10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2004

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ___to___

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

     Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No___

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

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

	Description of	Shares Outstanding
Registrant	Common Stock	at March 31, 2004
The Southern Company	Par Value $5 Per Share		737,463,215
Alabama Power Company	Par Value $40 Per Share		7,750,000
Georgia Power Company	Without Par Value		7,761,500
Gulf Power Company	Without Par Value		992,717
Mississippi Power Company	Without Par Value		1,121,000
Savannah Electric and Power Company	Par Value $5 Per Share		10,844,635
Southern Power Company	Par Value $0.01 Per Share		1,000

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

2

INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2004

		Page
		Number
DEFINITIONS			5
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition
	The Southern Company and Subsidiary Companies
	Condensed Consolidated Statements of Income		8
	Condensed Consolidated Statements of Cash Flows		9
	Condensed Consolidated Balance Sheets		10
	Condensed Consolidated Statements of Comprehensive Income		12
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		13
	Alabama Power Company
	Condensed Statements of Income		25
	Condensed Statements of Cash Flows		26
	Condensed Balance Sheets		27
	Condensed Statements of Comprehensive Income		29
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		30
	Georgia Power Company
	Condensed Statements of Income		38
	Condensed Statements of Cash Flows		39
	Condensed Balance Sheets		40
	Condensed Statements of Comprehensive Income		42
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		43
	Gulf Power Company
	Condensed Statements of Income		52
	Condensed Statements of Cash Flows		53
	Condensed Balance Sheets		54
	Condensed Statements of Comprehensive Income		56
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		57
	Mississippi Power Company
	Condensed Statements of Income		64
	Condensed Statements of Cash Flows		65
	Condensed Balance Sheets		66
	Condensed Statements of Comprehensive Income		68
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		69
	Savannah Electric and Power Company
	Condensed Statements of Income		77
	Condensed Statements of Cash Flows		78
	Condensed Balance Sheets		79
	Condensed Statements of Comprehensive Income		81
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		82
	Southern Power Company
	Condensed Statements of Income		89
	Condensed Statements of Cash Flows		90
	Condensed Balance Sheets		91
	Condensed Statements of Comprehensive Income		93
	Management’s Discussion and Analysis of Results of Operations and Financial Condition		94
	Notes to the Condensed Financial Statements		100
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		22
Item 4.	Controls and Procedures		23

3

INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2004

		Page
		Number
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		109
Item 2.	Changes in Securities, Unregistered Sales of Equity Securities and Use of Proceeds		109
Item 3.	Defaults Upon Senior Securities	Inapplicable
Item 4.	Submission of Matters to a Vote of Security Holders	Inapplicable
Item 5.	Other Information	Inapplicable
Item 6.	Exhibits and Reports on Form 8-K		109
	Signatures		113

4

DEFINITIONS

TERM	MEANING
Alabama Power	Alabama Power Company
Clean Air Act	Clean Air Act Amendments of 1990
Dynegy	Dynegy, Inc.
ECO Plan	Environmental Compliance Overview Plan
EITF	Emerging Issues Task Force
Energy Act	Energy Policy Act of 1992
EPA	U. S. Environmental Protection Agency
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
Form 10-K	Combined Annual Report on Form 10-K of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Savannah Electric and Southern Power for the year ended December 31, 2003
Georgia Power	Georgia Power Company
Gulf Power	Gulf Power Company
IRC	Internal Revenue Code
IRS	Internal Revenue Service
LIBOR	London Interbank Offered Rate
Mirant	Mirant Corporation
Mississippi Power	Mississippi Power Company
Mobile Energy	Mobile Energy Services Company, L.L.C. and Mobile Energy Services Holdings, Inc.
Moody’s	Moody’s Investors Service, Inc.
NRC	Nuclear Regulatory Commission
PEP	Performance Evaluation Plan
PPA	Purchase Power Agreement
PSC	Public Service Commission
PUHCA	Public Utility Holding Company Act of 1935, as amended
retail operating companies	Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric
RTO	Regional Transmission Organization
S&P	Standard and Poor’s, a division of The McGraw-Hill Companies, Inc.
Savannah Electric	Savannah Electric and Power Company
SCS	Southern Company Services, Inc.
SEC	Securities and Exchange Commission
SMA	Supply Margin Assessment
Southern Company	The Southern Company
Southern Company GAS	Southern Company Gas LLC
Southern Company system	Southern Company, the retail operating companies, Southern Power and other subsidiaries
Southern LINC	Southern Communications Services, Inc.
Southern Power	Southern Power Company
Super Southeast	Southern Company’s traditional service territory, Alabama, Florida, Georgia and Mississippi, plus the surrounding states of Kentucky, Louisiana, North Carolina, South Carolina, Tennessee and Virginia
TVA	Tennessee Valley Authority

5

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This Quarterly Report on Form 10-Q contains forward-looking statements in addition to historical information. Forward-looking information includes, among other things, statements concerning the strategic goals for Southern Company’s wholesale business, 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 comparable terminology. The registrants caution that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include:

• the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry and also changes in environmental, tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations;

• current and future litigation, regulatory investigations, proceedings or inquiries, including the pending EPA civil actions against certain Southern Company subsidiaries and current IRS audits;

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

• the impact of fluctuations in commodity prices, interest rates and customer demand;

• available sources and costs of fuels;

• ability to control costs;

• investment performance of Southern Company’s employee benefit plans;

• advances in technology;

• state and federal rate regulations and pending and future rate cases and negotiations;

• effects of and changes in political, legal and economic conditions and developments in the United States, including the current state of the economy;

• the performance of projects undertaken by the non-traditional business and the success of efforts to invest in and develop new opportunities;

• internal restructuring or other restructuring options that may be pursued;

• potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries;

• the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due;

• the ability to obtain new short- and long-term contracts with neighboring utilities;

• the direct or indirect effect on Southern Company’s business resulting from the terrorist incidents on September 11, 2001, or any similar incidents or responses to such incidents;

• 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;

• weather and other natural phenomena;

• the direct or indirect effects on Southern Company’s business resulting from the August 2003 power outage in the Northeast, or any similar incidents;

• the effect of accounting pronouncements issued periodically by standard-setting bodies; and

• other factors discussed elsewhere herein and in other reports filed by the registrants from time to time with the SEC.

6

THE SOUTHERN COMPANY
AND SUBSIDIARY COMPANIES

7

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

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Retail sales	$	2,144,089		$	1,973,844
Sales for resale		350,798			334,613
Other electric revenues		93,420			91,877
Other revenues		165,743			148,020
Total operating revenues		2,754,050			2,548,354
Operating Expenses:
Fuel		807,619			692,758
Purchased power		119,758			132,554
Other operations		535,772			493,866
Maintenance		237,497			229,710
Depreciation and amortization		240,654			244,988
Taxes other than income taxes		158,484			148,826
Total operating expenses		2,099,784			1,942,702
Operating Income		654,266			605,652
Other Income and (Expense):
Allowance for equity funds used during construction		8,184			7,851
Interest income		7,654			4,498
Equity in losses of unconsolidated subsidiaries		(56,447	)		(44,736	)
Leveraged lease income		15,927			17,715
Interest expense, net of amounts capitalized		(130,585	)		(123,761	)
Distributions on mandatorily redeemable preferred securities		(31,168	)		(39,586	)
Preferred dividends of subsidiaries		(5,472	)		(4,750	)
Other income (expense), net		(8,162	)		(4,283	)
Total other income and (expense)		(200,069	)		(187,052	)
Earnings Before Income Taxes		454,197			418,600
Income taxes		123,055			121,168
Earnings Before Cumulative Effect of Accounting Change		331,142			297,432
Cumulative effect of accounting change — less income taxes of $231		—			367
Consolidated Net Income	$	331,142		$	297,799
Common Stock Data:
Consolidated basic earnings per share	$	0.45		$	0.41
Consolidated diluted earnings per share	$	0.45		$	0.41
Average number of basic shares of common stock outstanding (in thousands)		736,638			718,943
Average number of diluted shares of common stock outstanding (in thousands)		741,603			724,891
Cash dividends paid per share of common stock	$	0.35		$	0.3425

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

8

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

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Consolidated net income	$	331,142		$	297,799
Adjustments to reconcile consolidated net income to net cash provided from operating activities —
Depreciation and amortization		293,828			294,146
Deferred income taxes and investment tax credits		135,801			78,032
Equity in losses of unconsolidated subsidiaries		25,316			27,167
Leveraged lease income		(15,927	)		(17,715	)
Pension, postretirement, and other employee benefits		10,208			1,040
Tax benefit of stock options		11,731			10,758
Other, net		(44,543	)		(3,790	)
Changes in certain current assets and liabilities —
Receivables, net		101,118			200,043
Fossil fuel stock		23,978			6,831
Materials and supplies		(2,932	)		(9,542	)
Other current assets		(70,044	)		(125,293	)
Accounts payable		(26,804	)		(76,526	)
Accrued taxes		(159,123	)		(8,259	)
Accrued compensation		(240,163	)		(263,560	)
Other current liabilities		(65,595	)		(43,736	)
Net cash provided from operating activities		307,991			367,395
Investing Activities:
Gross property additions		(512,667	)		(530,642	)
Cost of removal net of salvage		(9,767	)		(20,656	)
Other		(32,395	)		(52,443	)
Net cash used for investing activities		(554,829	)		(603,741	)
Financing Activities:
Increase in notes payable, net		107,398			533,363
Proceeds —
Long-term debt		597,717			1,104,870
Mandatorily redeemable preferred securities		200,000			—
Preferred stock		100,000			125,000
Common stock		48,702			110,903
Redemptions —
Long-term debt		(280,732	)		(1,299,768	)
Mandatorily redeemable preferred securities		(240,000	)		(40,000	)
Payment of common stock dividends		(257,506	)		(245,745	)
Other		(14,524	)		(15,892	)
Net cash provided from financing activities		261,055			272,731
Net Change in Cash and Cash Equivalents		14,217			36,385
Cash and Cash Equivalents at Beginning of Period		311,274			273,010
Cash and Cash Equivalents at End of Period	$	325,491		$	309,395
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $11,962 and $18,066 capitalized for 2004 and 2003, respectively)	$	139,478		$	117,458
Income taxes (net of refunds)	$	25,884			($117	)

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

9

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

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	325,491		$	311,274
Receivables —
Customer accounts receivable		629,415			695,042
Unbilled revenues		256,938			275,395
Under recovered regulatory clause revenues		247,055			187,866
Other accounts and notes receivable		255,328			338,557
Accumulated provision for uncollectible accounts		(33,817	)		(30,155	)
Fossil fuel stock, at average cost		292,148			316,126
Vacation pay		101,361			96,700
Materials and supplies, at average cost		573,274			570,787
Prepaid expenses		177,886			125,477
Other		69,782			30,380
Total current assets		2,894,861			2,917,449
Property, Plant, and Equipment:
In service		40,532,540			40,339,785
Less accumulated depreciation		14,495,666			14,303,516
		26,036,874			26,036,269
Nuclear fuel, at amortized cost		210,041			222,667
Construction work in progress		1,496,049			1,274,888
Total property, plant, and equipment		27,742,964			27,533,824
Other Property and Investments:
Nuclear decommissioning trusts, at fair value		830,817			807,893
Leveraged leases		853,770			837,843
Other		317,691			238,193
Total other property and investments		2,002,278			1,883,929
Deferred Charges and Other Assets:
Deferred charges related to income taxes		870,348			874,443
Prepaid pension costs		928,624			911,442
Unamortized debt issuance expense		150,173			151,558
Unamortized loss on reacquired debt		331,974			326,389
Other		446,075			446,149
Total deferred charges and other assets		2,727,194			2,709,981
Total Assets	$	35,367,297		$	35,045,183

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

10

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

	At March 31,				At December 31,
Liabilities and Stockholders' Equity	2004				2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	1,070,362		$		741,073
Notes payable		674,992				567,771
Accounts payable		658,576				699,524
Customer deposits		189,934				189,000
Accrued taxes —
Income taxes		126,048				153,757
Other		135,731				248,937
Accrued interest		170,373				186,935
Accrued vacation pay		131,758				128,505
Accrued compensation		137,480				436,854
Other		283,855				264,688
Total current liabilities		3,579,109				3,617,044
Long-term Debt		10,111,378				10,164,018
Long-term Debt Payable to Affiliated Trusts		1,960,644				—
Mandatorily Redeemable Preferred Securities		—				1,900,486
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		4,706,611				4,586,377
Deferred credits related to income taxes		400,496				409,339
Accumulated deferred investment tax credits		572,638				579,490
Employee benefit obligations		803,275				764,624
Asset retirement obligations		859,251				845,392
Other cost of removal obligations		1,268,682				1,268,729
Miscellaneous regulatory liabilities		541,232				576,393
Other		262,573				262,579
Total deferred credits and other liabilities		9,414,758				9,292,923
Total Liabilities		25,065,889				24,974,471
Cumulative Preferred Stock of Subsidiaries		523,126				423,126
Common Stockholders’ Equity:
Common stock, par value $5 per share —
Authorized — 1 billion shares
Issued — March 31, 2004: 737,666,597 Shares;
— December 31, 2003: 735,021,270 Shares
Treasury — March 31, 2004: 203,382 Shares;
— December 31, 2003: 192,691 Shares
Par value		3,688,333				3,675,106
Paid-in capital		793,458				746,080
Treasury, at cost		(4,378	)			(4,066	)
Retained earnings		5,415,465				5,343,471
Accumulated other comprehensive loss		(114,596	)			(113,005	)
Total Common Stockholders’ Equity		9,778,282				9,647,586
Total Liabilities and Stockholders’ Equity	$	35,367,297			$	35,045,183

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

11

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

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	331,142		$	297,799
Other comprehensive loss:
Change in fair value of marketable securities, net of tax of $4,061 and $-, respectively		7,623			112
Changes in fair value of qualifying hedges, net of tax of $(7,711) and $(641), respectively		(12,704	)		(717	)
Less: Reclassification adjustment for amounts included in net income, net of tax of $2,171 and $(4,698), respectively		3,490			(7,367	)
COMPREHENSIVE INCOME	$	329,551		$	289,827

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

12

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

OVERVIEW

Discussion of the results of operations is focused on Southern Company’s primary business of electricity sales in the Southeast by the retail operating companies – Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric – and Southern Power. Southern Power is an electric wholesale generation subsidiary with market-based rate authority. Southern Company’s other business activities include investments in synthetic fuels and leveraged lease projects, telecommunications, energy-related services and natural gas marketing. For additional information on these businesses, see Item 1 – Business — The SOUTHERN System — “Retail Operating Companies,” “Southern Power” and “Other Business” in the Form 10-K.

Earnings

Southern Company’s first quarter 2004 earnings were $331 million ($0.45 per share) compared with $298 million ($0.41 per share) in the first quarter 2003. Earnings in the first quarter 2004 increased due to a number of positive factors including growth in the number of customers in the Southern Company service area, successful efforts to control costs and strong results from Southern Company’s competitive generation business. Southern Company’s regulated retail business results were positively impacted by customer growth, increased residential consumption per customer and increased demand by industrial customers, as well as favorable weather conditions. Earnings from the competitive generation business continued to favorably affect Southern Company’s net income due to new generating capacity available for sale in wholesale markets. This new capacity led to increases in capacity revenues from new contracts and sales of uncontracted capacity in those wholesale markets.

RESULTS OF OPERATIONS

Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Retail sales	$	170,245			8.6
Sales for resale		16,185			4.8
Other revenues		17,723			12.0
Fuel expense		114,861			16.6
Purchased power		(12,796	)		(9.7	)
Other operation and maintenance expenses		49,693			6.9
Taxes other than income taxes		9,658			6.5
Equity in losses of unconsolidated subsidiaries		11,711			26.2
Interest expense, net of amounts capitalized		6,824			5.5
Distributions on mandatorily redeemable preferred securities		(8,418	)		(21.3	)

     Retail sales. Excluding fuel revenues, which generally do not affect net income, retail base revenues increased by $72 million, or 5.2%, in the first quarter 2004 when compared to the same period in 2003. In the first quarter, retail kilowatt-hour energy sales increased by 4.5% over the same period a year ago, primarily due

13

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

to customer and demand growth and the improving economy evidenced by increases in residential and industrial kilowatt-hour energy sales of 5.3% and 5.0%, respectively, when compared to the same period in 2003. The number of retail customers increased by 1.7% and weather-adjusted average consumption by residential customers increased by 4.4% in the first quarter 2004 when compared with the first quarter 2003.

     Sales for resale. During the first quarter 2004, sales for resale kilowatt-hours decreased by 2.6% when compared to the same period in the prior year. Sales for resale revenues increased $16.2 million, or 4.8%, when compared to the same period in the prior year. The increase in revenues reflected new wholesale contracts and increases in fuel revenues. An additional 2,407 megawatts of generating capacity were added in June and October 2003 by Southern Power. A portion of this new capacity contributed to the increase in sales for resale revenues for the first quarter 2004 as a result of capacity revenues from PPAs with neighboring utilities. In addition, sales from uncontracted capacity provided increased energy revenues. These increases in sales for resale revenues more than offset the reduction in revenues resulting from the termination of contracts with subsidiaries of Dynegy, Inc. in May 2003. See Note 3 to the financial statements of Southern Company under “Uncontracted Generating Capacity” in Item 8 of the Form 10-K for additional information on these contract terminations.

     Other revenues. In the first quarter 2004, other revenues increased $17.7 million, or 12.0%. Revenues from Southern Company’s investments in synthetic fuels increased $18 million, primarily as a result of shifting 2004 production schedules to accelerate production earlier in the year, and retail gas marketing revenues increased $5 million, primarily as a result of colder than normal weather. These increases were partially offset by a decrease in revenues from energy-related services of $3 million.

     Fuel expense. During the first quarter 2004, fuel expense was higher due to an increase in the average unit cost of fuel, as well as increased generating capacity at Southern Power. Total generation increased 3.1% for the first quarter 2004, when compared to the same period in the prior year. For the first quarter 2004, the average unit cost of fuel per net kilowatt-hour generated increased 3.0% when compared to the same period in the prior year. Increases in fuel expense at the retail operating companies are generally offset by fuel revenues and do not affect net income.

     Purchased power. The decrease in the first quarter 2004 for purchased power compared with the same period last year is primarily a result of lower demand for energy. These expenses do not have a significant impact on earnings since energy expenses are generally offset by energy revenues.

     Other operations and maintenance expenses. The increase in other operations and maintenance expenses in the first quarter 2004 is mainly attributable to increases in administrative and general, transmission and distribution maintenance and other production expenses. Administrative and general expenses increased $33.3 million, or 15.6%, primarily as a result of payroll and employee benefits costs as well as an increase of $12.2 million in freight costs related to the production of synthetic fuel. Transmission and distribution maintenance expenses increased $8.8 million as a result of completing work delayed from 2003. Other production expenses were up $7.0 million, or 5.4%, due to increased expenses primarily resulting from the operation of Southern Power’s new generating facilities.

     Taxes other than income taxes. The first quarter 2004 increase in taxes other than income taxes over the comparable period last year is primarily a result of increases in payroll taxes and property taxes on new facilities.

14

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

     Equity in losses of unconsolidated subsidiaries. Losses from unconsolidated subsidiaries increased in the first quarter 2004 when compared to the corresponding period in 2003. These losses relate primarily to Southern Company’s investments in entities that produce synthetic fuel. Changes between periods are a result of fluctuations in production levels and are generally offset by income tax credits generated by such entities.

     Interest expense, net of amounts capitalized. The increase in interest expense, net of amounts capitalized in the first quarter 2004 when compared to the same period in 2003 is mainly attributable to an increase in the amount of senior notes outstanding and lower amounts of interest capitalized as projects have reached completion, partially offset by refinancing long-term debt with lower interest-rate debt. See Financial Condition and Liquidity – “Financing Activities” herein for additional information. Capitalized interest decreased by $6.1 million, or 33.8%, during the first quarter 2004 when compared to the corresponding period in 2003.

     Distributions on mandatorily redeemable preferred securities. The decrease in distributions on mandatorily redeemable preferred securities is a result of refinancing a portion of those securities with proceeds from long-term senior notes issuances or equity funds. See Accounting Policies – “New Accounting Standards” herein for related information regarding Southern Company’s adoption of FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities.”

Future Earnings Potential

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

Environmental Matters

Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs cannot be recovered. For additional information, including information on certain environmental litigation, see Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — Environmental Matters” of Southern Company and Note 3 to the financial statements of Southern Company in Item 8 of the Form 10-K under “New Source Review Actions” and “Plant Wansley Environmental Litigation.” As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under either the New Source Review Litigation or Plant Wansley Environmental Litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New

15

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

Source Review action against the TVA. The cases against Alabama Power, Georgia Power and Savannah Electric have been effectively stayed pending final resolution of the TVA appeal. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome in any one of these cases could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties. This could affect future results of operations, cash flows, and possibly financial condition if such costs are not recovered through regulated rates.

     On March 12, 2004, the EPA redesignated the Birmingham, Alabama area from nonattainment to attainment under the one-hour ozone national ambient air quality standard. On April 30, 2004, the EPA published its eight-hour ozone nonattainment designations and a portion of the rules implementing the new eight-hour standard. Areas within the Southern Company’s service area that have been designated as nonattainment under the eight-hour ozone standard include Birmingham, Macon (Georgia), and a 20-county area within metropolitan Atlanta. Under the implementation provisions of the new rule, the EPA announced that the one-hour ozone standard will be revoked on June 15, 2005. Areas classified as “severe” nonattainment areas under the one-hour standard will not be required to impose emissions fees as a result of nonattainment. Georgia Power, therefore, will no longer be subject to imposition of emissions fees if the Atlanta area does not come into attainment with the one-hour standard. The impact of the eight-hour designations and the new standards will depend on the development and implementation of applicable state regulations and therefore cannot be determined at this time.

     On April 21, 2004, the EPA published the final regional nitrogen oxide reduction rules applicable to Georgia. These rules specify that Georgia must submit a revised state implementation plan by April 2005, and affected sources must comply with the reduction requirements by May 1, 2007. The impact of these regulations will depend on the development and approval of Georgia’s state implementation plan and cannot be determined at this time.

     Additionally, on April 15, 2004, the EPA announced proposed amendments to its Regional Haze rules with respect to Best Available Retrofit Technology (BART) guidelines and requirements. The impact of these regulations will depend on the development and implementation of the final rules and implementation by the states, and therefore cannot be determined at this time.

FERC Matters

See Management’s Discussion and Analysis – “Future Earnings Potential – FERC Matters – Market-Based Rate Authority” in Item 7 and Note 3 to the financial statements of Southern Company under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company anticipates filing a request for rehearing of the order. The final outcome of this matter cannot be determined at this time.

16

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

     Plant McIntosh Units 10 and 11 are currently under construction by Southern Power and are scheduled to be completed in June 2005. See Note 3 to Southern Company’s financial statements under “FERC Matters” in Item 8 of the Form 10-K and Note (C) to the Condensed Financial Statements herein for information regarding the FERC approval process for Southern Power’s PPAs with Georgia Power and Savannah Electric for Plant McIntosh Units 10 and 11.

