Southern Energy, Inc.Southern Energy, Inc.

“Natural Gas and Electricity:Looks Like a Good Marriage”

Pamela S. PierceIPAA Luncheon

November 8, 2000Houston, Texas

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Southern CompanySouthern Company

Southern Company

Official Sponsor of the

PGA Tour

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Southern Energy, Inc.Southern Energy, Inc.

Southern Company

Official Sponsor of the

PGA Tour

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IPO’d September 27, 2000 - NYSE Symbol SOE $9.2 billion company headquartered in Atlanta (20% currently

in public market) A leading integrated non-regulated power provider with

regionally based businesses in North America, Europe and the Asia-Pacific Region

Vertical integration of non-regulated electricity generation and distribution; marketing and risk management; and access/ management of gas and oil assets

Southern Energy, Inc.Southern Energy, Inc.

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Southern Energy, Inc.Southern Energy, Inc.

Price range originally filed with SEC: $15 - $17 / share Price range in last S-1 Amendment: $18 - $20 / share Actual IPO price: $22 / share Order book was 13.5 times oversubscribed Goldman Sachs’ most oversubscribed $1+ billion IPO Largest ever increase from initial filing range to offer price for

all IPOs greater than $1 billion (excluding technology and telecom)

Expectations for a full spin-off from Southern Company within 12 months

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Southern Energy, Inc.Southern Energy, Inc.

COMPETITOR GROUP

4.6

16.9

11.8

29.3

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Ref. Date 11/8/00

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Southern Energy, Inc.Southern Energy, Inc.

COMPETITOR GROUP

27.1

57.8

39.4

46.041.9

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20

30

40

50

60

70

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One of the leading non-regulated power producers in the U.S. 14,000 MW of operating capacity in North America targeted to

grow to 30,000 MW by 2004 Power assets in key population areas throughout the US Worldwide capacity targeted to grow to 50,000 MW by 2004.

Currently operating in Germany, England, Philippines, China, Trinidad and the U.S.

Southern Energy, Inc.Southern Energy, Inc.

ELECTRICITY GENERATION AND DISTRIBUTION

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Southern Energy, Inc.Southern Energy, Inc.

Q2’00 Gas Marketing Rankings*

(BCF/d)

1. Enron 27.1

2. Duke 11.2

3. Aquila 10.0

4. Coral 9.4

5. Sempra 8.4

6. Dynegy 8.3

7. BP Amoco 8.2

8. Reliant 7.9

9. TransCanada 6.4

10. Southern Energy 5.9

*Source: Gas Daily August 4, 2000

Q2’00 Power Marketing Rankings*

(MM MWh)

1. Enron 127.4

2. American Electric Power 102.2

3. Duke 59.0

4. PG&E Energy 58.8

5. Southern Energy 46.1

6. Aquila 39.9

7. Reliant 35.9

8. Constellation 27.4

9. Dynegy 26.3

10. Edison Mission 24.6

*Source: Power Markets Week August 21, 2000

MARKETING AND RISK MANAGEMENT

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Southern Energy, Inc.Southern Energy, Inc.

Provide financing options for oil and gas companies to transact acquisitions, development drilling programs, monetization of existing assets and company recapitalization

Maximum flexibility to design customized financial structures including debt, equity and working interest

Provide marketing and risk management services to add value to physical commodities

$400 MM annual capital budget Key drivers: the assets and the partners

SOUTHERN PRODUCER SERVICES, L.P. -ENERGY CAPITAL GROUP

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ELECTRICITY DEMAND 1999 annual U.S. electrical consumption 3,700,000 GW-hrs

Coal supplies about 55% Nuclear supplies about 18% Natural Gas supplies about 15% Hydro supplies about 8% Fuel Oil supplies about 4%

Electricity consumption grew by 5.4% during 1998, up from 3.2% annually from 1994-98

Electricity growth, upwards of 6% could occur due to greater dependence on electricity-consuming technology

Source: Edison Electric Institute and Simmons & Company

Southern Energy, Inc.Southern Energy, Inc.

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INCREMENTAL NATURAL GAS DEMAND

5% Electricity Growth - 185,000 GW-hrs per year incremental demand

185,000 GW-hrs x 8 mcf x 1,000 KW = 1,480 bcf

1,480 bcf = 4.0 bcf

Average daily demand growth 2-4 bcf depending on weather and plant efficiency

Source: Simmons & Company (modified)

year yearKW 1 GW

year day

day

Southern Energy, Inc.Southern Energy, Inc.

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Southern Energy, Inc.Southern Energy, Inc.

Natural gas supply growth for 2001 on 50 bcfd produced in 2000 is estimated at 1.0 bcfd or 2%

With 5% electricity growth in 2001, need 2-4 bcf/day Looks like a mismatch between natural gas supply and

electricity demand

NATURAL GAS AND ELECTRICITYA GOOD MARRIAGE?

Source: Simmons & Company