Coal as a Future Generation Fuel

Chris M. HobsonSenior Vice President

and

Chief Environmental Officer

December 3, 2009

Southern Company Overview

• 42,600 MW• 303 generating units

• 160,000,000 tons coal/yr

Generation

• 27,000 line miles• 3,300 substations

Transmission

• 156,000 line miles • 3.8 million poles

Environmental

• $48 B total assets• $17 B revenues

• $1.74 B Net Income

Financial

Fuel Mix

as of December 2008

Distribution

• $6.3 B completed projects• $3.1B new projects

Today and Tomorrow – Coal as a U.S. Generation Fuel

• Affordable and reliable energy

• Dominant energy source for U.S. economy

• Emissions down; demand for energy up

• Extensive infrastructure for mining, transport and fuel use

• No low-cost, short-term, viable alternative

• Coal reserves in 38 U.S. states – 1/4th the world reserve

• Diverse, well-established, and competitive markets

• Capture and confinement technologies developing rapidly

Coal

Natural Gas

NuclearCurrent U.S. Generation Mix

Other

Southern Company Advanced Coal Programs

Mississippi Saline TestMississippi Power’s Plant Daniel

Barry 25 MW CCS DemoAlabama Power’s Plant Barry

Gorgas Geological Suitables StudyAlabama Power’s Plant Gorgas

Citronelle Oil Field Study

Southern Company Service Territory Mississippi Saline Test

Mississippi Power’s Plant Daniel

Citronelle Oil Field Study

Gorgas Geologic Suitability StudiesAlabama Power’s Plant Gorgas

Barry CCS 25-MW DemoAlabama Power’s Plant Barry

National Carbon Capture CenterWilsonville, Al

Kemper County IGCC TRIGTM (65% CO2 Removal w/ EOR)Mississippi Power Company

• Dongguan City, China─ 50 miles northwest of Hong Kong

─ Existing 100-MW diesel CC

─ Repowered for Indonesian lignite

─ 113 MW (net) facility

─ May 2011

Dongguan City & Kemper County IGCC

• Kemper County, MS─ Mine mouth lignite

─ 582 MW

─ 65% CO2 capture

─ Gray Water System

─ May 2014

Future Power Generation Options, $/MWh

0

100

200

300

400

500

Source: Energy Information Administration, AnnualEnergy Outlook 2009, April 2009, SR-OIAF/2009-03

$/M

Wh

U.S. Average Levelized Cost for Plants Entering Service in 2016

Intermittent

Economic and Market Consideration forCoal-Fired Generation

• Coal provides stability in fuel/pricing mix.

• Natural gas cannot meet projected increases in energy demand.

• New nuclear generation is limited by construction timelines and financing.

• Most renewables are intermittent, regional, costly and need major development.

• Cost reductions and technology developments are expected for CCS.

• Significant market exist for resale of CO2 for EOR.

• Markets for products associated with IGCC must be developed.

Challenges for Coal

• Scientific and Technological– CCS

– Water and Waste Issues– Further Emission Reductions

• Regulatory– Permitting

– Monitoring/Certification– Site Closure

– Remediation

• Social-Political– Political/Public Confidence

• Legal– Liability– Ownership

Next Generation Coal Permitting

• Longer application preparation and agency review process• More external and regulatory involvement in process• Air

− Close scrutiny on every proposed limit− BACT/MACT− PM2.5 / Ozone - NAAQS− CO2

• Water (the new Air?)− More difficult water supply permitting− Changing discharge standards− Regional / local water planning boards

• Coal Combustion Byproduct disposal• It CAN be done – but expect litigation

Closing Thoughts

• Major environmental and political issues remain for coal.

• The current Administration, Congress, EPA and environmental groups will continue to push for reduced use of coal while providing incentives for renewable energy.

• Coal will provide at least 45% of the electric power generated in the United States through the next decade.

• Coal remains vital to the U.S. and world economies.

Chris M. HobsonSenior Vice President and Chief Environmental Officer

Coal as a Future Generation Fuel