     See Item 7 — Management’s Discussion and Analysis – “Future Earnings Potential — FERC Matters” of Southern Company in the Form 10-K for information on the FERC’s order related to RTOs and the FERC’s notice of proposed rulemaking regarding open access transmission service and standard electricity market design.

Mirant Related Matters

See Note 3 to the financial statements of Southern Company under “Mirant Related Matters” in Item 8 and Management’s Discussion and Analysis — “Future Earnings Potential – Other Matters” in Item 7 of the Form 10-K and Note (B) to the Condensed Financial Statements herein under “Mirant Related Matters”. In July 2003, Mirant filed for voluntary reorganization under Chapter 11 of the Federal Bankruptcy Code. Southern Company has various contingent liabilities associated with Mirant, including guarantees of contractual commitments, litigation and joint and several liabilities in connection with the consolidated federal income tax return. The ultimate outcome of such contingent liabilities cannot now be determined.

Income Tax Matters

See Item 7— Management’s Discussion and Analysis — “Future Earnings Potential — Income Tax Matters” of Southern Company and Note 3 to the financial statements of Southern Company under “Income Tax Issues” in Item 8 of the Form 10-K for information regarding IRS and other challenges to Southern Company’s transactions related to synthetic fuel tax credits and international leveraged leases. See Note (B) to the Condensed Financial Statements herein for information on potential additional challenges related to the international leveraged leases. The ultimate outcome of these matters cannot now be determined.

Other Matters

In January 2002, Georgia Power began operating under a three-year retail rate order. Under the terms of the order, earnings are evaluated annually against a retail return on common equity range of 10 percent to 12.95 percent. Two-thirds of any earnings above the 12.95 percent return will be applied to rate refunds, with the remaining one-third retained by Georgia Power. Georgia Power is required to file a general rate case on July 1, 2004, in response to which the Georgia PSC would be expected to determine whether the rate order should be continued, modified, or discontinued. See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential – Other Matters” and Note 3 to the financial statements of Southern Company under “Georgia Power Retail Rate Orders” in Item 8 of the Form 10-K for additional information.

     See Note 3 to Southern Company’s financial statements under “Mississippi Power Regulatory Filing” in Item 8 of the Form 10-K and Note (I) to the Condensed Financial Statements herein for information on Mississippi Power’s request to include 266 megawatts of Plant Daniel Units 3 and 4 generating capacity in jurisdictional cost of service. The final outcome of this matter cannot now be determined.

17

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

     Southern Power is completing limited construction activities on Plant Franklin Unit 3 to preserve the long-term viability of the project but has deferred final completion until the 2008-2011 period. See Note 3 to Southern Company’s financial statements under “Uncontracted Generating Capacity” in Item 8 of the Form 10-K for additional information. The final outcome of these matters cannot now be determined.

     See Management’s Discussion and Analysis — “Future Earnings Potential — Other Matters” in Item 7 of the Form 10-K for information on nuclear security measures. Implementation plans for the measures ordered by the NRC to be in effect by October 29, 2004 have been finalized based on current interpretations of the requirements. Alabama Power and Georgia Power — based on its ownership interest – currently estimate their respective expenditures related to these security measures to total $9.6 million and $9.3 million, of which $9.3 million and $1.3 million will be capitalized. These estimates are subject to change in the event additional NRC guidance is provided.

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

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

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Southern Company 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 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 Item 7 - Management’s Discussion and Analysis – “Accounting Policies — Application of Critical Accounting Policies and Estimates” of Southern Company in 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 Plant Daniel Capacity. Also see Note (I) to the Condensed Financial Statements herein for additional information related to Mississippi Power’s request to include the Plant Daniel capacity in jurisdictional cost of service.

New Accounting Standards

On March 31, 2004, Southern Company prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. The adoption of Interpretation No. 46R had no impact on Southern Company’s net income. However, as a result of the adoption, Southern Company and the retail operating companies

18

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

deconsolidated certain wholly-owned trusts established to issue preferred securities since Southern Company and the retail operating companies do not meet the definition of primary beneficiary established by Interpretation No. 46R. In addition, Southern Company consolidated its 85% limited partnership investment in an energy/telecom venture capital fund that was previously accounted for under the equity method. See Note (E) to the Condensed Financial Statements herein for additional information related to the adoption of Interpretation No. 46R.

FINANCIAL CONDITION AND LIQUIDITY

Overview

Major changes in Southern Company’s financial condition during the first three months of 2004 included $513 million used for gross property additions to utility plant. The funds for these additions and other capital requirements were primarily obtained from operating activities and net proceeds from security issuances of approximately $533 million. See Southern Company’s Condensed Consolidated Statements of Cash Flows and “Financing Activities” herein for further details.

Capital Requirements and Contractual Obligations

See Item 7 — Management’s Discussion and Analysis — “Capital Requirements and Contractual Obligations” of Southern Company in the Form 10-K for a description of Southern Company’s capital requirements for its construction program, and other funding requirements associated with scheduled maturities of long-term debt, as well as the related interest, preferred stock dividends, leases, trust funding requirements and other purchase commitments. Approximately $1.1 billion will be required by March 31, 2005 for redemptions and maturities of long-term debt.

Sources of Capital

Southern Company intends to meet its future capital needs through internal cash flow and external security issuances. The amounts and timing of additional equity capital to be raised will be contingent on Southern Company’s investment opportunities. The retail operating companies and Southern Power plan to obtain the funds required for construction and other purposes from sources similar to those used in the past, which were primarily from operating cash flows, security issuances and term loan and short-term borrowings. However, the amount, type and timing of any financings, if needed, will depend upon market conditions and regulatory approval. See Item 1 — Business — “Financing Programs” and Item 7 — Management’s Discussion and Analysis — “Financial Condition And Liquidity – Sources of Capital” of Southern Company in the Form 10-K for additional information.

     Southern Company’s current liabilities 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, the Southern Company system had at March 31, 2004 approximately $325 million of cash and cash equivalents and approximately $3.5 billion of unused credit arrangements with banks, of which $2.8 billion expire in 2004, $10 million expire in 2005 and $660 million expire in 2006 and beyond. Of the facilities maturing in 2004 and 2005, $2.2 billion contain provisions allowing two-year term loans executable at the expiration date and $225 million contain provisions allowing one-year term loans executable at the expiration date. These unused credit arrangements also provide liquidity support to variable rate pollution control bonds and commercial paper programs. Southern Company expects to renew its credit facilities, as

19

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

needed, prior to expiration. The retail operating companies may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of each of the retail operating companies. At March 31, 2004, the Southern Company system had outstanding extendible commercial notes of $4 million and outstanding commercial paper of $671 million. Management believes that the need for working capital can be adequately met by utilizing commercial paper programs and lines of credit without maintaining large cash balances.

Off-Balance Sheet Financing Arrangements

See Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity – Off-Balance Sheet Financing Arrangements” of Southern Company and Note 7 to the financial statements of Southern Company in Item 8 of the Form 10-K under “Operating Leases” for information related to Mississippi Power’s lease of a combined cycle generating facility at Plant Daniel.

Credit Rating Risk

Southern Company and its subsidiaries do not have any credit agreements 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 below investment grade. These contracts are primarily for physical electricity purchases and sales, fixed-price physical gas purchases and agreements covering interest rate swaps. At March 31, 2004, the maximum potential collateral requirements were approximately $426 million. Generally, collateral may be provided for by a Southern Company guaranty, letter of credit or cash.

Market Price Risk

Southern Company’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Southern Company is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, the retail operating companies have limited exposure to market volatility in interest rates, commodity fuel prices and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the retail operating companies and Southern Power enter into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market and, to a lesser extent, similar contracts for gas purchases. Also, the retail operating companies have each implemented fuel-hedging programs at the instruction of their respective PSCs. The fair value of derivative energy contracts at March 31, 2004 was as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	15,825
Contracts realized or settled		(5,647	)
New contracts at inception		—
Changes in valuation techniques		—
Current period changes		33,334
Contracts at March 31, 2004	$	43,512

20

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

	Source of March 31, 2004
	Valuation Prices
			Maturity
	Total
	Fair Value		Year 1		1-3 Years
	(in thousands)
Actively quoted	$	43,512	$	39,093		4,419
External sources		—		—		—
Models and other methods		—		—		—
Contracts at March 31, 2004	$	43,512	$	39,093	$	4,419

     For additional information, see Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Market Price Risk” of Southern Company in the Form 10-K and Notes 1 and 6 to the financial statements of Southern Company under “Financial Instruments” in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein.

Financing Activities

During the first quarter of 2004, Southern Company subsidiaries issued $590 million of senior notes, $208 million of other long-term debt, $100 million of preferred stock and $49 million of common stock through employee and directors stock plans. The issuances were primarily used to refund senior notes and other long-term debt. The remainder was used to repay short-term debt and fund ongoing construction programs. See Southern Company’s Condensed Consolidated Statements of Cash Flows herein for further details on financing activities during the first three months of 2004.

     In January 2004, Georgia Power issued $100 million of Series S 4.00% Senior Notes due January 15, 2011 and $100 million of Series T 5.75% Senior Public Income Notes due January 15, 2044. The proceeds from these sales were used in March 2004 to redeem all of its outstanding Series H 6.70% Senior Insured Quarterly Notes due March 1, 2011 and Series D 6 5/8% Senior Notes due March 31, 2039.

     Further in January 2004, Georgia Power Capital Trust VII, a statutory trust, sold $200 million of its 5 7/8% Trust Preferred Securities, which are guaranteed by Georgia Power. The net proceeds from this issuance were used to redeem 6.85% Trust Preferred Securities of Georgia Power Capital Trust IV. In connection with this transaction, Georgia Power issued $206 million of its junior subordinated debentures to Georgia Power Capital Trust VII.

     In February 2004, Alabama Power issued 4,000,000 shares ($100 million aggregate stated capital) of 5.30% Class A Preferred Stock, Cumulative, Par Value $1 Per Share (Stated Capital $25 Per Share) and $200 million of Series Z 5.125% Senior Notes due February 15, 2019. The proceeds from these sales were used to repay a portion of Alabama Power’s outstanding short-term indebtedness and for other general corporate purposes, including Alabama Power’s continuous construction program.

21

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

     Also in February 2004, Georgia Power issued $150 million of Series U Floating Rate Senior Notes due February 17, 2009. The proceeds of this sale were used for general corporate purposes.

     In March 2004, Mississippi Power issued $40 million of Series F Floating Rate Senior Notes due March 9, 2009. The proceeds from this sale, along with other monies of Mississippi Power were used to repay $80 million aggregate principal amount of Mississippi Power’s Series D Floating Rate Senior Notes due March 12, 2004.

     Additionally, in April 2004, Alabama Power issued $150 million of Series AA 5.625% Senior Notes due April 15, 2034. The proceeds from the sale will be used together with other funds to redeem, in May 2004, $200 million in aggregate principal amount of Alabama Power’s Series J 6.75% Senior Notes due June 30, 2039.

     Also in April 2004, Gulf Power issued $35 million of Series J 5.875% Senior Notes due April 1, 2044. The proceeds from this issue were used for general corporate purposes, including Gulf Power’s continuous construction program.

     Further, in April 2004, Mississippi Power issued 1,200,000 Depositary Shares ($30 million aggregate stated capital) each representing one-fourth of a share of 5.25% Series Preferred Stock cumulative, par value $100 per share. The proceeds from this sale were primarily used to redeem various issues of preferred stock and the remainder was used for general corporate purposes.

     Southern Company and its subsidiaries plan to continue, to the extent possible, a program to retire higher-cost debt and replace these securities with lower-cost capital.

     The market price of Southern Company’s common stock at March 31, 2004 was $30.50 per share and the book value was $13.26 per share, representing a market-to-book ratio of 230%, compared to $30.25, $13.13 and 230%, respectively, at the end of 2003. The dividend for the first quarter 2004 was $0.35 per share compared to $0.3425 per share in the first quarter 2003.

PART I

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

     See Management’s Discussion and Analysis — “Financial Condition and Liquidity - Market Price Risk” herein for each registrant and Notes 1 and 6 to the financial statements of each registrant under “Financial Instruments” in Item 8 of the Form 10-K. Also, see Note (G) to the Condensed Financial Statements herein for information relating to derivative instruments.

22

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

Item 4. Controls and Procedures.

     (a) Evaluation of disclosure controls and procedures.

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

     (b) Changes in internal controls.

There have been no changes in Southern Company’s, the retail operating companies’ or Southern Power’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the first quarter of 2004 that have materially affected or are reasonably likely to materially affect, Southern Company’s, the retail operating companies’ or Southern Power’s internal controls over financial reporting.

23

ALABAMA POWER COMPANY

24

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Retail sales	$	744,633		$	670,829
Sales for resale —
Non-affiliates		111,945			119,281
Affiliates		65,788			61,987
Other revenues		37,328			38,024
Total operating revenues		959,694			890,121
Operating Expenses:
Fuel		271,979			239,744
Purchased power —
Non-affiliates		28,642			28,830
Affiliates		59,932			41,496
Other operations		146,386			134,543
Maintenance		80,387			74,575
Depreciation and amortization		105,353			100,211
Taxes other than income taxes		64,447			60,085
Total operating expenses		757,126			679,484
Operating Income		202,568			210,637
Other Income and (Expense):
Allowance for equity funds used during construction		4,110			4,737
Interest income		4,439			3,276
Interest expense, net of amounts capitalized		(50,079	)		(54,573	)
Distributions on mandatorily redeemable preferred securities		(3,938	)		(3,441	)
Other income (expense), net		(4,338	)		(5,719	)
Total other income and (expense)		(49,806	)		(55,720	)
Earnings Before Income Taxes		152,762			154,917
Income taxes		57,268			59,073
Net Income		95,494			95,844
Dividends on Preferred Stock		4,747			4,025
Net Income After Dividends on Preferred Stock	$	90,747		$	91,819

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

25

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Net income	$	95,494		$	95,844
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		124,220			121,910
Deferred income taxes and investment tax credits, net		35,416			14,105
Deferred revenues		(3,080	)		(14,577	)
Pension, postretirement, and other employee benefits		(12,907	)		(10,633	)
Tax benefit of stock options		4,091			4,195
Other, net		(7,712	)		15,062
Changes in certain current assets and liabilities —
Receivables, net		29,613			80,795
Fossil fuel stock		9,043			(3,949	)
Materials and supplies		(3,448	)		(2,920	)
Other current assets		(46,030	)		(58,344	)
Accounts payable		(89,966	)		(112,134	)
Accrued taxes		29,758			60,108
Accrued compensation		(47,924	)		(58,677	)
Other current liabilities		6,368			35,666
Net cash provided from operating activities		122,936			166,451
Investing Activities:
Gross property additions		(204,249	)		(185,102	)
Cost of removal net of salvage		(9,272	)		(10,865	)
Other		14,048			2,160
Net cash used for investing activities		(199,473	)		(193,807	)
Financing Activities:
Increase (decrease) in notes payable, net		—			(36,991	)
Proceeds —
Senior notes		200,000			620,000
Preferred stock		100,000			125,000
Common stock		20,000			—
Redemptions —
Senior notes		—			(560,800	)
Other long-term debt		(1,438	)		(236	)
Payment of preferred stock dividends		(4,636	)		(3,200	)
Payment of common stock dividends		(109,325	)		(107,550	)
Other		(4,807	)		(2,949	)
Net cash provided from financing activities		199,794			33,274
Net Change in Cash and Cash Equivalents		123,257			5,918
Cash and Cash Equivalents at Beginning of Period		42,752			22,685
Cash and Cash Equivalents at End of Period	$	166,009		$	28,603
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $1,648 and $2,507 capitalized for 2004 and 2003, respectively)	$	36,445		$	31,313
Income taxes (net of refunds)	$	2,140		$	—

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

26

ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	166,009		$	42,752
Receivables —
Customer accounts receivable		212,369			240,562
Unbilled revenues		83,130			95,953
Under recovered regulatory clause revenues		38,403			—
Other accounts and notes receivable		39,994			53,547
Affiliated companies		34,413			48,876
Accumulated provision for uncollectible accounts		(5,868	)		(4,756	)
Fossil fuel stock, at average cost		77,950			86,993
Vacation pay		35,530			35,530
Materials and supplies, at average cost		215,138			211,690
Prepaid expenses		82,297			44,608
Other		27,797			19,454
Total current assets		1,007,162			875,209
Property, Plant, and Equipment:
In service		14,289,720			14,224,117
Less accumulated provision for depreciation		4,956,474			4,905,920
		9,333,246			9,318,197
Nuclear fuel, at amortized cost		86,907			93,611
Construction work in progress		410,615			321,316
Total property, plant, and equipment		9,830,768			9,733,124
Other Property and Investments:
Equity investments in unconsolidated subsidiaries		47,279			47,811
Nuclear decommissioning trusts, at fair value		395,607			384,574
Other		25,495			16,992
Total other property and investments		468,381			449,377
Deferred Charges and Other Assets:
Deferred charges related to income taxes		320,166			321,077
Prepaid pension costs		456,669			446,256
Unamortized loss on reacquired debt		108,886			110,946
Other		130,315			134,635
Total deferred charges and other assets		1,016,036			1,012,914
Total Assets	$	12,322,347		$	12,070,624

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

27

ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Liabilities and Stockholder's Equity	2004			2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	725,011		$	526,019
Accounts payable —
Affiliated		120,047			135,017
Other		92,781			162,314
Customer deposits		48,513			47,507
Accrued taxes —
Income taxes		68,524			83,544
Other		44,169			22,273
Accrued interest		56,710			46,489
Accrued vacation pay		35,530			35,530
Accrued compensation		27,697			75,620
Other		43,945			34,513
Total current liabilities		1,262,927			1,168,826
Long-term Debt		3,376,165			3,377,148
Long-term Debt Payable to Affiliated Trusts		309,279			—
Mandatorily Redeemable Preferred Securities		—			300,000
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		1,626,767			1,571,076
Deferred credits related to income taxes		158,555			162,168
Accumulated deferred investment tax credits		213,570			216,309
Employee benefit obligations		178,466			180,960
Deferred capacity revenues		33,486			36,567
Asset retirement obligations		364,775			358,759
Asset retirement obligation regulatory liability		136,356			127,346
Other cost of removal obligations		580,389			574,445
Miscellaneous regulatory liabilities		78,556			86,323
Other		34,873			37,525
Total deferred credits and other liabilities		3,405,793			3,351,478
Total Liabilities		8,354,164			8,197,452
Cumulative Preferred Stock		472,512			372,512
Common Stockholder’s Equity:
Common stock, par value $40 per share —
Authorized - 15,000,000 shares
Outstanding - March 31, 2004: 7,750,000 Shares
- December 31, 2003: 7,250,000 Shares		310,000			290,000
Paid-in capital		1,931,060			1,926,970
Premium on preferred stock		99			99
Retained earnings		1,271,210			1,291,558
Accumulated other comprehensive loss		(16,698	)		(7,967	)
Total common stockholder’s equity		3,495,671			3,500,660
Total Liabilities and Stockholder’s Equity	$	12,322,347		$	12,070,624

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

28

ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	90,747		$	91,819
Other comprehensive loss:
Changes in fair value of qualifying hedges, net of tax of $(6,162) and $(796), respectively		(10,136	)		(1,308	)
Less: Reclassification adjustment for amounts included in net income, net of tax of $854 and $752, respectively		1,405			1,236
COMPREHENSIVE INCOME	$	82,016		$	91,747

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

29

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

RESULTS OF OPERATIONS

Earnings

Alabama Power’s net income after dividends on preferred stock for the first quarter 2004 was $90.7 million compared to $91.8 million for the corresponding period of 2003. Earnings in the first quarter of 2004 decreased by $1.1 million, or 1.2%, primarily due to higher operation and maintenance expenses, depreciation expense and taxes other than income taxes. These increases were partially offset by an increase in retail base-rate revenues and a decrease in interest expense.

     Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Retail sales	$	73,804			11.0
Sales for resale — non-affiliates		(7,336	)		(6.2	)
Sales for resale — affiliates		3,801			6.1
Fuel expense		32,235			13.4
Purchased power — affiliates		18,436			44.3
Other operation expense		11,843			8.8
Maintenance expense		5,812			7.8
Depreciation and amortization		5,142			5.1
Taxes other than income taxes		4,362			7.3
Interest expense, net of amounts capitalized		(4,494	)		(8.2	)

     Retail sales. Excluding energy cost recovery revenues and revenues associated with PPAs certificated by the Alabama PSC, which generally do not affect net income, retail sales revenues increased by $21.6 million, or 4.3%, for the first quarter 2004 when compared to the corresponding period in 2003. See Note 3 to Alabama Power’s financial statements under “Retail Rate Adjustment Procedures” in Item 8 of the Form 10-K for additional information. Kilowatt-hour energy sales to residential, commercial, and industrial customers increased 4.4%, 2.6%, and 8.9%, respectively, for the first quarter 2004 when compared to the corresponding period of 2003 primarily due to favorable weather conditions and improved industrial sales mainly in the primary metal and automotive sectors.

     Sales for resale — non-affiliates. During the first quarter 2004, the revenues associated with sales for resale to non-affiliates decreased due to a 5.7% reduction in kilowatt-hour sales of energy while market based prices remained flat when compared to the first quarter of 2003. Kilowatt-hour sales of energy will vary depending on demand, market based prices and the availability of Southern Company system generation. These transactions did not have a significant impact on earnings since the energy is usually sold at variable cost.

30

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

     Sales for resale — affiliates and Purchased power — affiliates. Sales for resale to affiliates increased in the first quarter 2004 when compared to the corresponding period in 2003 due to a $1.0 million increase in capacity payments received in accordance with the affiliated company interchange agreement as a result of Alabama Power’s increased share of the total interchange capacity. Purchases of energy will vary depending on demand and the availability and cost of generating resources at each company. Purchased power from affiliates increased in the first quarter 2004 principally due to a PPA between Alabama Power and Southern Power that began in June 2003. The capacity component of these transactions was $9.4 million in the first quarter 2004. Excluding the capacity revenue received under the interchange agreement, these transactions did not have a significant impact on earnings since the related energy is sold at marginal cost, and energy purchases are generally offset by energy revenues through Alabama Power’s energy cost recovery clause.

     Fuel expense. Fuel expense was higher in the first quarter 2004 when compared to the corresponding period in 2003 mainly due to a 26.7% increase in natural gas prices and a 36.3% increase in generation from natural gas-fired generating facilities. The increase in generation from gas-fired facilities in the first quarter 2004 when compared to the first quarter 2003 is mainly due to a 27.1% decrease in generation from Alabama Power’s hydroelectric facilities. Since energy expenses are generally offset by energy revenues, these expenses do not have a significant impact on earnings.

