Table~~• ofinternal ~~Contents~~restructuring or other restructuring options that may be pursued;

~~THE~~• ~~SOUTHERN~~potential ~~COMPANY~~business ~~AND~~strategies, ~~SUBSIDIARY~~including ~~COMPANIES CONDENSED~~acquisitions ~~CONSOLIDATED~~or ~~BALANCE~~dispositions ~~SHEETS~~of ~~(UNAUDITED)~~ assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries;

	At March 31,			At December 31,
Liabilities and Stockholders’ Equity	2009			2008
	(in thousands)
Current Liabilities:
Securities due within one year	$	686,441		$	616,415
Notes payable		1,074,711			953,437
Accounts payable		1,639,403			1,249,694
Customer deposits		312,993			302,495
Accrued taxes —
Income taxes		221,875			195,922
Unrecognized tax benefits		143,858			131,641
Other		183,549			396,206
Accrued interest		225,139			195,500
Accrued vacation pay		169,121			178,519
Accrued compensation		131,092			446,718
Liabilities from risk management activities		354,349			260,977
Other		315,766			298,711
Total current liabilities		5,458,297			5,226,235
Long-term Debt		17,805,963			16,816,438
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		6,064,938			6,080,104
Deferred credits related to income taxes		254,883			259,156
Accumulated deferred investment tax credits		449,263			455,398
Employee benefit obligations		2,056,981			2,057,424
Asset retirement obligations		1,199,752			1,182,769
Other cost of removal obligations		1,333,078			1,320,558
Other regulatory liabilities		251,438			261,970
Other		347,950			329,534
Total deferred credits and other liabilities		11,958,283			11,946,913
Total Liabilities		35,222,543			33,989,586
Redeemable Preferred Stock of Subsidiaries		374,496			374,496
Stockholders’ Equity:
Common Stockholders’ Equity:
Common stock, par value $5 per share —
Authorized — 1 billion shares
Issued — March 31, 2009: 782,865,285 Shares;
— December 31, 2008: 777,615,751 Shares
Treasury — March 31, 2009: 431,603 Shares;
— December 31, 2008: 423,477 Shares
Par value		3,914,294			3,888,041
Paid-in capital		2,036,731			1,892,802
Treasury, at cost		(12,949	)		(12,279	)
Retained earnings		7,411,087			7,611,977
Accumulated other comprehensive loss		(96,455	)		(104,784	)
Total Common Stockholders’ Equity		13,252,708			13,275,757
Preferred and Preference Stock of Subsidiaries		707,367			707,367
Total Stockholders’ Equity		13,960,075			13,983,124
Total Liabilities and Stockholders’ Equity	$	49,557,114		$	48,347,206

•

the expected timing, likelihood, and benefits of completion of the Merger, including the failure to receive, on a timely basis or otherwise, the required approvals by government or regulatory agencies (including the terms of such approvals), the possibility that long-term financing for the Merger may not be put in place prior to the closing, the risk that a condition to closing of the Merger or funding of the Bridge Agreement may not be satisfied, the possibility that the anticipated benefits from the Merger cannot be fully realized or may take longer to realize than expected, the possibility that costs related to the integration of Southern Company and AGL Resources will be greater than expected, the credit ratings of the combined company or its subsidiaries may be different from what the parties expect, the ability to retain and hire key personnel and maintain relationships with customers, suppliers, or other business partners, the diversion of management time on Merger-related issues, and the impact of legislative, regulatory, and competitive changes;

~~The accompanying~~• ~~notes~~the asability ~~they~~of ~~relate~~counterparties toof Southern Company ~~are~~and anits ~~integral~~subsidiaries ~~part~~to ofmake ~~these~~payments ~~condensed~~as ~~financial~~and ~~statements.~~ when due and to perform as required;

12 • the ability to obtain new short- and long-term contracts with wholesale customers;

~~Table~~• the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or terrorist incidents and the threat of ~~Contents~~terrorist incidents;

~~THE~~• ~~SOUTHERN~~interest ~~COMPANY~~rate ~~AND~~fluctuations ~~SUBSIDIARY~~and ~~COMPANIES~~ financial market conditions and the results of financing efforts;

~~CONDENSED~~• ~~CONSOLIDATED~~changes ~~STATEMENTS~~in OFSouthern ~~COMPREHENSIVE~~Company's ~~INCOME~~and ~~(UNAUDITED)~~any of its subsidiaries' credit ratings, including impacts on interest rates, access to capital markets, and collateral requirements;

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Consolidated Net Income	$	141,916		$	375,399
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $762 and $(13,988), respectively		1,147			(22,251	)
Reclassification adjustment for amounts included in net income, net of tax of $3,833 and $1,778, respectively		6,098			2,775
Marketable securities:
Change in fair value, net of tax of $91 and $(2,137), respectively		734			(3,101	)
Pension and other post retirement benefit plans:
Reclassification adjustment for amounts included in net income, net of tax of $222 and $259, respectively		350			411
Total other comprehensive income (loss)		8,329			(22,166	)
Dividends on preferred and preference stock of subsidiaries		(16,195	)		(16,195	)
Comprehensive Income	$	134,050		$	337,038


•	the impacts of any sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the benefits of the DOE loan guarantees;

~~The~~• ~~accompanying~~the ~~notes~~ability asof ~~they~~Southern ~~relate~~Company's subsidiaries to ~~Southern~~obtain ~~Company~~additional ~~are~~generating ancapacity ~~integral~~(or ~~part~~sell ofexcess ~~these~~generating ~~condensed~~capacity) ~~financial~~at ~~statements.~~ competitive prices;

13 • catastrophic events such as fires, earthquakes, explosions, floods, hurricanes and other storms, droughts, pandemic health events such as influenzas, or other similar occurrences;

~~Table~~• the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid or operation of ~~Contents~~generating resources;

~~THE~~• ~~SOUTHERN~~the ~~COMPANY~~effect ~~AND~~of ~~SUBSIDIARY~~accounting ~~COMPANIES~~ pronouncements issued periodically by standard-setting bodies; and

~~MANAGEMENT’S~~• ~~DISCUSSION~~other ~~AND~~factors ~~ANALYSIS~~discussed OFelsewhere herein and in other reports (including the Form 10-K) filed by the registrants from time to time with the SEC.

~~FINANCIAL~~The ~~CONDITION~~registrants ~~AND~~expressly ~~RESULTS~~disclaim OFany ~~OPERATIONS~~obligation to update any forward-looking statements.

~~FIRST QUARTER 2009 vs. FIRST QUARTER 2008~~ 8

~~OVERVIEW~~ Table of Contents

~~Discussion~~THE ofSOUTHERN the results of operations is focused on Southern Company’s primary business of electricity sales in the Southeast by the traditional operating companies – Alabama Power, Georgia Power, Gulf Power, and Mississippi Power – and Southern Power. The traditional operating companies are vertically integrated utilities providing electric service in four Southeastern states. Southern Power constructs, acquires, owns, and manages generation assets and sells electricity at market-based rates in the wholesale market. Southern Company’s other business activities include investments in leveraged lease projects, telecommunications, and energy-related services. For additional information on these businesses, see BUSINESS – The Southern Company System – “Traditional Operating Companies,” “Southern Power,” and “Other Businesses” in Item 1 of the Form 10-K. COMPANY

Southern Company continues to focus on several key performance indicators. These indicators include customer satisfaction, plant availability, system reliability, and earnings per share. For additional information on these indicators, see MANAGEMENT’S DISCUSSION AND ~~ANALYSIS~~SUBSIDIARY ~~– OVERVIEW – “Key Performance Indicators” of Southern Company in Item 7 of the Form 10-K.~~ COMPANIES

~~RESULTS OF OPERATIONS~~ 9

~~Net~~Table ~~Income~~ of Contents

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(233.5)		(65.0)

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

~~Southern~~CONDENSED ~~Company’s~~CONSOLIDATED ~~first~~STATEMENTS ~~quarter~~OF ~~2009~~INCOME ~~net income after dividends on preferred and preference stock of subsidiaries was $125.7 million~~ (~~$0.16 per share~~UNAUDITED) compared to $359.2 million ($0.47 per share) for the first quarter 2008. The decrease for the first quarter 2009 when compared to the same period in 2008 was primarily the result of a litigation settlement agreement with MC Asset Recovery, LLC (MC Asset Recovery); a decrease in contributions from market-response rates to large commercial and industrial customers; and higher depreciation and amortization. The decrease for the first quarter 2009 was partially offset by an increase in customer charges at Alabama Power, increased environmental compliance cost recovery revenues at Georgia Power, and lower other operations and maintenance expenses.

Retail Revenues



	For the Three Months Ended March 31,
	2016			2015
	(in millions)
Operating Revenues:
Retail revenues	$	3,377		$	3,542
Wholesale revenues	396			467
Other electric revenues	181			163
Other revenues	11			11
Total operating revenues	3,965			4,183
Operating Expenses:
Fuel	911			1,212
Purchased power	165			144
Other operations and maintenance	1,106			1,122
Depreciation and amortization	541			487
Taxes other than income taxes	256			252
Estimated loss on Kemper IGCC	53			9
Total operating expenses	3,032			3,226
Operating Income	933			957
Other Income and (Expense):
Allowance for equity funds used during construction	53			63
Interest expense, net of amounts capitalized	(246		)	(213		)
Other income (expense), net	(21		)	(8		)
Total other income and (expense)	(214		)	(158		)
Earnings Before Income Taxes	719			799
Income taxes	222			274
Consolidated Net Income	497			525
Less:
Dividends on Preferred and Preference Stock of Subsidiaries	11			17
Net income attributable to noncontrolling interests	1			—
Consolidated Net Income Attributable to Southern Company	$	485		$	508
Common Stock Data:
Earnings per share (EPS) —
Basic EPS	$	0.53		$	0.56
Diluted EPS	$	0.53		$	0.56
Average number of shares of common stock outstanding (in millions)
Basic	916			910
Diluted	922			915
Cash dividends paid per share of common stock	$	0.5425		$	0.5250

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$59.0		2.0

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

~~In the first quarter 2009, retail revenues were $3.06 billion compared to $3.01 billion for the same period in 2008. Details of the change to retail revenues follow:~~ 10

	First Quarter
	2009
	(in millions)			(% change)
Retail – prior year	$	3,005.6
Estimated change in —
Rates and pricing		78.4			2.6
Sales growth (decline)		(56.8	)		(1.9	)
Weather		(4.0	)		(0.1	)
Fuel and other cost recovery		41.5			1.4
Retail – current year	$	3,064.7			2.0	%

Table of Contents

14 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

~~Table~~CONDENSED ofCONSOLIDATED ~~Contents~~STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



	For the Three Months Ended March 31,
	2016			2015
	(in millions)
Consolidated Net Income	$	497		$	525
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(72) and $(11), respectively	(117		)	(18		)
Reclassification adjustment for amounts included in net income, net of tax of $1 and $1, respectively	2			1
Pension and other post retirement benefit plans:
Reclassification adjustment for amounts included in net income, net of tax of $1 and $1, respectively	1			2
Total other comprehensive income (loss)	(114		)	(15		)
Less:
Dividends on preferred and preference stock of subsidiaries	11			17
Comprehensive income attributable to noncontrolling interests	1			—
Consolidated Comprehensive Income Attributable to Southern Company	$	371		$	493

~~Revenues~~The ~~associated~~accompanying ~~with~~notes ~~changes~~as inthey ~~rates~~relate ~~and pricing increased in the first quarter 2009 when compared~~ to ~~the~~Southern ~~same~~Company ~~period~~are inan ~~2008~~integral ~~primarily~~part ~~as a result~~ of anthese ~~increase~~consolidated infinancial customer charges at Alabama Power and increased environmental compliance cost recovery revenues at Georgia Power in accordance with its 2007 Retail Rate Plan, partially offset by a decrease in contributions from market-response rates to large commercial and industrial customersstatements.

Revenues attributable to changes in sales growth declined in the first quarter 2009 when compared to the same period in 2008 due to a 6.3% decrease in weather-adjusted retail KWH sales mainly due to recessionary economic conditions. For the first quarter 2009, weather-adjusted residential KWH sales decreased 0.4%, weather-adjusted commercial KWH sales decreased 1.3%, and weather-adjusted industrial KWH sales decreased 16.9%. Reduced demand in the primary and fabricated metal sectors, as well as in the chemicals, textiles, and transportation sectors, contributed to the decrease in weather-adjusted industrial KWH sales in the first quarter 2009 when compared to the same period in 2008. 11

~~Revenues~~Table ~~resulting~~of ~~from changes in weather were not material in the first quarter 2009 when compared to the same period in 2008 due to near normal weather in both periods.~~ Contents

~~Fuel~~THE ~~and~~SOUTHERN ~~other~~COMPANY ~~cost~~AND ~~recovery~~SUBSIDIARY revenues increased $41.5 million in the first quarter 2009 when compared to the same period in 2008. Electric rates for the traditional operating companies include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the fuel component of purchased power costs, and do not affect net income. COMPANIES

~~Wholesale~~CONDENSED ~~Revenues~~ CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

First Quarter 2009 vs. First Quarter 2008
	For the Three MonthsEnded March 31,
(change in millions)		(% change)
	2016			2015
$(62.3)		(12.1)
	(in millions)
Operating Activities:
Consolidated net income	$	497		$	525
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization, total	639			578
Deferred income taxes	(4		)	113
Allowance for equity funds used during construction	(53		)	(63		)
Stock based compensation expense	58			56
Estimated loss on Kemper IGCC	53			9
Other, net	(13		)	4
Changes in certain current assets and liabilities —
-Receivables	235			180
-Fossil fuel stock	31			76
-Materials and supplies	(14		)	4
-Other current assets	(90		)	(89		)
-Accounts payable	(72		)	(426		)
-Accrued taxes	(60		)	197
-Accrued compensation	(332		)	(381		)
-Retail fuel cost over recovery - short-term	25			49
-Mirror CWIP	—			40
-Other current liabilities	(35		)	41
Net cash provided from operating activities	865			913
Investing Activities:
Plant acquisitions	(114		)	(6		)
Property additions	(1,872		)	(1,091		)
Investment in restricted cash	(289		)	—
Distribution of restricted cash	292			—
Nuclear decommissioning trust fund purchases	(316		)	(290		)
Nuclear decommissioning trust fund sales	311			284
Cost of removal, net of salvage	(52		)	(36		)
Change in construction payables, net	(94		)	65
Prepaid long-term service agreement	(49		)	(37		)
Other investing activities	(14		)	4
Net cash used for investing activities	(2,197		)	(1,107		)
Financing Activities:
Increase in notes payable, net	294			597
Proceeds —
Long-term debt issuances	1,997			550
Common stock issuances	270			112
Short-term borrowings	—			280
Redemptions and repurchases —
Long-term debt	(888		)	(333		)
Common stock repurchased	—			(115		)
Short-term borrowings	(475		)	—
Distributions to noncontrolling interests	(4		)	—
Capital contributions from noncontrolling interests	131			—
Purchase of membership interests from noncontrolling interests	(129		)	—
Payment of common stock dividends	(497		)	(478		)
Other financing activities	(17		)	(17		)
Net cash provided from financing activities	682			596
Net Change in Cash and Cash Equivalents	(650		)	402
Cash and Cash Equivalents at Beginning of Period	1,404			710
Cash and Cash Equivalents at End of Period	$	754		$	1,112
Supplemental Cash Flow Information:
Cash paid (received) during the period for --
Interest (net of $30 and $32 capitalized for 2016 and 2015, respectively)	$	224		$	207
Income taxes, net	(141		)	(289		)
Noncash transactions — Accrued property additions at end of period	731			347

InThe ~~the~~accompanying ~~first~~notes ~~quarter~~as ~~2009,~~they ~~wholesale~~relate ~~revenues were $451.4 million compared~~ to ~~$513.7 million~~Southern ~~for the~~Company ~~same period in 2008. Wholesale fuel revenues, which~~ are ~~generally~~an ~~offset~~integral bypart wholesale fuel expenses and do not affect net income, decreased $81.7 million in the first quarter 2009 when compared to the same period in 2008. Excluding wholesale fuel revenues, wholesale revenues increased $19.4 million in the first quarter 2009 when compared to the same period in 2008. The increase for the first quarter 2009 was primarily the result of ~~additional~~these ~~revenues~~consolidated ~~associated~~financial ~~with Plant Franklin Unit 3 at Southern Power, renegotiated wholesale contracts, and changes in mark-to-market positions on sales of uncontracted generating capacity~~statements. Decreases in energy revenues and fewer short-term opportunity sales due to lower energy prices partially offset the first quarter 2009 increase. Short-term opportunity sales are made at market-based rates that generally provide a margin above Southern Company’s variable cost to produce the energy.

~~Other Electric Revenues~~ 12

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(7.4)		(5.7)

Table of Contents

InTHE ~~the~~SOUTHERN ~~first~~COMPANY ~~quarter~~AND ~~2009,~~SUBSIDIARY other electric revenues were $122.8 million compared to $130.2 million for the same period in 2008. The decrease for the first quarter 2009 when compared to the same period in 2008 was primarily the result of a $9.5 million decrease in co-generation revenues due to lower natural gas prices and a $6.5 million decrease in transmission revenues. The decrease for the first quarter 2009 was partially offset by an increase in revenues from other energy services of $3.3 million, an increase in customer fees of $2.5 million, COMPANIES

15 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)



Assets	At March 31, 2016			At December 31, 2015
	(in millions)
Current Assets:
Cash and cash equivalents	$	754		$	1,404
Receivables —
Customer accounts receivable	988			1,058
Unbilled revenues	380			397
Under recovered regulatory clause revenues	43			63
Income taxes receivable, current	—			144
Other accounts and notes receivable	236			398
Accumulated provision for uncollectible accounts	(13		)	(13		)
Fossil fuel stock, at average cost	837			868
Materials and supplies, at average cost	1,085			1,061
Vacation pay	181			178
Prepaid expenses	486			495
Other regulatory assets, current	394			402
Other current assets	90			71
Total current assets	5,461			6,526
Property, Plant, and Equipment:
In service	76,553			75,118
Less accumulated depreciation	24,566			24,253
Plant in service, net of depreciation	51,987			50,865
Other utility plant, net	218			233
Nuclear fuel, at amortized cost	941			934
Construction work in progress	9,406			9,082
Total property, plant, and equipment	62,552			61,114
Other Property and Investments:
Nuclear decommissioning trusts, at fair value	1,540			1,512
Leveraged leases	761			755
Miscellaneous property and investments	488			485
Total other property and investments	2,789			2,752
Deferred Charges and Other Assets:
Deferred charges related to income taxes	1,572			1,560
Unamortized loss on reacquired debt	220			227
Other regulatory assets, deferred	4,957			4,989
Income taxes receivable, non-current	413			413
Other deferred charges and assets	771			737
Total deferred charges and other assets	7,933			7,926
Total Assets	$	78,735		$	78,318

~~THE~~The ~~SOUTHERN~~accompanying ~~COMPANY~~notes ~~AND~~as ~~SUBSIDIARY~~they ~~COMPANIES MANAGEMENT’S~~relate ~~DISCUSSION~~to ~~AND~~Southern ~~ANALYSIS~~Company ~~OF FINANCIAL~~are ~~CONDITION~~an ~~AND~~integral ~~RESULTS~~part OFof ~~OPERATIONS~~ these consolidated financial statements.

~~and an increase in outdoor lighting revenues of $1.3 million. Revenues from co-generation and other energy services are generally offset by related expenses and do not affect net income.~~ 13

~~Other~~Table ~~Revenues~~ of Contents

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(6.0)		(18.0)

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

InCONDENSED ~~the~~CONSOLIDATED ~~first~~BALANCE ~~quarter~~SHEETS 2009, other revenues were $27.4 million compared to $33.4 million for the same period in 2008. The decrease for the first quarter 2009 when compared to the same period in 2008 was primarily the result of a $5.7 million decrease in revenues at SouthernLINC Wireless related to lower average revenue per subscriber and fewer subscribers due to increased competition in the industry. (UNAUDITED)

Fuel and Purchased Power Expenses



Liabilities and Stockholders' Equity	At March 31, 2016			At December 31, 2015
	(in millions)
Current Liabilities:
Securities due within one year	$	2,392		$	2,674
Notes payable	1,195			1,376
Accounts payable	1,584			1,905
Customer deposits	406			404
Accrued taxes —
Accrued income taxes	14			19
Other accrued taxes	240			484
Accrued interest	255			249
Accrued vacation pay	228			228
Accrued compensation	212			549
Asset retirement obligations, current	237			217
Liabilities from risk management activities	319			156
Other regulatory liabilities, current	210			278
Other current liabilities	564			590
Total current liabilities	7,856			9,129
Long-term Debt	26,091			24,688
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	12,274			12,322
Deferred credits related to income taxes	185			187
Accumulated deferred investment tax credits	1,350			1,219
Employee benefit obligations	2,546			2,582
Asset retirement obligations, deferred	3,504			3,542
Unrecognized tax benefits	375			370
Other cost of removal obligations	1,151			1,162
Other regulatory liabilities, deferred	303			254
Other deferred credits and liabilities	754			720
Total deferred credits and other liabilities	22,442			22,358
Total Liabilities	56,389			56,175
Redeemable Preferred Stock of Subsidiaries	118			118
Redeemable Noncontrolling Interests	44			43
Stockholders' Equity:
Common Stockholders' Equity:
Common stock, par value $5 per share —
Authorized — 1.5 billion shares
Issued -- March 31, 2016: 922 million shares
-- December 31, 2015: 915 million shares
Treasury -- March 31, 2016: 3.4 million shares
-- December 31, 2015: 3.4 million shares
Par value	4,604			4,572
Paid-in capital	6,582			6,282
Treasury, at cost	(144		)	(142		)
Retained earnings	9,999			10,010
Accumulated other comprehensive loss	(244		)	(130		)
Total Common Stockholders' Equity	20,797			20,592
Preferred and Preference Stock of Subsidiaries	609			609
Noncontrolling Interests	778			781
Total Stockholders' Equity	22,184			21,982
Total Liabilities and Stockholders' Equity	$	78,735		$	78,318

	First Quarter 2009 vs. First Quarter 2008
	(change in millions)			(% change)
Fuel	$	(45.7	)		(3.1	)
Purchased power		14.7			15.9
Total fuel and purchased power expenses	$	(31.0	)

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

Fuel and purchased power expenses for the first quarter 2009 were $1.51 billion compared to $1.54 billion for the same period in 2008. The decrease for the first quarter 2009 when compared to the same period in 2008 was primarily the result of a $139.0 million net decrease related to total KWHs generated and purchased, partially offset by a $108.0 million net increase in the average cost of fuel and purchased power, primarily related to a 27.9% increase in the cost of coal per net KWH generated. 14

~~Fuel~~Table expenses at the traditional operating companies are generally offset by fuel revenues and do not affect net income. See FUTURE EARNINGS POTENTIAL – “FERC and State PSC Matters – Retail Fuel Cost Recovery” herein for additional information. Fuel expenses incurred under Southern Power’s PPAs are generally the responsibility of ~~the counterparties and do not significantly affect net income.~~ Contents

~~Details~~SOUTHERN ofCOMPANY ~~Southern~~AND ~~Company’s~~SUBSIDIARY ~~cost of generation and purchased power are as follows:~~ COMPANIES

	First Quarter		First Quarter		Percent
Average Cost	2009		2008		Change
	(cents per net KWH)
Fuel		3.40		3.07		10.8
Purchased power		5.09		6.35		(19.8)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

~~Energy~~FINANCIAL ~~purchases~~CONDITION ~~will~~AND ~~vary~~RESULTS ~~depending~~OF on demand for energy within the Southern Company service area, the market cost of available energy as compared to the cost of Southern Company system-generated energy, and the availability of Southern Company system generation. OPERATIONS

~~Other~~FIRST ~~Operations~~QUARTER ~~and~~2016 ~~Maintenance~~vs. ~~Expenses~~ FIRST QUARTER 2015

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(25.7)		(2.9)

OVERVIEW

16 Southern Company is a holding company that owns all of the common stock of the traditional operating companies and Southern Power Company and owns other direct and indirect subsidiaries. Discussion of the results of operations is focused on the Southern Company system's primary business of electricity sales by the traditional operating companies and Southern Power. The four traditional operating companies are vertically integrated utilities providing electric service in four Southeastern states. Southern Power constructs, acquires, owns, and manages generation assets, including renewable energy projects, and sells electricity at market-based rates in the wholesale market. Southern Company's other business activities include investments in leveraged lease projects and telecommunications. For additional information on these businesses, see BUSINESS – "The Southern Company System – Traditional Operating Companies," " – Southern Power," and " – Other Businesses" in Item 1 of the Form 10-K.

~~Table~~Proposed ofMerger ~~Contents~~with AGL Resources

~~THE~~On ~~SOUTHERN~~August ~~COMPANY~~23, ~~AND~~2015, ~~SUBSIDIARY~~Southern ~~COMPANIES MANAGEMENT’S~~Company ~~DISCUSSION~~entered ~~AND~~into ~~ANALYSIS~~the ~~OF FINANCIAL~~Merger ~~CONDITION~~Agreement ~~AND~~to ~~RESULTS~~acquire OFAGL ~~OPERATIONS~~ Resources. Under the terms of the Merger Agreement, subject to the satisfaction or waiver (if permissible under applicable law) of specified conditions, Merger Sub will be merged with and into AGL Resources. AGL Resources will survive the Merger and become a wholly-owned, direct subsidiary of Southern Company.

InSouthern ~~the~~Company ~~first~~intends ~~quarter~~to ~~2009,~~fund ~~other~~the ~~operations~~cash ~~and~~consideration ~~maintenance~~for ~~expenses~~the ~~were~~Merger ~~$871.1 million~~using ~~compared to~~a ~~$896.8 million~~mix ~~for~~of ~~the~~debt ~~same~~and ~~period in 2008~~equity. ~~The~~Southern ~~decrease~~Company ~~for~~finances ~~the~~its ~~first~~capital ~~quarter~~needs ~~2009~~on ~~when compared~~a toportfolio ~~the~~basis ~~same~~and ~~period~~expects into ~~2008~~issue ~~was~~a ~~primarily~~minimum ~~the result~~ of a $258.~~3 million~~0 ~~decrease~~billion in ~~fossil and~~debt ~~hydro~~prior ~~expenses mainly due~~ to ~~fewer~~closing ~~scheduled~~the Merger and ~~unplanned~~a ~~outages;~~minimum aof $131.~~3 million~~2 ~~decrease~~billion in ~~transmission~~ ~~and~~equity ~~distribution~~during ~~expenses~~2016. ~~mainly~~This ~~due~~capital tois ~~lower~~expected ~~maintenance~~to ~~expenses;~~provide afunding ~~$7.1 million decrease~~for inthe ~~expenses~~Merger, ~~primarily~~the ~~related~~proposed toacquisition ~~lower~~of ~~advertising~~PowerSecure International, ~~litigation~~Inc. (PowerSecure), and ~~property~~Southern ~~insurance costs;~~Power and aother ~~$4.5 million~~Southern ~~decrease~~Company insystem ~~expenses~~capital ~~primarily~~projects. ~~related~~Total tocapital ~~lower~~raised ~~sales~~in ~~volume~~2016 ~~at SouthernLINC~~may ~~Wireless.~~increase ~~The~~due ~~decrease~~to ~~for~~cash ~~the~~needed ~~first~~at ~~quarter~~the ~~2009~~closing ~~was~~of ~~partially~~the ~~offset~~Merger, bysettlement aof ~~$27.1 million~~hedges, ~~increase in administration~~ and ~~general~~incremental ~~expenses~~investment ~~largely~~opportunities, ~~related~~including toadditional ~~the~~Southern ~~voluntary~~Power ~~attrition program~~projects atin ~~Georgia~~excess ~~Power~~of ~~under~~its ~~which~~current ~~579~~capital ~~employees~~plans. ~~elected~~In toaddition, ~~resign~~Southern ~~their~~Company ~~positions~~entered ~~effective March 31,~~into ~~2009~~the $8.1 ~~The~~billion ~~related~~Bridge ~~charge~~Agreement ~~will~~on beSeptember ~~largely~~30, ~~offset~~2015 byto ~~lower~~provide ~~salary~~financing ~~costs~~ for the ~~remainder of~~Merger in the ~~year~~event ~~and~~long-term financing is not ~~expected to have a material impact on Southern Company’s financial statements for the year ending December 31, 2009~~available.