     Other operation expense. The increase in other operation expense in the first quarter 2004 is a result of an $11.1 million increase in administrative and general expenses. This increase primarily relates to a $4.9 million increase in employee payroll and benefits, and legal expenses, a $1.9 million increase in property insurance, a $1.9 million increase in accrued expense for liability insurance, litigation and workers compensation and a $1.8 million increase in pension expense.

     Maintenance expense. The increase in maintenance expense for the first quarter 2004 when compared to the same period in 2003 is attributed to a $3.3 million increase in distribution expense and a $1.7 million increase in transmission expense. These increases are mainly related to scheduled work performed on overhead lines.

     Depreciation and amortization expense. The increase in depreciation and amortization expense during the first quarter 2004 is attributed to an increase in utility plant-in-service when compared to the same period in 2003. See Note 7 to Alabama Power’s financial statements under “Construction Program” in Item 8 of the Form 10-K for additional information.

     Taxes other than income taxes. The first quarter 2004 increase in taxes other than income taxes is due to a $2.3 million increase in payroll taxes and a $1.3 million increase in property taxes when compared to the corresponding period in 2003.

     Interest expense, net of amounts capitalized. The decrease in interest expense, net of amounts capitalized during the first quarter 2004 when compared to the same period in 2003 is the result of refinancing higher cost debt. For additional information, see “Financial Condition and Liquidity — Financing Activities” herein.

31

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

Future Earnings Potential

The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors including Alabama Power’s ability to maintain a stable regulatory environment, to achieve energy sales growth while containing costs and to recover costs related to growing demand and increasingly strict environmental standards. Growth in energy sales is subject to a number of factors. These factors include weather, competition, new energy contracts with neighboring utilities, energy conservation practiced by customers, the price of electricity, the price elasticity of demand and the rate of economic growth in Alabama Power’s service area. For additional information relating to these issues, see Item 1 — Business – The SOUTHERN System — “Risk Factors” and Item 7 – Management’s Discussion and Analysis – “Future Earnings Potential” of Alabama Power in the Form 10-K.

Environmental Matters

Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs cannot be recovered. For additional information about these issues, including the EPA litigation, see Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential - Environmental Matters” and Note 3 to the financial statements of Alabama Power under “New Source Review Actions” in Item 8 of the Form 10-K. As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under the New Source Review Litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New Source Review action against the TVA. The case against Alabama Power has been effectively stayed pending final resolution of the TVA appeal. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome in this case could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties. This could affect future results of operations, cash flows, and possibly financial condition if such costs are not recovered through regulated rates.

     On March 12, 2004, the EPA redesignated the Birmingham, Alabama area from nonattainment to attainment under the one-hour ozone national ambient air quality standard. On April 30, 2004, the EPA published its eight-hour ozone nonattainment designations and a portion of the rules implementing the new eight-hour standard. Within Alabama Power’s service area, Birmingham has been designated as nonattainment under the eight-hour ozone standard. Under the implementation provisions of the new rule, the EPA announced that the one-hour ozone standard will be revoked on June 15, 2005. The impact of the eight-hour designations and the new standards will depend on the development and implementation of applicable state regulations and therefore cannot be determined at this time. Additionally, on April 15, 2004, the EPA announced proposed amendments to its Regional Haze rules with respect to Best Available Retrofit Technology (BART) guidelines and requirements. The impact of these regulations will depend on the development and implementation of the final rules and implementation by the states, and therefore cannot be determined at this time.

FERC Matters

See Management’s Discussion and Analysis – “Future Earnings Potential – FERC Matters – Market-Based Rate Authority” in Item 7 and Note 3 to the financial statements of Alabama Power under “FERC

32

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

Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company is filing a request for rehearing of the FERC’s order. The final outcome of this matter cannot be determined at this time.

     See Item 7 — Management’s Discussion and Analysis – “Future Earnings Potential – FERC Matters” of Alabama Power in the Form 10-K for information on the FERC’s order related to RTOs and the FERC’s notice of proposed rulemaking regarding open access transmission service.

Other Matters

See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — Other Matters” of Alabama Power in Item 7 of the Form 10-K for information on nuclear security measures. Implementation plans for the measures ordered by the NRC to be in effect by October 29, 2004 have been finalized based on current interpretations of the requirements. Alabama Power currently estimates its expenditures related to these security measures to total $9.6 million of which $9.3 million will be capitalized. These estimates are subject to change in the event additional NRC guidance is provided.

     Alabama Power is subject to certain claims and legal actions arising in the ordinary course of business. In addition, 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 and citizen enforcement of environmental requirements, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such litigation against Alabama Power cannot be predicted at this time; however, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on Alabama Power’s financial statements.

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

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Alabama Power 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 Item 7 — Management’s Discussion and Analysis - “Accounting Policies — Application of Critical Accounting Policies and Estimates” of Alabama Power in the Form 10-K for a complete discussion of Alabama Power’s critical accounting policies and estimates related to Electric Utility Regulation and Contingent Obligations.

33

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

New Accounting Standards

On March 31, 2004, Alabama Power prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. The adoption of Interpretation No. 46R had no impact on Alabama Power’s net income. However, as a result of the adoption, Alabama Power deconsolidated certain wholly-owned trusts established to issue preferred securities since Alabama Power does not meet the definition of primary beneficiary established by Interpretation No. 46R. See Note (E) to the Condensed Financial Statements herein for additional information related to the adoption of Interpretation No. 46R.

FINANCIAL CONDITION AND LIQUIDITY

Overview

Major changes in Alabama Power’s financial condition during the first three months of 2004 included the addition of approximately $204 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operating activities and net proceeds from security issuances of $319 million. See Alabama Power’s Condensed Statements of Cash Flows herein for further details.

Capital Requirements and Contractual Obligations

See Item 7 — Management’s Discussion and Analysis — Financial Condition And Liquidity — “Capital Requirements and Contractual Obligations” of Alabama Power in of the Form 10-K for a description of Alabama Power’s capital requirements for its construction program, lease obligations, purchase commitments and trust funding requirements. Approximately $725 million will be required by March 31, 2005 for redemptions and maturities of long-term debt.

Sources of Capital

In addition to the financing activities described below, Alabama Power plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings — if needed — will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 — Business — “Financing Programs” in the Form 10-K for additional information.

     Alabama Power’s current liabilities exceed current assets primarily because of scheduled maturities of long-term debt. To meet short-term cash needs and contingencies, at March 31, 2004 Alabama Power had $166 million of cash and cash equivalents, unused committed lines of credit of approximately $865 million (including $504 million of such lines which are dedicated to funding purchase obligations relating to variable rate pollution control bonds) and an extendible commercial note program. These lines of credit will expire at various times during 2004. Alabama Power expects to renew its credit facilities, as needed, prior to expiration. Alabama Power may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of Alabama Power and other Southern Company subsidiaries. Alabama Power has regulatory authority for up to $1 billion of short-term borrowings. At March 31, 2004, Alabama Power had no commercial paper or notes payable outstanding. Management believes that the need for working capital can be adequately met by issuing commercial paper or utilizing lines of credit without maintaining large cash balances.

34

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

Credit Rating Risk

Alabama Power does not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are contracts that could require collateral – but not accelerated payment – in the event of a credit rating change to below investment grade. These contracts are primarily for physical electricity purchases and sales, fixed price physical gas purchases and agreements covering interest rate swaps. At March 31, 2004, the maximum potential collateral requirements were approximately $27 million.

Market Price Risk

Alabama Power’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Alabama Power is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Alabama Power has 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 fixed price contracts for the purchase and sale of electricity through the wholesale electricity market and, to a lesser extent, similar contracts for gas purchases. Alabama Power has also implemented a retail fuel hedging program at the instruction of the Alabama PSC. The fair value of derivative energy contracts at March 31, 2004 was as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	6,413
Contracts realized or settled		(3,189	)
New contracts at inception		—
Changes in valuation techniques		—
Current period changes		14,634
Contracts at March 31, 2004	$	17,858

	Source of March 31, 2004
	Valuation Prices
	Total		Maturity
	Fair Value		Year 1		1-3 Years
	(in thousands)
Actively quoted	$	17,858	$	16,432	$	1,426
External sources		—		—		—
Models and other methods		—		—		—
Contracts at March 31, 2004	$	17,858	$	16,432	$	1,426

35

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

     For additional information, see Item 7 — Management’s Discussion and Analysis — “Financial Condition And Liquidity — Market Price Risk” of Alabama Power in the Form 10-K 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 (G) to the Condensed Financial Statements herein.

Financing Activities

In February 2004, Alabama Power issued 500,000 shares of common stock to Southern Company at $40.00 a share ($20 million aggregate purchase price). The proceeds from the sale were used by Alabama Power for general corporate purposes.

     Also in February 2004, Alabama Power issued 4,000,000 shares ($100 million aggregate stated capital) of 5.30% Class A Preferred Stock, Cumulative, Par Value $1 per share (Stated Capital $25 Per Share) and $200 million of Series Z 5.125% Senior Notes due February 15, 2019. The proceeds from the sale were used to repay a portion of Alabama Power’s outstanding short-term indebtedness and for other general corporate purposes, including Alabama Power’s continuous construction program.

     In April 2004, Alabama Power issued $150 million of Series AA 5.625% Senior Notes due April 15, 2034. The proceeds from the sale will be used together with other funds to redeem in May 2004 $200 million in aggregate principal amount of the Series J 6.75% Senior Notes due June 30, 2039.

     Alabama Power plans to continue, when economically feasible, a program to retire higher-cost debt and replace these obligations with lower-cost capital if market conditions permit.

36

GEORGIA POWER COMPANY

37

GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Retail sales	$	1,037,795		$	965,707
Sales for resale —
Non-affiliates		65,456			73,986
Affiliates		54,142			47,486
Other revenues		41,996			39,259
Total operating revenues		1,199,389			1,126,438
Operating Expenses:
Fuel		285,214			242,503
Purchased power —
Non-affiliates		62,689			72,036
Affiliates		135,142			113,843
Other operations		198,393			185,990
Maintenance		108,468			110,944
Depreciation and amortization		67,737			85,742
Taxes other than income taxes		56,432			53,175
Total operating expenses		914,075			864,233
Operating Income		285,314			262,205
Other Income and (Expense):
Allowance for equity funds used during construction		3,347			2,956
Interest income		2,352			115
Interest expense, net of amounts capitalized		(45,650	)		(44,363	)
Distributions on mandatorily redeemable preferred securities		(15,839	)		(14,919	)
Other income (expense), net		(4,395	)		2,912
Total other income and (expense)		(60,185	)		(53,299	)
Earnings Before Income Taxes		225,129			208,906
Income taxes		81,120			75,468
Net Income		144,009			133,438
Dividends on Preferred Stock		168			168
Net Income After Dividends on Preferred Stock	$	143,841		$	133,270

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

38

GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Net income	$	144,009		$	133,438
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		91,462			102,770
Deferred income taxes and investment tax credits, net		56,823			29,956
Pension, postretirement, and other employee benefits		(7,342	)		(7,633	)
Tax benefit of stock options		4,523			2,750
Other, net		(15,288	)		(8,924	)
Changes in certain current assets and liabilities —
Receivables, net		42,798			114,048
Fossil fuel stock		(3,808	)		(11,235	)
Materials and supplies		773			(2,166	)
Other current assets		24,430			24,309
Accounts payable		5,576			(97,095	)
Accrued taxes		(131,794	)		(56,058	)
Accrued compensation		(93,468	)		(92,624	)
Other current liabilities		(262	)		413
Net cash provided from operating activities		118,432			131,949
Investing Activities:
Gross property additions		(158,743	)		(190,895	)
Cost of removal net of salvage		2,059			(4,950	)
Change in construction payables, net of joint owner portion		(20,809	)		(53,462	)
Other		5,210			6,865
Net cash used for investing activities		(172,283	)		(242,442	)
Financing Activities:
Increase in notes payable, net		55,044			171,742
Proceeds —
Senior notes		350,000			400,000
Mandatorily redeemable preferred securities		200,000			—
Redemptions —
Senior notes		(200,000	)		(315,000	)
Mandatorily redeemable preferred securities		(200,000	)		—
Payment of common stock dividends		(141,375	)		(141,450	)
Other		(11,567	)		(8,371	)
Net cash provided from financing activities		52,102			106,921
Net Change in Cash and Cash Equivalents		(1,749	)		(3,572	)
Cash and Cash Equivalents at Beginning of Period		8,699			16,873
Cash and Cash Equivalents at End of Period	$	6,950		$	13,301
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $1,180 and $1,846 capitalized for 2004 and 2003, respectively)	$	62,923		$	54,160
Income taxes (net of refunds)	$	16,494		$	(3,896	)

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

39

GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	6,950		$	8,699
Receivables —
Customer accounts receivable		235,414			261,771
Unbilled revenues		118,218			117,327
Under recovered regulatory clause revenues		177,935			151,447
Other accounts and notes receivable		66,067			101,783
Affiliated companies		38,004			52,413
Accumulated provision for uncollectible accounts		(5,350	)		(5,350	)
Fossil fuel stock, at average cost		141,345			137,537
Vacation pay		54,811			50,150
Materials and supplies, at average cost		270,267			271,040
Prepaid expenses		16,787			46,157
Other		9,867			83
Total current assets		1,130,315			1,193,057
Property, Plant, and Equipment:
In service		18,272,064			18,171,862
Less accumulated provision for depreciation		6,978,797			6,898,725
		11,293,267			11,273,137
Nuclear fuel, at amortized cost		123,133			129,056
Construction work in progress		354,607			341,783
Total property, plant, and equipment		11,771,007			11,743,976
Other Property and Investments:
Equity investments in unconsolidated subsidiaries		67,965			38,714
Nuclear decommissioning trusts, at fair value		435,210			423,319
Other		37,253			37,142
Total other property and investments		540,428			499,175
Deferred Charges and Other Assets:
Deferred charges related to income taxes		506,916			509,887
Prepaid pension costs		416,031			405,164
Unamortized debt issuance expense		75,625			75,245
Unamortized loss on reacquired debt		185,024			177,707
Other		166,029			177,817
Total deferred charges and other assets		1,349,625			1,345,820
Total Assets	$	14,791,375		$	14,782,028

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

40

GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Liabilities and Stockholder’s Equity	2004			2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	252,352		$	2,304
Notes payable		192,322			137,277
Accounts payable —
Affiliated		118,025			121,928
Other		220,435			238,069
Customer deposits		106,604			103,756
Accrued taxes —
Income taxes		116,667			107,532
Other		56,628			166,892
Accrued interest		70,102			70,844
Accrued vacation pay		42,749			38,206
Accrued compensation		40,536			134,004
Other		97,671			105,234
Total current liabilities		1,314,091			1,226,046
Long-term Debt		3,661,712			3,762,333
Long-term Debt Payable to Affiliated Trusts		969,073			—
Mandatorily Redeemable Preferred Securities		—			940,000
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		2,322,259			2,303,085
Deferred credits related to income taxes		182,806			186,625
Accumulated deferred investment tax credits		309,384			312,506
Employee benefit obligations		299,314			295,788
Asset retirement obligations		482,593			475,585
Other cost of removal obligations		413,875			412,161
Miscellaneous regulatory liabilities		208,084			249,687
Other		66,732			63,432
Total deferred credits and other liabilities		4,285,047			4,298,869
Total Liabilities		10,229,923			10,227,248
Cumulative Preferred Stock		14,569			14,569
Common Stockholder’s Equity:
Common stock, without par value — Authorized — 15,000,000 shares Outstanding — 7,761,500 shares		344,250			344,250
Paid-in capital		2,213,021			2,208,498
Premium on preferred stock		40			40
Retained earnings		2,012,764			2,010,297
Accumulated other comprehensive loss		(23,192	)		(22,874	)
Total common stockholder’s equity		4,546,883			4,540,211
Total Liabilities and Stockholder’s Equity	$	14,791,375		$	14,782,028

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

41

GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	143,841		$	133,270
Other comprehensive loss:
Changes in fair value of qualifying hedges, net of tax of $(880) and $(966), respectively		(1,395	)		(1,532	)
Less: Reclassification adjustment for amounts included in net income, net of tax of $679 and $-, respectively		1,077			(7	)
COMPREHENSIVE INCOME	$	143,523		$	131,731

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

42

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

RESULTS OF OPERATIONS

Earnings

Georgia Power’s net income after dividends on preferred stock for the first quarter 2004 was $143.9 million compared to $133.3 million for the corresponding period in 2003. Earnings in the first quarter 2004 increased by $10.6 million, or 7.9%, primarily due to higher retail revenues that were partially offset by higher non-fuel operating expenses when compared to the same period in 2003.

     Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Retail sales	$	72,088			7.5
Sales for resale — non-affiliates		(8,530	)		(11.5	)
Sales for resale — affiliates		6,656			14.0
Other revenues		2,737			7.0
Fuel expense		42,711			17.6
Purchased power — non-affiliates		(9,347	)		(13.0	)
Purchased power — affiliates		21,299			18.7
Other operation expense		12,403			6.7
Depreciation and amortization		(18,005	)		(21.0	)
Interest income		2,237			N/M
Other income (expense), net		(7,307	)		(250.9	)

N/M Not meaningful

     Retail sales. Excluding fuel revenues, which generally do not affect net income, retail sales revenue increased by $31.8 million, or 4.7%, in the first quarter 2004 compared to the corresponding period in 2003. In the first quarter 2004, kilowatt-hour energy sales to residential, commercial and industrial customers increased by 5.3%, 3.9% and 2.1%, respectively, when compared to the same period in 2003. These increases in the retail sectors during the first quarter 2004 are mainly due to customer growth of 2% and an improving economy.

     Sales for resale — non-affiliates. The decrease in revenues from sales for resale to non-affiliates in the first quarter 2004 is mainly attributed to lower demand for energy by these customers when compared to the same period in 2003. These transactions did not have a significant impact on earnings since the energy is usually sold at variable cost.

43

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

     Sales for resale — affiliates. Revenues from sales for resale to affiliates increased in the first quarter 2004 when compared to the same period in 2003 despite lower demand for energy due to higher fuel costs associated with generating electricity. These transactions did not have a significant impact on earnings since this energy is generally sold at marginal cost.

     Other revenues. The increase in other revenues during the first quarter 2004 when compared to the corresponding period of 2003 is primarily attributed to a $1.4 million increase in outdoor lighting revenues and a $0.7 million increase in electric property rental revenues.

     Fuel expense. During the first quarter 2004, fuel expenses increased as a result of a 15.1% increase in the unit cost of fuel when compared to the corresponding period in 2003 and an increase of 2.5% in generation due to increased retail sales. These expenses do not have a significant impact on earnings since fuel expenses are generally offset by fuel revenues through Georgia Power’s fuel cost recovery clause.

     Purchased power — non-affiliates. The first quarter 2004 decrease in purchased power from non-affiliates is primarily due to fluctuations in off-system energy purchases used to meet off-system sales commitments. These expenses do not have a significant impact on earnings since energy expenses are generally offset by energy revenues through Georgia Power’s fuel cost recovery clause.

     Purchased power — affiliates. Purchased power from affiliates increased in the first quarter 2004 when compared to the first quarter 2003 due to a PPA between Georgia Power and Southern Power that began in June 2003. The capacity component of these transactions totaled $10.7 million in the first quarter 2004. The energy component of power purchased from affiliated companies within the Southern Company system will vary depending on demand and the availability and cost of generating resources at each company and will have no significant impact on earnings since energy expenses are generally offset by energy revenues through Georgia Power’s fuel cost recovery clause.

     Other operation expense. Other operation expense in the first quarter 2004 was higher when compared to the same period in 2003 due to increased administrative and general expenses of $10.8 million related to employee payroll and benefits and $3.2 million in workers compensation benefits.

     Depreciation and amortization. In the first quarter 2004, depreciation and amortization expense was lower compared to the first quarter of 2003. This decrease was caused primarily by lower regulatory charges needed to levelize purchased power capacity costs under the terms of the retail rate order effective January 1, 2002. This decrease was offset by an increase in affiliated purchased power costs discussed above. See Note 1 to the financial statements under “Depreciation and Amortization” of Georgia Power in Item 8 of the Form 10-K for additional information.

     Interest income. During the first quarter 2004, interest income increased when compared to the corresponding period in 2003 due mainly to interest received from the State of Georgia for a favorable sales and use tax settlement.

     Other income (expense), net. The change in this item in the first quarter 2004 when compared to the first quarter 2003 reflects decreased income from a new electricity pricing program.

44

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

Future Earnings Potential

The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors including Georgia Power’s ability to maintain a stable regulatory environment, to achieve energy sales growth while containing costs, and to recover costs related to growing demand and increasingly stricter environmental standards. Growth in energy sales is subject to a number of factors, which include weather, competition, new energy contracts with neighboring utilities, energy conservation practiced by customers, the price of electricity, the price elasticity of demand, and the rate of economic growth in the service area. For additional information relating to these issues, see Item 1 — Business – The SOUTHERN System — “Risk Factors” and Item 7 – Management’s Discussion and Analysis – “Future Earnings Potential” of Georgia Power in the Form 10-K.

Environmental Matters

Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs cannot be recovered. For additional information, including information on certain environmental litigation, see Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — Environmental Matters” of Georgia Power and Note 3 to the financial statements of Georgia Power in Item 8 of the Form 10-K under “New Source Review Actions” and “Plant Wansley Environmental Litigation.” As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under either the New Source Review litigation or Plant Wansley Environmental litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New Source Review action against the TVA. The case against Georgia Power has been effectively stayed pending final resolution of the TVA appeal. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome in either of these cases could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties. This could affect future results of operations, cash flows and possibly financial condition if such costs are not recovered through regulated rates.

     On April 30, 2004, the EPA published its eight-hour ozone nonattainment designations and a portion of the rules implementing the new eight-hour standard. Areas within Georgia Power’s service area that have been designated as nonattainment under the eight-hour ozone standard include Macon and a 20-county area within metropolitan Atlanta. Under the implementation provisions of the new rule, the EPA announced that the one-hour ozone standard will be revoked on June 15, 2005. Areas classified as “severe” nonattainment areas under the one-hour standard will not be required to impose emissions fees as a result of nonattainment. Georgia Power, therefore, will no longer be subject to imposition of emissions fees if the Atlanta area does not come into attainment with the one-hour standard. The impact of the eight-hour designations and the new standards will depend on the development and implementation of applicable state regulations and therefore cannot be determined at this time.

     On April 21, 2004, the EPA published the final regional nitrogen oxide reduction rules applicable to the State of Georgia. These rules specify that Georgia must submit a revised state implementation plan by April 2005, and affected sources must comply with the reduction requirements by May 1, 2007. The impact of these regulations will depend on the development and approval of Georgia’s state implementation plan and cannot be determined at this time.

45

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

     Additionally, on April 15, 2004, the EPA announced proposed amendments to its Regional Haze rules with respect to Best Available Retrofit Technology (BART) guidelines and requirements. The impact of these regulations will depend on the development and implementation of the final rules and implementation by the states, and therefore cannot be determined at this time.

FERC Matters

See Management’s Discussion And Analysis – “Future Earnings Potential – FERC Matters – Market-Based Rate Authority” in Item 7 and Note 3 to the financial statements of Georgia Power under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company is filing a request for rehearing the FERC’s order. The final outcome of this matter cannot be determined at this time.

     See Note 3 to the financial statements of Georgia Power under “FERC Matters” in Item 8 of the Form 10-K and Note (C) to the Condensed Financial Statements herein for information regarding the FERC approval process for Southern Power’s PPAs with Georgia Power and Savannah Electric for Plant McIntosh Units 10 and 11.

     See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — FERC Matters” and Note 3 to the financial statements of Georgia Power under “FERC Matters” in Item 8 of the Form 10-K for information on the FERC’s order related to RTOs and the FERC’s notice of proposed rulemaking regarding open access transmission service.

Other Matters

In January 2002, Georgia Power began operating under a three-year retail rate order. Under the terms of the order, earnings will be evaluated annually against a retail return on common equity range of 10 percent to 12.95 percent. Two-thirds of any earnings above the 12.95 percent return will be applied to rate refunds, with the remaining one-third retained by Georgia Power. Retail rates were decreased by $118 million effective January 1, 2002. Purchases under PPAs are required by the order to be reflected in rates evenly over the three year period ending December 31, 2004. Georgia Power is required to file a general rate case on July 1, 2004, in response to which the Georgia PSC would be expected to determine whether the rate order should be continued, modified, or discontinued. See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential – Other Matters” and Note 3 to the financial statements of Georgia Power under “Retail Rate Orders” in Item 8 of the Form 10-K for additional information.

     In August 2003, the Georgia PSC issued an order allowing Georgia Power to increase customer fuel rates to recover existing under-recovered deferred fuel costs over the period October 1, 2003 through March 31, 2005. See Note 3 to the financial statements of Georgia Power under “Fuel Cost Recovery” in Item 8 of the Form 10-K for additional information.

46

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

     See Management’s Discussion and Analysis — “Future Earnings Potential — Other Matters” in Item 7 of the Form 10-K for information on nuclear security measures. Implementation plans for the measures ordered by the NRC to be in effect by October 29, 2004 have been finalized based on current interpretations of the requirements. Georgia Power, based on its ownership interest, currently estimates its expenditures related to these security measures will total $9.3 million, of which $1.3 million will be capitalized. These estimates are subject to change in the event additional NRC guidance is provided.

     In June 2002, Georgia Power entered into a fifteen-year PPA beginning in June 2005 with Southern Power to purchase 1,040 megawatts of capacity from Southern Power’s Plant McIntosh. See Management’s Discussion and Analysis – “Future Earnings Potential — FERC Matters – Market-Based Rate Authority” in Item 7 of the Form 10-K and Note 3 to the financial statements of Georgia Power under “FERC Matters” in Item 8 of the Form 10-K and Note (C) to the Condensed Financial Statements herein for information regarding the FERC approval process for this PPA.

     Georgia Power is subject to certain claims and legal actions arising in the ordinary course of business. In addition, Georgia 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 and citizen enforcement of environmental requirements, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such litigation against Georgia Power cannot be predicted at this time; however, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on Georgia Power’s financial statements.

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

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Georgia Power 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 Georgia 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 Georgia 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 Item 7 — Management’s Discussion and Analysis – “Accounting Policies — Application of Critical Accounting Policies and Estimates” of Georgia Power in the Form 10-K for a complete discussion of Georgia Power’s critical accounting policies and estimates related to Electric Utility Regulation and Contingent Obligations.

New Accounting Standards

On March 31, 2004, Georgia Power prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. The adoption of Interpretation No. 46R had no impact on Georgia Power’s net income. However, as a result of the adoption, Georgia Power deconsolidated certain wholly-owned trusts

47

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

established to issue preferred securities since Georgia Power does not meet the definition of primary beneficiary established by Interpretation No. 46R. See Note (E) to the Condensed Financial Statements herein for additional information related to the adoption of Interpretation No. 46R.

FINANCIAL CONDITION AND LIQUIDITY

Overview

The major change in Georgia Power’s financial condition during the first three months of 2004 was the addition of approximately $159 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operating activities. See Georgia Power’s Condensed Statements of Cash Flows herein for further details.

Capital Requirements and Contractual Obligations

See Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Capital Requirements and Contractual Obligations” of Georgia Power in the Form 10-K for a description of Georgia Power’s capital requirements for its construction program, lease obligations, purchase commitments and trust funding requirements. Approximately $252 million will be required by March 31, 2005 for redemptions and maturities of long-term debt.

Sources of Capital

Georgia Power plans to obtain the funds required for construction and other purposes from sources similar to those used in the past, including funds from operations and new security issuances. The amount, type and timing of additional security issuances — if needed — will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 — Business — “Financing Programs” in the Form 10-K for additional information.

     Georgia Power’s current liabilities frequently exceed current assets because of the continued use of short-term debt as a funding source to meet cash needs, which can fluctuate significantly due to the seasonality of the business. To meet short-term cash needs and contingencies, Georgia Power had at March 31, 2004 approximately $7.0 million of cash and cash equivalents and $725 million of unused credit arrangements with banks. These credit arrangements expire in June 2004 and contain provisions allowing two-year term loans executable at the expiration. Georgia Power expects to renew its credit facilities, as needed, prior to expiration. The credit arrangements provide liquidity support to Georgia Power’s obligations with respect to variable rate pollution control bonds and commercial paper. Georgia Power may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of Georgia Power and other Southern Company subsidiaries. At March 31, 2004, Georgia Power had outstanding $192 million in notes payable. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances.

48

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

Credit Rating Risk

Georgia Power does not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are contracts that could require collateral — but not accelerated payment — in the event of a credit rating change to below investment grade. These contracts are primarily for physical electricity purchases and sales, fixed-price physical gas purchases, and agreements covering interest rate swaps. At March 31, 2004, the maximum potential collateral requirements were approximately $227 million.

Market Price Risk

Georgia Power’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Georgia Power is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Georgia Power has 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, Georgia Power enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market and, to a lesser extent, similar contracts for gas purchases. Georgia Power has also implemented a retail fuel hedging program at the instruction of the Georgia PSC. The fair value of derivative energy contracts at March 31, 2004 was as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	3,155
Contracts realized or settled		(98	)
New contracts at inception		—
Changes in valuation techniques		—
Current period changes		7,476
Contracts at March 31, 2004	$	10,533

	Source of March 31, 2004
	Valuation Prices
			Maturity
	Total
	Fair Value		Year 1		1-3 Years
	(in thousands)
Actively quoted	$	10,533	$	9,238	$	1,295
External sources		—		—		—
Models and other methods		—		—		—
Contracts at March 31, 2004	$	10,533	$	9,238	$	1,295

49

`

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

     For additional information, see Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Market Price Risk” of Georgia Power in the Form 10-K and Notes 1 and 6 to the financial statements of Georgia Power under “Financial Instruments” in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein.

Financing Activities

In January 2004, Georgia Power issued $100 million of Series S 4.00% Senior Notes due January 15, 2011 and $100 million of Series T 5.75% Senior Public Income Notes due January 15, 2044. The proceeds from these sales were used in March 2004 to redeem all of its outstanding Series H 6.70% Senior Insured Quarterly Notes due March 1, 2011 and Series D 6 5/8% Senior Notes due March 31, 2039.

     Further in January 2004, Georgia Power Capital Trust VII, a statutory trust, sold $200 million of its 5 7/8% Trust Preferred Securities, which are guaranteed by Georgia Power. The net proceeds from this issuance were used to redeem the 6.85% Trust Preferred Securities of Georgia Power Capital Trust IV. In connection with this transaction, Georgia Power issued $206 million of its junior subordinated debentures to Georgia Power Capital Trust VII.

     In February 2004, Georgia Power issued $150 million of Series U Floating Rate Senior Notes due February 17, 2009. The proceeds of this sale were used for general corporate purposes.

     Georgia 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.

50

GULF POWER COMPANY

51

GULF POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Retail sales	$	165,084		$	159,793
Sales for resale —
Non-affiliates		19,488			18,725
Affiliates		20,695			10,217
Other revenues		9,652			9,103
Total operating revenues		214,919			197,838
Operating Expenses:
Fuel		78,416			63,267
Purchased power —
Non-affiliates		6,433			5,956
Affiliates		7,428			12,587
Other operations		33,018			30,011
Maintenance		16,206			16,580
Depreciation and amortization		20,552			20,252
Taxes other than income taxes		17,063			16,388
Total operating expenses		179,116			165,041
Operating Income		35,803			32,797
Other Income and (Expense):
Interest expense, net of amounts capitalized		(7,894	)		(8,055	)
Distributions on mandatorily redeemable preferred securities		(1,113	)		(2,028	)
Other income (expense), net		18			(423	)
Total other income and (expense)		(8,989	)		(10,506	)
Earnings Before Income Taxes		26,814			22,291
Income taxes		9,921			8,265
Net Income		16,893			14,026
Dividends on Preferred Stock		54			54
Net Income After Dividends on Preferred Stock	$	16,839		$	13,972

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

52

GULF POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Net income	$	16,893		$	14,026
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		22,084			21,656
Deferred income taxes		5			1,621
Pension, postretirement, and other employee benefits		1,427			1,981
Tax benefit of stock options		932			943
Other, net		1,939			5,081
Changes in certain current assets and liabilities —
Receivables, net		16,812			16,220
Fossil fuel stock		2,303			(3,127	)
Materials and supplies		624			(1,451	)
Other current assets		(2,248	)		7,798
Accounts payable		(4,899	)		(7,211	)
Accrued taxes		7,199			(6,544	)
Accrued compensation		(8,591	)		(7,854	)
Other current liabilities		1,999			5,819
Net cash provided from operating activities		56,479			48,958
Investing Activities:
Gross property additions		(33,145	)		(22,070	)
Cost of removal net of salvage		(3,067	)		(3,559	)
Investment in property damage fund		(6,700	)		(1,100	)
Other		(1,327	)		(4,463	)
Net cash used for investing activities		(44,239	)		(31,192	)
Financing Activities:
Decrease in notes payable, net		(19,682	)		(489	)
Proceeds —
Senior notes		—			65,000
Capital contributions from parent company		25,000			10,000
Redemptions —
Senior notes		—			(32	)
Mandatorily redeemable preferred securities		—			(40,000	)
Payment of preferred stock dividends		(54	)		(54	)
Payment of common stock dividends		(17,500	)		(17,550	)
Other		(203	)		(3,729	)
Net cash provided from (used for) financing activities		(12,439	)		13,146
Net Change in Cash and Cash Equivalents		(199	)		30,912
Cash and Cash Equivalents at Beginning of Period		2,548			13,278
Cash and Cash Equivalents at End of Period	$	2,349		$	44,190
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $233 and $20 capitalized for 2004 and 2003, respectively)	$	8,915		$	9,957
Income taxes (net of refunds)	$	1,849			($21	)

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

53

GULF POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	2,349		$	2,548
Receivables —
Customer accounts receivable		39,313			44,001
Unbilled revenues		28,284			31,548
Under recovered regulatory clause revenues		17,136			21,812
Other accounts and notes receivable		2,918			6,179
Affiliated companies		9,104			9,826
Accumulated provision for uncollectible accounts		(1,147	)		(947	)
Fossil fuel stock, at average cost		33,052			35,354
Vacation pay		5,254			5,254
Materials and supplies, at average cost		35,306			35,930
Prepaid expenses		5,937			6,310
Other		7,571			4,985
Total current assets		185,077			202,800
Property, Plant, and Equipment:
In service		2,311,976			2,306,959
Less accumulated provision for depreciation		860,541			847,519
		1,451,435			1,459,440
Construction work in progress		72,876			49,438
Total property, plant, and equipment		1,524,311			1,508,878
Other Property and Investments		21,530			12,597
Deferred Charges and Other Assets:
Deferred charges related to income taxes		18,366			18,263
Prepaid pension costs		42,809			42,014
Unamortized debt issuance expense		6,853			6,877
Unamortized premium on reacquired debt		18,942			19,389
Other		28,857			28,235
Total deferred charges and other assets		115,827			114,778
Total Assets	$	1,846,745		$	1,839,053

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

54

GULF POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Liabilities and Stockholder's Equity	2004			2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	50,000		$	50,000
Notes payable		17,985			37,666
Accounts payable —
Affiliated		24,166			26,945
Other		18,134			21,952
Customer deposits		18,790			18,271
Accrued taxes —
Income taxes		10,681			6,405
Other		8,688			8,621
Accrued interest		7,534			8,077
Accrued vacation pay		5,254			5,254
Accrued compensation		4,865			13,456
Other		13,905			9,694
Total current liabilities		180,002			206,341
Long-term Debt		515,946			515,827
Long-term Debt Payable to Affiliated Trusts		72,166			—
Mandatorily Redeemable Preferred Securities		—			70,000
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		179,409			175,685
Deferred credits related to income taxes		25,815			26,545
Accumulated deferred investment tax credits		19,960			20,451
Employee benefit obligations		54,616			52,395
Other cost of removal obligations		153,220			151,229
Miscellaneous regulatory liabilities		28,455			27,903
Other		26,241			27,083
Total deferred credits and other liabilities		487,716			481,291
Total Liabilities		1,255,830			1,273,459
Cumulative Preferred Stock		4,236			4,236
Common Stockholder’s Equity:
Common stock, without par value — Authorized — 992,717 shares Outstanding — 992,717 shares		38,060			38,060
Paid-in capital		390,784			364,852
Premium on preferred stock		12			12
Retained earnings		160,547			161,208
Accumulated other comprehensive loss		(2,724	)		(2,774	)
Total common stockholder’s equity		586,679			561,358
Total Liabilities and Stockholder’s Equity	$	1,846,745		$	1,839,053

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

55

GULF POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004		2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	16,839	$	13,972
Other comprehensive income (loss):
Less: Reclassification adjustment for amounts included in net income, net of tax of $31		50		—
COMPREHENSIVE INCOME	$	16,889	$	13,972

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

56

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

RESULTS OF OPERATIONS

Earnings

Gulf Power’s net income after dividends on preferred stock for the first quarter 2004 was $16.8 million compared to $14.0 million for the corresponding period in 2003. First quarter 2004 net income increased by $2.8 million, or 21.0%, primarily due to higher operating revenues when compared to the same period in 2003.

     Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Retail sales	$	5,291			3.3
Sales for resale — affiliates		10,478			102.5
Fuel expense		15,149			23.9
Purchased power — affiliates		(5,159	)		(41.0	)
Other operations expense		3,008			10.0
Distributions on mandatorily redeemable preferred securities		(915	)		(45.1	)

     Retail sales. Excluding the recovery of fuel expense and certain other expenses that do not affect net income, retail sales increased by $4.1 million, or 4.3%, for the first quarter 2004 when compared to the corresponding period in 2003. Energy sales to residential, commercial and industrial customers were higher by 5.2%, 3.6%, and 2.9%, respectively, in the first quarter 2004 as compared to the same period in 2003. The increase in retail sales revenue during the first quarter 2004 is primarily due to a 2.5% increase in customer growth and favorable weather conditions when compared to the same period in 2003.

     Sales for resale – affiliates and Purchased power — affiliates. Revenues from sales for resale to affiliates and purchases of energy by affiliates will vary depending on demand and the availability and cost of generating resources at each company within the Southern Company system. 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 Gulf Power’s fuel cost recovery mechanism. The increase in sales for resale to affiliates is due to available generation being sold to affiliate companies. The decrease in purchased power from affiliates is the result of a decrease in the demand for purchased power due to increased self-generation.

     Fuel expense. In the first quarter 2004, fuel expense was higher than the same period in 2003 due primarily to a 23.3% increase in generation to meet additional demand for energy as well as a 4.8% increase in coal prices and a 1.3% increase in natural gas prices. Since energy expenses are generally offset by energy revenues through Gulf Power’s fuel cost recovery mechanism, these expenses do not have a material impact on net income.

57

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

     Other operation expense. The increase in other operations expense during the first quarter 2004 is due to a $1.0 million increase in marketing expenses and a $1.3 million increase in employee benefit expenses when compared to the same period in 2003.

     Distributions on mandatorily redeemable preferred securities. The decrease in distributions on mandatorily redeemable preferred securities is due to the redemption of $40 million of 7.625% trust preferred securities during the first quarter 2003 and the redemption of $45 million of 7.000% trust preferred securities during the fourth quarter 2003.

Future Earnings Potential

The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors, including Gulf Power’s ability to maintain a stable regulatory environment, to achieve energy sales growth while containing costs, and to recover costs related to growing demand and increasingly stricter environmental standards. Growth in energy sales is subject to a number of factors, which include weather, competition, new energy contracts with neighboring utilities, energy conservation practiced by customers, the price of electricity, the price elasticity of demand, and the rate of economic growth in the service area. For additional information relating to these issues, see Item 1 — Business – The SOUTHERN System — “Risk Factors” and Item 7 – Management’s Discussion and Analysis – “Future Earnings Potential” of Gulf Power in the Form 10-K.

Environmental Matters

Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs are not fully recovered through Gulf Power’s Environmental Cost Recovery Clause. See Management’s Discussion and Analysis — “Future Earnings Potential — Environmental Matters” in Item 7 of the Form 10-K and Note 3 to the financial statements of Gulf Power under “New Source Review Actions” in Item 8 of the Form 10-K. As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under the New Source Review litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New Source Review action against the TVA. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome of this matter could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties. This could affect future results of operations, cash flows, and possibly financial condition if such costs are not recovered through regulated rates.

     Additionally, on April 15, 2004, the EPA announced proposed amendments to its Regional Haze rules with respect to Best Available Retrofit Technology (BART) guidelines and requirements. The impact of these regulations will depend on the development and implementation of the final rules and implementation by the states, and therefore cannot be determined at this time.

58

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

FERC Matters

See Management’s Discussion and Analysis – “Future Earnings Potential – FERC Matters – Market-Based Rate Authority” in Item 7 and Note 3 to the financial statements of Gulf Power under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company is filing a request for rehearing of the FERC’s order. The final outcome of this matter cannot be determined at this time.

     See Item 7 — Management’s Discussion and Analysis – “Future Earnings Potential — FERC Matters” of Gulf Power in the Form 10-K for information on the FERC’s order related to RTOs and notice of proposed rulemaking regarding open access transmission service.

Other Matters

Gulf Power is subject to certain claims and legal actions arising in the ordinary course of business. In addition, Gulf 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 and citizen enforcement of environmental requirements, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such litigation against Gulf Power cannot be predicted at this time; however, management does not anticipate that the liabilities, if any, arising from such current proceedings would have a material adverse effect on Gulf Power’s financial statements.

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

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Gulf Power 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 Gulf 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 Gulf 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 Item 7 — Management’s Discussion and Analysis — “Accounting Policies — Application of Critical Accounting Policies and Estimates” of Gulf Power in the Form 10-K for a complete discussion of Gulf Power’s critical accounting policies and estimates related to Electric Utility Regulation and Contingent Obligations.

59

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

New Accounting Standards

On March 31, 2004, Gulf Power prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. The adoption of Interpretation No. 46R had no impact on Gulf Power’s net income. However, as a result of the adoption, Gulf Power deconsolidated certain wholly-owned trusts established to issue preferred securities since Gulf Power does not meet the definition of primary beneficiary established by Interpretation No. 46R. See Note (E) to the Condensed Financial Statements herein for additional information related to the adoption of Interpretation No. 46R.

FINANCIAL CONDITION AND LIQUIDITY

Overview

Major changes in Gulf Power’s financial condition during the first three months of 2004 included the addition of approximately $33.1 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operating activities. See Gulf Power’s Condensed Statements of Cash Flows herein for further details.

Capital Requirements and Contractual Obligations

Reference is made to Item 7 — Management’s Discussion and Analysis – “Financial Condition and Liquidity — Capital Requirements and Contractual Obligations” of Gulf Power in the Form 10-K for a description of Gulf Power’s capital requirements for its construction program, lease obligations, purchase commitments and trust funding requirements.

Sources of Capital

In addition to the financing activities described herein, Gulf Power plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. These sources include cash flows from operating activities, issuances of unsecured debt and pollution control bonds issued for Gulf Power’s benefit by public authorities. The amount, type and timing of any future financings — if needed — will depend upon market conditions and regulatory approval. See Item 1 — Business — “Financing Programs” in the Form 10-K for additional information.

     To meet short-term cash needs and contingencies, Gulf Power has various internal and external sources of liquidity. At March 31, 2004, Gulf Power had approximately $2.3 million of cash and cash equivalents and $56 million of unused committed lines of credit with banks that expire in 2004. Gulf Power expects to renew its credit facilities, as needed, prior to expiration. In addition, Gulf Power has substantial cash flow from operating activities. The credit arrangements provide liquidity support to Gulf Power’s obligations with respect to variable rate pollution control bonds and commercial paper. Gulf Power may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of Gulf Power and other Southern Company subsidiaries. At March 31, 2004, Gulf Power had $18 million of commercial paper outstanding. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances.

60

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

Credit Rating Risk

Gulf Power does not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

Market Price Risk

Gulf Power’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Gulf Power is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Gulf Power has 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, Gulf Power enters into fixed price contracts for purchase of coal supplies, the purchase and sale of electricity through the wholesale electricity market and, to a lesser extent, similar contracts for gas purchases. Gulf Power has received approval from the Florida PSC to recover prudently incurred costs related to its fuel hedging program through the fuel cost recovery mechanism. The fair value of derivative energy contracts at March 31, 2004 was as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	2,504
Contracts realized or settled		(1,079	)
New contracts at inception		—
Changes in valuation techniques		—
Current period changes		4,249
Contracts at March 31, 2004	$	5,674

	Source of March 31, 2004
	Valuation Prices
			Maturity
	Total
	Fair Value		Year 1		1-3 Years
	(in thousands)
Actively quoted	$	5,674	$	5,154	$	520
External sources		—		—		—
Models and other methods		—		—		—
Contracts at March 31, 2004	$	5,674	$	5,154	$	520

     See Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Market Price Risk” of Gulf Power in the Form 10-K and Notes 1 and 6 to the financial statements of Gulf Power under “Financial Instruments” in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein for further information.

61

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

Financing Activities

In April 2004, Gulf Power issued $35 million of Series J 5.875% Senior Notes due April 1, 2044. The proceeds from this issue were used for general corporate purposes, including Gulf Power’s continuous construction program.

     Gulf Power plans to evaluate, and to the extent possible, retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit.