MCThrough ~~Asset~~May ~~Recovery~~5, ~~Litigation~~2016, ~~Settlement~~ the Maryland PSC, the Georgia PSC, the California Public Utilities Commission, and the Virginia State Corporation Commission have approved the Merger. On April 15, 2016, Southern Company, AGL Resources, and Northern Illinois Gas Company (collectively, the Joint Applicants) and the Retail Energy Supply Association filed a settlement agreement with the Illinois Commerce Commission. On April 28, 2016, the Joint Applicants, the Illinois Attorney General's Office, and the Citizens Utility Board filed a settlement agreement with the Illinois Commerce Commission. Collectively, these agreements resolve all remaining contested issues for Illinois Commerce Commission approval of the Merger. On May 5, 2016, Southern Company, AGL Resources, Merger Sub, Pivotal Utility Holdings, Inc. d/b/a Elizabethtown Gas, the Division of Rate Counsel, the Staff of the New Jersey Board of Public Utilities, and New Jersey Large Energy Users Coalition entered into a comprehensive settlement agreement relating to the New Jersey Board of Public Utilities review of the Merger. Additionally, the Federal Communications Commission (FCC) has approved the transfer of control over the FCC licenses of certain AGL Resources subsidiaries. Consummation of the Merger remains subject to the satisfaction or waiver of certain closing conditions, including, among others, (i) the approval of the Illinois Commerce Commission and the New Jersey Board of Public Utilities and other approvals required under applicable state laws, (ii) the absence of a judgment, order, decision, injunction, ruling, or other finding or agency requirement of a governmental entity prohibiting the consummation of the Merger, and (iii) other customary closing conditions, including (a) subject to certain materiality qualifiers, the accuracy of each party's representations and warranties and (b) each party's performance in all material respects of its obligations under the Merger Agreement.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$202.0		N/M

~~N/M~~Table —of ~~Not Meaningful~~ Contents

InSOUTHERN ~~the~~COMPANY ~~first~~AND ~~quarter~~SUBSIDIARY 2009, Southern Company entered into a litigation settlement agreement with MC Asset Recovery which resulted in a charge of $202.0 million. See Note (B) to the Condensed Financial Statements under “Mirant Matters — MC Asset Recovery Litigation” herein for additional information. COMPANIES

~~Depreciation~~MANAGEMENT'S ~~and~~DISCUSSION ~~Amortization~~ AND ANALYSIS OF

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$45.9		13.3

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

InPrior to the ~~first quarter 2009~~Merger, ~~depreciation~~Southern Company and ~~amortization~~AGL ~~was~~Resources ~~$389.8 million~~will ~~compared~~continue to ~~$343.9 million~~operate ~~for~~as ~~the~~separate ~~same period in 2008~~companies. ~~The~~Accordingly, ~~increase~~except for ~~the~~specific ~~first~~references ~~quarter 2009 when compared~~ to the ~~same~~ ~~period~~pending inMerger, ~~2008~~the ~~was~~descriptions ~~primarily~~of ~~the~~strategy ~~result~~and ofoutlook anand ~~increase~~the inrisks ~~plant~~and inchallenges ~~service~~Southern ~~related~~Company ~~to environmental~~faces, and ~~transmission~~the ~~projects~~discussion atand ~~Alabama~~analysis ~~Power~~of ~~and~~results ~~environmental,~~of ~~transmission,~~operations and ~~distribution~~ ~~projects~~financial atcondition ~~Georgia~~set ~~Power.~~forth Anherein ~~increase~~relate insolely ~~depreciation~~to ~~rates~~Southern atCompany. ~~Southern~~See ~~Power~~Note ~~also contributed~~(I) to the ~~first~~Condensed ~~quarter~~Financial ~~2009~~Statements ~~increase,~~under as"Southern ~~well~~Company as– ~~the~~Proposed ~~completion~~Merger ofwith ~~Southern~~AGL ~~Power’s~~Resources" ~~Plant Franklin~~herein ~~Unit~~for 3additional ininformation ~~June 2008~~regarding the Merger.

~~Taxes~~During ~~Other~~the ~~Than~~first ~~Income~~quarter ~~Taxes~~ 2016, Southern Company recorded in its statements of income external transaction costs for financing, legal, and consulting services associated with the proposed Merger of approximately $20 million, of which $6 million is included in operating expenses and $14 million is included in other income and (expense).

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$10.6		5.6

The ultimate outcome of these matters cannot be determined at this time. See RISK FACTORS in Item 1A and MANAGEMENT'S DISCUSSION AND ANALYSIS – OVERVIEW – "Proposed Merger with AGL Resources" of Southern Company in Item 7 of the Form 10-K for additional information related to the proposed Merger and the various risks related thereto.

InConstruction the first quarter 2009, taxes other than income taxes were $199.9 million compared to $189.3 million for the same period in 2008. The increase for the first quarter 2009 when compared to the same period in 2008 was primarily the result of increases in franchise fees and municipal gross receipt taxes associated with increases in revenues from retail energy sales. Higher ad valorem taxes at Georgia Power also contributed to the first quarter 2009 increase. Program

~~Other~~Construction ~~Income~~continues on Plant Vogtle Units 3 and 4 (~~Expense~~45.7% ownership interest by Georgia Power in the two units, each with approximately 1,100 MWs) and Mississippi Power's 582-MW Kemper IGCC. See RESULTS OF OPERATIONS – "Estimated Loss on Kemper IGCC," ~~Net~~ FUTURE EARNINGS POTENTIAL – "Construction Program," and Note (B) to the Condensed Financial Statements under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" and "Integrated Coal Gasification Combined Cycle" herein for additional information. For information about Southern Power's acquisitions and construction of renewable energy facilities, see Note (I) to the Condensed Financial Statements under "Southern Power" herein.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(13.8)		N/M

Key Performance Indicators

~~N/M~~Southern —Company ~~Not~~continues ~~Meaningful~~ to focus on several key performance indicators. These indicators include customer satisfaction, plant availability, system reliability, execution of major construction projects, 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.

17 RESULTS OF OPERATIONS

~~Table~~Net ~~of Contents~~Income

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(23)		(4.5)

InConsolidated ~~the~~net ~~first~~income ~~quarter~~attributable ~~2009,~~to ~~other~~Southern ~~income~~Company ~~(expense), net~~ was $485 million (12$0.953 per share) ~~million~~for the first quarter 2016 compared to $508 million ($0.~~9 million~~ 56 per share) for the ~~same~~first ~~period~~quarter ~~in 2008~~2015. The decrease ~~for~~was primarily the result of lower retail revenues due to milder weather in the first quarter ~~2009~~2016 ~~when~~as compared to the ~~same~~ corresponding period in ~~2008~~2015, ~~was~~higher ~~primarily~~depreciation ~~the~~and ~~result~~amortization, higher charges related to revisions of the ~~2008~~estimated ~~recognition~~costs expected to be incurred on Mississippi Power's construction of athe $6Kemper IGCC, and lower wholesale capacity revenues.~~4 million~~ ~~fee~~The ~~received~~decreases ~~for participating~~were partially offset by increases in anrevenues ~~asset~~due ~~auction~~to increases in non-fuel retail rates and asales ~~$6.0 million~~growth ~~gain~~and ona ~~the~~decrease ~~sale~~in ofincome antaxes ~~undeveloped~~primarily ~~tract~~from ~~of land~~income totax ~~the~~benefits ~~Orlando~~at ~~Utilities~~Southern ~~Commission~~Power.

~~Income~~See ~~Taxes~~ Note 3 to the financial statements of Southern Company under "Integrated Coal Gasification Combined Cycle" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Integrated Coal Gasification Combined Cycle" herein for additional information.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(10.9)		(6.2)

InTable the first quarter 2009, income taxes were $167.2 million compared to $178.1 million for the same period in 2008. The decrease for the first quarter 2009 when compared to the same period in 2008 was primarily the result of lower pre-tax earnings, partially offset by a decrease in the IRC Section 199 production activities deduction. See Note (H) to the Condensed Financial Statements under “Effective Tax Rate” herein for details regarding the impact of the MC Asset Recovery litigation settlement on the effective tax rate. Contents

~~FUTURE~~SOUTHERN ~~EARNINGS~~COMPANY ~~POTENTIAL~~ AND SUBSIDIARY COMPANIES

The results of operations discussed above are not necessarily indicative of Southern Company’s 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 traditional operating companies’ ability to maintain a constructive regulatory environment that continues to allow for the recovery of all prudently incurred costs during a time of increasing costs. Other major factors include profitability of the competitive wholesale supply 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 maintaining energy sales which is subject to a number of factors. These factors include weather, competition, new energy contracts with neighboring utilities and other wholesale customers, energy conservation practiced by customers, the price of electricity, the price elasticity of demand, and the rate of economic growth or decline in the service area. In addition, the level of future earnings for the wholesale supply business also depends on numerous factors including creditworthiness of customers, total generating capacity available in the Southeast, and the successful remarketing of capacity as current contracts expire. Recent recessionary conditions have negatively impacted sales growth for the traditional operating companies and have negatively impacted wholesale capacity revenues at Southern Power. The current economic recession is expected to continue to have a negative impact on energy sales, particularly to industrial customers. The timing and extent of the economic recovery will impact future earnings. For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT’'S DISCUSSION AND ANALYSIS ~~– FUTURE EARNINGS POTENTIAL of Southern Company in Item 7 of the Form 10-K.~~ OF

~~Environmental~~FINANCIAL ~~Matters~~ CONDITION AND RESULTS OF OPERATIONS

~~Compliance~~Retail costs related to the Clean Air Act and other environmental statutes and regulations could affect earnings if such costs cannot continue to be fully recovered in rates on a timely basis. 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 for additional information. Revenues



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(165)		(4.7)

~~Table~~In ofthe ~~Contents~~first quarter 2016, retail revenues were $3.4 billion compared to $3.5 billion for the corresponding period in 2015.

~~THE~~Details ~~SOUTHERN~~of ~~COMPANY~~the ~~AND~~changes ~~SUBSIDIARY~~in ~~COMPANIES MANAGEMENT’S~~retail ~~DISCUSSION~~revenues ~~AND~~were ~~ANALYSIS~~as ~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ follows:

Water Quality



	First Quarter 2016
	(in millions)			(% change)
Retail – prior year	$	3,542
Estimated change resulting from –
Rates and pricing	110			3.1
Sales growth	22			0.6
Weather	(85		)	(2.4	)
Fuel and other cost recovery	(212		)	(6.0	)
Retail – current year	$	3,377		(4.7	)%

~~See~~Revenues ~~MANAGEMENT’S~~associated ~~DISCUSSION~~with ~~AND~~changes ~~ANALYSIS~~in –rates ~~FUTURE EARNINGS POTENTIAL – “Environmental Matters – Environmental Statutes~~ and ~~Regulations~~pricing –increased ~~Water Quality” of Southern Company~~ in ~~Item 7 of~~ the ~~Form 10-K~~first ~~for~~quarter ~~additional~~2016 ~~information~~when ~~regarding~~compared ~~the~~to ~~EPA’s regulation of cooling water intake structures. On April 1, 2009,~~ the ~~U.S.~~corresponding ~~Supreme~~period ~~Court~~in ~~reversed~~2015 ~~the~~primarily ~~U.S.~~due ~~Court of Appeals for the Second Circuit’s decision with respect~~ to ~~the~~increased ~~rule’s~~revenues ~~use of cost-benefit analysis and held that the EPA could consider costs in arriving~~ at ~~its~~Alabama ~~standards~~Power ~~and~~under inRate ~~providing~~CNP ~~variances~~Compliance ~~from those standards for existing power plant cooling water intake structures. Other aspects of the court’s decision were not appealed~~ and ~~remain~~at ~~unaffected~~Georgia byPower ~~the~~related ~~U.S.~~to ~~Supreme~~increases ~~Court’s ruling. While the U.S. Supreme Court’s decision may ultimately result~~ in ~~greater~~base ~~flexibility~~tariffs ~~for~~under ~~demonstrating compliance with~~ the ~~standards,~~ ~~the~~2013 ~~full~~ARP ~~scope~~and of the ~~regulations~~NCCR ~~will depend on subsequent legal proceedings~~tariff, ~~further rulemaking~~all byeffective ~~the~~January ~~EPA~~1, ~~the~~2016. ~~results~~The ofincrease ~~studies~~in rates and ~~analyses~~pricing ~~performed~~was asalso ~~part~~due ofto the ~~rules’~~ implementation, ~~and~~of ~~the~~rates ~~actual~~for ~~requirements~~certain ~~established~~Kemper byIGCC ~~state~~in-service ~~regulatory~~assets ~~agencies and, therefore, cannot be determined~~ at ~~this~~Mississippi ~~time~~Power.

~~Global~~See ~~Climate~~Note ~~Issues~~ 3 to the financial statements of Southern Company under "Retail Regulatory Matters – Alabama Power," "Retail Regulatory Matters – Georgia Power – Rate Plans" and " – Nuclear Construction," and "Integrated Coal Gasification Combined – Cycle – Rate Recovery of Kemper IGCC Costs" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements herein for additional information.

~~See~~Revenues ~~MANAGEMENT’S~~attributable ~~DISCUSSION~~to ~~AND~~changes ~~ANALYSIS~~in –sales ~~FUTURE~~increased ~~EARNINGS~~in ~~POTENTIAL~~the –first ~~“Environmental~~quarter ~~Matters~~2016 ~~– Global~~when ~~Climate~~compared ~~Issues”~~to ofthe ~~Southern~~corresponding ~~Company~~period in ~~Item 7~~2015. ~~of the Form 10~~Weather-Kadjusted ~~for~~residential ~~information~~KWH ~~regarding~~sales ~~the potential~~increased ~~for legislation and regulation addressing greenhouse gas emissions~~1.4% Onin ~~April 17, 2009,~~ the ~~EPA~~first ~~released~~quarter a2016 ~~proposed finding that certain greenhouse gas emissions from new motor vehicles endanger public health and welfare~~ due to ~~climate~~customer ~~change.~~growth ~~The ultimate outcome of the proposed endangerment finding cannot be determined at this time~~ and ~~will~~increased ~~depend~~customer onusage. ~~additional~~Weather-adjusted ~~regulatory action~~commercial ~~and~~KWH ~~potential~~sales ~~legal~~increased ~~challenges~~0.8% ~~However,~~in ~~regulatory~~the ~~decisions~~first ~~that~~quarter ~~may~~2016 ~~follow~~primarily ~~from~~due ~~such~~to ~~a finding~~customer ~~could~~growth. ~~have~~Industrial ~~implications~~KWH ~~for~~sales ~~both~~decreased ~~new and existing stationary sources, such as power plants~~1. In0% ~~addition,~~in ~~federal~~the ~~legislative~~first ~~proposals~~quarter ~~that~~2016 ~~would~~primarily ~~impose~~due ~~mandatory~~to ~~requirements~~decreased ~~related~~sales ~~to greenhouse~~in ~~gas~~the ~~emissions~~chemicals, ~~renewable~~primary ~~energy~~metals, ~~standards~~non-manufacturing, and ~~energy~~pipeline ~~efficiency~~sectors, ~~standards~~partially ~~continue~~offset ~~to be~~by ~~actively~~increased ~~considered~~sales in ~~Congress, and~~ the ~~reduction~~paper ofand ~~greenhouse gas emissions has been identified as a high priority by the current Administration. The ultimate outcome of these matters cannot be determined at this time; however~~stone, ~~mandatory restrictions on Southern Company’s greenhouse gas emissions~~clay, orand ~~requirements~~glass ~~relating~~sectors. toA ~~renewable~~strong ~~energy or energy efficiency~~dollar, ~~could~~low ~~result~~oil ~~in significant additional compliance costs that could affect future unit retirement and replacement decisions and results of operations~~prices, ~~cash flows,~~ and ~~financial~~weak ~~condition~~global ifgrowth ~~such~~conditions ~~costs~~have ~~are~~constrained ~~not recovered~~growth ~~through~~in ~~regulated~~the ~~rates~~industrial sector.

~~FERC~~In the first quarter 2015, Mississippi Power updated the methodology to estimate the unbilled revenue allocation among customer classes. This change did not have a significant impact on net income. The KWH sales variances discussed above reflect an adjustment to the estimated allocation of Mississippi Power's unbilled first quarter 2015 KWH sales among customer classes that is consistent with the actual allocation in 2016. Without this adjustment, first quarter 2016 weather-adjusted residential sales increased 1.6%, weather-adjusted commercial sales increased 1.1%, and ~~State~~industrial ~~PSC~~KWH ~~Matters~~ sales decreased 0.8% as compared to the corresponding period in 2015.

~~Market-Based~~Fuel ~~Rate~~and ~~Authority~~ other cost recovery revenues decreased $212 million in the first quarter 2016, respectively, when compared to the corresponding period in 2015 primarily due to a decrease in fuel prices.

~~See~~Electric ~~MANAGEMENT’S~~rates DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “FERC Matters – Market-Based Rate Authority” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “FERC Matters – Market-Based Rate Authority” in Item 8 of the Form 10-K for ~~information regarding market-based rate authority. In October 2008, Southern Company filed with~~ the ~~FERC~~traditional aoperating ~~revised~~companies ~~market-based~~include ~~rate~~provisions ~~(MBR) tariff~~to ~~and~~adjust abillings ~~new cost-based rate (CBR) tariff. The revised MBR tariff provides~~ for afluctuations ~~“must offer” energy auction whereby Southern Company offers all of its available energy for sale~~ in afuel ~~day-ahead auction and an hour-ahead auction with reserve prices not to exceed the CBR tariff price~~costs, ~~after~~including ~~considering Southern Company’s native load requirements, reliability obligations, and sales commitments to third parties. All sales under~~ the energy ~~auction~~component ~~would be at market clearing prices established under the auction rules. The new CBR tariff provides for a cost-based price for wholesale sales~~ of ~~less~~ ~~than~~purchased apower ~~year~~costs. OnUnder ~~March 5,~~these ~~2009~~provisions, ~~the~~fuel ~~FERC~~revenues ~~accepted~~generally ~~Southern~~equal ~~Company’s~~fuel ~~CBR tariff for filing. On March 25~~expenses, ~~2009,~~including the ~~FERC accepted Southern Company’s compliance filing related to the MBR tariff and directed Southern Company to commence the~~ energy ~~auction~~component ~~in 30 days. Southern Company commenced the energy auction on April 23, 2009. Implementation~~ of ~~the~~purchased ~~energy auction in accordance with the MBR tariff order is expected to adequately mitigate going forward any presumption of market~~ power ~~that~~costs, ~~Southern~~and ~~Company~~do ~~may~~not ~~have~~affect innet ~~the~~income. ~~Southern~~ The

19 17

Table of Contents

~~THE~~ SOUTHERN COMPANY AND SUBSIDIARY COMPANIES ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Company~~MANAGEMENT'S ~~retail~~DISCUSSION ~~service~~AND ~~territory.~~ANALYSIS ~~The original generation dominance proceeding initiated by the FERC in December 2004 remains pending before the FERC. The ultimate outcome of this matter cannot be determined at this time.~~ OF

~~Retail~~FINANCIAL ~~Fuel~~CONDITION ~~Cost~~AND ~~Recovery~~ RESULTS OF OPERATIONS

~~The~~ traditional operating companies ~~each~~may ~~have~~also ~~established fuel cost recovery rates approved by their respective state PSCs. Over the past several years, the traditional operating companies~~ have ~~experienced~~ ~~higher~~one ~~than~~or ~~expected~~more ~~fuel~~regulatory ~~costs~~mechanisms ~~for~~to ~~coal,~~recover ~~natural~~other ~~gas, and uranium. These higher fuel~~ costs ~~have~~such ~~resulted in under recovered fuel costs included in the balance sheets of approximately $1.0 billion at March 31, 2009~~ as ~~compared~~environmental ~~to $1.2 billion at December 31, 2008. Operating revenues are adjusted for differences in actual recoverable fuel costs~~ and ~~amounts~~other ~~billed~~compliance ~~in current regulated rates. Accordingly~~costs, ~~changes~~storm to the billing factors will have no significant effect on Southern Company’s revenues or net income but will affect cash flow. The traditional operating companies continuously monitor the under recovered fuel cost balance in light of these higher fuel costs. See MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “PSC Matters – Fuel Cost Recovery” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Alabama Power Retail Regulatory Mattersdamage,” ~~“Georgia~~new ~~Power Retail Regulatory Matters~~plants,” and ~~“Gulf Power Retail Regulatory Matters” in Item 8 of the Form 10-K for additional information~~PPAs.

OnWholesale March 10, 2009, the Georgia PSC granted Georgia Power’s request to delay its fuel case filing until September 4, 2009. The extension was requested as a result of difficulty in establishing a forward-looking fuel rate due to volatile coal and gas prices, uncertain sales forecasts, and a continuing decline in the State of Georgia’s economy. New fuel rates are expected to become effective January 1, 2010. The ultimate outcome of this matter cannot now be determined. Revenues

Income Tax Matters



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(71)		(15.2)

~~Legislation~~ Wholesale revenues consist of PPAs primarily with investor-owned utilities and electric cooperatives and short-term opportunity sales. Wholesale revenues from PPAs (other than solar and wind PPAs) have both capacity and energy components. Capacity revenues reflect the recovery of fixed costs and a return on investment. Energy revenues will vary depending on fuel prices, the market prices of wholesale energy compared to the Southern Company system's generation, demand for energy within the Southern Company system's service territory, and the availability of the Southern Company system's generation. Increases and decreases in energy revenues that are driven by fuel prices are accompanied by an increase or decrease in fuel costs and do not have a significant impact on net income. Wholesale revenues at Mississippi Power include FERC-regulated municipal and rural association sales as well as market-based sales. Short-term opportunity sales are made at market-based rates that generally provide a margin above the Southern Company system's variable cost to produce the energy.

OnIn ~~February 17,~~the ~~2009,~~first ~~President~~quarter ~~Obama~~2016, ~~signed~~wholesale ~~into~~revenues ~~law~~were ~~the~~$396 ~~American~~million ~~Recovery~~compared ~~and~~to ~~Reinvestment~~$467 ~~Act~~million ~~of 2009~~for ~~(ARRA).~~the ~~Major~~corresponding ~~tax~~period ~~incentives~~ in ~~the~~2015 ~~ARRA~~related ~~include~~to ana ~~extension~~$43 ofmillion ~~bonus~~decrease ~~depreciation~~in ~~and multiple~~capacity ~~renewable~~revenues ~~energy~~and ~~incentives, which could have~~ a ~~significant~~$28 ~~impact~~million ondecrease ~~the~~in ~~future~~energy ~~cash~~revenues. ~~flow and~~The ~~net~~decrease ~~income~~in ofcapacity ~~Southern~~revenues ~~Company.~~was ~~Southern~~primarily ~~Company~~due ~~estimates~~to ~~the~~a ~~cash~~PPA ~~flow~~remarketing ~~reduction~~from non-affiliate to ~~2009~~affiliate ~~tax payments~~at asSouthern aPower, ~~result~~unit ofretirements ~~the~~at ~~bonus~~Georgia ~~depreciation~~Power, ~~provisions~~milder ofweather ~~the~~and ~~ARRA~~decreased tousage beat ~~between~~Mississippi ~~approximately $225 million~~Power, and ~~$275 million.~~the ~~Southern~~expiration ~~Company~~of isa ~~currently~~Plant ~~assessing~~Scherer ~~the~~Unit ~~other~~3 ~~financial implications~~power ofsales ~~the~~agreement ~~ARRA~~at Gulf Power. The ~~ultimate~~decrease ~~impact~~in ~~cannot~~energy berevenues ~~determined~~was atprimarily ~~this~~related ~~time~~to lower fuel costs.

~~Construction~~See ~~Projects~~ FUTURE EARNINGS POTENTIAL – "Other Matters" herein for additional information regarding the expiration of long-term sales agreements at Gulf Power for Plant Scherer Unit 3, which will impact future wholesale earnings.

~~Integrated~~Other ~~Coal~~Electric ~~Gasification Combined Cycle~~ Revenues

See MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “Construction Projects – Integrated Coal Gasification Combined Cycle” of Southern Company in Item 7 and Note 3 to the financial statements of Southern Company under “Integrated Coal Gasification Combined Cycle” in Item 8 of the Form 10-K for information regarding the Kemper IGCC.



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$18		11.0

OnIn ~~April 6, 2009,~~ the ~~Governor~~first ofquarter ~~the~~2016, ~~State~~other ofelectric ~~Mississippi~~revenues ~~signed~~were ~~into~~$181 ~~law~~million acompared ~~bill~~to ~~that~~$163 ~~will~~million ~~provide an ad valorem tax exemption~~ for ~~a portion of~~ the ~~assessed~~corresponding ~~value~~period ~~of all property utilized~~ in ~~certain electric generating facilities with integrated gasification process facilities~~2015. ~~This~~The ~~tax exemption,~~increase ~~which~~was ~~may~~primarily ~~not~~due ~~exceed~~to ~~50%~~an ofadjustment ~~the total value of the project, is~~ for ~~projects~~customer ~~with~~temporary ~~a capital~~facilities ~~investment~~service ~~from~~revenues ~~private~~at ~~sources~~Georgia ~~of $1 billion or more~~Power.

OnFuel ~~April 6,~~and ~~2009,~~Purchased ~~Mississippi~~ Power ~~received an accounting order from the Mississippi PSC directing Mississippi Power to continue to charge all Kemper IGCC generation resources planning, evaluation, and~~ Expenses



	First Quarter 2016 vs. First Quarter 2015
	(change in millions)			(% change)
Fuel	$	(301	)	(24.8)
Purchased power	21			14.6
Total fuel and purchased power expenses	$	(280	)

~~Table~~In the first quarter 2016, total fuel and purchased power expenses were $1.1 billion compared to $1.4 billion for the corresponding period in 2015. The decrease was primarily the result of ~~Contents~~a $223 million decrease in the average cost

~~THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ 18

~~screening~~Table ~~costs to regulatory assets including those costs associated with activities to obtain a certificate~~ of public convenience and necessity and costs necessary and prudent to preserve the availability, economic viability, and/or required schedule of the selected generation resource until the Mississippi PSC makes findings and determination as to the recovery of Mississippi Power’s prudent expenditures. Contents

AsSOUTHERN ofCOMPANY ~~March 31,~~AND ~~2009,~~SUBSIDIARY Mississippi Power had spent a total of $50.7 million associated with Mississippi Power’s generation resource planning, evaluation, and screening activities, including regulatory filings costs. Costs incurred during the first quarter 2009 totaled $8.4 million as compared to $7.2 million during the first quarter 2008. Of the total $50.7 million, $46.2 million was deferred in other regulatory assets, $3.7 million was related to land purchases capitalized, and $0.8 million was previously expensed. COMPANIES

~~Several~~MANAGEMENT'S ~~motions~~DISCUSSION ~~have~~AND ~~been~~ANALYSIS filed by intervenors in this proceeding, most of which are procedural in nature and seek to stay or delay the timely and orderly administration of the docket. In addition to these procedural motions, a motion has been filed by the Attorney General for the State of Mississippi which questions whether the Mississippi PSC has authority to approve the gasification portion of the Kemper IGCC. All of these motions were heard by the Mississippi PSC on May 5, 2009. OF

~~The~~FINANCIAL ~~ultimate~~CONDITION ~~outcome~~AND ofRESULTS ~~these~~OF ~~matters cannot now be determined.~~ OPERATIONS

~~Nuclear~~ of fuel and purchased power primarily due to lower natural gas and coal prices and a $145 million decrease in the volume of KWHs generated, partially offset by an $88 million increase in the volume of KWHs purchased.