62

MISSISSIPPI POWER COMPANY

63

MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Retail sales	$	128,555		$	113,970
Sales for resale —
Non-affiliates		65,800			70,425
Affiliates		11,809			6,223
Other revenues		3,564			3,268
Total operating revenues		209,728			193,886
Operating Expenses:
Fuel		76,525			51,124
Purchased power —
Non-affiliates		6,955			6,817
Affiliates		17,316			20,332
Other operations		34,978			35,163
Maintenance		15,072			14,260
Depreciation and amortization		14,143			13,073
Taxes other than income taxes		13,139			13,367
Total operating expenses		178,128			154,136
Operating Income		31,600			39,750
Other Income and (Expense):
Interest expense		(2,803	)		(3,770	)
Distributions on mandatorily redeemable preferred securities		(630	)		(630	)
Other income (expense), net		571			12
Total other income and (expense)		(2,862	)		(4,388	)
Earnings Before Income Taxes		28,738			35,362
Income taxes		10,916			13,463
Net Income		17,822			21,899
Dividends on Preferred Stock		503			503
Net Income After Dividends on Preferred Stock	$	17,319		$	21,396

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

64

MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Net income	$	17,822		$	21,899
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		15,247			15,910
Deferred income taxes and investment tax credits, net		5,872			(1,267	)
Pension, postretirement, and other employee benefits		(272	)		250
Tax benefit of stock options		293			606
Other, net		869			(1,351	)
Changes in certain current assets and liabilities —
Receivables, net		6,776			26,326
Fossil fuel stock		4,732			2,204
Materials and supplies		571			(529	)
Other current assets		(244	)		(4,940	)
Accounts payable		(7,781	)		(21,039	)
Accrued taxes		(28,379	)		(18,080	)
Accrued compensation		(14,552	)		(17,686	)
Other current liabilities		(11,883	)		(7,884	)
Net cash used for operating activities		(10,929	)		(5,581	)
Investing Activities:
Gross property additions		(15,611	)		(11,806	)
Cost of removal net of salvage		2,463			(1,236	)
Other		(1,651	)		1,532
Net cash used for investing activities		(14,799	)		(11,510	)
Financing Activities:
Increase in notes payable, net		34,939			19,975
Proceeds — Senior notes		40,000			—
Redemptions —
First mortgage bonds		—			(33,350	)
Pollution control bonds		—			(850	)
Senior notes		(80,000	)		(73	)
Payment of preferred stock dividends		(503	)		(503	)
Payment of common stock dividends		(16,550	)		(16,500	)
Other		—			(1,178	)
Net cash used for financing activities		(22,114	)		(32,479	)
Net Change in Cash and Cash Equivalents		(47,842	)		(49,570	)
Cash and Cash Equivalents at Beginning of Period		69,120			62,695
Cash and Cash Equivalents at End of Period	$	21,278		$	13,125
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest	$	2,468		$	2,612
Income taxes (net of refunds)	$	1,615		$	(226	)

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

65

MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	21,278		$	69,120
Receivables —
Customer accounts receivable		27,103			30,514
Unbilled revenues		16,853			19,278
Under recovered regulatory clause revenues		13,581			14,607
Other accounts and notes receivable		7,194			8,088
Affiliated companies		12,693			12,160
Accumulated provision for uncollectible accounts		(451	)		(897	)
Fossil fuel stock, at average cost		20,501			25,233
Vacation pay		5,766			5,766
Materials and supplies, at average cost		23,099			23,670
Prepaid income taxes		20,887			27,415
Prepaid expenses		5,775			4,517
Other		7,480			2,857
Total current assets		181,759			242,328
Property, Plant, and Equipment:
In service		1,844,475			1,841,668
Less accumulated provision for depreciation		676,236			672,730
		1,168,239			1,168,938
Construction work in progress		40,427			25,844
Total property, plant, and equipment		1,208,666			1,194,782
Other Property and Investments		3,847			2,750
Deferred Charges and Other Assets:
Deferred charges related to income taxes		11,941			12,125
Prepaid pension costs		18,375			18,167
Unamortized debt issuance expense		6,912			6,993
Unamortized loss on reacquired debt		10,000			10,201
Prepaid rent		14,287			14,758
Other		8,854			16,280
Total deferred charges and other assets		70,369			78,524
Total Assets	$	1,464,641		$	1,518,384

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

66

MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Liabilities and Stockholder’s Equity	2004			2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	—		$	80,000
Notes payable		34,939			—
Accounts payable —
Affiliated		26,113			21,259
Other		44,302			55,309
Customer deposits		8,215			11,863
Accrued taxes —
Income taxes		945			1,696
Other		13,241			42,834
Accrued interest		3,466			3,223
Accrued vacation pay		5,766			5,766
Accrued compensation		9,287			23,832
Regulatory clauses over recovery		26,439			31,118
Other		6,874			4,867
Total current liabilities		179,587			281,767
Long-term Debt		242,491			202,488
Long-term Debt Payable to Affiliated Trusts		36,082			—
Mandatorily Redeemable Preferred Securities		—			35,000
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		145,043			142,088
Deferred credits related to income taxes		22,894			23,279
Accumulated deferred investment tax credits		19,538			19,841
Employee benefit obligations		53,704			54,830
Plant Daniel lease guarantee obligation, at fair value		14,287			14,758
Plant Daniel capacity		60,300			60,300
Other cost of removal obligations		83,291			80,588
Miscellaneous regulatory liabilities		15,511			11,899
Other		27,319			27,248
Total deferred credits and other liabilities		441,887			434,831
Total Liabilities		900,047			954,086
Cumulative Preferred Stock		31,809			31,809
Common Stockholder’s Equity:
Common stock, without par value —
Authorized - 1,130,000 shares
Outstanding - 1,121,000 shares		37,691			37,691
Paid-in capital		292,807			292,515
Premium on preferred stock		326			326
Retained earnings		204,188			203,419
Accumulated other comprehensive loss		(2,227	)		(1,462	)
Total common stockholder’s equity		532,785			532,489
Total Liabilities and Stockholder’s Equity	$	1,464,641		$	1,518,384

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

67

MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	17,319		$	21,396
Other comprehensive income (loss):
Changes in fair value of qualifying hedges, net of tax of $(474)		(765	)		—
COMPREHENSIVE INCOME	$	16,554		$	21,396

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

68

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

RESULTS OF OPERATIONS

Earnings

Mississippi Power’s net income after dividends on preferred stock for the first quarter 2004 was $17.3 million compared to $21.4 million for the corresponding period of 2003. Earnings in the first quarter 2004 decreased by $4.1 million, or 19%, primarily due to lower wholesale revenues as a result of the termination of a contract with a subsidiary of Dynegy, Inc. in October 2003. See Note 3 to the financial statements of Mississippi Power under “Contract Termination” in Item 8 of the Form 10-K for additional information.

     Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Retail sales		14,585			12.8
Sales for resale — non-affiliates		(4,625	)		(6.6	)
Sales for resale — affiliates		5,586			89.8
Fuel expense		25,401			49.7
Purchased power — affiliates		(3,016	)		(14.8	)
Maintenance expense		812			5.7
Depreciation and amortization		1,070			8.2
Interest expense		(967	)		(25.6	)
Income taxes		(2,547	)		(18.9	)

     Retail sales. Retail sales revenue for the first quarter 2004 increased when compared to the same period in 2003 primarily as a result of a $13.6 million increase in fuel revenues, which generally do not have an effect on income. Retail sales revenues, excluding fuel revenues, for the first quarter 2004 to residential, commercial and industrial customers increased 2.7%, 2.5% and 2.3%, respectively, primarily as a result of economic growth in the service area when compared to the same period in 2003.

     Sales for resale — non-affiliates. The decrease in sales for resale to non-affiliates in the first quarter 2004 as compared to the same period in 2003 is primarily due to the termination of a contract with a subsidiary of Dynegy, Inc. in October 2003. See Note 3 to the financial statements of Mississippi Power under “Contract Termination” in Item 8 of the Form 10-K for additional information.

69

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

     Sales for resale — affiliates and Purchased power — affiliates. Revenues from sales for resale to affiliates, as well as purchases of energy from affiliates will vary depending on demand and the availability and cost of generating resources at each company within the Southern Company system. These transactions do not have a significant impact on earnings since the energy is generally sold at marginal cost and energy purchases are generally offset by energy revenues through Mississippi Power’s retail and wholesale fuel cost recovery clauses. The increase in sales for resale to affiliates and the decrease in purchased power from affiliates is a result of Mississippi Power’s more economical generating costs when compared to others.

     Fuel expense. In the first quarter 2004, fuel expense increased when compared to the same period in 2003 as a result of a 16.5% increase in generation and a 57.6% increase in cost of oil and gas. Since energy expenses are generally offset by energy revenues through Mississippi Power’s retail and wholesale fuel cost recovery clauses, these expenses do not have a significant impact on earnings.

     Maintenance expense. The first quarter 2004 increase in maintenance expense when compared to the same period in 2003 is a result of increased generation by the combined cycle units at Plant Daniel. Maintenance expense for the combined cycle units is based on fired operating hours which were 36.8% higher in the first quarter 2004 when compared to the same period in 2003.

     Depreciation and amortization. The first quarter 2004 increase in depreciation and amortization expense when compared to the same period in 2003 is primarily the result of a true-up in 2003 related to the Environmental Compliance Overview (ECO) Plan. See Note 3 to Mississippi Power’s financial statements under “Environmental Compliance Overview Plan” in Item 8 of the Form 10-K for additional information.

     Interest expense. The decreased interest expense for the first quarter 2004 as compared to the same period in 2003 is a result of lower interest rates on securities outstanding and a reduction in accrued interest expense related to prior years’ income tax adjustments. See Item 7 — Management’s Discussion and Analysis – Financial Condition and Liquidity – “Financing Activities” of Mississippi Power in the Form 10-K and Financial Condition and Liquidity – “Financing Activities” herein for further information on efforts to reduce interest rates.

     Income taxes. The decrease in income taxes of $2.5 million, or 18.9%, is a result of the $6.7 million reduction in pretax net income when compared to the same period in 2003.

Future Earnings Potential

The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors including Mississippi Power’s ability to maintain a stable regulatory environment, to achieve energy sales growth while containing costs, and to recover costs related to growing demand and increasingly stricter environmental standards. Growth in energy sales is subject to a number of factors, which include weather, competition, new energy contracts with neighboring utilities, energy conservation practiced by customers, the price of electricity, the price elasticity of demand, and the rate of economic growth in the service area. For additional information relating to these issues, see Item 1 — Business – The SOUTHERN System — “Risk Factors” and Item 7 – Management’s Discussion and Analysis – “Future Earnings Potential” of Mississippi Power in the Form 10-K.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Environmental Matters

Mississippi Power’s 2004 ECO Plan filing was approved, as filed, by the Mississippi PSC on March 15, 2004 and resulted in a slight decrease in rates effective April 2004. Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs cannot continue to be recovered. See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — Environmental Matters” and Note 3 to the financial statements of Mississippi Power under “New Source Review Actions” in Item 8 of the Form 10-K. As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under the New Source Review litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New Source Review action against the TVA. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome of this matter could require substantial capital expenditures and could possibly require substantial penalties. This could affect future results of operations, cash flows, and possibly financial condition if such costs are not recovered through regulated rates.

     Additionally, on April 15, 2004, the EPA announced proposed amendments to its Regional Haze rules with respect to Best Available Retrofit Technology (BART) guidelines and requirements. The impact of these regulations will depend on the development and implementation of the final rules and implementation by the states, and therefore cannot be determined at this time.

FERC Matters

See Item 7 — Management’s Discussion and Analysis – “Future Earnings Potential – FERC Matters – Market-Based Rate Authority” and Note 3 to the financial statements of Mississippi Power under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company is filing a request for rehearing of the FERC’s order. The final outcome of this matter cannot be determined at this time.

     See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — FERC Matters” of Mississippi Power in the Form 10-K for information on the FERC’s order related to RTOs and the notice of proposed rulemaking regarding open access transmission service.

Other Matters

See Note 3 to Mississippi Power’s financial statements under “Retail Regulatory Filing” in Item 8 of the Form 10-K and Note (I) to the Condensed Financial Statements herein for information on Mississippi Power’s request to include 266 megawatts of Plant Daniel Units 3 and 4 generating capacity in jurisdictional cost of service. The final outcome of this matter cannot now be determined.

     Mississippi Power is subject to certain claims and legal actions arising in the ordinary course of business. In addition, Mississippi Power’s business activities are subject to extensive governmental regulation related to

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

public health and the environment. Litigation over environmental issues and claims of various types, including property damage, personal injury and citizen enforcement of environmental requirements, has increased generally throughout the United States. In particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. The ultimate outcome of such litigation against Mississippi Power cannot be predicted at this time; however, management does not anticipate that the liabilities, if any, arising from any such current proceedings would have a material adverse effect on Mississippi Power’s financial statements.

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

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Mississippi Power 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 Mississippi 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 Mississippi 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 Item 7 — Management’s Discussion and Analysis — “Accounting Policies — Application of Critical Accounting Policies and Estimates” of the Form 10-K for a complete discussion of Mississippi Power’s critical accounting policies and estimates related to Electric Utility Regulation, Contingent Obligations, Plant Daniel Capacity and Plant Daniel Operating Lease. Also see Note (I) to the condensed financial statements herein for additional information related to Mississippi Power’s request to include the additional Plant Daniel capacity in jurisdictional cost of service.

New Accounting Standards

On March 31, 2004, Mississippi Power prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. The adoption of Interpretation No. 46R had no impact on Mississippi Power’s net income. However, as a result of the adoption, Mississippi Power deconsolidated certain wholly-owned trusts established to issue preferred securities since Mississippi Power does not meet the definition of primary beneficiary established by Interpretation No. 46R. See Note (E) to the Condensed Financial Statements herein for additional information related to the adoption of Interpretation No. 46R.

Financial Condition and Liquidity

Overview

Major changes in Mississippi Power’s financial condition during the first three months of 2004 included the addition of approximately $15.6 million to utility plant financed primarily from operating activities, a reduction in current liabilities of $102.5 million and a $40.1 million increase in long-term debt as a result of re-financing activities. See Mississippi Power’s Condensed Statements of Cash Flows and “Financing Activities” herein for further details.

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

Capital Requirements and Contractual Obligations

See Item 7 — Management’s Discussion and Analysis — Financial Condition and Liquidity — “Capital Requirements and Contractual Obligations” of Mississippi Power in the Form 10-K for a description of Mississippi Power’s capital requirements for its construction program, lease obligations, purchase commitments and trust funding requirements.

Sources of Capital

In addition to the financing activities described herein, Mississippi Power plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings — if needed — will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 — Business — “Financing Programs” in the Form 10-K for additional information.

     To meet short-term cash needs and contingencies, Mississippi Power had at March 31, 2004, approximately $21.3 million of cash and cash equivalents and $100 million of unused committed credit arrangements with banks that expire in 2004. Approximately $37.5 million of these credit arrangements contain provisions allowing two-year term loans executable at the expiration date. Mississippi Power expects to renew its credit facilities, as needed, prior to expiration. The credit arrangements provide liquidity support to Mississippi Power’s obligations with respect to variable rate pollution control bonds and commercial paper. Mississippi Power may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of Mississippi Power and other Southern Company subsidiaries. At March 31, 2004, Mississippi Power had $34.9 million in outstanding notes payable. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances.

Off-Balance Sheet Financing Arrangements

See Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Off-Balance Sheet Financing Arrangements” and Note 7 to the financial statements of Mississippi Power under “Operating Leases” in Item 8 of the Form 10-K for information related to Mississippi Power’s lease of a combined cycle generating facility at Plant Daniel.

Credit Rating Risk

Mississippi Power does not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

Market Price Risk

Mississippi Power’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Mississippi Power is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

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

     Due to cost-based rate regulation, Mississippi Power has 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, Mississippi Power enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Mississippi Power has also implemented retail fuel hedging programs at the instruction of its PSC and wholesale fuel hedging programs under agreements with wholesale customers. The fair values of derivative, fuel and energy contracts at March 31, 2004 were as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	2,470
Contracts realized or settled		(733	)
New contracts at inception		—
Changes in valuation techniques		—
Current period changes		3,884
Contracts at March 31, 2004	$	5,621

	Source of March 31, 2004
	Valuation Prices
	Total		Maturity
	Fair Value		Year 1		1-3 Years
	(in thousands)
Actively quoted	$	5,621	$	4,645	$	976
External sources		—		—		—
Models and other methods		—		—		—
Contracts at March 31, 2004	$	5,621	$	4,645	$	976

     For additional information, see Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Market Price Risk” of Mississippi Power in the Form 10-K and Notes 1 and 6 to the financial statements under “ Financial Instruments” of Mississippi Power in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein.

Financing Activities

In March 2004, Mississippi Power issued $40 million of Series F Floating Rate Senior Notes due March 9, 2009. The proceeds from this sale, along with other monies of Mississippi Power were used to repay at maturity $80 million aggregate principal amount of Mississippi Power’s Series D Floating Rate Senior Notes due March 12, 2004.

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

     In April 2004, Mississippi Power issued 1,200,000 Depositary Shares ($30 million aggregate stated capital) each representing one-fourth of a share of 5.25% Series Preferred Stock cumulative, par value $100 per share. The proceeds from this sale were primarily used to redeem various issues of higher cost preferred stock and the remainder was used for general corporate purposes.

     Mississippi Power plans to continue, to the extent possible, a program to retire higher-cost securities and replace these securities with lower-cost capital.

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SAVANNAH ELECTRIC
AND
POWER COMPANY

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SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Retail sales	$	68,023		$	63,546
Sales for resale —
Non-affiliates		1,410			1,926
Affiliates		2,437			2,324
Other revenues		965			1,078
Total operating revenues		72,835			68,874
Operating Expenses:
Fuel		10,484			11,425
Purchased power —
Non-affiliates		2,342			1,904
Affiliates		22,130			19,013
Other operations		14,101			13,099
Maintenance		6,431			5,910
Depreciation and amortization		5,204			5,061
Taxes other than income taxes		3,597			3,447
Total operating expenses		64,289			59,859
Operating Income		8,546			9,015
Other Income and (Expense):
Interest expense, net of amounts capitalized		(3,144	)		(2,621	)
Distributions on mandatorily redeemable preferred securities		(109	)		(685	)
Other income (expense), net		(347	)		(209	)
Total other income and (expense)		(3,600	)		(3,515	)
Earnings Before Income Taxes		4,946			5,500
Income taxes		1,798			1,991
Net Income	$	3,148		$	3,509

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

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SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Net income	$	3,148		$	3,509
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		5,739			5,582
Deferred income taxes and investment tax credits, net		1,516			(439	)
Pension, postretirement, and other employee benefits		1,713			1,670
Tax benefit of stock options		263			101
Other, net		2,479			2,143
Changes in certain current assets and liabilities —
Receivables, net		5,420			5,284
Fossil fuel stock		122			(1,620	)
Materials and supplies		(967	)		16
Other current assets		(2,193	)		(65	)
Accounts payable		(2,275	)		(5,911	)
Accrued taxes		790			(46	)
Accrued compensation		(3,129	)		(4,107	)
Other current liabilities		1,017			3,112
Net cash provided from operating activities		13,643			9,229
Investing Activities:
Gross property additions		(11,743	)		(10,798	)
Other		(796	)		3,342
Net cash used for investing activities		(12,539	)		(7,456	)
Financing Activities:
Increase (decrease) in notes payable, net		6,695			(2,897	)
Proceeds —
Pollution control bonds		—			13,870
Capital contributions from parent company		—			5,000
Redemptions —
Pollution control bonds		—			(13,870	)
Other long-term debt		281			(225	)
Mandatorily redeemable preferred securities		(40,000	)		—
Payment of common stock dividends		(5,800	)		(5,750	)
Other		1,105			(71	)
Net cash used for financing activities		(37,719	)		(3,943	)
Net Change in Cash and Cash Equivalents		(36,615	)		(2,170	)
Cash and Cash Equivalents at Beginning of Period		37,943			3,978
Cash and Cash Equivalents at End of Period	$	1,328		$	1,808
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $95 and $27 capitalized for 2004 and 2003, respectively)	$	1,392		$	1,724
Income taxes (net of refunds)	$	774		$	—

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

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SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	1,328		$	37,943
Receivables —
Customer accounts receivable		17,687			19,674
Unbilled revenues		10,452			11,288
Other accounts and notes receivable		1,073			1,138
Affiliated companies		2,464			4,872
Accumulated provision for uncollectible accounts		(765	)		(641	)
Fossil fuel stock, at average cost		8,530			8,652
Materials and supplies, at average cost		10,038			9,070
Prepaid income taxes		24,982			24,419
Prepaid expenses		2,061			1,377
Other		2,131			623
Total current assets		79,981			118,415
Property, Plant, and Equipment:
In service		916,068			912,504
Less accumulated provision for depreciation		407,060			402,394
		509,008			510,110
Construction work in progress		22,517			14,121
Total property, plant, and equipment		531,525			524,231
Other Property and Investments		2,265			2,248
Deferred Charges and Other Assets:
Deferred charges related to income taxes		9,462			9,611
Cash surrender value of life insurance for deferred compensation plans		23,969			23,866
Unamortized debt issuance expense		4,481			5,652
Unamortized loss on reacquired debt		8,479			7,488
Other		17,499			18,410
Total deferred charges and other assets		63,890			65,027
Total Assets	$	677,661		$	709,921

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

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SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Liabilities and Stockholder's Equity	2004			2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	958		$	40,910
Notes payable		6,695			—
Accounts payable —
Affiliated		10,751			13,797
Other		14,015			13,147
Customer deposits		7,012			6,922
Accrued taxes —
Income taxes		521			1,172
Other		2,913			1,473
Accrued interest		4,222			2,802
Accrued vacation pay		2,547			2,530
Accrued compensation		2,523			5,652
Other		4,609			5,107
Total current liabilities		56,766			93,512
Long-term Debt		222,725			222,493
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		85,911			83,852
Deferred credits related to income taxes		9,550			9,804
Accumulated deferred investment tax credits		8,459			8,625
Employee benefit obligations		41,546			39,833
Other cost of removal obligations		37,907			36,843
Miscellaneous regulatory liabilities		13,968			12,932
Other		16,935			15,735
Total deferred credits and other liabilities		214,276			207,624
Total Liabilities		493,767			523,629
Common Stockholder’s Equity:
Common stock, par value $5 per share — Authorized - 16,000,000 shares Outstanding - 10,844,635 shares		54,223			54,223
Paid-in capital		24,680			24,417
Retained earnings		107,204			109,856
Accumulated other comprehensive loss		(2,213	)		(2,204	)
Total common stockholder’s equity		183,894			186,292
Total Liabilities and Stockholder’s Equity	$	677,661		$	709,921

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

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SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	3,148		$	3,509
Other comprehensive income (loss):
Changes in fair value of qualifying hedges, net of tax of $(20)		(33	)		—
Less: Reclassification adjustment for amounts included in net income, net of tax of $15		24			—
COMPREHENSIVE INCOME	$	3,139		$	3,509

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

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

RESULTS OF OPERATIONS

Earnings

Savannah Electric’s net income for the first quarter 2004 was $3.1 million compared to $3.5 million for the corresponding period of 2003. Earnings decreased by $0.4 million, or 10.3%, in the first quarter 2004, primarily due to higher operating expenses, partially offset by higher operating revenues.

     Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Retail sales		4,477			7.0
Sales for resale — non-affiliates		(516	)		(26.8	)
Fuel expense		(941	)		(8.2	)
Purchased power — non-affiliates		438			23.0
Purchased power — affiliates		3,117			16.4
Other operation expense		1,002			7.6
Maintenance expense		521			8.8

     Retail sales. Excluding fuel revenues, which do not affect net income, retail sales revenue increased by $2.0 million, or 5.2%, in the first quarter 2004 when compared to the corresponding period in 2003. The first quarter 2004 increase in retail sales revenue is mainly attributed to a 3.4% increase in retail kilowatt-hour energy sales. Energy sales to residential and commercial customers were higher by 16.4% and 1.9%, respectively, mainly due to colder weather and growth in the number of customers when compared to the same period in 2003. Energy sales to industrial customers were lower by 16.6% in the first quarter 2004 compared to the first quarter 2003 primarily due to the installation of a cogeneration facility by one customer.

     Sales for resale — non-affiliates. In the first quarter 2004, revenues from sales for resale to non-affiliates is lower primarily due to fluctuations in off-system sale transactions that were generally offset by corresponding purchase transactions. These transactions had no significant effect on net income.

     Fuel expense. Fuel expense decreased in the first quarter 2004 primarily as a result of certain billing credits relating to the Plant McIntosh combustion turbines. Since fuel expenses are generally offset by fuel revenues through Savannah Electric’s fuel cost recovery clause, these expenses do not have a significant impact on net income.

     Purchased power — non-affiliates. In the first quarter 2004, the increase in purchased power from non-affiliates resulted from purchases used to meet a 103.1% increase in demand for energy from non-affiliates offset somewhat by a lower cost per kilowatt-hour. These transactions do not have a significant impact on earnings, as energy costs are generally recovered through Savannah Electric’s fuel cost recovery clause.

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

     Purchased power — affiliates. Purchased power from affiliates increased in the first quarter 2004 as compared to the same period in the prior year partially as the result of an accounting order approved by the Georgia PSC in December 2002 which allows Savannah Electric to write-down a portion of the approximately $3.8 million annual deferral in Plant Wansley purchased power costs, which the Georgia PSC had ruled to be outside the test period in Savannah Electric’s base rate order. See Note 3 to the financial statements of Savannah Electric under “Retail Regulatory Matters” in Item 8 of the Form 10-K for additional information. The net impact of these transactions compared to the prior year was a $0.3 million increase to expense. Purchased power from affiliates also includes energy purchases which will vary depending on demand and cost of generation resources at each company and higher energy costs. These energy costs are recovered through the fuel cost recovery clause and have no significant impact on earnings.

     Other operation expense. The increase for the first quarter 2004 as compared to the same period in the prior year in other operation expense is attributed to an increase in administrative and general expenses primarily relating to accounting and auditing services, employee benefits expenses and regulatory expenses.

     Maintenance expense. The increase in the first quarter 2004 as compared to the same period in the prior year is mainly due to scheduled generating plant maintenance and an increase in maintenance on distribution facilities.

Future Earnings Potential

The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors including Savannah Electric’s ability to maintain a stable regulatory environment, to achieve energy sales growth while containing costs, and to recover costs related to growing demand and increasingly stricter environmental standards. Growth in energy sales is subject to a number of factors, which include weather, competition, new energy contracts with neighboring utilities, energy conservation practiced by customers, the price of electricity, the price elasticity of demand, and the rate of economic growth in the service area. For additional information relating to these issues, see Item 1 — Business — The SOUTHERN System — “Risk Factors” and Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential” of Savannah Electric in the Form 10-K.

Environmental Matters

Compliance costs related to the Clean Air Act and other environmental regulations could affect earnings if such costs cannot be recovered. See Management’s Discussion and Analysis — “Future Earnings Potential — Environmental Matters” in Item 7 of the Form 10-K and Note 3 to the financial statements of Savannah Electric under “New Source Review Actions” in Item 8 of the Form 10-K. As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under the New Source Review litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New Source Review action against the TVA. The case against Savannah Electric has been effectively stayed pending final resolution of the TVA appeal. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome

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

in this case could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties. This could affect future results of operations, cash flows, and possibly financial condition if such costs are not recovered through regulated rates.

     On April 21, 2004, the EPA published the final regional nitrogen oxide reduction rules applicable to the State of Georgia. These rules specify that Georgia must submit a revised state implementation plan by April 2005, and affected sources must comply with the reduction requirements by May 1, 2007. The impact of these regulations will depend on the development and approval of Georgia’s state implementation plan and cannot be determined at this time. Additionally, on April 15, 2004, the EPA announced proposed amendments to its Regional Haze rules with respect to Best Available Retrofit Technology (BART) guidelines and requirements. The impact of these regulations will depend on the development and implementation of the final rules and implementation by the states, and therefore cannot be determined at this time.

FERC Matters

See Management’s Discussion and Analysis — “Future Earnings Potential — FERC Matters — Market-Based Rate Authority” in Item 7 and Note 3 to the financial statements of Savannah Electric under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company is filing a request for rehearing of the FERC’s order. The final outcome of this matter cannot be determined at this time.

     See to Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — FERC Matters” of Savannah Electric in the Form 10-K for information on plans to retire a 102 megawatt peaking facility in May 2005 and a fifteen-year PPA with Southern Power to purchase 200 megawatts of capacity beginning in June 2005 from the planned combined-cycle plant at Plant McIntosh to be built and owned by Southern Power. The annual capacity cost is expected to be approximately $15 million. See Note (C) to the Condensed Financial Statements herein for information regarding the FERC approval process for this PPA.

     See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — FERC Matters” of Savannah Electric in the Form 10-K for information on the FERC’s order related to RTOs and the FERC’s notice of proposed rulemaking regarding open access transmission service.

Other Matters

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

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

     Savannah Electric anticipates filing a base rate case in late 2004. See the Notes to the Condensed Financial Statements herein for discussion of various contingencies and other matters which may affect future earnings potential.

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Savannah Electric 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 Savannah Electric 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 Savannah Electric’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 Item 7 — Management’s Discussion and Analysis — “Accounting Policies — Application of Critical Accounting Policies and Estimates” of Savannah Electric in the Form 10-K for a complete discussion of Savannah Electric’s critical accounting policies and estimates related to Electric Utility Regulation and Contingent Obligations.

New Accounting Standards

On March 31, 2004, Savannah Electric prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. See Note 6 to the financial statements of Savannah Electric under “Mandatorily Redeemable Preferred Securities” in Item 8 of the Form 10-K regarding Savannah Electric’s redemption of all outstanding preferred securities in January 2004 and the dissolution of the issuing trust. Therefore, the adoption of Interpretation No. 46R had no impact on Savannah Electric’s financial statements.

FINANCIAL CONDITION AND LIQUIDITY

Overview

Major changes in Savannah Electric’s financial condition during the first three months of 2004 included the addition of approximately $11.7 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operating activities and short-term debt. See Savannah Electric’s Condensed Statements of Cash Flows herein for further details.

Capital Requirements and Contractual Obligations

Reference is made to Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity” of Savannah Electric under “Capital Requirements and Contractual Obligations,” in the Form 10-K for a description of Savannah Electric’s capital requirements for its construction program, lease obligations, purchase commitments and trust funding requirements.

85

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

Sources of Capital

Savannah Electric plans to obtain the funds required for construction and other purposes from sources similar to those used in the past including both internal and external funds. The amount, type and timing of any future financings — if needed — will depend upon market conditions and regulatory approval. See Item 1 — Business — “Financing Programs” in the Form 10-K for additional information.

     To meet short-term cash needs and contingencies, Savannah Electric had at March 31, 2004 approximately $1.3 million of cash and cash equivalents and $60 million of unused committed credit arrangements with banks, of which $40 million expires in 2004, $10 million expires in 2005 and $10 million expires in 2006 and beyond. Of the unused credit arrangements expiring in 2004 and 2005, $40 million include two year term loan options executable at the expiration date. The credit arrangements provide liquidity support to some of Savannah Electric’s obligations with respect to its variable rate debt and its commercial paper. Savannah Electric expects to renew its credit facilities, as needed, prior to expiration. Savannah Electric may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of Savannah Electric and other Southern Company subsidiaries. At March 31, 2004, Savannah Electric had $6.7 million of outstanding commercial paper. Since Savannah Electric has no major generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit.

Credit Rating Risk

Savannah Electric does not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade.

Market Price Risk

Savannah Electric’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Savannah Electric is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Savannah Electric has 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, Savannah Electric enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market and, to a lesser extent, similar contracts for gas and oil purchases. Savannah Electric has also implemented a retail fuel hedging program at the instruction of the Georgia PSC.

86

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

The fair value of derivative energy contracts at March 31, 2004 was as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	463
Contracts realized or settled		(1	)
New contracts at inception		—
Changes in valuation techniques		—
Current period changes		1,497
Contracts at March 31, 2004	$	1,959

	Source of March 31, 2004
	Valuation Prices
	Total		Maturity
	Fair Value		Year 1		1-3 Years
	(in thousands)
Actively quoted	$	1,959	$	1,757	$	202
External sources		—		—		—
Models and other methods		—		—		—
Contracts at March 31, 2004	$	1,959	$	1,757	$	202

     For additional information, see Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Market Price Risk” of Savannah Electric and Notes 1 and 6 to the financial statements of Savannah Electric under “Financial Instruments” in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein.

Financing Activities

Savannah Electric plans to evaluate, and to the extent possible, retire higher-cost debt and replace these securities with lower-cost capital.

87

SOUTHERN POWER COMPANY

88

SOUTHERN POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Revenues:
Sales for resale —
Non-affiliates	$	86,699		$	50,269
Affiliates		86,795			55,290
Other revenues		2,111			1,880
Total Operating Revenues		175,605			107,439
Operating Expenses:
Fuel		30,335			20,038
Purchased power —
Non-affiliates		13,605			15,323
Affiliates		42,056			17,932
Other operations		14,725			5,908
Maintenance		3,012			2,177
Depreciation and amortization		12,778			6,544
Taxes other than income taxes		2,679			1,300
Total operating expenses		119,190			69,222
Operating Income		56,415			38,217
Other Income and (Expense):
Interest expense, net of amounts capitalized		(12,586	)		(1,399	)
Other income (expense), net		493			303
Total other income and (expense)		(12,093	)		(1,096	)
Earnings Before Income Taxes		44,322			37,121
Income taxes		17,137			14,363
Earnings Before Cumulative Effect of Accounting Change		27,185			22,758
Cumulative effect of accounting change — less income taxes of $231 thousand		—			367
Net Income	$	27,185		$	23,125

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

89

SOUTHERN POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Operating Activities:
Net income	$	27,185		$	23,125
Adjustments to reconcile net income to net cash provided from operating activities —
Depreciation and amortization		15,267			6,544
Deferred income taxes and investment tax credits, net		16,525			9,062
Deferred capacity revenues		(19,235	)		(12,392	)
Tax benefit of stock options		109			41
Other, net		(4,957	)		844
Changes in certain current assets and liabilities —
Receivables, net		(9,435	)		(1,857	)
Fossil fuel stock		2,867			7,917
Materials and supplies		(508	)		(79	)
Other current assets		(161	)		(1,544	)
Accounts payable		(9,961	)		(10,629	)
Accrued taxes		2,884			1,764
Accrued interest		(16,166	)		(12,618	)
Net cash provided from operating activities		4,414			10,178
Investing Activities:
Gross property additions		(68,779	)		(103,974	)
Change in construction payables, net		(6,589	)		(8,042	)
Other		185			239
Net cash used for investing activities		(75,183	)		(111,777	)
Financing Activities:
Increase (decrease) in notes payable, net — affiliated		67,411			11,950
Increase (decrease) in notes payable, net		94			446,485
Proceeds — Capital contributions from parent company		—			113
Redemptions — Other long-term debt		—			(373,979	)
Other		933			234
Net cash provided from financing activities		68,438			84,803
Net Change in Cash and Cash Equivalents		(2,331	)		(16,796	)
Cash and Cash Equivalents at Beginning of Period		2,798			19,474
Cash and Cash Equivalents at End of Period	$	467		$	2,678
Supplemental Cash Flow Information:
Cash paid during the period for —
Interest (net of $8,739 and $13,526 capitalized for 2004 and 2003, respectively)	$	25,114		$	12,767
Income taxes (net of refunds)	$	1,684		$	4,018

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

90

SOUTHERN POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Assets	2004			2003
	(in thousands)
Current Assets:
Cash and cash equivalents	$	467		$	2,798
Receivables —
Customer accounts receivable		10,501			10,772
Affiliated companies		23,506			14,130
Accumulated provision for uncollectible accounts		(350	)		(350	)
Other accounts receivable		600			270
Fossil fuel stock, at average cost		2,931			5,798
Materials and supplies, at average cost		8,632			8,123
Prepaid income taxes		12,432			11,222
Prepaid expenses		1,478			2,528
Other		534			1,174
Total current assets		60,731			56,465
Property, Plant, and Equipment:
In service		1,830,846			1,831,139
Less accumulated provision for depreciation		72,810			60,005
		1,758,036			1,771,134
Construction work in progress		573,169			504,097
Total property, plant, and equipment		2,331,205			2,275,231
Deferred Charges and Other Assets:
Unamortized debt issuance expense		17,433			18,315
Accumulated deferred income taxes		4,921			21,911
Prepaid maintenance expenses		24,224			21,728
Prepaid transmission expenses — affiliated		13,690			12,790
Other		2,885			2,845
Total deferred charges and other assets		63,153			77,589
Total Assets	$	2,455,089		$	2,409,285

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

91

SOUTHERN POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)

	At March 31,			At December 31,
Liabilities and Stockholder’s Equity	2004			2003
	(in thousands)
Current Liabilities:
Securities due within one year	$	200		$	200
Notes payable		114,339			114,347
Notes payable to parent		67,411			—
Accounts payable —
Affiliated		35,335			51,442
Other		6,149			6,591
Accrued taxes other than income taxes		4,173			1,289
Accrued interest		13,846			30,012
Other		717			489
Total current liabilities		242,170			204,370
Long-term Debt		1,149,266			1,149,112
Deferred Credits and Other Liabilities:
Deferred capacity revenues—
Affiliated		9,727			28,799
Other		91			256
Other—
Affiliated		14,281			15,061
Other		143			211
Total deferred credits and other liabilities		24,242			44,327
Total Liabilities		1,415,678			1,397,809
Common Stockholder’s Equity:
Common stock, par value $.01 per share — Authorized - 1,000,000 shares Outstanding - 1,000 shares Paid-in capital		850,421			850,312
Retained earnings		244,811			217,626
Accumulated other comprehensive loss		(55,821	)		(56,462	)
Total common stockholder’s equity		1,039,411			1,011,476
Total Liabilities and Stockholder’s Equity	$	2,455,089		$	2,409,285

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

92

SOUTHERN POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months
	Ended March 31,
	2004			2003
	(in thousands)
Net Income After Dividends on Preferred Stock	$	27,185		$	23,125
Other comprehensive income (loss):
Changes in fair value of qualifying hedges, net of tax of $(522) and $(2,400), respectively		(928	)		(3,833	)
Less: Reclassification adjustment for amounts included in net income, net of tax of $987 and $166, respectively		1,569			264
COMPREHENSIVE INCOME	$	27,826		$	19,556

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

93

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

FIRST QUARTER 2004 vs. FIRST QUARTER 2003

RESULTS OF OPERATIONS

Earnings

Southern Power’s net income for first quarter 2004 was $27.2 million compared to $23.1 million for the corresponding period of 2003. The increase in first quarter 2004 earnings of $4.1 million, or 17.6%, was due primarily to increased wholesale capacity and energy revenues from units placed in service during 2003 (Plant Franklin Unit 2, Plant Harris Units 1 and 2 and Plant Stanton A). The increased revenues came from new PPAs with Alabama Power and Georgia Power for Plants Harris Unit 1 and Franklin Unit 2 that began in June 2003 and with the Stanton joint owners for Stanton A that began in October 2003. Additional sales of uncontracted capacity from Plant Harris Unit 2 also contributed to the increase.

     Significant income statement items appropriate for discussion include the following:

	Increase (Decrease)
	First Quarter
	(in thousands)			%
Sales for resale — non-affiliates	$	36,430			72.5
Sales for resale – affiliates		31,505			57.0
Fuel expense		10,297			51.4
Purchased power — non-affiliates		(1,718	)		(11.2	)
Purchased power – affiliates		24,124			134.5
Other operation expense		8,817			149.2
Depreciation and amortization		6,234			95.3
Interest expense, net of amounts capitalized		11,187			799.6

     Sales for resale — non-affiliates. In the first quarter 2004, revenues from sales for resale to non-affiliates were higher when compared to the corresponding period in 2003. This increase was due primarily to additional wholesale capacity and energy sales to non-affiliates as a result of commercial operation of Plant Harris Unit 2, which was placed into commercial operation in June 2003 and Plant Stanton A, which was placed into commercial operation in October 2003.

     Sales for resale — affiliates. During the first quarter 2004, sales for resale to affiliates increased primarily due to energy and capacity sales through PPAs with Alabama Power and Georgia Power that commenced in June 2003. Revenues from sales to affiliated companies through the Southern Company system power pool and energy sales under PPAs will vary depending on demand and the availability and cost of generating resources accessible throughout the Southern Company system.

94

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

     Fuel expense. Fuel expense in the first quarter 2004 increased significantly when compared to the same period in 2003. The first quarter 2004 increase resulted primarily from commercial operation of Plant Harris Unit 2, and higher natural gas prices.

     Purchased power — non-affiliates. The decrease in purchased power from non-affiliates during the first quarter 2004 when compared to the first quarter 2003 is primarily due to the availability of lower cost energy from affiliates.

     Purchased power — affiliates. The availability of power at prices lower than Southern Power’s self-generation, which is primarily natural gas-fired, accounted for the first quarter 2004 increase in purchased power from affiliates when compared to the same period in the prior year. Expenses from purchased power transactions will vary depending on demand, availability and the cost of generating resources accessible throughout the Southern Company system.

     Other operation expense. During the first quarter 2004, other operation expense increased when compared to the same period in the prior year due mainly to administrative and general expenses associated with the commercial operation of Plant Franklin Unit 2 and Plant Harris Units 1 and 2, which were all placed into commercial operation in June 2003, and Plant Stanton A which was placed into commercial operation in October 2003.

     Depreciation and amortization. New generating units placed into service in June and October 2003, are the main drivers for the increases in depreciation and amortization in the first quarter 2004 as compared to the corresponding period in the prior year.

     Interest expense, net of amounts capitalized. In the first quarter 2004, interest expense, net of amounts capitalized increased when compared to the same period in 2003 due to an increase in the amount of senior notes outstanding and a lower percentage of interest costs being capitalized as projects have reached completion.

Future Earnings Potential

The results of operations are not necessarily indicative of future earnings. The level of future earnings depends on numerous factors including completion of construction on new generating facilities, regulatory matters including those related to affiliate contracts, energy sales, creditworthiness of customers, total generating capacity available in the Super Southeast and the remarketing of capacity. Another major factor is federal regulatory policy, which may impact Southern Power’s level of participation in the wholesale energy market. For additional information relating to these issues, see Item 1 - - Business – The SOUTHERN System — “Risk Factors” and Item 7 – Management’s Discussion and Analysis – “Future Earnings Potential” of Southern Power in the Form 10-K.

     See Item 7 — Management’s Discussion and Analysis – “Future Earnings Potential – General” and “Power Sales Agreements” of Southern Power in the Form 10-K for additional information on long-term power sales agreements and PPAs. Southern Power’s PPAs with non-affiliated counterparties have provisions that require the posting of collateral or an acceptable substitute guarantee in the event that S&P or Moody’s downgrades the credit ratings of such counterparty to below-investment grade, or, if the counterparty is not rated, fails to maintain a minimum coverage ratio. The PPAs are expected to provide Southern Power with a stable source of revenue during their respective terms.

95

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

     In June 2003, Southern Power placed Plant Franklin Unit 2 and Plant Harris Units 1 and 2 into commercial operation. In October 2003, Southern Power placed Plant Stanton A into commercial operation. In June 2004, the PPA with Georgia Power for the remaining 200 MW of uncontracted capacity at Plant Franklin Unit 2 will begin. Also, in June 2004, the PPA with Georgia Power for Plant Harris Unit 2 will begin. PPAs for the other units became effective upon commercial operation. As these PPAs become effective, the opportunity for external sales out of uncontracted capacity will decline significantly. Plant McIntosh Units 10 and 11 are under construction and are scheduled to be completed in June 2005. See Note 3 to Southern Power’s financial statements under “FERC Matters” in Item 8 of the Form 10-K and Note (C) to the Condensed Financial Statements herein for information regarding the FERC approval process for Southern Power’s PPAs with Georgia Power and Savannah Electric for Plant McIntosh Units 10 and 11. Southern Power is also completing limited construction activities on Plant Franklin Unit 3 to preserve the long-term viability of the project but has deferred final completion until the 2008-2011 period. See Note 3 to Southern Power’s financial statements under “Uncontracted Generating Capacity” in Item 8 of the Form 10-K for additional information. The final outcome of these matters cannot now be determined.

     See Item 7 — Management’s Discussion and Analysis — “Future Earnings Potential — FERC Matters” of Southern Power in the Form 10-K for information on the FERC’s order related to RTOs and the FERC’s notice of proposed rulemaking regarding open access transmission service.

     See Management’s Discussion and Analysis – “Future Earnings Potential – FERC Matters – Market-Based Rate Authority” in Item 7 and Note 3 to the financial statements of Southern Power under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. See Note (B) to the Condensed Financial Statements under “FERC Matters” herein for additional information. Southern Company is filing a request for rehearing of the FERC’s order. The final outcome of this matter cannot be determined at this time.

     See Item 7 — Management’s Discussion and Analysis – “Future Earnings Potential — Environmental Matters” of Southern Power in the Form 10-K for information on the development by federal and state environmental regulatory agencies of additional control strategies for emission of air pollution from industrial sources, including electric generating facilities. Compliance costs related to current and future environmental laws and regulations could affect earnings if such costs are not fully recovered.

     Southern Power is subject to certain claims and legal actions arising in the ordinary course of business. In addition, Southern 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 and citizen enforcement of environmental requirements, has increased generally throughout the United States; in particular, personal injury claims for damages caused by alleged exposure to hazardous materials have become more frequent. No such litigation is currently pending against Southern Power.

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

96

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

ACCOUNTING POLICIES

Application of Critical Accounting Policies and Estimates

Southern Power 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 Southern 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 Southern 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 Item 7 –Management’s Discussion and Analysis – “Accounting Policies — Application of Critical Accounting Policies and Estimates” of Southern Power in the Form 10-K for a complete discussion of Southern Power’s critical accounting policies and estimates related to Revenue Recognition and Asset Impairments.