~~See~~Fuel ~~MANAGEMENT’S~~and ~~DISCUSSION~~purchased ~~AND~~power ~~ANALYSIS~~energy –transactions at the traditional operating companies are generally offset by fuel revenues and do not have a significant impact on net income. See FUTURE EARNINGS POTENTIAL – ~~“Construction~~"Retail ~~Projects~~Regulatory Matters – ~~Nuclear”~~ ofRetail ~~Southern~~Fuel ~~Company~~Cost inRecovery" ~~Item 7~~herein ~~and~~for ~~Note~~additional 3information. toFuel ~~the~~expenses ~~financial~~incurred ~~statements~~under of Southern ~~Company under~~Power's ~~“Nuclear”~~PPAs inare ~~Item 8~~generally of the ~~Form~~responsibility ~~10-K~~of ~~for~~the ~~information~~counterparties ~~regarding~~and ~~the~~do ~~potential~~not ~~expansion~~significantly ~~of Plant~~impact ~~Vogtle~~net income.

OnDetails ~~March 17, 2009, the Georgia PSC voted to certify construction~~ of ~~Plant Vogtle Units 3 and 4 at an in-service cost of $6.4 billion. In addition,~~ the ~~Georgia~~Southern ~~PSC~~Company ~~voted~~system's togeneration ~~approve inclusion of the related construction work in progress accounts in rate base~~ and topurchased ~~recover~~power ~~financing~~were ~~costs~~as ~~during the construction period beginning in 2011.~~ follows:

On April 21, 2009, the Governor of the State of Georgia signed into law The Georgia Nuclear Energy Financing Act that will allow Georgia Power to recover financing costs for nuclear construction projects by including the related construction work in progress accounts in rate base during the construction period. The cost recovery provisions will become effective January 1, 2011.



	First Quarter 2016	First Quarter 2015
Total generation (billions of KWHs)	44	46
Total purchased power (billions of KWHs)	4	3
Sources of generation (percent) —
Coal	27	33
Nuclear	17	16
Gas	47	47
Hydro	7	3
Other Renewables	2	1
Cost of fuel, generated (cents per net KWH) —
Coal	3.24	3.70
Nuclear	0.82	0.67
Gas	2.16	2.71
Average cost of fuel, generated (cents per net KWH)	2.23	2.71
Average cost of purchased power (cents per net KWH)^(*)	5.27	7.18

~~Other~~(*) ~~Matters~~ Average cost of purchased power includes fuel purchased by the Southern Company system for tolling agreements where power is generated by the provider.

Southern Company is involved in various other matters being litigated, regulatory matters, and certain tax-related issues that could affect future earnings. In addition, Southern Company is subject to certain claims and legal actions arising in the ordinary course of business. 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, common law nuisance, and citizen enforcement of environmental requirements such as opacity and air and water quality standards, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such pending or potential litigation against Southern Company and its subsidiaries cannot be predicted at this time; however, for current proceedings not specifically reported herein or in Note 3 to the financial statements of Southern Company in Item 8 of the Form 10-K, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on Southern Company’s financial statements. Fuel

In the first quarter 2016, fuel expense was $911 million compared to $1.2 billion for the corresponding period in 2015. The decrease was primarily due to a 21 .9% decrease in the volume of KWHs generated by coal, a 20.3% decrease in the average cost of natural gas per KWH generated, a 12.4% decrease in the average cost of coal per KWH generated, and an 83.1% increase in the volume of KWHs generated by hydro facilities resulting from more rainfall.

~~Table~~Purchased ~~of Contents~~Power

~~THE~~In ~~SOUTHERN~~the ~~COMPANY~~first ~~AND~~quarter ~~SUBSIDIARY~~2016, ~~COMPANIES MANAGEMENT’S~~purchased ~~DISCUSSION~~power ~~AND~~expense ~~ANALYSIS~~was ~~OF FINANCIAL~~$165 ~~CONDITION~~million ~~AND~~compared ~~RESULTS~~to OF$144 ~~OPERATIONS~~ million for the corresponding period in 2015. The increase was primarily due to a 50.8% increase in the volume of KWHs purchased, partially offset by a 26.6% decrease in the average cost per KWH purchased primarily as a result of lower natural gas and coal prices.

~~See~~Energy purchases will vary depending on demand for energy within the ~~Notes~~Southern toCompany system's service territory, the ~~Condensed~~market ~~Financial~~prices ~~Statements~~of ~~herein~~wholesale ~~for~~energy ~~discussion~~as compared to the cost of ~~various~~the ~~other contingencies,~~Southern ~~regulatory~~Company ~~matters~~system's generation, and ~~other~~the ~~matters~~availability ~~being~~of ~~litigated~~the ~~which~~Southern ~~may~~Company ~~affect~~system's ~~future earnings potential~~generation.

~~ACCOUNTING POLICIES~~ 19

~~Application~~Table of ~~Critical Accounting Policies and Estimates~~ Contents

~~Southern~~SOUTHERN ~~Company~~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, 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. See MANAGEMENT’S DISCUSSION AND ~~ANALYSIS~~SUBSIDIARY – 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. COMPANIES

~~FINANCIAL~~MANAGEMENT'S ~~CONDITION~~DISCUSSION AND ~~LIQUIDITY~~ ANALYSIS OF

~~Overview~~ FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Southern~~Other ~~Company’s~~Operations financial condition remained stable at March 31, 2009. Throughout the recent turmoil in the financial markets, Southern Company has maintained adequate access to capital without drawing on any of its committed bank credit arrangements used to support its commercial paper programs and ~~variable~~Maintenance rate pollution control revenue bonds. Southern Company and the other registrants have continued to issue commercial paper at reasonable rates. Southern Company intends to continue to monitor its access to short-term and long-term capital markets as well as its bank credit arrangements to meet future capital and liquidity needs. Market rates for committed credit have increased, and Southern Company and its subsidiaries have been and expect to continue to be subject to higher costs as existing facilities are replaced or renewed. Of the $215 million of facilities expiring in the first quarter 2009, $160 million of them were replaced or renewed. In addition, Gulf Power entered into a $20 million facility and Mississippi Power increased an existing facility by $10 million. Subsequent to March 31, 2009, Georgia Power, Gulf Power, and Mississippi Power entered into new credit arrangements resulting in a net increase of $425 million, $75 million, and $40 million, respectively. These additional facilities all expire in 2010. Total committed credit fees at Southern Company and its subsidiaries average less than 1/4 of 1% per year. Southern Company’s interest cost for short-term debt has decreased as market short-term interest rates have declined from 2008 levels. The ultimate impact on future financing costs as a result of the financial turmoil cannot be determined at this time. Southern Company experienced no material counterparty credit losses as a result of the turmoil in the financial markets. See “Sources of Capital” and “Financing Activities” herein for additional information. Expenses

Southern Company’s investments in pension and nuclear decommissioning trust funds have continued to decline in value during the first quarter 2009. Southern Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Southern Company does not expect any changes to funding obligations to the nuclear decommissioning trusts prior to 2011.



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(16)		(1.4)

22 In the first quarter 2016, other operations and maintenance expenses were $1.11 billion compared to $1.12 billion for the corresponding period in 2015. The decrease was primarily due to a decrease in scheduled outage and maintenance costs at generation facilities and a decrease in employee compensation and benefits including pension costs.

~~Table~~Depreciation ofand ~~Contents~~Amortization

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$54		11.1

~~Net~~In ~~cash provided from operating activities totaled $401 million for~~ the first quarter ~~2009~~2016, ~~a decrease~~depreciation ofand ~~$136 million~~amortization ~~from~~was ~~the~~$541 ~~same~~million ~~period~~compared into ~~2008.~~$487 ~~Significant~~million ~~changes in operating cash flow~~ for the ~~first~~corresponding ~~quarter 2009 as compared to the prior~~ period ~~include increases~~ in ~~the~~2015. ~~use~~The ofincrease ~~funds for~~was ~~federal~~primarily ~~tax~~due ~~and~~to ~~property~~a ~~tax payments of~~ $~~199 million~~43 ~~and fuel purchases of $108~~ million~~. These~~ ~~uses~~increase ofrelated ~~funds~~to ~~were~~additional ~~partially~~plant ~~offset~~in byservice ~~increased~~at ~~cash~~the ~~inflows~~traditional asoperating acompanies ~~result~~and ofSouthern ~~higher fuel rates included in customer billings~~Power. ~~Net~~Also ~~cash~~contributing ~~used~~to ~~for investing activities totaled $1.12 billion for~~ the ~~first quarter 2009~~increase, anGulf ~~increase~~Power ofrecorded $~~127~~ 14 million ~~over~~less ~~the~~of ~~prior~~a ~~period,~~reduction ~~primarily~~in ~~due~~depreciation ~~to property~~in ~~additions to utility plant. For~~ the first ~~quarter~~three ~~2009,~~months ~~net~~of ~~cash~~2016 ~~provided from financing activities totaled $976 million~~ compared to ~~$506 million for~~ the ~~first~~corresponding ~~quarter~~period ~~2008.~~in ~~The~~2015, ~~$470 million~~as ~~increase~~authorized isby ~~primarily~~the ~~due~~Florida toPSC ~~higher~~in ~~levels~~a ofsettlement ~~short-term borrowings and the issuance of new long-term debt~~agreement.

~~Significant~~See ~~balance~~Note ~~sheet~~3 ~~changes~~to ~~for~~ the ~~first~~financial ~~quarter~~statements ~~2009~~of ~~include~~Southern anCompany ~~increase~~under of"Retail ~~$256 million~~Regulatory ~~in cash~~Matters ~~and~~– ~~cash~~Gulf ~~equivalents~~Power ~~primarily~~– ~~due~~Retail toBase anRate ~~increase~~Case" in ~~temporary~~Item ~~cash~~8 ~~investments and an increase~~ of ~~$889 million~~the inForm ~~total~~10-K ~~property, plant,~~ and ~~equipment~~Note ~~for~~(B) ~~the installation of equipment~~ to ~~comply~~the ~~with~~Condensed ~~environmental~~Financial ~~standards,~~Statements ~~construction~~under of"Retail ~~generation,~~Regulatory ~~transmission~~Matters ~~and~~– ~~distribution facilities,~~Gulf ~~and~~Power ~~purchases~~– ofRetail ~~nuclear~~Base ~~fuel.~~Rate ~~Other~~Case" ~~significant~~herein ~~changes include an increase in long-term debt, excluding amounts due within one year, of $990 million used primarily~~ for ~~construction~~ ~~expenditures~~additional ~~and general corporate purposes~~information.

~~The~~Estimated ~~market~~Loss ~~price of Southern Company’s common stock at March 31, 2009 was $30.62 per share (based~~ on ~~the~~Kemper closing price as reported on the New York Stock Exchange) and the book value was $16.94 per share, representing a market-to-book ratio of 181%, compared to $37.00, $17.08, and 217%, respectively, at the end of 2008. The dividend for the first quarter 2009 was $0.42 per share compared to $0.4025 per share in the first quarter 2008. In April 2009, the quarterly dividend payable in June 2009 was increased to $0.4375 per share. IGCC

Capital Requirements and Contractual Obligations



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$44		N/M

~~See~~N/M ~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~ – ~~FINANCIAL~~Not 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 and preference stock dividends, leases, trust funding requirements, other purchase commitments, unrecognized tax benefits and interest, and derivative obligations. Approximately $686 million will be required through March 31, 2010 for maturities of long-term debt. The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental statutes and regulations; changes in nuclear plants to meet new regulatory requirements; changes in FERC rules and regulations; PSC approvals; changes in legislation; the cost and efficiency of construction labor, equipment, and materials; and the cost of capital. In addition, there can be no assurance that costs related to capital expenditures will be fully recovered. meaningful

~~Sources~~In the first quarter 2016 and 2015, estimated probable losses on the Kemper IGCC of ~~Capital~~ $53 million and $9 million, respectively, were recorded at Southern Company. These losses reflect revisions of estimated costs expected to be incurred on Mississippi Power's construction of the Kemper IGCC in excess of the $2.88 billion cost cap established by the Mississippi PSC, net of $245 million of grants awarded to the project by the DOE under the Clean Coal Power Initiative Round 2 (Initial DOE Grants) and excluding the cost of the lignite mine and equipment, the cost of the CO2 pipeline facilities, AFUDC, and certain general exceptions, including change of law, force majeure, and beneficial capital (which exists when Mississippi Power demonstrates that the purpose and effect of the construction cost increase is to produce efficiencies that will result in a neutral or favorable effect on customers relative to the original proposal for the CPCN) (Cost Cap Exceptions). See FUTURE EARNINGS POTENTIAL – "Construction Program – Integrated Coal Gasification Combined Cycle" and Note (B) to the Condensed Financial Statements under "Integrated Coal Gasification Combined Cycle" herein for additional information.

Southern Company intends to meet its future capital needs through internal cash flow and external security issuances. Equity capital can be provided from any combination of Southern Company’s stock plans, private placements, or public offerings. The amount and timing of additional equity capital to be raised in 2009, as well as in subsequent years, will be contingent on Southern Company’s investment opportunities. The traditional 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, term loans, short-term borrowings, and equity contributions from Southern Company. 20

23 Table of Contents

~~Table~~SOUTHERN ofCOMPANY ~~Contents~~AND SUBSIDIARY COMPANIES

~~THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES~~ MANAGEMENT’'S DISCUSSION AND ANALYSIS OF ~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

However, the amount, type, and timing of any financings, if needed, will depend upon prevailing market conditions, regulatory approval, and other factors. See MANAGEMENT’S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND ~~LIQUIDITY~~RESULTS –OF ~~“Sources of Capital” of Southern Company in Item 7 of the Form 10-K for additional information.~~ OPERATIONS

~~Southern~~Allowance Company’s current liabilities frequently exceed current assets because of the continued use of short-term debt as a funding source to meet cash needs as well as scheduled maturities of long-term debt. To meet short-term cash needs and contingencies, Southern Company has substantial cash flow from operating activities and access to capital markets, including commercial paper programs (which are backed by bank credit facilities) to meet liquidity needs. At March 31, 2009, Southern Company and its subsidiaries had approximately $672 million of cash and cash equivalents and approximately $4.2 billion of unused credit arrangements with banks, of which $775 million expire in 2009, $160 million expire in 2010, $25 million expire in 2011, and $3.2 billion expire in 2012. Approximately $94 million of the credit facilities expiring in 2009 and 2010 allow for ~~the execution~~Equity ofFunds ~~term~~Used ~~loans~~During for an additional two-year period, and $504 million contain provisions allowing one-year term loans. At March 31, 2009, approximately $1.3 billion of the credit facilities were dedicated to providing liquidity support to the traditional operating companies’ variable rate pollution control revenue bonds. See Note 6 to the financial statements of Southern Company under “Bank Credit Arrangements” in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements under “Bank Credit Arrangements” herein for additional information. The traditional operating companies may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper at the request and for the benefit of each of the traditional operating companies. At March 31, 2009, the Southern Company system had outstanding commercial paper of $915.6 million and short-term bank notes of $150 million. Management believes that the need for working capital can be adequately met by utilizing commercial paper programs, lines of credit, and cash. Construction

Off-Balance Sheet Financing Arrangements



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(10)		(15.9)

~~See~~In ~~MANAGEMENT’S~~the ~~DISCUSSION~~first ~~AND~~quarter ~~ANALYSIS~~2016, –AFUDC ~~FINANCIAL~~equity ~~CONDITION~~was ~~AND~~$53 ~~LIQUIDITY~~million –compared ~~“Off-Balance~~to ~~Sheet Financing~~$63 ~~Arrangements”~~million offor ~~Southern~~the ~~Company~~corresponding period in ~~Item 7~~2015. ~~and~~The ~~Note~~decrease 7was toprimarily ~~the~~due ~~financial~~to ~~statements~~environmental ~~of Southern~~and ~~Company~~generation ~~under~~projects ~~“Operating~~placed ~~Leases”~~ in ~~Item 8~~service ofat ~~the~~Alabama ~~Form 10-K for information related to Mississippi~~ Power’s ~~lease~~and ofGulf ~~a combined cycle generating facility at Plant Daniel~~Power.

~~Credit~~Interest ~~Rating~~Expense, ~~Risk~~ Net of Amounts Capitalized

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 of certain subsidiaries to BBB and Baa2, or BBB- and/or Baa3 or below. These contracts are for physical electricity purchases and sales, fuel purchases, fuel transportation and storage, emissions allowances, energy price risk management, and construction of new generation. At March 31, 2009, the maximum potential collateral requirements under these contracts at a BBB and Baa2 rating were approximately $9 million and at a BBB- and/or Baa3 rating were approximately $403 million. At March 31, 2009, the maximum potential collateral requirements under these contracts at a rating below BBB- and/or Baa3 were approximately $1.9 billion. In addition, certain nuclear fuel agreements could require collateral of up to $251 million in the event of a rating change to below investment grade for Southern Company. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, any credit rating downgrade could impact Southern Company’s ability to access capital markets, particularly the short-term debt market.



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$33		15.5

24 In the first quarter 2016, interest expense, net of amounts capitalized was $246 million compared to $213 million in the corresponding period in 2015. The increase was primarily due to an increase in outstanding long-term debt, partially offset by a decrease related to interest on deposits resulting from the termination of an asset purchase agreement between Mississippi Power and SMEPA in May 2015.

~~Table~~See ofNote ~~Contents~~(E) to the Condensed Financial Statements herein for additional information.

Other Income (Expense), Net

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(13)		N/M

~~Market~~N/M ~~Price~~– ~~Risk~~ Not meaningful

~~Southern~~In ~~Company’s~~the ~~market~~first ~~risk~~quarter ~~exposure~~2016, ~~relative~~other toincome ~~interest~~(expense), ~~rate~~net ~~changes~~was ~~has~~$(21) ~~not~~million ~~changed materially~~ compared ~~with~~to ~~the~~$(8) ~~December 31,~~million ~~2008~~for ~~reporting~~the corresponding period. ~~Since~~in a2015. ~~significant~~The ~~portion~~change ~~of outstanding~~was ~~indebtedness~~primarily isdue atto ~~fixed~~Bridge ~~rates,~~Agreement-related ~~Southern~~expenses ~~Company~~associated iswith ~~not aware of any facts or circumstances that would significantly affect exposures on existing indebtedness in~~ the ~~near~~proposed ~~term~~Merger. ~~However, the impact on future financing costs cannot now be determined.~~

~~Due~~See toNote ~~cost-based~~(I) ~~rate regulation, the traditional operating companies continue~~ to 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.~~Condensed ~~However,~~Financial ~~during~~Statements ~~2009,~~under "Southern ~~Power~~Company is– ~~exposed~~Proposed toMerger ~~market volatility~~with inAGL ~~energy-related~~Resources" ~~commodity~~herein prices as a result of sales of uncontracted generating capacity. The traditional operating companies continue to manage fuel-hedging programs implemented per the guidelines of their respective state PSCs. To mitigate residual risks relative to movements in electricity prices, the traditional operating companies enter into physical fixed-price contracts for ~~the~~additional ~~purchase and sale of electricity through the wholesale electricity market~~information. To mitigate residual risks relative to movements in gas prices, the registrants may enter into fixed-price contracts for natural gas purchases; however, a significant portion of contracts are priced at market. As such, the traditional operating companies have no material change in market risk exposure when compared with the December 31, 2008 reporting period.

Income Taxes

The changes in fair value of energy-related derivative contracts for the three months ended March 31, 2009 were as follows:



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(52)		(19.0)

	First Quarter
	2009
	Changes
	Fair Value
	(in millions)
Contracts outstanding at the beginning of the period, assets (liabilities), net	$	(285	)
Contracts realized or settled		60
Current period changes(a)		(198	)
Contracts outstanding at the end of the period, assets (liabilities), net	$	(423	)

In the first quarter 2016, income taxes were $222 million compared to $274 million for the corresponding period in 2015. The decrease was primarily due to increased federal income tax benefits from ITCs and PTCs at Southern Power and an increase in tax benefits related to estimated probable losses on Mississippi Power's construction of the Kemper IGCC.

See Note (aG) ~~Current~~to ~~period changes also include~~ the ~~changes~~Condensed inFinancial ~~fair~~Statements ~~value~~herein offor ~~new~~additional ~~contracts entered into during the period, if any~~information.

~~The~~FUTURE ~~decrease~~EARNINGS in the fair value positions of the energy-related derivative contracts for the three months ended March 31, 2009 was $138 million, substantially all of which is due to natural gas positions. This change is attributable to both the volume and prices of natural gas. At March 31, 2009, Southern Company had a net hedge volume of 172.6 Bcf (includes location basis of 2 Bcf) with a weighted average contract cost approximately $2.53 per mmBtu above market prices, compared to 148.8 Bcf at December 31, 2008 with a weighted average contract cost approximately $1.97 per mmBtu above market prices. The majority of the natural gas hedges are recovered through the traditional operating companies’ fuel cost recovery clauses. POTENTIAL

25 The results of operations discussed above are not necessarily indicative of Southern Company's future earnings potential. The level of Southern Company's future earnings depends on numerous factors that affect the opportunities, challenges, and risks of the Southern Company system's primary business of selling electricity. These

~~Table of Contents~~21

~~THE~~Table ~~SOUTHERN~~of ~~COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ Contents

AtSOUTHERN ~~March 31,~~COMPANY ~~2009,~~AND ~~the~~SUBSIDIARY ~~fair value of energy-related derivative contracts by hedge designation was reflected in the financial statements as follows:~~ COMPANIES

	March 31, 2009
	(in millions)
Regulatory hedges	$	(427	)
Cash flow hedges		1
Not designated		3
Total fair value	$	(423	)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

~~Energy-related~~FINANCIAL ~~derivative~~CONDITION ~~contracts~~AND ~~which~~RESULTS ~~are~~OF designated as regulatory hedges relate to the traditional operating companies’ fuel hedging programs, where gains and losses are initially recorded as regulatory liabilities and assets, respectively, and then are included in fuel expense as they are recovered through the fuel cost recovery clauses. Gains and losses on energy-related derivatives designated as cash flow hedges are mainly used by Southern Power to hedge anticipated purchases and sales and are initially deferred in other comprehensive income before being recognized in income in the same period as the hedged transaction. Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements of income as incurred. OPERATIONS

~~Total~~factors ~~net~~include ~~unrealized~~the ~~pre~~traditional operating companies' ability to maintain a constructive regulatory environment that allows for the timely recovery of prudently-~~tax~~incurred ~~losses~~costs ~~recognized~~during ina time of increasing costs and the ~~statements~~completion and subsequent operation of ~~income~~the Kemper IGCC and Plant Vogtle Units 3 and 4 as well as other ongoing construction projects. Other major factors include the profitability of Southern Power's competitive wholesale business and successful additional investments in renewable and other energy projects. Future earnings for the ~~three~~electricity ~~months ended~~business ~~March 31~~in the near term will depend, ~~2009~~in ~~for~~part, ~~energy-related~~upon ~~derivative~~maintaining ~~contracts~~and ~~that~~growing sales which are ~~not~~subject ~~hedges~~to ~~were~~a ~~$1 million~~number of factors. ~~For~~ These factors include weather, competition, new energy contracts with other utilities and other wholesale customers, energy conservation practiced by customers, the ~~three~~use ~~months~~of ~~ended~~alternative ~~March 31~~energy sources by customers, ~~2008~~the price of electricity, the ~~total~~price ~~net~~elasticity ~~unrealized~~of ~~losses~~demand, ~~recognized~~and the rate of economic growth or decline in the ~~statements~~ service territory. In addition, the level of ~~income~~future ~~were~~earnings ~~$14 million.~~for ~~See~~the ~~Note~~wholesale ~~(F) to~~business also depends on numerous factors including regulatory matters, creditworthiness of customers, total generating capacity available and related costs, future acquisitions and construction of generating facilities, the ~~Condensed~~impact ~~Financial~~of ~~Statements~~tax ~~herein~~ credits from renewable energy projects, and the successful remarketing of capacity as current contracts expire. Demand for ~~further~~electricity ~~details~~is primarily driven by economic growth. The pace of ~~these~~economic ~~losses~~growth and electricity demand may be affected by changes in regional and global economic conditions, which may impact future earnings.

~~The~~As ~~maturities~~part of ~~the~~its ~~energy~~ongoing effort to adapt to changing market conditions, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, partnerships, and acquisitions involving other utility or non-~~related~~utility ~~derivative~~businesses ~~contracts~~or properties, disposition of certain assets, internal restructuring, or some combination thereof. Furthermore, Southern Company may engage in new business ventures that arise from competitive and regulatory changes in the ~~level~~utility industry. Pursuit of any of the ~~fair~~above ~~value~~strategies, ~~hierarchy in~~or ~~which~~any ~~they~~combination ~~fall~~thereof, atmay ~~March 31~~significantly affect the business operations, ~~2009~~risks, ~~are~~and asfinancial ~~follows:~~ condition of Southern Company. In addition, the proposed Merger will result in a combined company that is subject to various risks that do not currently impact Southern Company.

	March 31, 2009
	Fair Value Measurements
	Total			Maturity
	Fair Value			Year 1			Years 2&3			Years 4&5
	(in millions)
Level 1	$	—		$	—		$	—		$	—
Level 2		(423	)		(319	)		(99	)		(5	)
Level 3		—			—			—			—
Fair value of contracts outstanding at end of period	$	(423	)	$	(319	)	$	(99	)	$	(5	)

For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL of Southern Company in Item 7 of the Form 10-K.

~~Southern~~Environmental Company uses over-the-counter contracts that are not exchange traded but are fair valued using prices which are actively quoted, and thus fall into Level 2. See Note (C) to the Condensed Financial Statements herein for further discussion on fair value measurements. Matters

~~For~~Compliance ~~additional~~costs ~~information~~related to federal and state environmental statutes and regulations could affect earnings if such costs cannot continue to be fully recovered in rates on a timely basis or through market-based contracts. Environmental compliance spending over the next several years may differ materially from the amounts estimated. The timing, ~~see~~specific requirements, and estimated costs could change as environmental statutes and regulations are adopted or modified, as compliance plans are revised or updated, and as legal challenges to rules are completed. Further, higher costs that are recovered through regulated rates could contribute to reduced demand for electricity, which could negatively affect results of operations, cash flows, and financial condition. See MANAGEMENT’'S DISCUSSION AND ANALYSIS – ~~FINANCIAL~~FUTURE ~~CONDITION~~EARNINGS ~~AND LIQUIDITY~~POTENTIAL – ~~“Market~~"Environmental ~~Price~~Matters" ~~Risk”~~ of Southern Company in Item 7 and ~~Notes~~Note 13 ~~and 6~~ to the financial statements of Southern Company under ~~“Financial~~"Environmental ~~Instruments”~~Matters" in Item 8 of the Form 10-K ~~and~~for ~~Note (F) to~~additional ~~the Condensed Financial Statements herein~~information.

26 Environmental Statutes and Regulations

~~Table~~Air ~~of Contents~~Quality

~~THE~~See ~~SOUTHERN COMPANY AND SUBSIDIARY COMPANIES~~ MANAGEMENT’'S DISCUSSION AND ANALYSIS ~~OF FINANCIAL~~– ~~CONDITION~~FUTURE ~~AND~~EARNINGS ~~RESULTS~~POTENTIAL OF– ~~OPERATIONS~~ "Environmental Matters – Environmental Statutes and Regulations – Air Quality" of Southern Company in Item 7 of the Form 10-K for additional information regarding the EPA's final MATS rule and regional haze regulations.

~~Financing~~On ~~Activities~~ April 25, 2016, in response to a June 2015 U.S. Supreme Court opinion, the EPA published its supplemental finding regarding consideration of costs in support of the MATS rule. This finding does not impact MATS rule compliance requirements, costs, or deadlines, and all units within the Southern Company system that are subject to

In the first three months of 2009, Southern Company’s subsidiaries issued $1.1 billion of senior notes, and Southern Company issued $151 million of common stock through the Southern Investment Plan and employee and director stock plans. The proceeds were primarily used to fund ongoing construction projects and to repay short-term and long-term indebtedness. Alabama Power issued $500 million of Series 2009A 6.00% Senior Notes due March 1, 2039. Alabama Power used the proceeds to repay short-term indebtedness and for other general corporate purposes, including Alabama Power’s continuous construction program. Georgia Power issued $500 million of Series 2009A 5.95% Senior Notes due February 1, 2039. Georgia Power used the proceeds to repay $150 million aggregate principal amount of its Series U Floating Rate Senior Notes at maturity, to repay a portion of short-term indebtedness, and for general corporate purposes, including Georgia Power’s continuous construction program. Georgia Power settled $100 million of hedges related to the Series 2009A issuance at a loss of approximately $16 million, and this loss will be amortized to interest expense, in earnings, together with a previously settled loss of approximately $2 million, over 10 years. Mississippi Power issued $125 million of Series 2009A 5.55% Senior Notes due March 1, 2019. Mississippi Power used the proceeds to repay at maturity Mississippi Power’s $40 million aggregate principal amount of Series F Floating Rate Senior Notes due March 9, 2009, to repay a portion of short-term indebtedness, and for general corporate purposes, including Mississippi Power’s continuous construction program. Gulf Power also incurred obligations related to the issuance of pollution control revenue bonds totaling approximately $130 million. Gulf Power is using the proceeds for acquisition, construction, installation, and equipping of certain solid waste disposal facilities located at Plant Crist. See Southern Company’s Condensed Consolidated Statements of Cash Flows herein for further details regarding financing activities during the first three months of 2009. 22

InTable ~~addition~~of 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. Contents

27 SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

~~Table~~MANAGEMENT'S ofDISCUSSION ~~Contents~~AND ANALYSIS OF

~~PART~~FINANCIAL I CONDITION AND RESULTS OF OPERATIONS

~~Item 3.~~the ~~Quantitative~~MATS ~~And~~rule ~~Qualitative~~have ~~Disclosures~~completed ~~About~~the ~~Market~~measures ~~Risk~~necessary to achieve compliance with the MATS rule by the applicable deadlines.

~~See~~Also ~~MANAGEMENT’S~~on ~~DISCUSSION~~April ~~AND~~25, ~~ANALYSIS~~2016, —the ~~FINANCIAL~~EPA ~~CONDITION~~issued ~~AND~~proposed ~~LIQUIDITY~~revisions —to ~~“Market~~the ~~Price~~regional ~~Risk” herein~~haze ~~for~~regulations. The ~~each~~ultimate ~~registrant~~impact ~~and~~of ~~Notes 1 and 6 to~~ the ~~financial~~proposed ~~statements~~revisions ofwill ~~Southern~~depend ~~Company, Alabama~~on ~~Power,~~their ~~Georgia~~ultimate ~~Power~~adoption, ~~Gulf Power~~implementation, ~~Mississippi Power,~~ and ~~Southern~~any ~~Power~~legal ~~under~~challenges ~~“Financial Instruments”~~and incannot ~~Item 8~~be ofdetermined ~~the~~at ~~Form~~this ~~10-K~~time. ~~Also, see Note (F) to the Condensed Financial Statements herein for information relating to derivative instruments.~~

~~Item 4.~~Retail ~~Controls~~Regulatory ~~and Procedures.~~ Matters

~~(a) Evaluation~~Retail ofFuel ~~disclosure~~Cost ~~controls and procedures.~~ Recovery

AsSee ofMANAGEMENT'S ~~the~~DISCUSSION ~~end~~AND ofANALYSIS ~~the~~– ~~period~~FUTURE ~~covered~~EARNINGS byPOTENTIAL ~~this~~– ~~quarterly~~"Retail ~~report,~~Regulatory ~~Southern~~Matters ~~Company~~– ~~conducted~~Retail ~~an evaluation~~Fuel ~~under~~Cost ~~the~~Recovery" ~~supervision and with the participation~~ of Southern Company’s ~~management, including~~in ~~the~~Item ~~Chief~~7 ~~Executive Officer~~ and ~~the~~Note ~~Chief~~3 ~~Financial~~to ~~Officer, of~~ the ~~effectiveness~~financial statements of ~~the design~~Southern ~~and~~Company ~~operation~~under of"Retail ~~the~~Regulatory ~~disclosure~~Matters ~~controls~~– ~~and~~Alabama ~~procedures~~Power ~~(as~~– ~~defined~~Rate inECR" ~~Sections 13a-15(e)~~ and ~~15d-15(e)~~"Retail ofRegulatory ~~the~~Matters ~~Securities~~– ~~Exchange~~Georgia ~~Act~~Power of– ~~1934).~~Fuel ~~Based~~Cost ~~upon~~Recovery" ~~this~~in ~~evaluation,~~Item ~~the~~8 ~~Chief Executive~~of ~~Officer and~~ the ~~Chief~~Form ~~Financial~~10-K ~~Officer~~for ~~concluded~~additional ~~that~~information ~~the~~regarding ~~disclosure~~retail ~~controls~~fuel ~~and procedures~~cost ~~are effective~~recovery.

~~(b) Changes~~The traditional operating companies each have established fuel cost recovery rates approved by their respective state PSCs. Fuel cost recovery revenues are adjusted for differences in ~~internal~~actual ~~controls~~recoverable fuel costs and amounts billed in current regulated rates. Accordingly, changes in the billing factor will not have a significant effect on Southern Company's revenues or net income, but will affect cash flow. The traditional operating companies continuously monitor their under or over recovered fuel cost balances and make appropriate filings with their state PSCs to adjust fuel cost recovery rates as necessary.

~~There~~On ~~have~~April ~~been~~14, no2016, ~~changes~~Georgia inPower ~~Southern~~filed ~~Company’s~~a ~~internal~~request ~~control~~with ~~over~~the ~~financial~~Georgia ~~reporting~~PSC ~~(as~~to ~~such term~~decrease isfuel ~~defined~~rates inby ~~Rules 13a-~~15~~(f)~~% ~~and~~effective ~~15d-15(f)~~June ~~under~~1, ~~the~~2016, ~~Securities~~which ~~Exchange~~is ~~Act~~expected ofto ~~1934)~~reduce ~~during the~~annual ~~first~~billings ~~quarter~~by ~~2009~~approximately ~~that~~$313 ~~have~~million. ~~materially~~Georgia ~~affected~~Power oris ~~are~~currently ~~reasonably~~scheduled ~~likely~~ to ~~materially~~file ~~affect Southern~~its ~~Company’s~~next ~~internal~~fuel ~~control~~case ~~over~~by ~~financial~~February ~~reporting~~28, 2017. The ultimate outcome of this matter cannot be determined at this time.

~~Item 4T. Controls and Procedures.~~ Renewables

~~(a) Evaluation~~See MANAGEMENT'S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – "Retail Regulatory Matters – Renewables" of ~~disclosure~~Southern ~~controls~~Company ~~and~~in ~~procedures~~Item 7 of the Form 10-K for additional information regarding the Southern Company system's renewables activity.

As ofpart ~~the end~~ of the ~~period covered by this quarterly report, Alabama Power,~~ Georgia Power, ~~Gulf Power,~~Advanced ~~Mississippi~~Solar ~~Power~~Initiative, ~~and~~four ~~Southern~~PPAs ~~Power~~totaling ~~conducted~~149 ~~separate~~MWs ~~evaluations under the supervision and with the participation~~ of ~~each~~Georgia ~~company’~~Power's ~~management,~~solar ~~including~~contracted ~~the~~capacity ~~Chief~~from ~~Executive~~Southern ~~Officer~~Power ~~and the~~began ~~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~~first ~~Exchange Act~~quarter ~~of 1934)~~2016. ~~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.~~

~~(b) Changes~~In November 2015, the Mississippi PSC issued orders approving three solar facilities for a combined total of approximately 105 MWs. Mississippi Power will purchase all of the energy produced by the solar facilities for the 25-year term under each of the three PPAs, two of which were finalized as of December 31, 2015 and one of which was finalized as of March 2, 2016. The projects are expected to be in ~~internal~~service ~~controls~~by the end of 2016 and the resulting energy purchases are expected to be recovered through Mississippi Power's fuel cost recovery mechanism.

~~There~~The ~~have~~Florida ~~been~~PSC noissued ~~changes~~a infinal ~~Alabama~~approval ~~Power’s,~~order ~~Georgia~~on ~~Power’s,~~ Gulf Power’'s, ~~Mississippi~~Community ~~Power’s, or~~Solar ~~Southern~~Pilot ~~Power’s~~Program ~~internal~~on ~~control~~April ~~over~~15, ~~financial~~2016. ~~reporting~~The ~~(as~~program ~~such~~will ~~term~~offer isall ~~defined~~Gulf inPower ~~Rules 13a-15(f)~~customers ~~and~~an ~~15d-15(f)~~opportunity ~~under~~to voluntarily contribute to the ~~Securities~~construction ~~Exchange~~and ~~Act~~operation of ~~1934)~~a ~~during~~solar ~~the~~photovoltaic ~~first~~facility ~~quarter~~with ~~2009 that~~electric ~~have~~generating ~~materially~~capacity ~~affected~~of orup ~~are~~to ~~reasonably~~1 ~~likely~~MW tothrough ~~materially~~annual ~~affect~~subscriptions. ~~Alabama~~The ~~Power’s, Georgia~~energy ~~Power’s,~~generated ~~Gulf~~from ~~Power’s,~~the ~~Mississippi~~solar ~~Power’s,~~facility oris ~~Southern~~expected ~~Power’s~~to ~~internal~~provide ~~control~~power ~~over financial~~to ~~reporting~~all of Gulf Power's customers.

28 Alabama Power

~~Table~~Alabama Power's revenues from regulated retail operations are collected through various rate mechanisms subject to the oversight of ~~Contents~~the Alabama PSC. Alabama Power currently recovers its costs from the regulated retail business primarily through its Rate RSE, Rate CNP Compliance, rate energy cost recovery, and natural disaster reserve rate. In addition, the Alabama PSC issues accounting orders to address current events impacting Alabama Power. See Note 3 to the financial statements of Southern Company under "Retail Regulatory Matters – Alabama Power" in

~~ALABAMA POWER COMPANY~~ 23

29 Table of Contents

~~Table~~SOUTHERN ofCOMPANY ~~Contents~~AND SUBSIDIARY COMPANIES

~~ALABAMA~~MANAGEMENT'S ~~POWER~~DISCUSSION ~~COMPANY~~ AND ANALYSIS OF

~~CONDENSED~~FINANCIAL ~~STATEMENTS~~CONDITION OFAND ~~INCOME~~RESULTS ~~(UNAUDITED)~~OF OPERATIONS

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Operating Revenues:
Retail revenues	$	1,058,137		$	1,034,254
Wholesale revenues —
Non-affiliates		158,695			170,040
Affiliates		84,352			83,692
Other revenues		38,582			48,693
Total operating revenues		1,339,766			1,336,679
Operating Expenses:
Fuel		483,233			453,149
Purchased power —
Non-affiliates		15,544			11,219
Affiliates		41,560			88,707
Other operations and maintenance		276,859			309,550
Depreciation and amortization		143,416			124,637
Taxes other than income taxes		80,281			75,771
Total operating expenses		1,040,893			1,063,033
Operating Income		298,873			273,646
Other Income and (Expense):
Allowance for equity funds used during construction		16,725			11,304
Interest income		4,122			4,642
Interest expense, net of amounts capitalized		(72,207	)		(68,976	)
Other income (expense), net		(6,372	)		(7,222	)
Total other income and (expense)		(57,732	)		(60,252	)
Earnings Before Income Taxes		241,141			213,394
Income taxes		85,009			73,428
Net Income		156,132			139,966
Dividends on Preferred and Preference Stock		9,866			9,866
Net Income After Dividends on Preferred and Preference Stock	$	146,266		$	130,100

Item 8 of the Form 10-K for additional information regarding Alabama Power's rate mechanisms and accounting orders. The recovery balance of each regulatory clause for Alabama Power is reported in Note (B) to the Condensed Financial Statements herein.

~~CONDENSED~~Georgia ~~STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)~~ Power

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Net Income After Dividends on Preferred and Preference Stock	$	146,266		$	130,100
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(886) and $(2,211), respectively		(1,457	)		(3,637	)
Reclassification adjustment for amounts included in net income, net of tax of $1,061 and $185, respectively		1,745			305
Total other comprehensive income (loss)		288			(3,332	)
COMPREHENSIVE INCOME	$	146,554		$	126,768

Georgia Power's revenues from regulated retail operations are collected through various rate mechanisms subject to the oversight of the Georgia PSC. Georgia Power currently recovers its costs from the regulated retail business through the 2013 ARP, which includes traditional base tariff rates, Demand-Side Management tariffs, Environmental Compliance Cost Recovery tariffs, and Municipal Franchise Fee tariffs. In addition, financing costs related to the construction of Plant Vogtle Units 3 and 4 are being collected through the NCCR tariff and fuel costs are collected through separate fuel cost recovery tariffs. See Note (B) to the Condensed Financial Statements under "Retail Regulatory Matters – Georgia Power – Fuel Cost Recovery" herein and Note 3 to the financial statements of Southern Company under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" in Item 8 of the Form 10-K for additional information regarding Georgia Power's fuel cost recovery and the NCCR tariff, respectively.

~~The~~Pursuant ~~accompanying~~to ~~notes~~the asterms ~~they~~and ~~relate~~conditions of a settlement agreement related to ~~Alabama~~Southern Company's proposed acquisition of AGL Resources approved by the Georgia PSC on April 14, 2016, Georgia Power's ~~are~~2013 anARP ~~integral~~will ~~part~~continue in effect until December 31, 2019, and Georgia Power will be required to file its next base rate case by July 1, 2019. Furthermore, through December 31, 2019, Georgia Power and Atlanta Gas Light Company (collectively, Utilities) will retain the merger savings, net of ~~these~~transition ~~condensed~~ costs, as defined in the settlement agreement; through December 31, 2022, net merger savings will be shared on a 60/40 basis between customers and the Utilities; thereafter, all merger savings will be retained by customers. See Note 3 to the financial statements of Southern Company under "Retail Regulatory Matters – Georgia Power" in Item 8 of the Form 10-K for additional information regarding the 2013 ARP and Note (I) to the Condensed Financial Statements under "Southern Company – Proposed Merger with AGL Resources" herein for additional information regarding the Merger.

30 Construction Program

~~Table of Contents~~Overview

~~ALABAMA~~The ~~POWER~~subsidiary ~~COMPANY~~ companies of Southern Company are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. The Southern Company system intends to continue its strategy of developing and constructing new generating facilities, as well as adding or changing fuel sources for certain existing units, adding environmental control equipment, and expanding the transmission and distribution systems. For the traditional operating companies, major generation construction projects are subject to state PSC approval in order to be included in retail rates. While Southern Power generally constructs and acquires generation assets covered by long-term PPAs, any uncontracted capacity could negatively affect future earnings.

~~CONDENSED~~The ~~STATEMENTS~~two OFlargest ~~CASH~~construction ~~FLOWS~~projects currently underway in the Southern Company system are Plant Vogtle Units 3 and 4 (~~UNAUDITED~~45.7% ownership interest by Georgia Power in the two units, each with approximately 1,100 MWs) and Mississippi Power's 582-MW Kemper IGCC. See Note 3 to the financial statements of Southern Company under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" and "Integrated Coal Gasification Combined Cycle" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" and "Integrated Coal Gasification Combined Cycle" herein for additional information. For additional information about costs relating to Southern Power's acquisitions that involve construction of renewable energy facilities, see Note 12 to the financial statements of Southern Company under "Southern Power – Construction Projects" in Item 8 of the Form 10-K and Note (I) to the Condensed Financial Statements under "Southern Power – Construction Projects" herein.

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Operating Activities:
Net income	$	156,132		$	139,966
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		164,488			146,208
Deferred income taxes and investment tax credits, net		(25,795	)		4,513
Allowance for equity funds used during construction		(16,725	)		(11,304	)
Pension, postretirement, and other employee benefits		(4,933	)		(3,995	)
Stock option expense		2,851			2,178
Tax benefit of stock options		24			347
Other, net		8,834			9,223
Changes in certain current assets and liabilities —
Receivables		173,032			62,227
Fossil fuel stock		(11,654	)		(34,750	)
Materials and supplies		(6,775	)		(7,751	)
Other current assets		(73,518	)		(63,757	)
Accounts payable		(136,678	)		(124,727	)
Accrued taxes		123,746			79,338
Accrued compensation		(64,030	)		(64,851	)
Other current liabilities		7,928			9,357
Net cash provided from operating activities		296,927			142,222
Investing Activities:
Property additions		(337,984	)		(349,683	)
Investment in restricted cash from pollution control revenue bonds		(160	)		(145	)
Distribution of restricted cash from pollution control revenue bonds		13,774			19,622
Nuclear decommissioning trust fund purchases		(60,600	)		(46,941	)
Nuclear decommissioning trust fund sales		60,600			46,941
Cost of removal, net of salvage		(5,109	)		(8,863	)
Other		3,025			13,453
Net cash used for investing activities		(326,454	)		(325,616	)
Financing Activities:
Decrease in notes payable, net		(24,995	)		—
Proceeds —
Common stock issued to parent		—			150,000
Capital contributions		6,682			6,016
Gross excess tax benefit of stock options		47			607
Senior notes		500,000			300,000
Redemptions —
Preferred stock		—			(125,000	)
Payment of preferred and preference stock dividends		(9,868	)		(11,275	)
Payment of common stock dividends		(130,700	)		(122,825	)
Other		(5,869	)		(1,684	)
Net cash provided from financing activities		335,297			195,839
Net Change in Cash and Cash Equivalents		305,770			12,445
Cash and Cash Equivalents at Beginning of Period		28,181			73,616
Cash and Cash Equivalents at End of Period	$	333,951		$	86,061
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $6,992 and $5,130 capitalized for 2009 and 2008, respectively)	$	54,875		$	63,324
Income taxes (net of refunds)	$	(640	)	$	1,550

Also see FINANCIAL CONDITION AND LIQUIDITY – "Capital Requirements and Contractual Obligations" herein for additional information regarding Southern Company's capital requirements for its subsidiaries' construction programs.

~~The accompanying notes as they relate to Alabama Power are an integral part of these condensed financial statements.~~ 24

31 Table of Contents

~~Table~~SOUTHERN ofCOMPANY ~~Contents~~AND SUBSIDIARY COMPANIES

~~ALABAMA~~MANAGEMENT'S ~~POWER~~DISCUSSION ~~COMPANY~~ AND ANALYSIS OF

~~CONDENSED~~FINANCIAL ~~BALANCE~~CONDITION ~~SHEETS~~AND ~~(UNAUDITED)~~RESULTS OF OPERATIONS

	At March 31,			At December 31,
Assets	2009			2008
	(in thousands)
Current Assets:
Cash and cash equivalents	$	333,951		$	28,181
Restricted cash and cash equivalents		66,466			80,079
Receivables —
Customer accounts receivable		343,870			350,410
Unbilled revenues		89,450			98,921
Under recovered regulatory clause revenues		204,804			153,899
Other accounts and notes receivable		29,649			44,645
Affiliated companies		60,765			70,612
Accumulated provision for uncollectible accounts		(9,161	)		(8,882	)
Fossil fuel stock, at average cost		330,134			322,089
Materials and supplies, at average cost		312,416			305,880
Vacation pay		52,701			52,577
Prepaid expenses		130,271			88,219
Other regulatory assets		105,654			74,825
Other		12,772			12,915
Total current assets		2,063,742			1,674,370
Property, Plant, and Equipment:
In service		17,789,435			17,635,129
Less accumulated provision for depreciation		6,346,622			6,259,720
		11,442,813			11,375,409
Nuclear fuel, at amortized cost		255,818			231,862
Construction work in progress		1,243,412			1,092,516
Total property, plant, and equipment		12,942,043			12,699,787
Other Property and Investments:
Equity investments in unconsolidated subsidiaries		51,745			50,912
Nuclear decommissioning trusts, at fair value		376,606			403,966
Other		63,496			62,782
Total other property and investments		491,847			517,660
Deferred Charges and Other Assets:
Deferred charges related to income taxes		369,991			362,596
Prepaid pension costs		176,613			166,334
Deferred under recovered regulatory clause revenues		—			180,874
Other regulatory assets		761,831			732,367
Other		206,178			202,018
Total deferred charges and other assets		1,514,613			1,644,189
Total Assets	$	17,012,245		$	16,536,006

Integrated Coal Gasification Combined Cycle

~~The~~Mississippi ~~accompanying~~Power's ~~notes~~current ascost ~~they~~estimate ~~relate~~for the Kemper IGCC in total is approximately $6.58 billion, which includes approximately $5.35 billion of costs subject to ~~Alabama~~the construction cost cap and is net of $137 million in additional DOE grants Mississippi Power received for the Kemper IGCC on April 8, 2016 (Additional DOE Grants), which are anexpected ~~integral~~to ~~part~~be used to reduce future rate impacts for customers. Mississippi Power does not intend to seek any rate recovery for any related costs that exceed the $2.88 billion cost cap, net of ~~these~~the ~~condensed~~Initial ~~financial~~DOE Grants and excluding the Cost Cap Exceptions. In the aggregate, Southern Company has incurred charges of $2.47 billion ($1.52 billion after tax) as a result of changes in the cost estimate above the cost cap for the Kemper IGCC through March 31, 2016. Mississippi Power's current cost estimate includes costs through September 30, 2016. In subsequent periods, any further changes in the estimated costs to complete construction of the Kemper IGCC subject to the $2.88 billion cost cap, net of the Initial DOE Grants and excluding the Cost Cap Exceptions, will be reflected in Southern Company's statements of income and these changes could be material.

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

~~Table~~Civil ~~of Contents~~Lawsuit

~~ALABAMA~~On ~~POWER~~April ~~COMPANY CONDENSED~~26, ~~BALANCE~~2016, ~~SHEETS~~a ~~(UNAUDITED)~~ complaint against Mississippi Power was filed in Harrison County Circuit Court by Biloxi Freezing & Processing Inc., Gulfside Casino Partnership, and John Carlton Dean. The plaintiffs allege that Mississippi Power violated the Mississippi Unfair Trade Practices Act and concealed, falsely represented, and failed to fully disclose important facts concerning the cost and schedule of the Kemper IGCC and that Mississippi Power's alleged breaches interfered with and destroyed economically advantageous relationships between the plaintiffs and their current and prospective business associates. The plaintiffs seek unspecified actual damages and punitive damages as well as attorney's fees, costs, and interest. The plaintiffs also seek an injunction to prevent any Kemper IGCC costs from being charged to customers through electric rates. Mississippi Power believes this legal challenge has no merit; however, an adverse outcome in this proceeding could have an impact on Southern Company's results of operations, financial condition, and liquidity. Mississippi Power will vigorously defend the matter, and the final outcome of this matter cannot be determined at this time.

	At March 31,			At December 31,
Liabilities and Stockholder’s Equity	2009			2008
	(in thousands)
Current Liabilities:
Securities due within one year	$	250,040		$	250,079
Notes payable		—			24,995
Accounts payable —
Affiliated		140,190			178,708
Other		272,427			358,176
Customer deposits		81,730			77,205
Accrued taxes —
Income taxes		143,306			18,299
Other		49,447			30,372
Accrued interest		67,393			56,375
Accrued vacation pay		44,217			44,217
Accrued compensation		26,973			91,856
Liabilities from risk management activities		116,330			83,873
Other		43,075			53,777
Total current liabilities		1,235,128			1,267,932
Long-term Debt		6,103,870			5,604,791
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		2,192,025			2,243,117
Deferred credits related to income taxes		90,806			90,083
Accumulated deferred investment tax credits		170,653			172,638
Employee benefit obligations		399,844			396,923
Asset retirement obligations		468,632			461,284
Other cost of removal obligations		655,389			634,792
Other regulatory liabilities		79,371			79,151
Other		51,638			45,858
Total deferred credits and other liabilities		4,108,358			4,123,846
Total Liabilities		11,447,356			10,996,569
Preferred and Preference Stock		685,127			685,127
Common Stockholder’s Equity:
Common stock, par value $40 per share —
Authorized - 40,000,000 shares
Outstanding - 25,475,000 shares		1,019,000			1,019,000
Paid-in capital		2,101,062			2,091,462
Retained earnings		1,769,361			1,753,797
Accumulated other comprehensive loss		(9,661	)		(9,949	)
Total common stockholder’s equity		4,879,762			4,854,310
Total Liabilities and Stockholder’s Equity	$	17,012,245		$	16,536,006

Other Matters

~~The~~Southern ~~accompanying~~Company ~~notes~~and asits ~~they~~subsidiaries ~~relate~~are involved in various other matters being litigated and regulatory matters that could affect future earnings. In addition, Southern Company and its subsidiaries are subject to ~~Alabama~~certain ~~Power~~claims and legal actions arising in the ordinary course of business. The business activities of Southern Company's subsidiaries are ansubject ~~integral~~to ~~part~~extensive governmental regulation related to public health and the environment, such as regulation of ~~these~~air ~~condensed~~emissions ~~financial~~and ~~statements~~water discharges. Litigation over environmental issues and claims of various types, including property damage, personal injury, common law nuisance, and citizen enforcement of environmental requirements, such as air quality and water standards, has occurred throughout the U.S. This litigation has included claims for damages alleged to have been caused by CO2 and other emissions, CCR, and alleged exposure to hazardous materials, and/or requests for injunctive relief in connection with such matters.

33 The ultimate outcome of such pending or potential litigation against Southern Company and its subsidiaries cannot be predicted at this time; however, for current proceedings not specifically reported in Note (B) to the Condensed Financial Statements herein or in Note 3 to the financial statements of Southern Company in Item 8 of the Form 10-K, management does not anticipate that the ultimate liabilities, if any, arising from such current proceedings would have a material effect on Southern Company's financial statements. See Note (B) to the Condensed Financial Statements herein for a discussion of various other contingencies, regulatory matters, and other matters being litigated which may affect future earnings potential.