FINANCIAL CONDITION AND LIQUIDITY

Overview

The major change in Southern Power’s financial condition during the first three months of 2004 was the addition of approximately $69 million to utility plant related to on-going construction of Southern Power’s combined-cycle units. The funds for these additions were provided by subordinated loans from Southern Company and ongoing operations. See Southern Power’s Condensed Statements of Cash Flows herein for further details.

Capital Requirements and Contractual Obligations

Reference is made to Item 7 — Management’s Discussion and Analysis — “Financial Condition and Liquidity — Capital Requirements and Contractual Obligations” of Southern Power in the Form 10-K for a description of Southern Power’s capital requirements for its construction program, maturing debt, purchase commitments and long-term service agreements.

Sources of Capital

Southern Power’s current liabilities exceed current assets because of the continued use of short-term debt as an interim funding source for Southern Power’s ongoing construction program and the seasonality of the electricity business. In February 2003, Southern Power initiated a commercial paper program to fund a portion of the construction costs of new generating facilities. The amount of commercial paper initially represented approximately 45% of total debt, but is forecasted to be less than 20% at year-end 2005. Southern Power’s strategy is to refinance most of such short-term borrowings with long-term securities following commercial operation of the generating facilities. At March 31, 2004, Southern Power had outstanding $114.3 million in commercial paper. See Note 6 to the financial statements of Southern Power under “Commercial Paper” in Item 8 of the Form 10-K for additional information.

97

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

     To meet liquidity and capital resource requirements, Southern Power had at March 31, 2004 approximately $650 million of an unused committed credit arrangement with banks expiring in 2006. This arrangement also provides liquidity support for Southern Power’s commercial paper program (as discussed above). Amounts drawn under the arrangements may be used to finance acquisition and construction costs related to gas-fired electric generating facilities and for general corporate purposes, subject to borrowing limitations for each generating facility. The arrangements permit Southern Power to fund construction of future generating facilities upon meeting certain requirements. Southern Power expects to renew its credit facility, as needed, prior to expiration. Financing of construction at the McIntosh facility is subject to FERC approval of the related PPAs. Reference is made to Note (C) to the Condensed Financial Statements herein for information regarding the FERC approval process for Southern Power’s PPAs with Georgia Power and Savannah Electric for Plant McIntosh Units 10 and 11. Southern Power also has access to loans from Southern Company to meet any additional Plant McIntosh funding needs should other funding sources not be adequate.

Credit Rating Risk

Southern Power does not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. There are contracts that could require collateral — but not accelerated payment — in the event of a credit rating change to below investment grade. These contracts are primarily for physical electricity purchases and sales, fixed-price physical gas purchases and agreements covering interest rate swaps. Generally, collateral may be provided by a Southern Company guaranty, letter of credit or cash. At March 31, 2004, the maximum potential collateral requirements were approximately $172 million.

Market Price Risk

Southern Power’s market risk exposures relative to interest rate changes have not changed materially compared with the December 31, 2003 reporting period. In addition, Southern Power is not aware of any facts or circumstances that would significantly affect such exposures in the near term.

     Because energy from Southern Power’s generating facilities is primarily sold under long-term PPAs with tolling agreements and provisions shifting substantially all of the responsibility for fuel cost to the purchasers, Southern Power’s exposure to market volatility in commodity fuel prices and prices of electricity is limited. To mitigate residual risks in those areas, Southern Power enters into fixed-price contracts for the sale of electricity. Unrealized gains and losses on electric and gas contracts qualifying as cash flow hedges of anticipated purchases and sales are deferred in Other Comprehensive Income.

98

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

      The fair values of derivative energy contracts at March 31, 2004 were as follows:

	First Quarter
	2004
	Changes
	Fair Value
	(in thousands)
Contracts beginning of period	$	665
Contracts realized or settled		(665	)
New contracts at inception		—
Current period changes		(203	)
Contracts at March 31, 2004	$	(203	)

     At March 31, 2004, all of these contracts mature within one year and are based on actively quoted market prices. For additional information, see Item 7 - - Management’s Discussion and Analysis – “Financial Condition and Liquidity— Market Price Risk” and Notes 1 and 6 to the financial statements under “Financial Instruments” of Southern Power in Item 8 of the Form 10-K and Note (G) to the Condensed Financial Statements herein.

99

NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SAVANNAH ELECTRIC AND POWER COMPANY
SOUTHERN POWER COMPANY

INDEX TO APPLICABLE NOTES TO
FINANCIAL STATEMENTS BY REGISTRANT

Registrant	Applicable Notes
Southern Company	A, B, C, D, E, F, G, H, I, J, L
Alabama Power	A, B, D, E, G, H
Georgia Power	A, B, C, D, E, G, H
Gulf Power	A, B, D, E, G, H
Mississippi Power	A, B, D, E, G, H, I
Savannah Electric	A, B, C, D, G, H, K
Southern Power	A, B, C, G

100

THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SAVANNAH ELECTRIC AND POWER COMPANY
SOUTHERN POWER COMPANY

NOTES TO THE CONDENSED FINANCIAL STATEMENTS:

(A)	The condensed financial statements of the registrants included herein have been prepared by each registrant, without audit, pursuant to the rules and regulations of the SEC. In the opinion of each registrant’s management, the information regarding such registrant furnished herein reflects all adjustments necessary to present fairly the results of operations for the periods ended March 31, 2004 and 2003. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although each registrant believes that the disclosures regarding such registrant are adequate to make the information presented not misleading. Disclosure which would substantially duplicate the disclosure in the Form 10-K and details which have not changed significantly in amount or composition since the filing of the Form 10-K are omitted from this Form 10-Q. Therefore, these condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation. Due to seasonal variations in the demand for energy, operating results for the periods presented do not necessarily indicate operating results for the entire year.
(B)	See Note 3 to the financial statements of each of the registrants in Item 8 and “Legal Proceedings” in Item 3 of the Form 10-K for information relating to various lawsuits and other contingencies.
	NEW SOURCE REVIEW ACTIONS
	See Note 3 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric under “New Source Review Actions” and of Southern Company and Georgia Power under “Plant Wansley Environmental Litigation” in Item 8 of the Form 10-K. As of March 15, 2004, civil penalties under the Clean Air Act were increased prospectively to a maximum of $32,500 per day, per violation. To the extent alleged violations under either the New Source Review Litigation or Plant Wansley Environmental Litigation are deemed to be continuing, this increased civil penalty amount could apply to such violations found to continue after that date. On May 3, 2004, the U.S. Supreme Court denied the EPA’s petition to review the Eleventh Circuit Court of Appeals’ decision in the EPA’s similar New Source Review action against the TVA. The cases against Alabama Power, Georgia Power and Savannah Electric have been effectively stayed pending final resolution of the TVA appeal. With the denial of the EPA’s petition for review, the Court of Appeals’ decision is now final. An adverse outcome in any one of these cases could require substantial capital expenditures that cannot be determined at this time and could possibly require payment of substantial penalties. This could affect future results of operations, cash flows, and possibly financial condition if such costs are not recovered through regulated rates.

101

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

MIRANT RELATED MATTERS

See Note 3 to the financial statements of Southern Company under “Mirant Related Matters — Mirant Bankruptcy” in Item 8 and Management’s Discussion and Analysis – “Future Earnings Potential — Other Matters” of Southern Company in Item 7 of the Form 10-K. On April 7, 2004, the U.S. Bankruptcy Court judge presiding over Mirant’s proceedings ordered that an examiner be appointed and identified a number of duties for the examiner, including preliminary investigation of potential causes of action against insiders, past or present, of Mirant. On April 13, 2004, the judge approved the appointment of William K. Snyder as examiner. In an April 29, 2004 Order, the judge further defined the duties of the examiner, including the investigation of any potential causes of action or any basis for objecting to or subordinating any claim that may be available to Mirant against any past or present insider or any member of a committee appointed in Mirant’s bankruptcy proceeding. As a former shareholder of Mirant, Southern Company could be considered a past insider. The final outcome of these matters cannot now be determined.

See Note 3 to Southern Company’s financial statements in Item 8 of the Form 10-K under “Mirant Bankruptcy” and Note 5 to Southern Company’s financial statements in Item 8 of the Form 10-K for information related to potential contingent liabilities as a result of Mirant’s inclusion in the consolidated federal income tax return prior to the spin-off. In connection with the audit of tax years 2000 and 2001, the IRS has preliminarily indicated that they may challenge certain tax deductions arising from Mirant’s operations prior to the spin-off. The ultimate outcome of this matter cannot now be determined.

See Note 3 to the financial statements of Southern Company under “Mobile Energy Services’ Petition for Bankruptcy” in Item 8 of the Form 10-K. On April 29, 2004, Mobile Energy Services Holdings (MESH) sold the electric generating facility. In connection with the sale, the pulp and paper complex owners released Southern Company from its contingent obligations associated with the guarantee of certain potential environmental obligations and with the potential obligation to fund a maintenance reserve account. Southern Company simultaneously released MESH from its indemnification obligations.

FERC MATTERS

See Note 3 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Savannah Electric and Southern Power under “FERC Matters” in Item 8 of the Form 10-K. On April 14, 2004, the FERC issued an order that abandoned the SMA test and adopted a new interim analysis for measuring generation market power. This new interim approach includes a pivotal supplier analysis and a wholesale market share analysis, the results of which provide a rebuttable presumption regarding generation market power. The FERC’s order also sets forth procedures for rebutting these presumptions and addresses mitigation measures for those entities that are found to have market power. In the absence of specific mitigation measures, the order includes several cost-based mitigation measures that would apply by default. The FERC also initiated a new rulemaking proceeding that, among other things, will adopt a final methodology for assessing generation market power. Southern Company, the retail operating companies, and Southern Power believe that it may be difficult for a traditional utility company, or affiliate thereof, with a significant load service obligation and generation to satisfy that obligation to pass all aspects of the market power screens as currently designed; however, each of the companies believes that it has appropriate basis to rebut the generation market power presumption. In the event that FERC’s default mitigation measures are ultimately applied, Southern Power and the retail operating companies may be required to charge cost-based rates, which may be lower than negotiated market-based rates. Southern Company is filing a request for

102

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

	rehearing of the FERC’s order. The final outcome of this matter will depend on the form in which the final methodology for assessing generation market power and mitigation rules may be ultimately adopted and cannot be determined at this time.
	INCOME TAX MATTERS
	See Note 3 to Southern Company’s financial statements under “Income Tax Issues — Leveraged Lease Transactions” in Item 8 of the Form 10-K. In connection with their current audits of Southern Company’s consolidated federal income tax returns for the 2000 and 2001 tax years, the IRS has indicated that they intend to propose a similar adjustment of $18 million to disallow the tax losses associated with the international leveraged lease transaction originally challenged in their 1996-1999 audits. The IRS has also preliminarily indicated that they may challenge Southern Company’s other three international leveraged lease transactions (so-called SILO or sale-in-lease-out transactions). See Note 1 to Southern Company’s financial statements under “Leveraged Leases” in Item 8 of the Form 10-K for additional details of the deferred taxes related to these transactions. The ultimate outcome of these matters cannot now be determined
(C)	See Note 3 under “FERC Matters” to the financial statements of Georgia Power, Savannah Electric and Southern Power, in Item 8 of the Form 10-K for information regarding PPAs between Southern Power and Georgia Power and Savannah Electric for Plant McIntosh capacity.
	In April 2003, Southern Power applied for FERC approval of these PPAs. In July 2003, the FERC accepted the PPAs to become effective June 1, 2005, subject to refund, and ordered that hearings be held. The hearings previously scheduled to commence on March 1, 2004 were postponed pending the outcome of settlement negotiations. Settlement negotiations have been terminated and hearings have been rescheduled to begin on May 25, 2004. Management believes that the PPAs should be approved by the FERC; however, the ultimate outcome of this matter cannot now be determined.
(D)	See Note 1 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric under “Asset Retirement Obligations and Other Costs of Removal” in Item 8 of the Form 10-K. The following table reflects the details of the Asset Retirement Obligations included in the Condensed Balance Sheets.

	Balance at		Liabilities		Liabilities					Cash Flow		Balance at
	12/31/03		Incurred		Settled			Accretion		Revisions		03/31/04
	(in millions)
Alabama Power	$	359	$	—	$	—		$	6	$	—	$	365
Georgia Power		476		—		(1	)		8		—		483
Gulf Power		4		—		—			—		—		4
Mississippi Power		2		—		—			—		1		3
Savannah Electric		4		—		—			—		—		4
Southern Company	$	845	$	—	$	(1	)	$	14	$	1	$	859

(E) On March 31, 2004, Southern Company prospectively adopted FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” which requires the primary beneficiary of a variable interest entity to consolidate the related assets and liabilities. The adoption of Interpretation No. 46R had no impact on Southern Company’s net income. However, as a result of the adoption, Southern Company and the retail operating companies deconsolidated certain wholly-owned trusts established to issue preferred securities since Southern Company and the retail operating companies do not meet the

103

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

definition of primary beneficiary established by Interpretation No. 46R. Therefore, the investments in these trusts are reflected as Equity Investments in Unconsolidated Subsidiaries for Alabama Power and Georgia Power and as Other Investments for Southern Company, Gulf Power and Mississippi Power. The related loans from the trusts to Southern Company and the retail operating companies are reflected as Notes Payable to Affiliated Trusts on the accompanying Balance Sheets. This treatment resulted in the following increases in both total assets and total liabilities as of March 31, 2004 (in millions):

Alabama Power	$	9
Georgia Power		29
Gulf Power		2
Mississippi Power		1
Southern Company	$	60

In addition, Southern Company consolidated its 85% limited partnership investment in an energy/telecom venture capital fund that was previously accounted for under the equity method. At March 31, 2004, Southern Company’s investment totaled $25 million; Southern Company has committed to a maximum investment of $75 million. The assets of the venture capital fund are included in Cash and Other Investments on the accompanying Condensed Balance Sheets.

(F)

See Note 1 under “Stock Options” and Note 8 under “Stock Option Plan” to the financial statements of Southern Company in Item 8 of the Form 10-K for information regarding non-qualified employee stock options provided by Southern Company. Southern Company accounts for options granted in accordance with Accounting Principles Board Opinion No. 25; thus, no compensation expense is recognized because the exercise price of all options granted equaled the fair market value on the date of the grant. The estimated fair values of stock options granted during the three-month periods ending March 31, 2004 and 2003 have been derived using the Black-Scholes stock option pricing model. The following table shows the assumptions and the weighted average fair values of these stock options:

	Three Months Ended			Three Months Ended
	March 31, 2004			March 31, 2003
Interest Rate		3.1	%		2.7	%
Average expected life of stock options (in years)		5.0			4.3
Expected volatility of common stock		19.7	%		23.6	%
Expected annual dividends on common stock	$	1.40		$	1.37
Weighted average fair value of stock options granted	$	3.29		$	3.59

     The pro forma impact of fair-value accounting for options granted on net income is as follows:

	As Reported		Pro Forma
Three Months Ended March 31, 2004
Net income (in millions)	$	331	$	326
Earnings per share (dollars):
Basic	$	0.45	$	0.44
Diluted	$	0.45	$	0.44
Three Months Ended March 31, 2003
Net income (in millions)	$	298	$	294
Earnings per share (dollars):
Basic	$	0.41	$	0.41
Diluted	$	0.41	$	0.41

104

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

Diluted Earnings Per Share

	Three Months Ended		Three Months Ended
	March 31, 2004		March 31, 2003
	(in thousands)
As Reported Shares		736,638		718,943
Effect of options		4,965		5,948
Diluted Shares		741,603		724,891

(G) See Note 6 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Savannah Electric and Southern Power under “Financial Instruments” in Item 8 of the Form 10-K. At March 31, 2004, the fair value of derivative energy contracts was reflected in the financial statements as follows:

	Southern			Alabama			Georgia		Gulf		Mississippi			Savannah			Southern
	Company			Power			Power		Power		Power			Electric			Power
	Amounts
	(in thousands)
Regulatory liabilities, net	$	43,110		$	18,078		$	10,526	$	5,673	$	6,859		$	1,974		$	—
Other comprehensive income (loss)		606			(226	)		—		—		(1,239	)		(15	)		(216	)
Net income		(204	)		6			7		1		1			—			13
Total fair value	$	43,512		$	17,858		$	10,533	$	5,674	$	5,621		$	1,959		$	(203	)

For the three months ended March 31, 2004 and 2003, the amounts recognized in income for Southern Company, Alabama Power, Georgia, Power, Gulf Power, Mississippi Power, Savannah Electric and Southern Power were immaterial.

In addition, approximately $2.7 million in pre-tax gains will be reclassified from Other Comprehensive Income to Fuel Expense by Southern Company for the twelve month period ended March 31, 2005.

At March 31, 2004, Southern Company had $3.4 billion notional amount of interest rate swaps outstanding with net fair value gains of $21.1 million as follows:

Fair Value Hedges

	Notional	Fixed Rate			Variable Rate	Maturity	Fair Value Gain (Loss)
	Amount	Received			Paid	Date	March 31, 2004
							(in millions)
Southern Company	$400 million		5.3	%	6-month LIBOR (in arrears) less 0.103%	February 2007	$	31.3
Southern Company	$40 million		7.625	%	6-month LIBOR (in arrears) plus 2.9225%	December 2009	$	2.2

105

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

Cash Flow Hedges

			Weighted
		Variable	Average				Fair Value
	Notional	Rate	Fixed Rate			Maturity	Gain (Loss)
	Amount	Received	Paid			Date	March 31, 2004
							(in millions)
Variable Rate Securities
Southern Company	$200 million	1-month LIBOR		3.1975	%	June 2004	$	(1.0	)
Alabama Power	$536 million	BMA Index		2.007	%	January 2007	$	(1.6	)
Alabama Power	$195 million	3-month LIBOR		1.89	%	April 2006	$	(0.3	)
Alabama Power	$250 million	3-month LIBOR		3.9198	%	September 2009	$	(5.0	)
Alabama Power	$220 million	3-month LIBOR		3.4145	%	November 2007	$	(3.0	)
Alabama Power	$150 million	3-month LIBOR		5.051	%	April 2034	$	1.0
Georgia Power	$250 million	3-month LIBOR plus 0.125%		1.96	%	February 2005	$	(1.4	)
Georgia Power	$50 million	3-month LIBOR plus 0.10%		1.5625	%	January 2005	$	(0.1	)
Georgia Power	$873 million	BMA Index		1.3878	%	December 2004	$	(1.5	)
Georgia Power	$250 million	3-month LIBOR		4.6629	%	February 2015	$	0.6
Savannah Electric	$20 million	3-month LIBOR plus 0.375%		2.055	%	December 2004	$	(0.1	)

For the twelve month period ended March 31, 2005, the following table reflects the estimated pre-tax losses that will be reclassified from Other Comprehensive Income to Interest Expense.

	(in Millions)
Alabama Power	$	(11.6	)
Georgia Power		(4.1	)
Gulf Power		(0.3	)
Mississippi Power		—
Savannah Electric		(0.1	)
Southern Power		(10.6	)
Southern Company	$	(27.8	)

106

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

(H) See Note 2 to the financial statements of Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric in Item 8 of the Form 10-K. Components of the pension plans’ and postretirement plans’ net periodic costs for the three-month periods ending March 31, 2004 and 2003 are as follows:

	Southern			Alabama			Georgia			Gulf			Mississippi			Savannah
	Company			Power			Power			Power			Power			Electric
PENSION PLANS (in millions)
Three Months Ended March 31, 2004
Service cost	$	32		$	8		$	10		$	1		$	2		$	1
Interest cost		68			18			26			3			3			1
Expected return on plan assets		(113	)		(35	)		(45	)		(5	)		(5	)		(1	)
Recognized net gain		(1	)		(1	)		(1	)		—			—			—
Net amortization		4			1			2			—			—			—
Net cost (income)	$	(10	)	$	(9	)	$	(8	)	$	(1	)	$	—		$	1
Three Months Ended March 31, 2003
Service cost	$	29		$	7		$	10		$	1		$	1		$	1
Interest cost		65			17			25			3			3			1
Expected return on plan assets		(112	)		(35	)		(45	)		(5	)		(4	)		(1	)
Recognized net gain		(11	)		(3	)		(5	)		—			—			—
Net amortization		4			1			2			—			—			—
Net cost (income)	$	(25	)	$	(13	)	$	(13	)	$	(1	)	$	—		$	1
POSTRETIREMENT PLANS (in millions)
Three Months Ended March 31, 2004
Service cost	$	7		$	2		$	2		$	—		$	—		$	—
Interest cost		24			6			11			1			1			1
Expected return on plan assets		(12	)		(4	)		(6	)		—			—			—
Net amortization		9			2			5			—			—			—
Net cost (income)	$	28		$	6		$	12		$	1		$	1		$	1
Three Months Ended March 31, 2003
Service cost	$	6		$	2		$	2		$	—		$	—		$	—
Interest cost		23			6			10			1			1			1
Expected return on plan assets		(12	)		(4	)		(6	)		—			—			—
Net amortization		8			2			4			—			—			—
Net cost (income)	$	25		$	6		$	10		$	1		$	1		$	1

107

NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)

(I)	See Note 3 to the financial statements in Item 8 of the Form 10-K for Southern Company under “Mississippi Power Regulatory Filing” and Mississippi Power under “Retail Regulatory Filing” in Item 8 of the Form 10-K regarding Mississippi Power’s request with the Mississippi PSC to include 266 megawatts of Plant Daniel Units 3 and 4 generating capacity not currently included in jurisdictional cost of service. The Mississippi PSC held hearings in April 2004 and a final decision in this matter is pending. The ultimate outcome of this matter cannot now be determined.
(J)	See Note 1 to Southern Company’s financial statements under “Leveraged Leases” in Item 8 of the Form 10-K. In April 2004, Southern Company entered into a commitment with KeySpan Corporation for the purchase and subsequent leaseback of the Ravenswood Expansion Facility, a 250 megawatt combined cycle gas turbine facility in New York, New York. The cost of the facility is estimated at $375 million. Southern Company’s net investment in the leveraged lease is currently anticipated to be approximately $70 million. The transaction is projected to close in the second quarter of 2004.
(K)	On March 23, 2004, Savannah Electric submitted a request to the Georgia PSC for an accounting order which, if approved by the Georgia PSC, would allow for the cost of a coal transloader currently under construction to be amortized over twenty-four months through fuel expense and recovered through Savannah Electric’s fuel cost recovery clause. This transloader will allow foreign coal to be off-loaded from ships at Savannah Electric’s Plant Kraft dock, and then transferred by rail to Savannah Electric’s Plant McIntosh. The total cost of the transloader, including carrying costs, is expected to be approximately $4.0 million.
(L)	Southern Company’s reportable business segment is the sale of electricity in the Southeast by the five retail operating companies and Southern Power. The All Other column includes parent Southern Company, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include investments in synthetic fuels and leveraged lease projects, telecommunications, energy-related services and natural gas marketing. Intersegment revenues are not material. Financial data for business segments and products and services for the periods covered in the Form 10-Q are as follows:

	Electric Utilities
	Retail
	Operating		Southern							All		Reconciling
	Companies		Power		Eliminations			Total		Other		Eliminations			Consolidated
	(in millions)
Three Months Ended March 31, 2004:
Operating revenues	$	2,542	$	176	$	(130	)	$	2,588	$	173	$	(7	)	$	2,754
Segment net income (loss)		272		27		—			299		33		(1	)		331
Total assets at March 31, 2004	$	31,602	$	2,455	$	(96	)	$	33,961	$	1,825	$	(419	)	$	35,367
Three Months Ended March 31, 2003:
Operating revenues	$	2,366	$	107	$	(73	)	$	2,400	$	153	$	(5	)	$	2,548
Segment net income (loss)		264		23		—			287		11		—			298
Total assets at December 31, 2003	$	31,412	$	2,409	$	(122	)	$	33,699	$	1,671	$	(325	)	$	35,045

Products and Services

	Electric Utilities Revenues
Period	Retail		Wholesale		Other		Total
	(in millions)
Three Months Ended March 31, 2004	$	2,144	$	351	$	93	$	2,588
Three Months Ended March 31, 2003		1,974		334		92		2,400

108

PART II- OTHER INFORMATION

Item 1.  Legal Proceedings.