~~Table~~The SEC is conducting a formal investigation of ~~Contents~~Southern Company and Mississippi Power concerning the estimated costs and expected in-service date of the Kemper IGCC. Southern Company and Mississippi Power believe the investigation is focused primarily on periods subsequent to 2010 and on accounting matters, disclosure controls and procedures, and internal controls over financial reporting associated with the Kemper IGCC. See ACCOUNTING POLICIES – "Application of Critical Accounting Policies and Estimates" herein for additional

~~ALABAMA POWER COMPANY~~ 25

~~MANAGEMENT’S~~Table ~~DISCUSSION~~of ~~AND ANALYSIS OF~~Contents

~~FINANCIAL~~SOUTHERN ~~CONDITION~~COMPANY AND ~~RESULTS~~SUBSIDIARY ~~OF OPERATIONS~~COMPANIES

~~FIRST~~MANAGEMENT'S ~~QUARTER~~DISCUSSION ~~2009~~AND ~~vs.~~ANALYSIS ~~FIRST QUARTER 2008~~ OF

~~OVERVIEW~~ FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Alabama~~information ~~Power~~on ~~operates~~the asKemper aIGCC ~~vertically~~estimated ~~integrated~~construction ~~utility~~costs ~~providing electricity to retail customers within its traditional service area located within the State of Alabama~~ and toexpected ~~wholesale customers~~ in-service ~~the Southeast~~date. ~~Many~~Southern ~~factors~~Company ~~affect the opportunities, challenges,~~ and ~~risks~~Mississippi ~~of Alabama~~ Power’s ~~primary~~are ~~business~~cooperating offully ~~selling~~with ~~electricity. These factors include~~ the ~~ability~~SEC. ~~to maintain~~The aultimate ~~constructive~~outcome ~~regulatory~~of ~~environment,~~this tomatter ~~maintain~~cannot ~~energy~~be ~~sales~~determined inat ~~the~~this ~~midst~~time; ~~of the current economic downturn~~however, ~~and~~it tois ~~effectively~~not ~~manage~~expected ~~and secure timely recovery of rising costs. These costs include those related~~ to ~~projected~~have ~~long-term~~a ~~demand~~material ~~growth,~~impact ~~increasingly~~on ~~stringent environmental standards, fuel prices, capital expenditures, and restoration following major storms. Appropriately balancing~~ the ~~need~~financial tostatements ~~recover~~of ~~these~~Southern ~~increasing costs with customer prices will continue to challenge Alabama Power for the foreseeable future~~Company.

~~Alabama~~Through 2015, capacity revenues from long-term non-affiliate sales out of Gulf Power's ~~continues~~ownership toof ~~focus~~Plant onScherer ~~several~~Unit ~~key~~3 ~~performance~~(205 ~~indicators~~MWs) represented the majority of Gulf Power's wholesale earnings. ~~These~~The ~~indicators~~capacity ~~include customer~~revenues ~~satisfaction,~~associated ~~plant~~with ~~availability,~~these ~~system~~contracts ~~reliability~~covering 100% of Gulf Power's ownership represented 82% of Gulf Power's wholesale capacity revenues in 2015. Due to the expiration of a wholesale contract at the end of 2015 and another wholesale contract at the end of May 2016, Gulf Power's remaining contracted sales from the unit from June 2016 through 2019 will cover approximately 24% of the unit. The expiration of the contract in 2015 and ~~net~~the ~~income~~scheduled ~~after~~future ~~dividends~~expiration of the remaining contracts are not expected to have a material impact on ~~preferred~~ ~~and~~Southern ~~preference~~Company's ~~stock~~earnings. ~~For~~The ~~additional~~alternatives ~~information~~Gulf onPower ~~these~~is ~~indicators~~actively evaluating include, ~~see~~without ~~MANAGEMENT’S DISCUSSION~~limitation, ~~AND~~rededication ~~ANALYSIS~~of –the ~~OVERVIEW~~asset –to ~~“Key~~serve ~~Performance~~retail ~~Indicators”~~customers for whom it was originally planned and built, replacement long-term wholesale contracts or other sales into the wholesale market, or an asset sale. On May 5, 2016, Gulf Power delivered a letter to the Florida PSC requesting recognition of ~~Alabama~~Gulf Power's ownership in ~~Item 7~~Plant of Scherer Unit 3 as being in service to retail customers when and as the ~~Form~~contracts ~~10-K~~expire. The ultimate outcome of this matter cannot be determined at this time.

~~RESULTS~~ACCOUNTING ~~OF OPERATIONS~~ POLICIES

~~Net~~Application ~~Income~~ of Critical Accounting Policies and Estimates

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$16.2		12.4

Southern Company prepares its consolidated financial statements in accordance with GAAP. 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, 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. 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, Asset Retirement Obligations, Pension and Other Postretirement Benefits, and Contingent Obligations.

~~Alabama~~Kemper ~~Power’s~~IGCC ~~financial~~Estimated ~~performance~~Construction ~~remained~~Costs, ~~stable~~Project inCompletion the first quarter 2009 despite the continued challenges of a recessionary economy. Alabama Power’s net income after dividends on preferred and preference stock for the first quarter 2009 was $146.3 million compared to $130.1 million for the same period in 2008. The increase was primarily due to the corrective rate package providing for adjustments associated with customer charges to certain existing rate structures effective in January 2009Date, and aRate decrease in other operations and maintenance expenses related to steam power associated with fewer scheduled outages. The increase was partially offset by a decline in sales growth and increases in income taxes and depreciation and amortization resulting from additional plant in service. Recovery

~~Retail~~During ~~Revenues~~ 2016, Mississippi Power further revised its cost estimate to complete construction and start-up of the Kemper IGCC to an amount that exceeds the $2.88 billion cost cap, net of the Initial DOE Grants and excluding the Cost Cap Exceptions. Mississippi Power does not intend to seek any rate recovery for any costs related to the construction of the Kemper IGCC that exceed the $2.88 billion cost cap, net of the Initial DOE Grants and excluding the Cost Cap Exceptions.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$23.9		2.3

As a result of the revisions to the cost estimate, Southern Company recorded total pre-tax charges to income for the estimated probable losses on the Kemper IGCC of $53 million ($33 million after tax) in the first quarter 2016, $183 million ($113 million after tax) in the fourth quarter 2015, $150 million ($93 million after tax) in the third quarter 2015, $23 million ($14 million after tax) in the second quarter 2015, $9 million ($6 million after tax) in the first quarter 2015, $70 million ($43 million after tax) in the fourth quarter 2014, $418 million ($258 million after tax) in the third quarter 2014, $380 million ($235 million after tax) in the first quarter 2014, $40 million ($25 million after tax) in the fourth quarter 2013, $150 million ($93 million after tax) in the third quarter 2013, $450 million ($278 million after tax) in the second quarter 2013, and $540 million ($333 million after tax) in the first quarter 2013. In the aggregate, Southern Company has incurred charges of $2.47 billion ($1.52 billion after tax) as a result of changes in the cost estimate above the cost cap for the Kemper IGCC through March 31, 2016.

InMississippi ~~the~~Power ~~first~~has ~~quarter~~experienced, ~~2009~~and may continue to experience, ~~retail~~material ~~revenues~~changes ~~were~~in $1the cost estimate for the Kemper IGCC.~~06 billion~~ ~~compared~~In subsequent periods, any further changes in the estimated costs to complete construction and start-up of the Kemper IGCC subject to the $12.0388 billion ~~for~~cost cap, net of the ~~same~~ ~~period~~Initial DOE Grants and excluding the Cost Cap Exceptions, will be reflected in ~~2008~~Southern Company's statements of income and these changes could be material.

34 26

Table of Contents

~~ALABAMA~~SOUTHERN ~~POWER~~ COMPANY ~~MANAGEMENT’S~~ ~~DISCUSSION~~ AND ~~ANALYSIS~~SUBSIDIARY ~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ COMPANIES

~~Details~~MANAGEMENT'S ofDISCUSSION ~~the~~AND ~~change~~ANALYSIS ~~to retail revenues are as follows:~~ OF

	First Quarter
	2009
	(in millions)			(% change)
Retail – prior year	$	1,034.3
Estimated change in —
Rates and pricing		49.6			4.8
Sales growth (decline)		(32.4	)		(3.1	)
Weather		(0.7	)		(0.1	)
Fuel and other cost recovery		7.3			0.7
Retail – current year	$	1,058.1			2.3	%

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Revenues~~Any ~~associated~~further ~~with~~cost ~~changes~~increases ~~in rates~~ and/or ~~pricing~~extensions ~~increased~~of in the ~~first~~in-service ~~quarter~~date ~~2009~~with ~~when compared~~respect to the ~~same~~Kemper ~~period~~IGCC inmay ~~2008~~result ~~primarily~~from ~~due~~factors including, but not limited to, ~~the~~labor ~~corrective~~costs ~~rate~~and ~~package~~productivity, ~~increase~~adverse ~~effective January 2009~~weather conditions, ~~which~~shortages ~~mainly~~and ~~provided~~inconsistent ~~for~~quality ~~adjustments~~of ~~associated~~equipment, ~~with~~materials, ~~customer~~and ~~charges~~labor, tocontractor ~~certain existing~~or ~~rate~~supplier ~~structures.~~delay, ~~See~~non-performance ~~MANAGEMENT’S~~under ~~DISCUSSION~~operating ~~AND~~or ~~ANALYSIS~~other –agreements, ~~FUTURE~~operational ~~EARNINGS~~readiness, ~~POTENTIAL~~including ~~– “PSC~~specialized ~~Matters~~operator –training ~~Retail~~and ~~Rate~~required ~~Adjustments”~~site ofsafety ~~Alabama~~programs, ~~Power~~unforeseen inengineering ~~Item 7~~or ~~and~~design ~~Note~~problems, 3start-up toactivities ~~the~~for ~~financial statements~~this first-of-a-kind ~~Alabama~~technology ~~Power~~(including, ~~under~~but ~~“Retail~~not ~~Regulatory~~limited ~~Matters”~~to, inmajor ~~Item 8~~equipment offailure ~~the~~and ~~Form~~system ~~10-K~~integration), ~~for~~ and/or operational performance (including, but not limited to, additional ~~information~~costs to satisfy any operational parameters ultimately adopted by the Mississippi PSC).

~~Revenues~~Mississippi ~~attributable~~Power's revised cost estimate includes costs through September 30, 2016. Any extension of the in-service date beyond September 30, 2016 is currently estimated to ~~changes~~result in ~~sales~~additional ~~growth~~base ~~declined~~costs ~~due~~of approximately $25 million to a$35 million ~~recessionary~~per ~~economy~~month, inwhich ~~the first~~includes ~~quarter~~maintaining ~~2009~~necessary ~~when~~levels ~~compared~~of start-up labor, materials, and fuel, as well as operational resources required to ~~the~~execute ~~same~~start-up ~~period~~and incommissioning ~~2008~~activities. ~~Weather-adjusted~~However, ~~residential~~additional ~~KWH energy~~costs ~~sales~~may ~~decreased~~be 2required for remediation of any further equipment and/or design issues identified.6% ~~driven~~Any byextension aof ~~decline~~the in-service ~~customer~~date ~~demand~~with ~~related~~respect to ~~customer~~the ~~energy efficiency~~Kemper ~~efforts~~IGCC inbeyond ~~addition~~September to30, a2016 ~~recessionary~~would ~~economy.~~also ~~Industrial~~increase ~~KWH~~costs ~~energy~~for ~~sales~~the ~~decreased 21.6%~~Cost ~~due~~Cap Exceptions, which are not subject to athe ~~broad~~$2.88 billion ~~decline~~cost incap ~~demand~~established ~~across~~by ~~all~~the ~~industrial~~Mississippi ~~segments~~PSC. ~~Weather-adjusted~~These ~~commercial KWH~~costs ~~energy~~include ~~sales~~AFUDC, ~~decreased~~which ~~2.5%~~is ~~due~~currently estimated to atotal ~~decline~~approximately $14 million per month, as well as carrying costs and operating expenses on Kemper IGCC assets placed in ~~customer~~service ~~demand~~and consulting and legal fees of approximately $2 million per month.

~~Revenues~~Given ~~resulting~~the ~~from~~significant ~~changes~~judgment involved in ~~weather~~estimating ~~were~~the ~~relatively~~future ~~flat~~costs into complete construction and start-up, the ~~first~~project ~~quarter~~completion ~~2009~~date, ~~when compared~~the ultimate rate recovery for the Kemper IGCC, and the potential impact on Southern Company's results of operations, Southern Company considers these items to be critical accounting estimates. See Note 3 to the ~~same~~financial ~~period~~statements of Southern Company under "Integrated Coal Gasification Combined Cycle" in ~~2008~~Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Integrated Coal Gasification Combined Cycle" herein for additional information.

~~Fuel~~Recently ~~and~~Issued ~~other~~Accounting cost recovery revenues increased in the first quarter 2009 when compared to the same period in 2008 due to increases in fuel costs. Electric rates include provisions to recognize the full recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the natural disaster reserve. Under these provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not impact net income. Standards

~~Wholesale~~On ~~Revenues~~February –25, ~~Non~~2016, the FASB issued ASU No. 2016-~~Affiliates~~ 02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires lessees to recognize on the balance sheet a lease liability and a right-of-use asset for all leases. ASU 2016-02 also changes the recognition, measurement, and presentation of expense associated with leases and provides clarification regarding the identification of certain components of contracts that would represent a lease. The accounting required by lessors is relatively unchanged and there is no change to the accounting for existing leveraged leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Southern Company is currently evaluating the new standard and has not yet determined its ultimate impact; however, adoption of ASU 2016-02 is expected to have a significant impact on Southern Company's balance sheet.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(11.3)		(6.7)

On March 30, 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 changes the accounting for income taxes and the cash flow presentation for share-based payment award transactions. Most significantly, entities are required to recognize all excess tax benefits and deficiencies related to the exercise or vesting of stock compensation as income tax expense or benefit in the income statement. Southern Company currently recognizes any excess tax benefits and deficiencies related to the exercise and vesting of stock compensation in additional paid-in capital. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. Southern Company is currently evaluating the new standard and has not yet determined its ultimate impact.

Wholesale revenues from non-affiliates will vary depending on the market cost of available energy compared to the cost of Alabama Power and Southern Company system-owned generation, demand for energy within the Southern Company service territory, and availability of Southern Company system generation. In the first quarter 2009, wholesale revenues from non-affiliates were $158.7 million compared to $170.0 million for the same period in 2008. This decrease was primarily due to a 7.8% reduction in price. 27

35 Table of Contents

~~Table~~SOUTHERN ofCOMPANY ~~Contents~~AND SUBSIDIARY COMPANIES

~~ALABAMA POWER COMPANY~~ MANAGEMENT’'S DISCUSSION AND ANALYSIS OF ~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Other~~FINANCIAL ~~Revenues~~ CONDITION AND RESULTS OF OPERATIONS

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(10.1)		(20.8)

FINANCIAL CONDITION AND LIQUIDITY

In the first quarter 2009, other revenues were $38.6 million compared to $48.7 million for the same period in 2008. This decrease was primarily due to a decrease of $9.5 million in revenues from gas-fueled co-generation steam facilities resulting from lower gas prices. Overview

CoSee MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Overview" of Southern Company in Item 7 of the Form 10-~~generation~~K ~~steam~~for ~~fuel~~additional ~~revenues~~information. doSouthern ~~not~~Company's ~~have~~financial acondition ~~significant~~remained ~~impact~~stable onat ~~earnings~~March 31, ~~since~~2016. ~~they~~Through ~~are generally~~March 31, ~~offset~~2016, bySouthern ~~fuel~~Company ~~expense~~has incurred non-recoverable cash expenditures of $2. 11 billion and is expected to incur approximately $0.36 billion in additional non-recoverable cash expenditures through completion of the Kemper IGCC. Southern Company intends to continue to monitor its access to short-term and long-term capital markets as well as bank credit agreements to meet future capital and liquidity needs. See "Capital Requirements and Contractual Obligations," "Sources of Capital," and "Financing Activities" herein for additional information.

~~Fuel~~Net cash provided from operating activities totaled $0.9 billion for the first three months of 2016 and ~~Purchased~~the ~~Power~~corresponding ~~Expenses~~ period in 2015. Net cash used for investing activities totaled $2.2 billion for the first three months of 2016 primarily due to gross property additions for construction of generation, transmission, and distribution facilities and installation of equipment to comply with environmental standards. Net cash provided from financing activities totaled $0.7 billion for the first three months of 2016 primarily due to issuances of long-term debt, partially offset by redemptions of short-term and long-term debt and common stock dividend payments. Fluctuations in cash flow from financing activities vary from period to period based on capital needs and the maturity or redemption of securities.

	First Quarter 2009 vs. First Quarter 2008
	(change in millions)			(% change)
Fuel	$	30.1			6.6
Purchased power – non-affiliates		4.3			38.6
Purchased power – affiliates		(47.1	)		(53.1	)
Total fuel and purchased power expenses	$	(12.7	)

Significant balance sheet changes for the first three months of 2016 include an increase of $1.4 billion in total property, plant, and equipment to comply with environmental standards and construction of generation, transmission, and distribution facilities; a $0.7 billion decrease in cash and cash equivalents due to the funding of acquisitions and construction of renewable energy projects; a $1.1 billion increase in short-term and long-term debt to fund the subsidiaries' continuous construction programs and for other general corporate purposes; a $0.3 billion decrease in accounts payable due to the timing of vendor payments; and a $0.3 billion decrease in accrued compensation due to the timing of payments.

InAt the end of the first quarter ~~2009~~2016, ~~total~~the ~~fuel~~market ~~and~~price ~~purchased~~of ~~power~~Southern ~~expenses~~Company's ~~were~~common ~~$540.4 million~~stock ~~compared~~was to $~~553~~51.~~1 million~~73 ~~for~~per share (based on the ~~same~~closing ~~period~~price inas ~~2008.~~reported ~~This~~on ~~decrease~~the ~~was~~New ~~primarily~~York ~~due~~Stock toExchange) aand the book value was $6822.~~8 million decrease~~65 inper ~~total~~share, ~~KWHs~~representing ~~generated~~a ~~and~~market-to-book ~~purchased,~~ratio ~~partially~~of ~~offset~~228%, bycompared ato $5646.~~1 million~~79, ~~increase~~$22.59, inand 207%, respectively, at the ~~cost~~ end of ~~energy~~2015. ~~resulting~~Southern ~~from~~Company's ancommon ~~increase~~stock individend for the ~~average~~first ~~cost~~quarter of2016 ~~coal~~was $0. 5425 per share compared to $0.5250 per share in the first quarter 2015.

~~Fuel~~Capital ~~and~~Requirements ~~purchased power transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Rate ECR. See FUTURE EARNINGS POTENTIAL – “FERC~~ and ~~Alabama~~Contractual ~~PSC Matters – Retail Fuel Cost Recovery” herein for additional information.~~ Obligations

~~Details~~See MANAGEMENT'S DISCUSSION AND ANALYSIS – FINANCIAL CONDITION AND LIQUIDITY – "Capital Requirements and Contractual Obligations" of ~~Alabama~~Southern ~~Power’~~Company in Item 7 of the Form 10-K for a description of Southern Company's ~~cost~~capital requirements for the construction programs of ~~generation~~the Southern Company system, including estimated capital expenditures for new generating facilities and ~~purchased~~to ~~power~~comply ~~are~~with existing environmental statutes and regulations, scheduled maturities of long-term debt, as ~~follows:~~ well as related interest, derivative obligations, preferred and preference stock dividends, leases, purchase commitments, trust funding requirements, and unrecognized tax benefits. Approximately $2.5 billion will be required through March 31, 2017 to fund maturities and announced redemptions of long-term debt. See "Sources of Capital" herein for additional information.

	First Quarter		First Quarter		Percent
Average Cost	2009		2008		Change
	(cents per net KWH)
Fuel		2.92		2.60		12.3
Purchased power		6.14		5.67		8.3

In addition to the cash consideration for the Merger to be paid by Southern Company at the effective time of the Merger, Southern Company will also assume AGL Resources' outstanding indebtedness (approximately $4.3 billion at March 31, 2016). See OVERVIEW herein for additional information regarding the Merger as well as Note (I) to the Condensed Financial Statements herein.

InThe ~~the~~Southern ~~first~~Company ~~quarter~~system's ~~2009,~~construction ~~fuel~~program ~~expense~~is ~~was~~currently ~~$483.3 million~~estimated ~~compared~~ to total $~~453~~7.~~2 million for the same period in 2008. The increase was due to a 12.~~3% ~~increase~~billion infor ~~the average cost of fuel per KWH generated~~2016, ~~primarily due to the price of fuels~~$5.2 ~~The~~billion ~~average~~for ~~cost~~2017, ~~of coal per KWH generated increased 33.3% primarily as a result of increases in commodity~~ and ~~transportation costs~~$5.5 ~~The average~~billion ~~cost~~for ~~of natural gas per KWH generated decreased 25~~2018.1% ~~primarily~~These asamounts ainclude ~~result~~expenditures of ~~decreases~~approximately ~~in commodity prices~~$0. 7 billion

36 28

Table of Contents

~~ALABAMA~~SOUTHERN ~~POWER~~ COMPANY ~~MANAGEMENT’S~~ ~~DISCUSSION~~ AND ~~ANALYSIS~~SUBSIDIARY ~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ COMPANIES

~~Non-Affiliates~~ MANAGEMENT'S DISCUSSION AND ANALYSIS OF

InFINANCIAL ~~the~~CONDITION ~~first~~AND ~~quarter~~RESULTS ~~2009,~~OF purchased power expense from non-affiliates was $15.5 million compared to $11.2 million for the same period in 2008. This increase was primarily related to a 37.8% volume increase in KWHs purchased from available lower-priced market energy alternatives. OPERATIONS

~~Energy~~related ~~purchases~~to ~~from~~the ~~non~~construction and start-~~affiliates~~up ~~will~~of ~~vary~~the ~~depending~~Kemper onIGCC ~~the~~in ~~market~~2016; ~~cost~~$0.6 ofbillion, ~~available~~$0.7 ~~energy being~~billion, ~~lower~~and ~~than~~$0.4 ~~the~~billion ~~cost~~to ofcontinue ~~Southern~~construction ~~Company~~on ~~system-generated~~Plant ~~energy~~Vogtle Units 3 and 4 in 2016, ~~demand~~2017, ~~for~~and ~~energy~~2018, ~~within~~respectively; ~~the Southern~~and ~~Company~~$2.2 ~~system~~billion, ~~service~~$0.9 ~~territory~~billion, and ~~availability~~$1.4 ofbillion for Southern ~~Company~~Power's ~~system~~acquisitions ~~generation~~and/or construction of new generating facilities in 2016, 2017, and 2018, respectively.

~~Affiliates~~ The construction programs are subject to periodic review and revision, and actual construction costs may vary from these estimates because of numerous factors. These factors include: changes in business conditions; changes in load projections; changes in environmental statutes and regulations; the outcome of any legal challenges to the environmental rules; changes in generating plants, including unit retirements and replacements and adding or changing fuel sources at existing units, to meet regulatory requirements; changes in FERC rules and regulations; PSC approvals; changes in the expected environmental compliance program; changes in legislation; the cost and efficiency of construction labor, equipment, and materials; project scope and design changes; storm impacts; and the cost of capital. In addition, there can be no assurance that costs related to capital expenditures will be fully recovered. Additionally, planned expenditures for plant acquisitions may vary due to market opportunities and Southern Power's ability to execute its growth strategy. See Note 12 to the financial statements of Southern Company under "Southern Power" in Item 8 of the Form 10-K and Note (I) to the Condensed Financial Statements under "Southern Power" herein for additional information regarding Southern Power's plant acquisitions. See Note 3 to the financial statements of Southern Company under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" and "Integrated Coal Gasification Combined Cycle" in Item 8 of the Form 10-K and Note (B) to the Condensed Financial Statements under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" and "Integrated Coal Gasification Combined Cycle" herein for information regarding additional factors that may impact construction expenditures.

InSources the first quarter 2009, purchased power expense from affiliates was $41.6 million compared to $88.7 million for the same period in 2008. This decrease was primarily related to a 57.5% decrease in the amount of ~~energy purchased because of the availability of lower-priced market energy alternatives, partially offset by a 10.4% increase in price.~~ Capital

~~Energy~~Southern ~~purchases~~Company ~~from~~intends ~~affiliates~~to ~~will~~meet ~~vary~~its ~~depending~~future oncapital ~~demand~~needs ~~and~~through ~~the~~operating ~~availability~~cash flows, short-term debt, term loans, and ~~cost~~external ~~of generating~~security ~~resources~~issuances. atEquity ~~each~~capital ~~company~~can ~~within~~be ~~the~~provided from any combination of Southern Company's ~~system~~stock plans, private placements, or public offerings. ~~These~~The ~~purchases~~amount ~~are~~and ~~made in~~timing ~~accordance~~of ~~with~~additional ~~the~~equity ~~IIC~~capital and debt issuances in 2016, as ~~approved~~well byas in subsequent years, will be contingent on Southern Company's investment opportunities and the ~~FERC~~Southern Company system's capital requirements.

~~Other~~Except ~~Operations~~as described herein, the traditional operating companies and ~~Maintenance~~Southern ~~Expenses~~ Power plan to obtain the funds required for construction and other purposes from operating cash flows, external security issuances, term loans, short-term borrowings, and equity contributions or loans from Southern Company. However, the amount, type, and timing of any future financings, if needed, will depend upon prevailing market conditions, regulatory approval, and other factors. 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.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(32.7)		(10.6)

In addition, Georgia Power may make borrowings through a loan guarantee agreement (Loan Guarantee Agreement) between Georgia Power and the DOE, the proceeds of which may be used to reimburse Georgia Power for Eligible Project Costs incurred in connection with its construction of Plant Vogtle Units 3 and 4. Under the Loan Guarantee Agreement, the DOE agreed to guarantee borrowings of up to $3.46 billion (not to exceed 70% of Eligible Project Costs) to be made by Georgia Power under a multi-advance credit facility (FFB Credit Facility) among Georgia Power, the DOE, and the FFB. See Note 6 to the financial statements of Southern Company under "DOE Loan Guarantee Borrowings" in Item 8 of the Form 10-K for additional information regarding the Loan Guarantee Agreement and Note (B) to the Condensed Financial Statements under "Retail Regulatory Matters – Georgia Power – Nuclear Construction" herein for additional information regarding Plant Vogtle Units 3 and 4.

InEligible ~~the~~Project ~~first~~Costs ~~quarter~~incurred ~~2009~~through March 31, ~~other~~2016 ~~operations~~would ~~and~~allow ~~maintenance~~for ~~expenses~~borrowings ~~were~~of ~~$276.8 million~~up ~~compared~~ to $~~309~~2.5 ~~million~~billion ~~for~~under the ~~same~~FFB ~~period~~Credit inFacility, ~~2008. This decrease was primarily a result~~ of awhich ~~$35.9 million~~Georgia ~~decrease~~Power inhas ~~steam~~borrowed ~~power expense associated with fewer scheduled outages, primarily offset by a~~ $52.02 ~~million increase in nuclear production expense related to operations and scheduled outage cost~~billion.

~~Depreciation~~Mississippi ~~and~~Power ~~Amortization~~ received $245 million of Initial DOE Grants in prior years that were used for the construction of the Kemper IGCC. An additional $25 million of grants from the DOE is expected to be received for commercial operation of the Kemper IGCC. On April 8, 2016, Mississippi Power received approximately $137 million in

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$18.8		15.1

~~For~~Table ~~the first quarter 2009, depreciation and amortization was $143.4 million compared to $124.6 million for the same period in 2008. This increase was the result~~ of an increase in plant in service due to additions to property, plant, and equipment primarily related to steam power, environmental mandates, and transmission projects. See MANAGEMENT’S DISCUSSION AND ANALYSIS – RESULTS OF OPERATIONS – “Depreciation and Amortization” of Alabama Power in Item 7 of the Form 10-K for additional information. Contents

37 SOUTHERN COMPANY AND SUBSIDIARY COMPANIES

~~Table~~MANAGEMENT'S ofDISCUSSION ~~Contents~~AND ANALYSIS OF

~~ALABAMA POWER COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~ FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Allowance~~Additional DOE Grants for ~~Equity~~the ~~Funds~~Kemper ~~Used~~IGCC, ~~During~~which ~~Construction~~ are expected to be used to reduce future rate impacts for customers. In addition, see Note 3 to the financial statements of Southern Company under "Integrated Coal Gasification Combined Cycle" in Item 8 of the Form 10-K for information regarding legislation related to the securitization of certain costs of the Kemper IGCC.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$5.4		48.0

As of March 31, 2016, Southern Company's current liabilities exceeded current assets by $2.4 billion, primarily due to long-term debt that is due within one year, including approximately $0.9 billion at the parent company, $0.2 billion at Alabama Power, $0.5 billion at Georgia Power, $0.1 billion at Gulf Power, $0.3 billion at Mississippi Power, and $0.4 billion at Southern Power. To meet short-term cash needs and contingencies, Southern Company has substantial cash flow from operating activities and access to capital markets and financial institutions. Southern Company, the traditional operating companies, and Southern Power intend to utilize operating cash flows, as well as commercial paper, lines of credit, bank notes, and securities issuances, as market conditions permit, as well as, under certain circumstances for the traditional operating companies and Southern Power, equity contributions and/or loans from Southern Company to meet their short-term capital needs. In addition, for the remainder of 2016, Georgia Power expects to utilize borrowings through the FFB Credit Facility as an additional source of long-term borrowed funds.

~~For~~At ~~the~~March 31, ~~first quarter 2009~~2016, ~~allowance~~Southern ~~for~~Company ~~equity~~and ~~funds~~its ~~used~~subsidiaries ~~during~~had ~~construction~~approximately ~~(AFUDC) was~~ $160.~~7 million~~8 ~~compared~~billion toof ~~$11.3 million~~cash ~~for~~and ~~the~~cash ~~same period in 2008~~equivalents. ~~This~~Committed ~~increase~~credit ~~was~~arrangements ~~primarily~~with ~~due~~banks ~~to increases in the amount of construction work in progress~~ at ~~generating~~March 31, ~~facilities~~2016 ~~related~~were ~~to environmental~~as ~~mandates.~~ follows:

Income Taxes



	Expires												Executable Term Loans				Due Within One Year
Company	2016		2017		2018		2020		Total		Unused		One Year		Two Years		Term Out		No Term Out
									(in millions)				(in millions)				(in millions)
Southern Company ^(a)	$	—	$	—	$	1,000	$	1,250	$	2,250	$	2,250	$	—	$	—	$	—	$	—
Alabama Power	40		—		500		800		1,340		1,340		—		—		—		40
Georgia Power	—		—		—		1,750		1,750		1,732		—		—		—		—
Gulf Power	75		40		165		—		280		280		45		—		45		40
Mississippi Power	205		—		—		—		205		180		30		15		45		160
Southern Power Company ^(b)	—		—		—		600		600		560		—		—		—		—
Other	70		—		—		—		70		70		20		—		20		50
Total	$	390	$	40	$	1,665	$	4,400	$	6,495	$	6,412	$	95	$	15	$	110	$	290

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$11.6		15.8


(a)	Excludes the $8.1 billion Bridge Agreement entered into in September 2015 that will be funded only to the extent necessary to provide financing for the Merger as discussed herein.

~~For~~(b) ~~the~~Excludes ~~first~~credit ~~quarter~~agreements ~~2009,~~(Project ~~income~~Credit ~~taxes~~Facilities) ~~were~~assumed ~~$85.0 million~~with ~~compared~~the toacquisition ~~$73.4 million~~of ~~for~~certain ~~the~~solar ~~same period~~facilities, inwhich ~~2008.~~are ~~This~~non-recourse ~~increase~~to ~~was~~Southern ~~primarily~~Power ~~due~~Company, tothe ~~higher~~proceeds ~~pre-tax~~of ~~income~~which ~~and~~are abeing ~~decrease~~used into ~~the~~finance ~~tax benefit~~project ~~from~~costs ~~the~~related ~~production~~to ~~activities~~such ~~deduction,~~solar ~~partially~~facilities ~~offset~~currently byunder ~~the~~construction. ~~increase~~See inNote ~~non-taxable AFUDC~~(I) ~~and~~to athe ~~decrease~~Condensed inFinancial ~~expense~~Statements ~~related~~under to"Southern ~~tax~~Power" ~~contingencies~~herein for additional information.

~~FUTURE~~See ~~EARNINGS~~Note ~~POTENTIAL~~ 6 to the financial statements of Southern Company under "Bank Credit Arrangements" in Item 8 of the Form 10-K and Note (E) to the Condensed Financial Statements under "Bank Credit Arrangements" herein for additional information.

~~The~~Most ~~results~~ of ~~operations~~these ~~discussed~~bank ~~above~~credit ~~are~~arrangements, ~~not~~as ~~necessarily~~well ~~indicative~~as ofthe ~~Alabama~~term ~~Power’s~~loan ~~future earnings~~arrangements ~~potential.~~of ~~The~~Southern ~~level~~Company, of Alabama Power’s, ~~future~~Mississippi ~~earnings~~Power, ~~depends~~and onSouthern ~~numerous~~Power, ~~factors~~contain covenants that ~~affect~~ ~~the~~limit ~~opportunities,~~debt ~~challenges,~~levels and ~~risks~~contain ofcross ~~Alabama~~acceleration ~~Power’s~~or ~~primary~~cross ~~business~~default ofprovisions ~~selling electricity.~~to ~~These~~other ~~factors~~indebtedness ~~include~~(including ~~Alabama~~guarantee ~~Power’s~~obligations) ~~ability~~that toare ~~maintain~~restricted aonly ~~constructive regulatory environment that continues~~ to ~~allow for~~ the ~~recovery~~indebtedness of ~~all~~the ~~prudently~~individual ~~incurred~~company. ~~costs~~Such ~~during~~cross adefault ~~time of~~provisions ~~increasing~~to ~~costs.~~other ~~Future~~indebtedness ~~earnings~~would intrigger ~~the~~an ~~near~~event ~~term~~of ~~will~~default ~~depend,~~if inthe ~~part,~~applicable ~~upon~~borrower ~~maintaining energy~~defaulted ~~sales~~on ~~which~~indebtedness isor ~~subject~~guarantee toobligations over a ~~number~~specified ~~of factors~~threshold. ~~These~~Such ~~factors~~cross ~~include~~acceleration ~~weather,~~provisions ~~competition, new~~to ~~energy~~other ~~contracts~~indebtedness ~~with~~would ~~neighboring~~trigger ~~utilities,~~an ~~energy~~event ~~conservation~~of ~~practiced~~default byif ~~customers,~~ the ~~price~~ ofapplicable ~~electricity,~~borrower ~~the~~defaulted ~~price~~on ~~elasticity of demand~~indebtedness, ~~and~~ the ~~rate~~payment of ~~economic~~which ~~growth~~was orthen ~~decline~~accelerated. ~~in Alabama~~Southern ~~Power’s~~Company, ~~service~~the ~~area.~~traditional ~~Recent~~operating ~~recessionary~~companies, ~~conditions~~and ~~have~~Southern ~~negatively~~Power ~~impacted~~Company ~~sales growth and~~ are ~~expected~~currently toin ~~continue~~compliance towith ~~have~~all asuch ~~negative~~covenants. ~~impact~~None onof ~~energy~~the ~~sales,~~bank ~~particularly~~credit toarrangements ~~industrial customers.~~contain ~~The~~material ~~timing~~adverse ~~and~~change ~~extent~~clauses ofat the ~~economic~~time ~~recovery~~of ~~will impact future earnings~~borrowings.

~~For additional information relating to these issues, see RISK FACTORS in Item 1A and MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL of Alabama Power in Item 7 of the Form 10-K.~~ 30

~~Environmental~~Table ~~Matters~~ of Contents

~~Compliance~~SOUTHERN ~~costs~~COMPANY related to the Clean Air Act and other environmental statutes and regulations could affect earnings if such costs cannot continue to be fully recovered in rates on a timely basis. See MANAGEMENT’S DISCUSSION AND ~~ANALYSIS~~SUBSIDIARY – FUTURE EARNINGS POTENTIAL – “Environmental Matters” of Alabama Power in Item 7 and Note 3 to the financial statements of Alabama Power under “Environmental Matters” in Item 8 of the Form 10-K for additional information. COMPANIES

38 MANAGEMENT'S DISCUSSION AND ANALYSIS OF

~~Table~~FINANCIAL ofCONDITION ~~Contents~~AND RESULTS OF OPERATIONS

~~ALABAMA~~Subject ~~POWER~~to ~~COMPANY MANAGEMENT’S~~applicable ~~DISCUSSION~~market ~~AND~~conditions, ~~ANALYSIS~~Southern ~~OF FINANCIAL~~Company ~~CONDITION~~and ~~AND~~its ~~RESULTS~~subsidiaries OFexpect ~~OPERATIONS~~ to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.

~~Water~~A ~~Quality~~ portion of the unused credit with banks is allocated to provide liquidity support to the traditional operating companies' pollution control revenue bonds and commercial paper programs. The amount of variable rate pollution control revenue bonds outstanding requiring liquidity support as of March 31, 2016 was approximately $1.8 billion. In addition, at March 31, 2016, the traditional operating companies had approximately $269 million of fixed rate pollution control revenue bonds outstanding that were required to be reoffered within the next 12 months.

~~See MANAGEMENT’S~~Southern ~~DISCUSSION~~Company ~~AND~~intends ~~ANALYSIS~~to –fund ~~FUTURE~~the ~~EARNINGS POTENTIAL~~cash –consideration ~~“Environmental~~for ~~Matters~~the ~~– Environmental~~Merger ~~Statutes~~using ~~and~~a ~~Regulations~~mix –of ~~Water~~debt ~~Quality”~~and ofequity. ~~Alabama~~Southern ~~Power~~Company infinances ~~Item 7~~its ofcapital ~~the~~needs ~~Form 10-K~~on ~~for~~a ~~additional~~portfolio ~~information~~basis ~~regarding~~and ~~the~~expects ~~EPA’s~~to ~~regulation~~issue a minimum of ~~cooling~~$8.0 ~~water~~billion ~~intake~~in ~~structures. On~~debt ~~April 1,~~prior ~~2009,~~to closing the ~~U.S.~~Merger ~~Supreme~~and ~~Court~~a ~~reversed~~minimum ~~the~~of U$1.S.2 ~~Court~~billion ofin ~~Appeals~~equity ~~for~~during ~~the~~2016. ~~Second Circuit’s~~This ~~decision~~capital ~~with~~is ~~respect~~expected to provide funding for the ~~rule’s~~Merger, ~~use~~the ofproposed ~~cost-benefit~~acquisition ~~analysis~~of PowerSecure, and ~~held~~Southern ~~that~~Power ~~the~~and ~~EPA could~~other ~~consider~~Southern ~~costs~~Company insystem ~~arriving~~capital atprojects. ~~its~~Total ~~standards~~capital ~~and~~raised in ~~providing~~2016 ~~variances~~may ~~from~~increase ~~those~~due ~~standards for~~to ~~existing~~cash ~~power~~needed ~~plant~~at ~~cooling~~the ~~water~~closing ~~intake~~of ~~structures.~~the ~~Other~~Merger, ~~aspects~~settlement of ~~the~~hedges, ~~court’s~~and ~~decision were~~incremental ~~not~~investment ~~appealed~~opportunities, ~~and~~including ~~remain~~additional ~~unaffected~~Southern byPower ~~the~~projects ~~U.S.~~in ~~Supreme~~excess ~~Court’s~~of ~~ruling.~~its ~~While~~current ~~the~~capital Uplans.S. ~~Supreme Court’s~~Southern ~~decision~~Company ~~may~~expects ~~ultimately~~to ~~result~~issue inthe ~~greater~~debt ~~flexibility~~to ~~for~~fund ~~demonstrating~~the ~~compliance~~cash ~~with~~consideration ~~the standards,~~for the ~~full~~Merger ~~scope~~in several tranches including long-dated maturities. The amount of ~~the~~debt ~~regulations~~issued at each maturity will depend on ~~subsequent~~prevailing ~~legal~~market ~~proceedings,~~conditions ~~further rulemaking~~at bythe time of the ~~EPA~~offering and other factors. In addition, Southern Company entered into the ~~results~~$8.1 ofbillion ~~studies~~Bridge ~~and~~Agreement ~~analyses~~on ~~performed~~September as30, ~~part~~2015 ofto provide financing for the ~~rules’ implementation,~~Merger ~~and~~in the ~~actual~~event ~~requirements~~long-term ~~established~~financing byis ~~state~~not ~~regulatory~~available. ~~agencies~~See ~~and, therefore,~~MANAGEMENT'S ~~cannot~~DISCUSSION beAND ~~determined~~ANALYSIS at– ~~this~~FINANCIAL ~~time~~CONDITION AND LIQUIDITY – "Sources of Capital" of Southern Company in Item 7 of the Form 10-K for additional information.

~~Global~~Southern ~~Climate~~Company, ~~Issues~~ the traditional operating companies, and Southern Power make short-term borrowings primarily through commercial paper programs that have the liquidity support of the committed bank credit arrangements described above, excluding the Bridge Agreement. Southern Company, the traditional operating companies, and Southern Power may also borrow through various other arrangements with banks. Short-term borrowings are included in notes payable in the balance sheets.

~~See MANAGEMENT’S~~Details ~~DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “Environmental Matters – Global Climate Issues”~~ of ~~Alabama Power in Item 7 of the Form 10~~short-Kterm ~~for~~borrowings ~~information~~were regarding the potential for legislation and regulation addressing greenhouse gas emissions. On April 17, 2009, the EPA released a proposed finding that certain greenhouse gas emissions from new motor vehicles endanger public health and welfare due to climate change. The ultimate outcome of the proposed endangerment finding cannot be determined at this time and will depend on additional regulatory action and potential legal challenges. However, regulatory decisions that may follow from such a finding could have implications for both new and existing stationary sources, such as power plants. In addition, federal legislative proposals that would impose mandatory requirements related to greenhouse gas emissions, renewable energy standards, and energy efficiency standards continue to be actively considered in Congress, and the reduction of greenhouse gas emissions has been identified as a high priority by the current Administration. The ultimate outcome of these matters cannot be determined at this time; however, mandatory restrictions on Alabama Power’s greenhouse gas emissions, or requirements relating to renewable energy or energy efficiency, could result in significant additional compliance costs that could affect future unit retirement and replacement decisions and results of operations, cash flows, and financial condition if such costs are not recovered through regulated rates. follows:

FERC and Alabama PSC Matters



	Short-term Debt at March 31, 2016				Short-term Debt During the Period^(*)
	Amount Outstanding		Weighted Average Interest Rate		Average Amount Outstanding		Weighted Average Interest Rate		Maximum Amount Outstanding
	(in millions)				(in millions)				(in millions)
Commercial paper	$	757	0.8	%	$	853	0.8	%	$	1,233
Short-term bank debt	25		2.1	%	375		1.9	%	500
Total	$	782	0.9	%	$	1,228	1.0	%

~~Market~~(*) Average and maximum amounts are based upon daily balances during the three-~~Based~~month ~~Rate~~period ~~Authority~~ ended March 31, 2016.

~~See MANAGEMENT’S~~In ~~DISCUSSION~~addition ~~AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “FERC Matters – Market-Based Rate Authority” of Alabama Power in Item 7 and Note 3~~ to the ~~financial statements of Alabama Power under “FERC Matters – Market~~short-~~Based~~term ~~Rate~~borrowings ~~Authority”~~ in ~~Item 8 of~~ the ~~Form~~table ~~10-K for information regarding market-based rate authority. In October 2008~~above, ~~Southern Company filed with~~ the ~~FERC~~Project aCredit ~~revised~~Facilities ~~market-based~~had ~~rate~~total ~~(MBR) tariff~~amounts ~~and~~outstanding aas ~~new~~of ~~cost-based rate (CBR)~~March ~~tariff.~~31, ~~The revised~~2016 ~~MBR~~of ~~tariff~~$413 ~~provides~~million ~~for~~at a ~~“must~~weighted ~~offer”~~average ~~energy~~interest ~~auction~~rate ~~whereby Southern Company offers all~~ of its available energy for sale in a day-ahead auction and an hour-ahead auction with reserve prices not to exceed the CBR tariff price, after considering Southern Company’s native load requirements, reliability obligations, and sales commitments to third parties1.99%. ~~All~~For ~~sales under~~ the ~~energy~~ ~~auction~~three ~~would~~months beended ~~at market clearing prices established under the auction rules. The new CBR tariff provides for a cost-based price for wholesale sales of less than a year. On~~ March 531, ~~2009~~2016, ~~the~~ ~~FERC~~these ~~accepted~~credit ~~Southern~~agreements ~~Company’s~~had ~~CBR~~a ~~tariff~~maximum ~~for~~amount ~~filing.~~outstanding Onof ~~March 25,~~$413 ~~2009~~million, ~~the~~and ~~FERC~~an ~~accepted Southern~~average ~~Company’s~~amount ~~compliance~~outstanding ~~filing~~of ~~related~~$260 tomillion ~~the~~at ~~MBR~~a ~~tariff~~weighted ~~and~~average ~~directed~~interest ~~Southern~~rate ~~Company~~of ~~to commence~~ 1.99%.

39 Southern Company believes the need for working capital can be adequately met by utilizing commercial paper programs, lines of credit, bank notes, and operating cash flows.

~~Table of Contents~~31

~~ALABAMA~~Table ~~POWER~~of ~~COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ Contents

~~the~~SOUTHERN ~~energy~~COMPANY ~~auction~~AND inSUBSIDIARY 30 days. Southern Company commenced the energy auction on April 23, 2009. Implementation of the energy auction in accordance with the MBR tariff order is expected to adequately mitigate going forward any presumption of market power that Southern Company may have in the Southern Company retail service territory. The original generation dominance proceeding initiated by the FERC in December 2004 remains pending before the FERC. The ultimate outcome of this matter cannot be determined at this time. COMPANIES

~~Retail~~MANAGEMENT'S ~~Fuel~~DISCUSSION ~~Cost~~AND ~~Recovery~~ ANALYSIS OF

~~See MANAGEMENT’S~~FINANCIAL ~~DISCUSSION~~CONDITION AND ~~ANALYSIS~~RESULTS –OF FUTURE EARNINGS POTENTIAL – “PSC Matters – Retail Fuel Cost Recovery” of Alabama Power in Item 7 and Note 3 to the financial statements of Alabama Power under “Retail Regulatory Matters – Fuel Cost Recovery” in Item 8 of the Form 10-K for information regarding Alabama Power’s fuel cost recovery. Alabama Power’s under recovered fuel costs as of March 31, 2009 totaled $189.0 million as compared to $305.8 million at December 31, 2008. These under recovered fuel costs at March 31, 2009 are included in under recovered regulatory clause revenues on Alabama Power’s Condensed Balance Sheets herein. This classification is based on an estimate which includes such factors as weather, generation availability, energy demand, and the price of energy. A change in any of these factors could have a material impact on the timing of the recovery of the under recovered fuel costs. OPERATIONS

~~Rate~~Credit ~~ECR~~Rating ~~revenues, as recorded on the financial statements, are adjusted for differences in actual recoverable costs and amounts billed in current regulated rates.~~ Risk

~~Natural~~Southern ~~Disaster~~Company ~~Cost~~and ~~Recovery~~ its subsidiaries do not have any credit arrangements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

~~See MANAGEMENT’S~~There ~~DISCUSSION~~are ~~AND~~certain ~~ANALYSIS –~~contracts ~~FUTURE~~that ~~EARNINGS POTENTIAL~~could –require ~~“PSC~~collateral, ~~Matters~~but –not ~~Natural Disaster~~accelerated ~~Cost~~payment, ~~Recovery” of Alabama Power~~ in ~~Item 7 and Note 3 to~~ the ~~financial~~event ~~statements~~ of ~~Alabama~~ ~~Power~~a ~~under~~credit ~~“Retail~~rating ~~Regulatory~~change ~~Matters~~of –certain ~~Natural~~subsidiaries ~~Disaster~~to ~~Cost~~BBB ~~Recovery”~~and/or inBaa2 ~~Item 8~~or ofbelow. ~~the Form~~These ~~10-K~~contracts are for ~~information~~physical ~~regarding~~electricity ~~natural~~purchases ~~disaster~~and ~~cost~~sales, ~~recovery.~~fuel ~~At March 31~~purchases, ~~2009,~~fuel ~~Alabama Power~~transportation ~~had~~and ~~accumulated~~storage, aenergy ~~balance~~price ofrisk ~~$37.1 million~~management, intransmission, ~~the~~interest ~~target~~rate ~~reserve for future storms~~management, ~~which~~and ~~is included~~construction inof ~~the~~new ~~Condensed~~generation ~~Balance~~at ~~Sheets~~Plant ~~herein~~Vogtle ~~under~~Units ~~“Other~~3 ~~Regulatory~~and ~~Liabilities~~4.”

~~Steam~~The ~~Service~~ maximum potential collateral requirements under these contracts at March 31, 2016 were as follows:

On February 5, 2009, the Alabama PSC granted a Certificate of Abandonment of Steam Service in the downtown area of the City of Birmingham. The order allows Alabama Power to discontinue steam service by the earlier of three years from May 14, 2008 or when it has no remaining steam service customers. Currently, Alabama Power has contractual obligations to provide steam service until 2013. Impacts related to the abandonment of steam service are recognized in operating income and are not material to the earnings of Alabama Power.



Credit Ratings	Maximum Potential Collateral Requirements
	(in millions)
At BBB and/or Baa2	$	12
At BBB- and/or Baa3	$	511
Below BBB- and/or Baa3	$	2,335

~~Income~~Generally, ~~Tax~~collateral ~~Matters~~ may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, a credit rating downgrade could impact the ability of Southern Company and its subsidiaries to access capital markets, and would be likely to impact the cost at which they do so.

~~Legislation~~ Financing Activities

OnDuring ~~February 17,~~the ~~2009,~~first ~~President~~three ~~Obama~~months ~~signed~~of ~~into~~2016, ~~law~~Southern ~~the~~Company ~~American~~issued ~~Recovery~~approximately ~~and~~6.6 ~~Reinvestment~~million ~~Act~~shares of ~~2009~~ ~~(ARRA).~~common ~~Major~~stock ~~tax~~primarily ~~incentives~~through in the ~~ARRA~~employee ~~include~~equity ancompensation ~~extension~~plan ~~of bonus depreciation~~ and ~~multiple~~ ~~renewable~~received ~~energy~~proceeds ~~incentives,~~of ~~which~~approximately ~~could~~$270 ~~have~~million. aSouthern ~~significant~~Company ~~impact~~may onsatisfy ~~the~~its ~~future~~obligations ~~cash~~with ~~flow and~~respect ~~net~~to ~~income~~the ofplans ~~Alabama~~in ~~Power.~~several ~~Alabama~~ways, ~~Power~~including ~~estimates~~through ~~the~~using ~~cash~~newly ~~flow~~issued ~~reduction~~shares toor ~~2009~~treasury ~~tax payments~~shares asor aacquiring ~~result~~shares ofon the ~~bonus~~open ~~depreciation~~market ~~provisions~~through ofindependent ~~the~~plan ~~ARRA to be between approximately $75 million and $90 million~~administrators. ~~Alabama~~

40 The following table outlines the long-term debt financing activities for Southern Company and its subsidiaries for the first three months of 2016:



Company^(a)	Senior Note Issuances		Senior Note Maturities and Redemptions		Revenue Bond Maturities, Redemptions, and Repurchases		Other Long-Term Debt Issuances			Other Long-Term Debt Redemptions and Maturities^(b)
	(in millions)
Alabama Power	$	400	$	200	$	—	$	45		$	—
Georgia Power	650		250		4		—			1
Mississippi Power	—		—		—		1,100			426
Southern Power	—		—		—		2			3
Other	—		—		—		—			4
Elimination^(c)	—		—		—		(200		)	—
Total	$	1,050	$	450	$	4	$	947		$	434

~~ALABAMA~~(a) ~~POWER~~Southern ~~COMPANY MANAGEMENT’S~~Company ~~DISCUSSION~~and ~~AND~~Gulf ~~ANALYSIS~~Power ~~OF FINANCIAL~~did ~~CONDITION~~not ~~AND~~issue ~~RESULTS~~or OFredeem ~~OPERATIONS~~ any long-term debt during the first three months of 2016.

~~Power~~(b) isIncludes ~~currently~~reductions ~~assessing~~in ~~the~~capital ~~other~~lease ~~financial~~obligations ~~implications~~resulting offrom ~~the~~cash ~~ARRA.~~payments ~~The~~under ~~ultimate~~capital ~~impact cannot be determined at this time~~leases.

~~Other~~(c) ~~Matters~~ Intercompany loans from Southern Company to Mississippi Power eliminated in Southern Company's Consolidated Financial Statements.

Alabama Power is involved in various other matters being litigated and regulatory matters that could affect future earnings. In addition, Alabama Power is subject to certain claims and legal actions arising in the ordinary course of business. Alabama Power’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, common law nuisance, and citizen enforcement of environmental requirements such as opacity and air and water quality standards, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such pending or potential litigation against Alabama Power cannot be predicted at this time; however, for current proceedings not specifically reported herein or in Note 3 to the financial statements of Alabama Power in Item 8 of the Form 10-K, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on Alabama Power’s financial statements. 32

~~See~~Table ~~the Notes to the Condensed Financial Statements herein for discussion~~ of ~~various other contingencies, regulatory matters, and other matters being litigated which may affect future earnings potential.~~ Contents

~~ACCOUNTING~~SOUTHERN ~~POLICIES~~ COMPANY AND SUBSIDIARY COMPANIES

~~Application~~MANAGEMENT'S ofDISCUSSION ~~Critical~~AND ~~Accounting~~ANALYSIS ~~Policies and Estimates~~ OF

~~Alabama~~FINANCIAL ~~Power~~CONDITION prepares its 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 Alabama Power in Item 8 of the Form 10-K. In the application of these policies, certain estimates are made that may have a material impact on Alabama Power’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. See MANAGEMENT’S DISCUSSION AND ~~ANALYSIS~~RESULTS –OF ACCOUNTING POLICIES – “Application of Critical Accounting Policies and Estimates” of Alabama Power in Item 7 of the Form 10-K for a complete discussion of Alabama Power’s critical accounting policies and estimates related to Electric Utility Regulation, Contingent Obligations, and Unbilled Revenues. OPERATIONS

~~FINANCIAL~~In ~~CONDITION~~February ~~AND~~2016, ~~LIQUIDITY~~ Southern Company entered into forward-starting interest rate swaps to hedge exposure to interest rate changes related to anticipated debt issuances. The notional amount of the swaps totaled $700 million.

~~Overview~~ Except as described herein, Southern Company's subsidiaries used the proceeds of the debt issuances shown in the table above for their redemptions and maturities shown in the table above, to repay short-term indebtedness, and for general corporate purposes, including their continuous construction programs and, for Southern Power, its growth strategy.

~~Alabama~~On ~~Power’s~~March ~~financial~~8, ~~condition~~2016, ~~remained~~Mississippi ~~stable~~Power atentered ~~March 31,~~into ~~2009.~~an ~~Throughout~~unsecured ~~the~~term ~~recent turmoil~~loan inagreement ~~the~~for ~~financial~~an ~~markets,~~aggregate ~~Alabama~~amount ~~Power~~of ~~has~~$1.2 ~~maintained~~billion ~~adequate~~to ~~access~~repay toexisting ~~capital~~indebtedness ~~without drawing~~and onfor ~~any~~other ofgeneral ~~its~~corporate ~~committed~~purposes. ~~bank~~Mississippi ~~credit~~Power ~~arrangements~~borrowed ~~used~~$900 tomillion ~~support~~under ~~its~~the ~~commercial~~term ~~paper programs~~loan agreement and ~~variable~~has ~~rate~~the ~~pollution~~right ~~control~~to ~~revenue~~borrow ~~bonds.~~the ~~Alabama~~remaining ~~Power~~$300 ~~has~~million ~~continued~~on toor ~~issue commercial~~before ~~paper~~October at15, ~~reasonable~~2016, ~~rates~~upon satisfaction of certain customary conditions. ~~Alabama~~Mississippi Power ~~intends~~used tothe ~~continue~~initial proceeds to ~~monitor~~repay ~~its~~$900 ~~access~~million ~~to short-term~~in ~~and~~maturing ~~long-term~~bank ~~capital~~notes ~~markets~~on asMarch ~~well~~8, as2016 ~~its~~and ~~bank~~expects ~~credit~~the ~~arrangements~~remaining $300 million to ~~meet~~be ~~future capital~~used ~~and~~to ~~liquidity~~repay ~~needs.~~senior ~~Market~~notes ~~rates~~maturing ~~for~~in ~~committed~~October ~~credit~~2016. ~~have~~The ~~increased,~~term ~~and~~loan ~~Alabama~~pursuant ~~Power has~~to ~~been~~this ~~and~~agreement ~~expects~~matures toon ~~continue~~April to1, be2018 ~~subject~~and tobears ~~higher~~interest ~~costs~~based ason ~~its~~one-month ~~existing~~ LIBOR.

41 During the three months ended March 31, 2016, Southern Power's subsidiaries borrowed $276 million pursuant to the Project Credit Facilities at a weighted average interest rate of 1.99%.

~~Table~~Subsequent to March 31, 2016, Southern Power's subsidiaries borrowed $187 million pursuant to the Project Credit Facilities at a weighted average interest rate of ~~Contents~~1.93%.

~~ALABAMA~~Also ~~POWER~~subsequent ~~COMPANY MANAGEMENT’S~~to ~~DISCUSSION~~March ~~AND~~31, ~~ANALYSIS~~2016, ~~OF FINANCIAL~~Gulf ~~CONDITION~~Power ~~AND~~announced ~~RESULTS~~the OFredemption ~~OPERATIONS~~ in May 2016 of $125 million aggregate principal amount of its Series 2011A 5.75% Senior Notes due June 1, 2051.

~~facilities~~In ~~are~~addition ~~replaced~~to orany ~~renewed.~~financings ~~Total~~that ~~committed~~may ~~credit~~be ~~fees~~necessary ~~average~~to ~~less~~meet ~~than~~capital ~~1/4~~requirements ofand 1%contractual ~~per~~obligations, ~~year for~~Southern ~~Alabama~~Company ~~Power.~~and ~~Alabama~~its ~~Power’s~~subsidiaries ~~interest~~plan ~~cost~~to ~~for~~continue, ~~short-term~~when ~~debt~~economically ~~has~~feasible, ~~decreased as market short-term interest rates have declined from 2008 levels. The ultimate impact on future financing costs as~~ a ~~result~~program ofto ~~the~~retire ~~financial~~higher-cost ~~turmoil~~securities ~~cannot~~and bereplace ~~determined~~these atobligations ~~this~~with ~~time.~~lower-cost ~~Alabama~~capital ~~Power experienced~~if nomarket ~~material~~conditions ~~counterparty credit losses as a result of the turmoil in the financial markets~~permit. ~~See “Sources of Capital” and “Financing Activities” herein for additional information.~~

Alabama Power’s investments in pension and nuclear decommissioning trust funds have continued to decline in value during the first quarter 2009. Alabama Power expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Alabama Power does not expect any changes to the funding obligations to the nuclear decommissioning trust at this time. 33

~~Net~~Table ~~cash provided from operating activities totaled $296.9 million for the first three months~~ of ~~2009,~~ compared to $142.2 million for the corresponding period in 2008. Significant changes in operating cash flow for the first three months of 2009 include a lower receivables balance from increased collections and lower cash outflows for fossil fuel inventory as compared to the first three months of 2008. Net cash used for investing activities totaled $326.5 million primarily due to gross property additions to utility plant of $338.0 million in the first three months of 2009. These additions were primarily related to construction of transmission and distribution facilities, replacement of steam generation equipment, purchases of nuclear fuel, and construction related to environmental mandates. Net cash provided from financing activities totaled $335.3 million for the first three months of 2009, compared to $195.8 million for the corresponding period in 2008. The $139.5 million increase is primarily due to greater issuances of securities and no redemption of securities in the first three months of 2009 as compared to the first three months of 2008. Fluctuations in cash flow from financing activities vary from year-to-year based on capital needs and securities redeemed. Contents

~~Significant~~PART balance sheet changes for the first quarter 2009 include an increase of $305.8 million in cash and cash equivalents primarily due to an increase in temporary cash investments, an increase of $154.3 million in gross plant primarily due to increases in transmission and distribution projects and other production expenses. Long-term debt increased $499.1 million. I

~~Capital~~Item ~~Requirements~~3. Quantitative and ~~Contractual~~Qualitative ~~Obligations~~ Disclosures About Market Risk.

~~See MANAGEMENT’S~~During ~~DISCUSSION~~the ~~AND~~three ~~ANALYSIS~~months –ended ~~FINANCIAL~~March 31, ~~CONDITION AND~~2016, ~~LIQUIDITY~~there –were ~~“Capital Requirements~~no ~~and~~material ~~Contractual~~changes ~~Obligations”~~to ofeach ~~Alabama~~registrant's ~~Power~~disclosures inabout ~~Item 7~~market ofrisk. ~~the~~For ~~Form~~an 10in-Kdepth ~~for~~discussion ~~a description~~ of ~~Alabama~~each ~~Power’~~registrant's ~~capital~~market ~~requirements for its construction program~~risks, ~~scheduled maturities~~see ofMANAGEMENT'S ~~long-term~~DISCUSSION ~~debt,~~AND asANALYSIS ~~well~~– asFINANCIAL ~~the~~CONDITION ~~related~~AND ~~interest,~~LIQUIDITY ~~derivative~~– ~~obligations,~~"Market ~~preferred and~~Price ~~preference~~Risk" ~~stock~~of ~~dividends,~~each ~~leases,~~registrant ~~purchase~~in ~~commitments,~~Item ~~and~~7 ~~trust~~of ~~funding~~the ~~requirements. Approximately~~Form ~~$250.0 million~~10-K ~~will~~and beNote ~~required~~1 ~~through~~to ~~March 31,~~the ~~2010~~financial ~~for~~statements ~~maturities~~ of ~~long-term debt.~~each ~~The~~registrant ~~construction~~under ~~program~~"Financial ~~is subject to periodic review and revision~~Instruments," ~~and~~Note ~~actual~~11 ~~construction costs~~to ~~may~~the ~~vary~~financial ~~from~~statements ~~these estimates because~~ of ~~numerous~~Southern ~~factors.~~Company, ~~These~~Alabama ~~factors~~Power, ~~include:~~and ~~changes~~Georgia ~~in business~~Power, ~~conditions;~~Note ~~revised~~10 ~~load~~to ~~growth~~the ~~estimates;~~financial ~~changes~~statements inof ~~environmental~~Gulf ~~statutes~~Power and ~~regulations;~~ ~~changes~~Mississippi inPower, ~~nuclear plants to meet new regulatory requirements; changes in FERC rules~~ and ~~regulations;~~Note ~~Alabama~~9 ~~PSC~~to ~~approvals;~~ the ~~cost~~financial ~~and~~statements ~~efficiency~~ of ~~construction~~Southern ~~labor,~~Power ~~equipment, and~~in ~~materials;~~Item ~~and~~8 of the ~~cost~~Form ~~of capital~~10-K. ~~In addition~~Also, ~~there~~see ~~can~~Note be(H) noto ~~assurance~~the ~~that~~Condensed ~~costs~~Financial ~~related to~~Statements ~~capital~~herein ~~expenditures~~for ~~will~~information berelating ~~fully~~to ~~recovered~~derivative instruments.

42 Item 4. Controls and Procedures.

~~Table~~(a) Evaluation of ~~Contents~~disclosure controls and procedures.

~~ALABAMA~~As ~~POWER~~of ~~COMPANY MANAGEMENT’S~~the ~~DISCUSSION~~end ~~AND~~of ~~ANALYSIS~~the ~~OF FINANCIAL~~period ~~CONDITION~~covered ~~AND~~by ~~RESULTS~~this OFQuarterly ~~OPERATIONS~~ Report on Form 10-Q, Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power Company 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, as amended). 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.

~~Sources~~(b) ofChanges ~~Capital~~ in internal controls over financial reporting.

~~Alabama~~There ~~Power~~have ~~plans~~been tono ~~obtain~~changes ~~the~~in ~~funds~~Southern ~~required~~Company's, ~~for~~Alabama ~~construction~~Power's, ~~and~~Georgia ~~other purposes~~Power's, ~~from~~Gulf ~~sources~~Power's, ~~similar~~Mississippi ~~to those utilized in the past. Recently~~Power's, ~~Alabama~~or Southern Power ~~has~~Company's ~~primarily utilized~~internal ~~funds~~control ~~from~~over ~~operating~~financial ~~cash~~reporting ~~flows,~~(as ~~unsecured~~such ~~debt,~~term ~~common~~is ~~stock,~~defined ~~preferred~~in ~~stock,~~Rules 13a-15(f) and ~~preference~~ ~~stock.~~15d-15(f) ~~However,~~under the ~~amount,~~Securities ~~type,~~Exchange ~~and~~Act ~~timing~~ of ~~any future financings~~1934, ifas ~~needed,~~amended) ~~will depend~~during ~~upon~~the ~~regulatory~~first ~~approval,~~quarter ~~prevailing~~2016 ~~market~~that ~~conditions,~~have ~~and~~materially ~~other~~affected ~~factors.~~or ~~See~~are ~~MANAGEMENT’S DISCUSSION~~reasonably ~~AND~~likely ~~ANALYSIS~~to –materially ~~FINANCIAL~~affect ~~CONDITION~~Southern ~~AND~~Company's, ~~LIQUIDITY~~Alabama –Power's, ~~“Sources~~Georgia ofPower's, ~~Capital”~~Gulf ofPower's, ~~Alabama~~ Mississippi Power's, inor ~~Item 7~~Southern ofPower ~~the~~Company's ~~Form~~internal ~~10-K~~control ~~for~~over ~~additional~~financial ~~information~~reporting.

Alabama Power’s current liabilities sometimes exceed current assets because of Alabama Power’s debt due within one year and the periodic use of short-term debt as a funding source primarily to meet scheduled maturities of long-term debt as well as cash needs which can fluctuate significantly due to the seasonality of the business. To meet short-term cash needs and contingencies, Alabama Power had at March 31, 2009 cash and cash equivalents of approximately $334 million, unused committed lines of credit of approximately $1.3 billion (including $582 million of such lines which are dedicated to funding purchase obligations related to variable rate pollution control revenue bonds), and commercial paper programs. Of the unused credit facilities, $466 million will expire in 2009, $25 million will expire in 2011, and $765 million will expire in 2012. Of the facilities that expire in 2009, $379 million allow for one-year term loans. Alabama Power expects to renew its credit facilities, as needed, prior to expiration. See Note 6 to the financial statements of Alabama Power under “Bank Credit Arrangements” in Item 8 of the Form 10-K and Note (F) to the Condensed Financial Statements under “Bank Credit Arrangements” herein for additional information. Alabama Power may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper at the request and for the benefit of Alabama Power and other Southern Company subsidiaries. At March 31, 2009, Alabama Power had no commercial paper outstanding and no outstanding borrowings under its committed lines of credit. Management believes that the need for working capital can be adequately met by utilizing commercial paper programs, lines of credit, and cash. 34

~~Credit~~Table ~~Rating~~of ~~Risk~~ Contents

~~Alabama~~ALABAMA ~~Power~~POWER 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- and/or Baa3 or below. These contracts are primarily for fuel purchases, fuel transportation and storage, emissions allowances, and energy price risk management. At March 31, 2009, the maximum potential collateral requirements under these contracts at a BBB- and/or Baa3 rating were approximately $4 million. At March 31, 2009, the maximum potential collateral requirements under these contracts at a rating below BBB- and/or Baa3 were approximately $203 million. Included in these amounts are certain agreements that could require collateral in the event that one or more Power Pool participants has a credit rating change to below investment grade. In addition, certain nuclear fuel agreements could require collateral of up to $64 million in the event of a rating change to below investment grade for Southern Company. Generally, collateral may be provided by a Southern Company guaranty, letter of credit, or cash. Additionally, any credit rating downgrade could impact Alabama Power’s ability to access capital markets, particularly the short-term debt market. COMPANY

~~Market Price Risk~~ 35

~~Alabama~~Table ~~Power’s market risk exposure relative to interest rate changes has not changed materially compared with the December 31, 2008 reporting period. Since a significant portion~~ of ~~outstanding indebtedness is at fixed rates, Alabama Power is not aware of any facts or circumstances that would significantly affect exposures on~~ Contents

43 ALABAMA POWER COMPANY

~~Table~~CONDENSED ofSTATEMENTS ~~Contents~~OF INCOME (UNAUDITED)

ALABAMA POWER COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



	For the Three Months Ended March 31,
	2016			2015
	(in millions)
Operating Revenues:
Retail revenues	$	1,193		$	1,268
Wholesale revenues, non-affiliates	63			65
Wholesale revenues, affiliates	22			15
Other revenues	53			53
Total operating revenues	1,331			1,401
Operating Expenses:
Fuel	268			310
Purchased power, non-affiliates	36			41
Purchased power, affiliates	33			53
Other operations and maintenance	392			399
Depreciation and amortization	172			158
Taxes other than income taxes	97			94
Total operating expenses	998			1,055
Operating Income	333			346
Other Income and (Expense):
Allowance for equity funds used during construction	10			15
Interest expense, net of amounts capitalized	(73		)	(65		)
Other income (expense), net	(8		)	(4		)
Total other income and (expense)	(71		)	(54		)
Earnings Before Income Taxes	262			292
Income taxes	103			113
Net Income	159			179
Dividends on Preferred and Preference Stock	4			10
Net Income After Dividends on Preferred and Preference Stock	$	155		$	169

~~existing~~CONDENSED ~~indebtedness~~STATEMENTS inOF ~~the~~COMPREHENSIVE ~~near~~INCOME ~~term. However, the impact on future financing costs cannot now be determined.~~ (UNAUDITED)

Due to cost-based rate regulation, Alabama Power continues to have limited exposure to market volatility in interest rates, commodity fuel prices, and prices of electricity. To mitigate residual risks relative to movements in electricity prices, Alabama Power enters into physical fixed-price contracts for the purchase and sale of electricity through the wholesale electricity market. Alabama Power continues to manage a retail fuel-hedging program implemented per the guidelines of the Alabama PSC. As such, Alabama Power has no material change in market risk exposure when compared with the December 31, 2008 reporting period.



	For the Three Months Ended March 31,
	2016			2015
	(in millions)
Net Income	$	159		$	179
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $(1) and $(2), respectively	(2		)	(4		)
Reclassification adjustment for amounts included in net income, net of tax of $1 and $-, respectively	1			—
Total other comprehensive income (loss)	(1		)	(4		)
Comprehensive Income	$	158		$	175

The ~~changes~~accompanying innotes ~~fair~~as ~~value~~they ofrelate ~~energy-related~~to ~~derivative~~Alabama ~~contracts~~Power ~~for~~are ~~the~~an ~~three~~integral ~~months~~part ~~ended~~of ~~March 31,~~these ~~2009~~condensed ~~were~~financial ~~as follows:~~ statements.

	First Quarter
	2009
	Changes
	Fair Value
	(in millions)
Contracts outstanding at the beginning of the period, assets (liabilities), net	$	(91.9	)
Contracts realized or settled		23.2
Current period changes(a)		(61.5	)
Contracts outstanding at the end of the period, assets (liabilities), net	$	(130.2	)

~~(a)~~Table ~~Current period changes also include the changes in fair value~~ of ~~new contracts entered into during the period, if any.~~Contents

~~The~~ALABAMA ~~decrease~~POWER in the fair value positions of the energy-related derivative contracts for the three months ended March 31, 2009 was $38 million, substantially all of which is due to natural gas positions. This change is attributable to both the volume and prices of natural gas. At March 31, 2009, Alabama Power had a net hedge volume of 49.3 Bcf with a weighted average contract cost approximately $2.70 per mmBtu above market prices, compared to 44.5 Bcf at December 31, 2008 with a weighted average contract cost approximately $2.12 per mmBtu above market prices. The majority of the natural gas hedges are recovered through the fuel cost recovery clause. COMPANY

AtCONDENSED ~~March 31,~~STATEMENTS ~~2009,~~OF ~~the~~CASH ~~fair~~FLOWS ~~value of energy-related derivative contracts by hedge designation was reflected in the financial statements as follows:~~ (UNAUDITED)

		March 31, 2009
	For the Three MonthsEnded March 31,
		(in millions)
	2016				2015
Regulatory hedges		$	(130.2	)
	(in millions)
Cash flow hedges			—
Operating Activities:
Not designated			—
Net income	$	159			$	179
-
Adjustments to reconcile net income to net cash provided from operating activities —
Total fair value		$	(130.2	)
Depreciation and amortization, total	211				196
Deferred income taxes	68				16
Allowance for equity funds used during construction	(10		)		(15		)
Other, net	(3		)		2
Changes in certain current assets and liabilities —
-Receivables	191				(3		)
-Fossil fuel stock	(27		)		—
-Materials and supplies	(8		)		12
-Other current assets	(79		)		(80		)
-Accounts payable	(143		)		(229		)
-Accrued taxes	64				246
-Accrued compensation	(75		)		(89		)
-Retail fuel cost over recovery	(1		)		34
-Other current liabilities	(8		)		21
Net cash provided from operating activities	339				290
Investing Activities:
Property additions	(313		)		(325		)
Nuclear decommissioning trust fund purchases	(105		)		(129		)
Nuclear decommissioning trust fund sales	105				129
Cost of removal, net of salvage	(31		)		(13		)
Change in construction payables	(15		)		34
Other investing activities	(9		)		(9		)
Net cash used for investing activities	(368		)		(313		)
Financing Activities:
Proceeds —
Senior notes issuances	400				550
Capital contributions from parent company	236				6
Other long-term debt issuances	45				—
Redemptions — Senior notes	(200		)		(250		)
Payment of common stock dividends	(191		)		(143		)
Other financing activities	(11		)		(18		)
Net cash provided from financing activities	279				145
Net Change in Cash and Cash Equivalents	250				122
Cash and Cash Equivalents at Beginning of Period	194				273
Cash and Cash Equivalents at End of Period	$	444			$	395
Supplemental Cash Flow Information:
Cash paid (received) during the period for --
Interest (net of $4 and $5 capitalized for 2016 and 2015, respectively)	$	76			$	68
Income taxes, net	(162		)		(136		)
Noncash transactions — Accrued property additions at end of period	106				41

~~Energy-related~~The ~~derivative~~accompanying ~~contracts~~notes ~~which are designated~~ as ~~regulatory~~they ~~hedges~~ relate to Alabama Power’s ~~fuel hedging program where gains and losses~~ are ~~initially~~an ~~recorded~~integral aspart ~~regulatory liabilities~~of ~~and~~these ~~assets,~~condensed ~~respectively,~~financial and then are included in fuel expense as they are recovered through the fuel cost recovery clauses. Certain other gains and losses on energy-related derivatives, designated as cash flow hedges, are initially deferred in other comprehensive income before being recognized in income in the same period as the hedged transaction. Gains and losses on energy-related derivative contracts that are not designated or fail to qualify as hedges are recognized in the statements ~~of income as incurred~~.

44 37

Table of Contents

ALABAMA POWER COMPANY ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Unrealized~~CONDENSED ~~pre-tax~~BALANCE ~~gains~~SHEETS ~~and losses recognized in income for the three months ended March 31, 2009 and 2008 for energy-related derivative contracts that are not hedges were not material.~~ (UNAUDITED)

The maturities of the energy-related derivative contracts and the level of the fair value hierarchy in which they fall at March 31, 2009 are as follows:



Assets	At March 31, 2016			At December 31, 2015
	(in millions)
Current Assets:
Cash and cash equivalents	$	444		$	194
Receivables —
Customer accounts receivable	311			332
Unbilled revenues	113			119
Under recovered regulatory clause revenues	22			43
Income taxes receivable, current	—			142
Other accounts and notes receivable	25			20
Affiliated companies	38			50
Accumulated provision for uncollectible accounts	(10		)	(10		)
Fossil fuel stock, at average cost	266			239
Materials and supplies, at average cost	406			398
Vacation pay	67			66
Prepaid expenses	129			83
Other regulatory assets, current	99			115
Other current assets	10			10
Total current assets	1,920			1,801
Property, Plant, and Equipment:
In service	25,187			24,750
Less accumulated provision for depreciation	8,791			8,736
Plant in service, net of depreciation	16,396			16,014
Nuclear fuel, at amortized cost	359			363
Construction work in progress	550			801
Total property, plant, and equipment	17,305			17,178
Other Property and Investments:
Equity investments in unconsolidated subsidiaries	68			71
Nuclear decommissioning trusts, at fair value	746			737
Miscellaneous property and investments	99			96
Total other property and investments	913			904
Deferred Charges and Other Assets:
Deferred charges related to income taxes	520			522
Deferred under recovered regulatory clause revenues	105			99
Other regulatory assets, deferred	1,105			1,114
Other deferred charges and assets	109			103
Total deferred charges and other assets	1,839			1,838
Total Assets	$	21,977		$	21,721

	March 31, 2009
	Fair Value Measurements
	Total			Maturity
	Fair Value			Year 1			Years 2&3			Years 4&5
	(in millions)
Level 1	$	—		$	—		$	—		$	—
Level 2		(130.2	)		(105.4	)		(24.8	)		—
Level 3		—			—			—			—
Fair value of contracts outstanding at end of period	$	(130.2	)	$	(105.4	)	$	(24.8	)	$	—

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

Alabama Power uses over-the-counter contracts that are not exchange traded but are fair valued using prices which are actively quoted, and thus fall into Level 2. See Note (C) to the Condensed Financial Statements herein for further discussion on fair value measurements. 38

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

~~Financing~~ALABAMA ~~Activities~~ POWER COMPANY

InCONDENSED ~~March 2009,~~BALANCE ~~Alabama~~SHEETS Power issued $500 million of Series 2009A 6.00% Senior Notes due March 1, 2039. The proceeds were used to repay short-term indebtedness and for other general corporate purposes, including Alabama Power’s continuous construction program. (UNAUDITED)

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



Liabilities and Stockholder's Equity	At March 31, 2016			At December 31, 2015
	(in millions)
Current Liabilities:
Securities due within one year	$	200		$	200
Accounts payable —
Affiliated	258			278
Other	271			410
Customer deposits	88			88
Accrued taxes —
Accrued income taxes	11			—
Other accrued taxes	62			38
Accrued interest	65			73
Accrued vacation pay	55			55
Accrued compensation	47			119
Liabilities from risk management activities	37			55
Other regulatory liabilities, current	175			240
Other current liabilities	39			39
Total current liabilities	1,308			1,595
Long-term Debt	6,894			6,654
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	4,306			4,241
Deferred credits related to income taxes	69			70
Accumulated deferred investment tax credits	116			118
Employee benefit obligations	377			388
Asset retirement obligations	1,461			1,448
Other cost of removal obligations	705			722
Other regulatory liabilities, deferred	119			136
Deferred over recovered regulatory clause revenues	64			—
Other deferred credits and liabilities	78			76
Total deferred credits and other liabilities	7,295			7,199
Total Liabilities	15,497			15,448
Redeemable Preferred Stock	85			85
Preference Stock	196			196
Common Stockholder's Equity:
Common stock, par value $40 per share --
Authorized - 40,000,000 shares
Outstanding - 30,537,500 shares	1,222			1,222
Paid-in capital	2,585			2,341
Retained earnings	2,425			2,461
Accumulated other comprehensive loss	(33		)	(32		)
Total common stockholder's equity	6,199			5,992
Total Liabilities and Stockholder's Equity	$	21,977		$	21,721

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

~~Table of Contents~~39

~~GEORGIA~~Table ~~POWER~~of ~~COMPANY~~ Contents

46 ALABAMA POWER COMPANY

~~Table~~MANAGEMENT'S ofDISCUSSION ~~Contents~~AND ANALYSIS OF

~~GEORGIA~~FINANCIAL ~~POWER~~CONDITION ~~COMPANY~~ AND RESULTS OF OPERATIONS

~~CONDENSED~~FIRST ~~STATEMENTS~~QUARTER OF2016 ~~INCOME~~vs. ~~(UNAUDITED)~~FIRST QUARTER 2015

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Operating Revenues:
Retail revenues	$	1,592,395		$	1,575,007
Wholesale revenues —
Non-affiliates		95,986			152,692
Affiliates		15,210			73,910
Other revenues		62,250			63,238
Total operating revenues		1,765,841			1,864,847
Operating Expenses:
Fuel		600,490			637,923
Purchased power —
Non-affiliates		61,953			58,031
Affiliates		197,223			252,935
Other operations and maintenance		390,493			368,815
Depreciation and amortization		167,111			150,608
Taxes other than income taxes		76,248			71,286
Total operating expenses		1,493,518			1,539,598
Operating Income		272,323			325,249
Other Income and (Expense):
Allowance for equity funds used during construction		20,754			27,757
Interest income		1,230			787
Interest expense, net of amounts capitalized		(98,390	)		(86,338	)
Other income (expense), net		(6,720	)		(3,293	)
Total other income and (expense)		(83,126	)		(61,087	)
Earnings Before Income Taxes		189,197			264,162
Income taxes		62,628			83,801
Net Income		126,569			180,361
Dividends on Preferred and Preference Stock		4,345			4,345
Net Income After Dividends on Preferred and Preference Stock	$	122,224		$	176,016

OVERVIEW

~~CONDENSED~~Alabama ~~STATEMENTS~~Power OFoperates ~~COMPREHENSIVE~~as ~~INCOME~~a ~~(UNAUDITED)~~ vertically integrated utility providing electricity to retail and wholesale customers within its traditional service territory located within the State of Alabama in addition to wholesale customers in the Southeast.

	For the Three Months
	Ended March 31,
	2009		2008
	(in thousands)
Net Income After Dividends on Preferred and Preference Stock	$	122,224	$	176,016
Other comprehensive income (loss):
Qualifying hedges:
Changes in fair value, net of tax of $1,180 and $(6,043), respectively		1,870		(9,580	)
Reclassification adjustment for amounts included in net income, net of tax of $1,743 and $206, respectively		2,763		327
Total other comprehensive income (loss)		4,633		(9,253	)
COMPREHENSIVE INCOME	$	126,857	$	166,763

Many factors affect the opportunities, challenges, and risks of Alabama Power's business of selling electricity. These factors include the ability to maintain a constructive regulatory environment, to maintain and grow energy sales, and to effectively manage and secure timely recovery of costs. These costs include those related to projected long-term demand growth, increasingly stringent environmental standards, reliability, fuel, capital expenditures, and restoration following major storms. Alabama Power has various regulatory mechanisms that operate to address cost recovery. Effectively operating pursuant to these regulatory mechanisms and appropriately balancing required costs and capital expenditures with customer prices will continue to challenge Alabama Power for the foreseeable future.

~~The~~Alabama ~~accompanying~~Power ~~notes~~continues asto ~~they~~focus ~~relate~~on toseveral ~~Georgia~~key ~~Power~~performance ~~are~~indicators. anThese ~~integral~~indicators ~~part~~include ofcustomer satisfaction, plant availability, system reliability, and net income after dividends on preferred and preference stock. For additional information on these ~~condensed~~indicators, ~~financial~~see ~~statements~~MANAGEMENT'S DISCUSSION AND ANALYSIS – OVERVIEW – "Key Performance Indicators" of Alabama Power in Item 7 of the Form 10-K.

47 RESULTS OF OPERATIONS

~~Table~~Net ~~of Contents~~Income

GEORGIA POWER COMPANY



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(14)		(8.3)

~~CONDENSED~~Alabama ~~STATEMENTS~~Power's OFnet ~~CASH~~income ~~FLOWS~~after ~~(UNAUDITED)~~dividends on preferred and preference stock for the first quarter 2016 was $155 million compared to $169 million for the corresponding period in 2015. The decrease was primarily related to a decrease in revenue primarily due to milder weather in the first quarter 2016 as compared to the corresponding period in 2015, an increase in interest expense, and a decrease in AFUDC. These decreases were partially offset by an increase in revenues under Rate CNP Compliance and a decrease in dividends on preferred and preference stock.

	For the Three Months
	Ended March 31,
	2009			2008
	(in thousands)
Operating Activities:
Net income	$	126,569		$	180,361
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		199,773			178,735
Deferred income taxes and investment tax credits		(7,130	)		(5,709	)
Deferred revenues		(7,685	)		35,046
Deferred expenses		26,387			27,996
Allowance for equity funds used during construction		(20,754	)		(27,757	)
Pension, postretirement, and other employee benefits		(386	)		9,863
Hedge settlements		(16,167	)		(15,816	)
Other, net		26,708			(25,593	)
Changes in certain current assets and liabilities —
Receivables		13,563			77,074
Fossil fuel stock		(112,255	)		1,293
Prepaid income taxes		(5,139	)		22,380
Other current assets		4,562			(4,042	)
Accounts payable		174,347			(44,570	)
Accrued taxes		(135,100	)		(79,097	)
Accrued compensation		(96,144	)		(72,174	)
Other current liabilities		61,917			22,630
Net cash provided from operating activities		233,066			280,620
Investing Activities:
Property additions		(640,486	)		(517,606	)
Distribution of restricted cash from pollution control revenue bonds		9,305			16,094
Nuclear decommissioning trust fund purchases		(318,732	)		(113,811	)
Nuclear decommissioning trust fund sales		320,681			106,931
Cost of removal, net of salvage		(16,368	)		(11,346	)
Change in construction payables, net of joint owner portion		55,767			8,608
Other		14,125			(11,239	)
Net cash used for investing activities		(575,708	)		(522,369	)
Financing Activities:
Decrease in notes payable, net		(76,509	)		(359,113	)
Proceeds —
Capital contributions from parent company		280,016			241,800
Senior notes		500,000			250,000
Other long-term debt		750			300,000
Redemptions —
Senior notes		(150,361	)		(417	)
Payment of preferred and preference stock dividends		(4,413	)		(3,947	)
Payment of common stock dividends		(184,725	)		(180,300	)
Other		(7,554	)		(3,313	)
Net cash provided from financing activities		357,204			244,710
Net Change in Cash and Cash Equivalents		14,562			2,961
Cash and Cash Equivalents at Beginning of Period		132,739			15,392
Cash and Cash Equivalents at End of Period	$	147,301		$	18,353
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $9,143 and $11,837 capitalized for 2009 and 2008, respectively)	$	60,905		$	70,452
Income taxes (net of refunds)	$	13,330		$	450

Retail Revenues

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



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(75)		(5.9)

48 In the first quarter 2016, retail revenues were $1.19 billion compared to $1.27 billion for the corresponding period in 2015.

~~Table of Contents~~40

~~GEORGIA~~Table ~~POWER~~of ~~COMPANY~~ Contents

~~CONDENSED~~ALABAMA ~~BALANCE~~POWER ~~SHEETS (UNAUDITED)~~COMPANY

	At March 31,			At December 31,
Assets	2009			2008
	(in thousands)
Current Assets:
Cash and cash equivalents	$	147,301		$	132,739
Restricted cash and cash equivalents		15,879			22,381
Receivables —
Customer accounts receivable		505,440			554,219
Unbilled revenues		131,520			147,978
Under recovered regulatory clause revenues		351,964			338,780
Other accounts and notes receivable		228,555			97,899
Affiliated companies		20,874			13,091
Accumulated provision for uncollectible accounts		(11,291	)		(10,732	)
Fossil fuel stock, at average cost		597,012			484,757
Materials and supplies, at average cost		361,226			356,537
Vacation pay		65,390			71,217
Prepaid income taxes		71,126			65,987
Other regulatory assets		164,748			118,961
Other		45,489			63,464
Total current assets		2,695,233			2,457,278
Property, Plant, and Equipment:
In service		24,266,916			23,975,262
Less accumulated provision for depreciation		9,204,865			9,101,474
		15,062,051			14,873,788
Nuclear fuel, at amortized cost		292,163			278,412
Construction work in progress		1,773,995			1,434,989
Total property, plant, and equipment		17,128,209			16,587,189
Other Property and Investments:
Equity investments in unconsolidated subsidiaries		57,796			57,163
Nuclear decommissioning trusts, at fair value		432,575			460,430
Other		37,970			40,945
Total other property and investments		528,341			558,538
Deferred Charges and Other Assets:
Deferred charges related to income taxes		578,218			572,528
Deferred under recovered regulatory clause revenues		366,045			425,609
Other regulatory assets		1,435,775			1,449,352
Other		205,278			265,174
Total deferred charges and other assets		2,585,316			2,712,663
Total Assets	$	22,937,099		$	22,315,668

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

~~The~~FINANCIAL ~~accompanying~~CONDITION ~~notes~~AND asRESULTS ~~they~~OF ~~relate to Georgia Power are an integral part of these condensed financial statements.~~ OPERATIONS

49 Details of the changes in retail revenues were as follows:



	First Quarter 2016
	(in millions)			(% change)
Retail – prior year	$	1,268
Estimated change resulting from –
Rates and pricing	33			2.6
Sales growth	8			0.6
Weather	(45		)	(3.5	)
Fuel and other cost recovery	(71		)	(5.6	)
Retail – current year	$	1,193		(5.9	)%

~~GEORGIA~~Revenues ~~POWER~~associated ~~COMPANY~~ with changes in rates and pricing increased in the first quarter 2016 when compared to the corresponding period in 2015 primarily due to increased revenues under Rate CNP Compliance associated with increases in the average net investments. See Note 3 to the financial statements of Alabama Power under "Retail Regulatory Matters" in Item 8 of the Form 10-K for additional information.

~~CONDENSED~~Revenues ~~BALANCE~~attributable ~~SHEETS~~to ~~(UNAUDITED)~~sales growth increased in the first quarter 2016 when compared to the corresponding period in 2015. Weather-adjusted residential and commercial KWH energy sales increased 2.3% and 0.9%, respectively, for the first quarter 2016 when compared to the corresponding period in 2015 as a result of increased customer demand. Industrial KWH energy sales decreased 3.5% for the first quarter 2016 when compared to the corresponding period in 2015 as a result of a decrease in demand resulting from changes in production levels primarily in the pipelines, primary metals, and chemicals sectors. A strong dollar, low oil prices, and weak global growth conditions have constrained growth in the industrial sector.

	At March 31,			At December 31,
Liabilities and Stockholder’s Equity	2009			2008
	(in thousands)
Current Liabilities:
Securities due within one year	$	380,323		$	280,443
Notes payable		280,586			357,095
Accounts payable —
Affiliated		195,395			260,545
Other		748,629			422,485
Customer deposits		191,356			186,919
Accrued taxes —
Income taxes		102,591			70,916
Unrecognized tax benefits		141,095			128,712
Other		91,672			278,172
Accrued interest		107,411			79,432
Accrued vacation pay		51,563			57,643
Accrued compensation		43,734			135,191
Liabilities from risk management activities		143,271			113,432
Other		186,851			136,176
Total current liabilities		2,664,477			2,507,161
Long-term Debt		7,254,092			7,006,275
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		3,076,923			3,064,580
Deferred credits related to income taxes		136,630			140,933
Accumulated deferred investment tax credits		252,788			256,218
Employee benefit obligations		882,380			882,965
Asset retirement obligations		696,930			688,019
Other cost of removal obligations		385,140			396,947
Other regulatory liabilities		97,502			115,865
Other		119,370			111,505
Total deferred credits and other liabilities		5,647,663			5,657,032
Total Liabilities		15,566,232			15,170,468
Preferred and Preference Stock		265,957			265,957
Common Stockholder’s Equity:
Common stock, without par value—
Authorized - 20,000,000 shares
Outstanding - 9,261,500 shares		398,473			398,473
Paid-in capital		3,939,265			3,655,731
Retained earnings		2,795,289			2,857,789
Accumulated other comprehensive loss		(28,117	)		(32,750	)
Total common stockholder’s equity		7,104,910			6,879,243
Total Liabilities and Stockholder’s Equity	$	22,937,099		$	22,315,668

Revenues resulting from changes in weather decreased in the first quarter 2016 due to milder weather experienced in Alabama Power's service territory compared to the corresponding period in 2015. For the first quarter 2016, the resulting decreases were 6.6% and 2.2% for residential and commercial sales revenue, respectively.

~~The~~Fuel ~~accompanying~~and ~~notes~~other ascost ~~they~~recovery ~~relate~~revenues decreased in the first quarter 2016 when compared to ~~Georgia~~the ~~Power~~corresponding ~~are~~period anin ~~integral~~2015 ~~part~~primarily due to a decrease in KWH generation and a decrease in the average cost of fuel. Electric rates include provisions to recognize the full recovery of fuel costs, purchased power costs, PPAs certificated by the Alabama PSC, and costs associated with the natural disaster reserve. Under these ~~condensed~~provisions, fuel and other cost recovery revenues generally equal fuel and other cost recovery expenses and do not affect net income. See Note 3 to the financial statements of Alabama Power under "Retail Regulatory Matters" in Item 8 of the Form 10-K for additional information.

50 Wholesale Revenues – Affiliates



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$7		46.7

~~GEORGIA~~Wholesale ~~POWER~~revenues ~~COMPANY~~ from sales to affiliated companies will vary depending on demand and the availability and cost of generating resources at each company. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since this energy is generally sold at marginal cost and energy purchases are generally offset by energy revenues through Alabama Power's energy cost recovery clauses.

~~MANAGEMENT’S~~In ~~DISCUSSION~~the ~~AND~~first ~~ANALYSIS~~quarter ~~OF FINANCIAL~~2016, ~~CONDITION~~wholesale ~~AND~~revenues ~~RESULTS~~from OFsales ~~OPERATIONS~~to affiliates were $22 million compared to $15 million for the corresponding period in 2015. KWH sales to affiliates increased 78.5% primarily as a result of higher available hydro generation and lower natural gas prices.

~~FIRST QUARTER 2009 vs. FIRST QUARTER 2008~~ 41

~~OVERVIEW~~ Table of Contents

~~Georgia~~ALABAMA ~~Power~~POWER operates as a vertically integrated utility providing electricity to retail customers within its traditional service area located within the State of Georgia and to wholesale customers in the Southeast. Many factors affect the opportunities, challenges, and risks of Georgia Power’s business of selling electricity. These factors include the ability to maintain a constructive regulatory environment, to maintain energy sales in the midst of the current economic downturn, and to effectively manage and secure timely recovery of rising costs. These costs include those related to projected long-term demand growth, increasingly stringent environmental standards, and fuel prices. Appropriately balancing the need to recover these increasing costs with customer prices will continue to challenge Georgia Power for the foreseeable future. Georgia Power is required to file a general rate case by July 1, 2010, which will determine whether the 2007 Retail Rate Plan should be continued, modified, or discontinued. Georgia Power also expects to file a fuel cost recovery case in the third quarter 2009. COMPANY

Georgia Power continues to focus on several key performance indicators. These indicators include customer satisfaction, plant availability, system reliability, and net income after dividends on preferred and preference stock. For additional information on these indicators, see MANAGEMENT’'S DISCUSSION AND ANALYSIS ~~– OVERVIEW – “Key Performance Indicators” of Georgia Power in Item 7 of the Form 10-K.~~ OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Net~~Fuel ~~Income~~ and Purchased Power Expenses

First Quarter 2009 vs. First Quarter 2008
	First Quarter 2016vs.First Quarter 2015
~~(change in millions)~~	(% change in millions)			(% change)
$(53.8)	(30.6)
Fuel	$	(42	)	(13.5)
Purchased power – non-affiliates	(5		)	(12.2)
Purchased power – affiliates	(20		)	(37.7)
Total fuel and purchased power expenses	$	(67	)

~~Georgia~~In ~~Power’s~~the ~~net~~first ~~income~~quarter ~~after~~2016, ~~dividends~~total onfuel ~~preferred~~ and ~~preference~~purchased ~~stock~~power ~~for~~expenses ~~the~~were ~~first quarter 2009 was~~ $~~122.2~~ 337 million compared to $~~176.0~~ 404 million for the corresponding period in ~~2008~~2015. The decrease was primarily due to ~~lower~~a ~~industrial~~$33 ~~base~~million ~~revenues~~decrease ~~resulting~~related ~~from~~to the ~~recessionary economy~~volume ~~and~~of KWHs purchased, a ~~charge~~$23 inmillion decrease related to the ~~first~~volume ~~quarter~~of ~~2009~~KWHs generated, and a $19 million decrease in ~~connection~~the ~~with~~average acost ~~voluntary~~of ~~attrition~~fuel. ~~plan~~These ~~under which~~decreases ~~579~~were ~~employees~~partially ~~elected~~offset toby ~~resign~~an ~~from~~$8 ~~their~~million ~~positions~~increase ~~effective~~in ~~March 31,~~the ~~2009~~average cost of purchased power.

Fuel and purchased power energy transactions do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Alabama Power's energy cost recovery clause. Alabama Power, along with the Alabama PSC, continuously monitors the under/over recovered balance to determine whether adjustments to billing rates are required. See Note 3 to the financial statements of Alabama Power under "Retail ~~Revenues~~ Regulatory Matters – Rate ECR" in Item 8 of the Form 10-K for additional information.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$17.4		1.1

Details of Alabama Power's generation and purchased power were as follows:

In the first quarter 2009, retail revenues were $1.59 billion compared to $1.57 billion for the corresponding period in 2008.



	First Quarter 2016	First Quarter 2015
Total generation (billions of KWHs)	15	15
Total purchased power (billions of KWHs)	1	2
Sources of generation (percent) —
Coal	40	47
Nuclear	27	26
Gas	19	19
Hydro	14	8
Cost of fuel, generated (cents per net KWH) —
Coal	2.86	2.89
Nuclear	0.77	0.80
Gas	2.46	3.03
Average cost of fuel, generated (cents per net KWH)^(a)	2.12	2.33
Average cost of purchased power (cents per net KWH)^(b)	5.16	4.60

51 (a) KWHs generated by hydro are excluded from the average cost of fuel, generated.

~~Table~~(b) Average cost of ~~Contents~~purchased power includes fuel, energy, and transmission purchased by Alabama Power for tolling agreements where power is generated by the provider.

~~GEORGIA POWER COMPANY MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ Fuel

~~Details~~In ofthe first quarter 2016, fuel expense was $268 million compared to $310 million for the ~~change~~corresponding period in 2015. The decrease was primarily due to ~~retail~~a ~~revenues~~18.8% ~~are~~decrease asin ~~follows:~~ the average cost of natural gas per KWH generated, which excludes fuel associated with tolling agreements, and a 15.0% decrease in the volume of KWHs generated by coal, partially offset by a 6.8% increase in the volume of KWHs generated by natural gas.

	First Quarter
	2009
	(in millions)			(% change)
Retail – prior year	$	1,575.0
Estimated change in —
Rates and pricing		19.7			1.3
Sales growth (decline)		(18.1	)		(1.2	)
Weather		(0.6	)		—
Fuel cost recovery		16.4			1.0
Retail – current year	$	1,592.4			1.1	%

~~Revenues~~Table ~~associated with changes in rates and pricing increased in the first quarter 2009 when compared to the corresponding period in 2008 due to increased environmental compliance cost recovery revenues~~ of ~~$49.4 million in accordance with the 2007 Retail Rate Plan, partially offset by decreased revenues from market-response rates to large commercial and industrial customers.~~ Contents

~~Revenues~~ALABAMA ~~attributable~~POWER to changes in sales growth declined in the first quarter 2009 when compared to the corresponding period for 2008. This decrease was primarily due to the recessionary economy, partially offset by a 0.4% increase in retail customers. Weather-adjusted residential KWH sales increased 1.3%, weather-adjusted commercial KWH sales decreased 0.6%, and weather-adjusted industrial KWH sales decreased 13.9% for the first quarter 2009 when compared to the corresponding period in 2008. Weather-adjusted industrial KWH sales decreased due to a broad decline in demand across all industrial segments. COMPANY

~~Fuel~~MANAGEMENT'S ~~revenues~~DISCUSSION ~~and~~AND ~~costs~~ANALYSIS are allocated between retail and wholesale jurisdictions. Retail fuel cost recovery revenues increased by $16.4 million in the first quarter 2009 when compared to the corresponding period in 2008 due to a higher proportion of retail fuel revenues compared to wholesale fuel revenues during the period, partially offset by decreased fuel and purchased power expenses. Electric rates include provisions to adjust billings for fluctuations in fuel costs, including the energy component of purchased power costs. Under these provisions, fuel revenues generally equal fuel expenses, including the fuel component of purchased power costs, and do not affect net income. OF

~~Wholesale~~FINANCIAL ~~Revenues~~CONDITION –AND ~~Non-Affiliates~~ RESULTS OF OPERATIONS

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(56.7)		(37.1)

Purchased Power – Non-Affiliates

~~Wholesale~~In ~~revenues~~the ~~from~~first ~~non-affiliates~~quarter ~~will~~2016, ~~vary~~purchased ~~depending~~power onexpense ~~the~~from ~~market~~non-affiliates ~~cost~~was of$36 ~~available~~million ~~energy~~ compared to ~~the~~$41 ~~cost~~million ~~of Georgia Power and Southern Company system-owned generation, demand~~ for ~~energy~~ ~~within~~ the ~~Southern~~corresponding ~~Company~~period ~~service~~in ~~territory,~~2015. ~~and~~The ~~the~~decrease ~~availability~~was ofrelated ~~Southern~~to ~~Company system~~a ~~generation~~10.7% Indecrease in the ~~first~~amount ~~quarter~~of ~~2009,~~energy ~~wholesale~~purchased ~~revenues~~due ~~from non-affiliates were $96.0 million compared~~ to ~~$152.7 million in~~ the ~~same~~availability ~~period~~of inlower ~~2008.~~cost ~~This~~generation ~~decrease~~as ~~was~~a ~~due~~result toof amore ~~53.1% decrease~~rainfall infor ~~KWH~~hydro ~~sales~~generation ~~due~~and to lower ~~demand~~natural gas prices.

52 Energy purchases from non-affiliates will vary depending on the market prices of wholesale energy as compared to the cost of the Southern Company system's generation, demand for energy within the Southern Company system's service territory, and the availability of the Southern Company system's generation.

~~Table~~Purchased ofPower ~~Contents~~– Affiliates

~~GEORGIA~~In ~~POWER~~the ~~COMPANY MANAGEMENT’S~~first ~~DISCUSSION~~quarter ~~AND~~2016, ~~ANALYSIS~~purchased ~~OF FINANCIAL~~power ~~CONDITION~~expense ~~AND~~from ~~RESULTS~~affiliates OFwas ~~OPERATIONS~~ $33 million compared to $53 million for the corresponding period in 2015. The decrease was related to a 48.2% decrease in the amount of energy purchased due to milder weather and the availability of lower cost generation as a result of more rainfall for hydro generation and lower natural gas prices. The decrease was partially offset by a 20.6% increase in the average cost of purchased power per KWH from affiliates.

~~Wholesale~~Energy ~~Revenues~~purchases –from ~~Affiliates~~ affiliates will vary depending on demand for energy and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC or other contractual agreements, as approved by the FERC.

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$(58.7)		(79.4)

Other Operations and Maintenance Expenses

Wholesale revenues from affiliated companies will vary depending on demand and the availability and cost of generating resources at each company within the Southern Company system. These affiliate sales are made in accordance with the IIC, as approved by the FERC. These transactions do not have a significant impact on earnings since the energy is generally sold at marginal cost. In the first quarter 2009, wholesale revenues from affiliates were $15.2 million compared to $73.9 million in the same period in 2008. This decrease was due to an 83.6% decrease in KWH sales due to lower demand primarily caused by the recessionary economy.



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(7)		(1.8)

~~Fuel~~In the first quarter 2016, other operations and ~~Purchased~~maintenance ~~Power~~expenses ~~Expenses~~ were $392 million compared to $399 million for the corresponding period in 2015. The decrease was primarily due to a decrease of $14 million in steam generation costs primarily due to scheduled outage costs. This decrease was partially offset by a $6 million increase in nuclear generation costs primarily due to outage amortization and materials costs.

	First Quarter 2009 vs. First Quarter 2008
	(change in millions)			(% change)
Fuel	$	(37.4	)		(5.9	)
Purchased power – non-affiliates		3.9			6.8
Purchased power – affiliates		(55.7	)		(22.0	)
Total fuel and purchased power expenses	$	(89.2	)

Depreciation and Amortization

In the first quarter 2009, total fuel and purchased power expenses were $859.7 million compared to $948.9 million in the same period in 2008. This decrease was due to a $104.8 million decrease related to fewer KWHs generated and purchased, partially offset by a $15.6 million net increase in the average cost of fuel and purchased power.



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$14		8.9

~~Details~~In the first quarter 2016, depreciation and amortization was $172 million compared to $158 million for the corresponding period in 2015. The increase was primarily the result of ~~Georgia~~an ~~Power’s~~increase ~~cost~~in depreciation of ~~generation~~compliance ~~and~~related ~~purchased~~steam ~~power~~equipment. ~~are~~See asNote ~~follows:~~ 3 to the financial statements of Alabama Power under "Retail Regulatory Matters – Rate CNP" in Item 8 of the Form 10-K for additional information.

	First Quarter		First Quarter		Percent
Average Cost	2009		2008		Change
	(cents per net KWH)
Fuel		3.23		2.84		13.7
Purchased power		6.40		7.32		(12.6	)

Allowance for Equity Funds Used During Construction

In the first quarter 2009, fuel expense was $600.5 million compared to $637.9 million in the same period in 2008. This decrease was due to an 18.2% decrease in volume of KWHs generated primarily as a result of the lower KWH demand and lower natural gas prices, partially offset by a 28.8% increase in the average cost of coal per KWH generated.



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(5)		(33.3)

~~Fuel~~In ~~and~~the ~~purchased~~first ~~power~~quarter ~~transactions~~2016, doAFUDC ~~not~~equity ~~have~~was a$10 ~~significant~~million ~~impact~~compared onto ~~earnings~~$15 ~~since~~million ~~energy expenses~~for ~~are~~the ~~generally~~corresponding ~~offset~~period byin ~~energy~~2015. ~~revenues~~The ~~through~~decrease ~~Georgia~~was ~~Power’s~~primarily ~~fuel~~associated ~~cost~~with ~~recovery~~capital ~~clause. See~~projects ~~FUTURE~~being ~~EARNINGS~~placed ~~POTENTIAL~~in –service ~~“FERC~~for environmental and ~~Georgia~~steam ~~PSC~~generation ~~Matters~~in ~~– Retail Fuel Cost Recovery” herein for additional information~~2016.

53 43

Table of Contents

~~GEORGIA~~ALABAMA POWER COMPANY ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Non-Affiliates~~ MANAGEMENT'S DISCUSSION AND ANALYSIS OF

InFINANCIAL ~~the~~CONDITION ~~first~~AND ~~quarter~~RESULTS ~~2009,~~OF purchased power expense from non-affiliates was $62.0 million compared to $58.0 million in the same period in 2008. This increase was due to a 45.9% volume increase in KWHs purchased from available lower-priced market energy alternatives partially offset by a 26.9% decrease in the average cost per KWH purchased. OPERATIONS

~~Energy~~Interest ~~purchases from non-affiliates will vary depending on the market cost of available energy being lower than Southern Company system-generated energy~~Expense, ~~demand~~Net ~~for energy within the Southern Company system service territory, and availability~~ of ~~Southern~~Amounts ~~Company system generation.~~ Capitalized

Affiliates



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$8		12.3

In the first quarter ~~2009~~2016, ~~purchased~~interest ~~power~~ expense, ~~from~~net ~~affiliates~~of amounts capitalized was $~~197.2~~ 73 million compared to $~~252.9~~ 65 million infor the ~~same~~corresponding period in ~~2008~~2015. ~~This~~The ~~decrease~~increase was primarily due to atiming ~~9.5%~~of ~~decrease~~debt inissuances, ~~the~~maturities, ~~average cost per KWH purchased~~ and ~~a 7~~redemptions.~~6% volume decrease in KWHs purchased because of the availability of lower-priced market energy alternatives within the Power Pool.~~

~~Energy~~Income purchases from affiliated companies will vary depending on demand and the availability and cost of generating resources at each company within the Southern Company system. These purchases are made in accordance with the IIC, as approved by the FERC. Taxes

Other Operations and Maintenance Expenses



First Quarter 2016 vs. First Quarter 2015
(change in millions)		(% change)
$(10)		(8.8)

First Quarter 2009 vs. First Quarter 2008
(change in millions)		(% change)
$21.7		5.9

In the first quarter 2016, income taxes were $103 million compared to $113 million for the corresponding period in 2015. The decrease was primarily due to lower pre-tax earnings.

InDividends the first quarter 2009, other operations and maintenance expenses were $390.5 million compared to $368.8 million in the same period in 2008. This increase was primarily due to a $29.4 million charge in the first quarter 2009 in connection with a voluntary attrition plan under which 579 employees elected to resign their positions effective March 31, 2009. The first quarter 2009 charge will be largely offset by lower salary costs for the remainder of the year and is not expected to have a material impact on ~~Georgia~~Preferred ~~Power’s financial statements for the year ending December 31, 2009. This increase was partially offset by an $8.5 million decrease in fossil~~ and ~~distribution~~ ~~maintenance~~

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