See the Notes to the Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which Southern Company and its reporting subsidiaries are involved.

Item 2.  Changes in Securities, Unregistered Sales of Equity Securities and Use of Proceeds.

On February 17, 2004, Alabama Power issued to Southern Company, in a private placement, 500,000 shares of Alabama Power’s common stock, $40.00 par value per share, for a price of $40.00 per share ($20,000,000 aggregate purchase price). There were no underwriting discounts or commissions. The issuance to Southern Company was exempt from registration under the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act because it was a transaction by an issuer that did not involve a public offering. The proceeds from the sale were used by Alabama Power for general corporate purposes.

Item 6.  Exhibits and Reports on Form 8-K.

(a)	Exhibits.
(3)	Articles of Incorporation and By-Laws
	Georgia Power

(c) 1 - By-laws of Georgia Power as amended effective August 20, 2003, and as presently in effect.

(24)		Power of Attorney and Resolutions
	Southern Company

(a) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 1-3526 as Exhibit 24(a) and incorporated herein by reference.)

Alabama Power

(b) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 1-3164 as Exhibit 24(b) and incorporated herein by reference.)

Georgia Power

(c) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 1-6468 as Exhibit 24(c) and incorporated herein by reference.)

109

Item 6.  Exhibits and Reports on Form 8-K.

(a)	Exhibits. (Continued)
	Gulf Power

(d) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 0-2429 as Exhibit 24(d) and incorporated herein by reference.)

Mississippi Power

(e) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 001-11229 as Exhibit 24(e) and incorporated herein by reference.)

Savannah Electric

(f) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 1-5072 as Exhibit 24(f) and incorporated herein by reference.)

Southern Power

(g) 1 - Power of Attorney and resolution. (Designated in the Form 10-K for the year ended December 31, 2003, File No. 333-98553 as Exhibit 24(g) and incorporated herein by reference.)

(31) Section 302 Certifications

Southern Company

(a) 1	-	Certificate of Southern Company’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
(a) 2	-	Certificate of Southern Company’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Alabama Power

(b) 1	-	Certificate of Alabama Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
(b) 2	-	Certificate of Alabama Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Georgia Power

(c) 1 - Certificate of Georgia Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

110

Item 6.  Exhibits and Reports on Form 8-K.

(a) Exhibits. (Continued)

(c) 2 - Certificate of Georgia Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Gulf Power

(d) 1	-	Certificate of Gulf Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
(d) 2	-	Certificate of Gulf Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Mississippi Power

(e) 1	-	Certificate of Mississippi Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
(e) 2	-	Certificate of Mississippi Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Savannah Electric

(f) 1	-	Certificate of Savannah Electric’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
(f) 2	-	Certificate of Savannah Electric’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

Southern Power

(g) 1	-	Certificate of Southern Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
(g) 2	-	Certificate of Southern Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.

(32) Section 906 Certifications

Southern Company

(a) - Certificate of Southern Company’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Alabama Power

(b) - Certificate of Alabama Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

111

Item 6.  Exhibits and Reports on Form 8-K.

(a)	Exhibits. (Continued)
	Georgia Power

(c) - Certificate of Georgia Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Gulf Power

(d) - Certificate of Gulf Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Mississippi Power

(e) - Certificate of Mississippi Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Savannah Electric

(f) - Certificate of Savannah Electric’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

Southern Power

(g) - Certificate of Southern Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K.

The registrants collectively and separately furnished Current Reports on Form 8-K dated January 29, 2004:

Item reported:
Financial statements filed: Item 12
None

Alabama Power filed Current Reports on Form 8-K dated February 5, 2004 and February 10, 2004:

Items reported:
Financial statements filed: Items 5 and 7 None

Georgia Power filed Current Reports on Form 8-K dated January 12, 2004, January 15, 2004 and February 12, 2004:

Item reported:
Financial statements filed: Items 5 and 7 None

Mississippi Power filed Current Reports on Form 8-K both dated March 3, 2004:

Items reported:
Financial statements filed: Items 5 and 7 None

112

THE SOUTHERN COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	THE SOUTHERN COMPANY
By	Allen Franklin
	Chairman and Chief Executive Officer
	(Principal Executive Officer)
By	Thomas A. Fanning
	Executive Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

113

ALABAMA POWER COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	ALABAMA POWER COMPANY
By	Charles D. McCrary
	President and Chief Executive Officer
	(Principal Executive Officer)
By	William B. Hutchins, III
	Executive Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

114

GEORGIA POWER COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	GEORGIA POWER COMPANY
By	Michael D. Garrett
	President and Chief Executive Officer
	(Principal Executive Officer)
By	C. B. Harreld
	Executive Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

115

GULF POWER COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	GULF POWER COMPANY
By	Susan N. Story
	President and Chief Executive Officer
	(Principal Executive Officer)
By	Ronnie R. Labrato
	Vice President, Chief Financial Officer and Comptroller
	(Principal Financial and Accounting Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

116

MISSISSIPPI POWER COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	MISSISSIPPI POWER COMPANY
By	Anthony J. Topazi
	President and Chief Executive Officer
	(Principal Executive Officer)
By	Michael W. Southern
	Vice President, Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

117

SAVANNAH ELECTRIC AND POWER COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	SAVANNAH ELECTRIC AND POWER COMPANY
By	A. R. James
	President and Chief Executive Officer
	(Principal Executive Officer)
By	Kirby R. Willis
	Vice President, Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

118

SOUTHERN POWER COMPANY

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

	SOUTHERN POWER COMPANY
By	William P. Bowers
	President and Chief Executive Officer
	(Principal Executive Officer)
By	Cliff S. Thrasher
	Senior Vice President, Comptroller and Chief Financial Officer
	(Principal Financial and Accounting Officer)
By	/s/ Wayne Boston
	(Wayne Boston, Attorney-in-fact)

Date: May 6, 2004

119

EX-3.C.1

                                                                   Exhibit 3(c)1
                         BYLAWS OF GEORGIA POWER COMPANY
                      As Amended Effective August 20, 2003


                                      Seal

SECTION 1. The corporate seal shall be circular in form and bear the name of the
Company in the margin and the year of organization and the word "Seal" in the
center.


                             Stockholders' Meetings

SECTION 2. The annual meeting of the stockholders shall be held, upon notice as
hereinafter provided, at the principal office of the Company in the City of
Atlanta, County of Fulton, State of Georgia, on the third Wednesday in the month
of May in each year, if not a legal holiday, and if a legal holiday, then on the
next secular day following, when the stockholders entitled to vote thereon shall
elect by plurality vote the Board of Directors, and transact such other business
as may be brought before the meeting. At the annual meeting any business may be
transacted irrespective of whether the notice calling such meeting shall have
contained a reference thereto.

SECTION 3. Special meetings of the stockholders shall be held, upon notice as
hereinafter provided, at the principal office of the Company in the City of
Atlanta, County of Fulton, State of Georgia, except such meetings as the
Chairman of the Board or the President or the Board of Directors expressly
determine shall be held elsewhere within or without the State of Georgia, but
within the United States, in which case meetings may be held, upon notice as
hereinafter provided, at such other place or places as the Chairman of the Board
or the President or the Board of Directors may determine.

SECTION 4. At all meetings of the stockholders, the holders of capital stock of
the Company representing a majority of the aggregate number of votes entitled to
be cast at the meeting, present in person or represented by proxy, shall
constitute a quorum requisite for the transaction of business, except as
otherwise required by the Charter or by law. If, however, a quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time without notice other than announcement at
the meeting, until the requisite amount of voting stock shall be present, except
as otherwise required by the Charter or by law. At such adjourned meeting at
which the requisite amount of voting stock shall be represented, any business
may be transacted which might have been transacted at the meeting originally
notified.

SECTION 5. Each stockholder entitled to vote in accordance with the charter or
any amendment thereof and in accordance with the provisions of these Bylaws or
of any action taken pursuant thereto shall be entitled, in person or by proxy,
to the vote provided by the Charter for each share of stock entitled to vote
held by such stockholder. Except where the transfer books of the Company shall
have been closed or a date shall have been fixed as the record date for the
determination of its stockholders entitled to vote, as hereinafter provided, no
share of stock shall be voted on at any election for Directors which shall have
been transferred on the books of the Company within twenty days next preceding
such election of Directors. The vote for Directors, and, upon the demand of any
stockholder, the vote upon any question before the meeting, shall be by ballot.
All elections shall be by and all questions decided by plurality vote except as
otherwise provided by the Charter and/or by the laws of the State of Georgia.

SECTION 6. Written notice of the annual meeting shall be mailed to each
stockholder entitled to vote thereat, at such address as appears on the stock
books of the Company, at least ten days prior to the meeting. It shall be the
duty of every stockholder to furnish to the Secretary of the Company or to the
Transfer Agent, if any, of the class or series of stock owned by him, his post
office address and to notify said Secretary or Transfer Agent of any change
therein.

SECTION 7. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the Chairman of the
Board or by the President, and shall be called by the Chairman of the Board or
by the President or the Secretary upon the order in writing of a majority of or
by resolution of the Board of Directors or at the request in writing of
stockholders owning one-fourth of the entire capital stock of the Company issued
and outstanding and entitled to vote. Such request or order shall state the
purpose or purposes of the proposed meeting. On failure by the Chairman of the
Board or the President or the Secretary to call such special meeting when duly
requested, the makers of such request or order may call such special meeting
over their own signatures.

SECTION 8. Written notice of a special meeting of stockholders, stating the time
and place and object thereof, shall, unless waived in writing, be mailed,
postage prepaid, or delivered, at least ten days before such meeting, to each
stockholder entitled to vote thereat, at such address as appears on the books of
the Company. No business may be transacted at such meeting except that referred
to in said notice, or in a supplemental notice given also in compliance with the
provisions hereof, or such other business as may be germane or supplementary to
that stated in said notice or notices.

SECTION 9. No stockholder shall be entitled to notice of any meeting of
stockholders with respect to any shares registered in his name after the date
upon which notice of such meeting is required by law or these Bylaws to have
been mailed or otherwise given to stockholders.


                                    Directors

SECTION 10. The affairs of the Company shall be managed by a Board of Directors
consisting of not less than five nor more than the maximum number allowed by
law, who shall be elected annually by the stockholders entitled to vote, to hold
office for one year and until their successors are elected and qualify except
that any Director who is a full-time employee of the Company shall cease to be a
Director upon termination of his employment as a full-time employee or upon his
retirement from active duty under the Company's pension plan; provided that in
the event of failure to hold such annual meeting of the stockholders or to hold
such election at such meeting, such election may be held at any special meeting
of the stockholders called for the purpose and the Directors then in office
shall continue in office until their successors shall have been duly elected and
qualified. If the stockholders at such annual meeting or at any special meeting
called for the election of Directors shall not elect a full Board of Directors
at such election, the Directors elected may elect the remaining Directors in the
manner provided below for the filling of vacancies.

In addition to the Directors authorized by the first paragraph of this section,
there may also be one or more honorary members of the Board of Directors
consisting of retired employees of the Company or of any affiliated company or
companies who were serving as regular members of the Board of Directors at the
time of their retirement from active duty under the Company's pension plan, or
of any other former members of the Board who did not wish to continue or were
unable to continue as regular members of the Board, or of any other persons
whose services as such will be of value to the Company. Any such retired
employee or other former member of the Board or other person may, on the
recommendation of the Chief Executive Officer of the Company, be elected as an
Honorary Director at any Board of Directors' meeting by the vote of the majority
of the entire Board then in office or at any meeting of the stockholders by the
vote of the holders of the majority of the stock issued and outstanding and
entitled to vote at such meeting. An Honorary Director so chosen shall hold
office until the next annual meeting of stockholders. Honorary Directors shall
receive notices of all meetings of the Board of Directors and shall receive the
customary fee or salary and expense reimbursement or allowance for attending
meetings and may participate in an advisory capacity in all discussions and
deliberations of the Board of Directors, but will not have the right to vote.
Such Honorary Directors shall not be counted in determining compliance with the
number of Directors authorized by the first paragraph of this section or in
determining the existence of a quorum.

No person shall be eligible to serve as a Director or as an Honorary Director
after his 70th birthday; provided, however, that such provision shall not apply
to any person so long as such person shall serve as a member of the Independent
Litigation Committee established and designated by the Board of Directors on
September 17, 1986.

Any Director of the Company may resign at any time by giving written notice to
the Chairman of the Board or the President or the Secretary of the Company. Such
resignation shall take effect at the time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

Each Director who is not an employee-director of the Company shall tender his
resignation from the Board of Directors when a change occurs in his principal
business association prior to normal retirement, excluding Directors serving on
the Board of Directors as of November 15, 2000. Upon receipt of a tender of
resignation in accordance with the foregoing statement, the Board of Directors,
in its sole discretion, shall determine whether such resignation shall be
accepted.

SECTION 11. In case of any vacancies in the Board of Directors through death,
resignation, disqualification, or any cause other than by reason of removal, the
remaining Directors, if less than a quorum, by affirmative vote of a majority
thereof, or if a quorum, by a majority vote of such quorum, may elect a
successor or successors, and the Director or Directors so chosen shall hold
office until the next annual election and until their successor or successors
shall be elected and qualified.

SECTION 12. In addition to the powers and authorities expressly conferred upon
it by the statute, by the charter and by these Bylaws, the Board may exercise
all such powers of the Company and do all such lawful acts and things as may be
done by the Company as are not by statute or by the charter or by these Bylaws
directed or required to be exercised or done by the stockholders.

SECTION 13. A majority of the Board shall constitute a quorum and shall be
competent to do all acts which the Board can do.

SECTION 14. Any and all of the Directors may at any time be removed without
cause assigned by the vote of the holders of a majority in number of all of the
outstanding stock entitled to vote, given at a meeting called for the purpose of
considering such action.


                       Meetings of the Board of Directors

SECTION 15. The newly elected Board of Directors may meet at such place and time
as shall be fixed by the vote of the stockholders at the meeting at which such
newly elected board was elected, for the purpose of organization or otherwise,
and no notice of such meeting shall be necessary to the elected Directors in
order legally to constitute the meeting, provided a quorum shall be present, or
they may meet at such place and time as shall be stated in a notice given to
such Directors either personally or by mail or telegram two days prior to such
meeting or as shall be fixed by the consent in writing of all the Directors.

SECTION 16. Regular meetings of the Board may be held without notice at such
time and place as shall from time to time be determined by the Board.

SECTION 17. Special meetings of the Board may be called by the Chairman of the
Board or the President, on two days' notice to each Director, by delivered
letter, by mail or by telegram or by personal communication either over the
telephone or otherwise; special meetings shall be called by the Secretary in
like manner and on like notice, on the written request of two Directors or on
the request of the Chairman of the Board or the President.

SECTION 18. Directors shall be entitled to a fee for attendance at each regular
or special meeting of the Board, or a committee of the Board, and/or to a
monthly or annual fee or salary provided that no fees or salaries shall be paid
to those Directors who are officers or employees, other than retired employees,
who are on a fixed basis of compensation from the Company or any subsidiary or
affiliated company and who have duties and responsibilities to such companies
other than those arising from the office of Director. Directors shall be
reimbursed for actual expenses, if any, incurred in attending meetings of the
Board of Directors and in otherwise performing duties as such Directors or in
lieu thereof to an allowance for expenses. The amount of fee for salary paid to
Directors and expense allowance, if any, shall be fixed by the Board of
Directors.


                         Executive and Other Committees

SECTION 19. The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate an executive committee, a controls and
compliance committee, a compensation committee, a finance committee and a
nuclear oversight committee each consisting of three or more directors, each of
which committees may act by a majority of its members. There may also exist, at
the Board's discretion, one or more other committees each consisting of one or
more directors, each of which committees may act by a majority of its members.
Such executive committee shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Company when the Board is not meeting; and each other committee
shall have such powers of the Board and otherwise as are provided in the
resolution establishing such committee. Provided, however, notwithstanding
anything to the contrary herein, the executive committee and all other
committees established by the Board shall have no power or authority (1) to
amend the Charter or the Bylaws; (2) to adopt a plan of merger or consolidation;
(3) to sell, lease, exchange or otherwise dispose of all or substantially all of
the assets and property of the Company; or (4) to voluntarily dissolve or revoke
a voluntary dissolution of the Company. Unless otherwise specifically permitted
by the Board of Directors, the rules promulgated by these Bylaws with respect to
meetings of Directors, notice, quorums, voting and other procedures at such
meeting shall be applicable to meetings of the executive and any other committee
established by the Board of Directors, except that special meetings of any such
committees may be called on one day's notice to all members of such committee.


                                    Officers

SECTION 20. The officers of the Company shall be chosen by the Board of
Directors at its first meeting after the meeting of stockholders at which such
board has been elected. The executive officers shall be a President, one or more
Vice Presidents as said Board of Directors may from time to time determine, and
in the discretion of the Board of Directors, a Chairman of the Board. The
administrative officers shall be a Secretary, a Treasurer and a Comptroller, and
such Assistant Secretaries, Assistant Treasurers and Assistant Comptrollers as
the Board of Directors may from time to time determine. Any two or more offices
may be held by the same person, except the offices of President and Secretary.
The Chairman of the Board and the President shall be chosen from among the Board
of Directors, but the other officers need not be members of the Board.

SECTION 21. The Board may appoint such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time by
the Board.

SECTION 22. The officers of the Company shall hold office at the pleasure of the
Board, until their successors are chosen and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board of
Directors with or without cause.


                 Powers and Duties of the Chairman of the Board

SECTION 23. The Chairman of the Board shall preside at all meetings of Directors
and stockholders. Unless otherwise provided by the Board, under the supervision
of and subject to the Board of Directors, he shall have the general control and
management of the business and affairs of the Company; and he shall perform and
do all acts and things incident to the position of Chairman of the Board and
such other duties as may be assigned to him from time to time by the Board of
Directors.

Unless otherwise provided by the Board, the Chairman of the Board shall have
full power and authority on behalf of the Company to execute any stockholder's
consent and to attend and act and to vote in person or by proxy at any meetings
of stockholders of any corporation in which the Company may own stock, and at
any such meeting shall possess and may exercise any and all the rights and
powers incident to the ownership of such stock and which, as the owner thereof,
the Company might have possessed and exercised if present. The Board of
Directors by resolution from time to time may confer like powers upon any other
person or persons.


                       Powers and Duties of the President

SECTION 24. The President shall do and perform all acts and things incident to
the position of President and such other duties as may be assigned to him from
time to time by the Board of Directors or the Chairman of the Board. In the
absence or inability to act of the Chairman of the Board, he shall act in his
stead. In the event the office of Chairman of the Board has not been filled by
the Board of Directors, or in the event it is specifically provided for by the
Board, the President shall have the powers and duties attributed to the office
of Chairman of the Board under the other provisions of these Bylaws.


                      Powers and Duties of Vice Presidents

SECTION 25. The Vice Presidents shall perform such duties on behalf of the
Company as may be respectively assigned to them from time to time by the Board
of Directors or the Chairman of the Board. In the absence or inability to act of
the President, any one of the Vice Presidents may act in his stead.
Notwithstanding any other provision of these Bylaws, under emergency conditions
existing in case of catastrophe wrought by war affecting the territory,
facilities or personnel of the Company, in the event of the absence, death or
inability to act of the Chairman of the Board, the powers and duties of the
Chairman of the Board shall, until the end of the emergency or until prior
action by the Board of Directors, devolve successively upon the President and
such other officers as shall have been designated in a resolution adopted by the
Board of Directors, and in accordance with the order of succession set forth
therein.


                        Power and Duties of the Secretary

SECTION 26. It shall be the duty of the Secretary to act as custodian of the
minutes of all meetings of the Board of Directors and of the stockholders and of
any committees of the Board of Directors which keep formal minutes; he shall
attend to the giving and serving of all notices of the Company; he shall attest
the seal of the Company upon all contracts and instruments executed under such
seal and shall affix or cause to be affixed the seal of the Company thereto and
to all certificates of shares of the capital stock. He shall have charge of the
corporate records and other corporate matters, of the stock certificate book,
transfer book and stock ledger, and such other books and papers as the Board of
Directors or the Chairman of the Board may direct. He shall perform such other
duties as may be assigned to him from time to time by the Board of Directors or
the Chairman of the Board


                       Powers and Duties of the Treasurer

SECTION 27. It shall be the duty of the Treasurer to have the care and custody
of all the funds and securities of the Company. He shall be accountable for the
receipts and disbursements of the funds of the Company. He shall endorse checks,
drafts and other instruments for the payment of money for deposit or collection
when necessary or proper and shall deposit the same to the credit of the Company
in such depositories as the Board of Directors may designate; he shall perform
all acts incident to the position of Treasurer, and such other duties as may be
assigned to him from time to time by the Board of Directors or the Chairman of
the Board.


                      Powers and Duties of the Comptroller

SECTION 28. It shall be the duty of the Comptroller to maintain adequate records
of all assets, liabilities, and accounting transactions of the Company; he shall
have charge of the installation and supervision of all accounting and
statistical records, financial and statistical statements and reports, and the
supervision of the accounting methods and systems in use by all departments and
shall perform such other duties as may be assigned to him from time to time by
the Board of Directors or the Chairman of the Board.


     Assistant Secretaries, Assistant Treasurers and Assistant Comptrollers

SECTION 29. An Assistant Secretary or an Assistant Treasurer or an Assistant
Comptroller shall, in the absence or disability or at the request of the
Secretary or Treasurer or Comptroller, respectively, perform the duties of the
Secretary or Treasurer or Comptroller, respectively, and shall perform such
other duties as may, from time to time, be assigned to him by the Board of
Directors or the Chairman of the Board. The performance of any such duty shall
be conclusive evidence of his right to act.


                       Duties of Officers May Be Delegated

SECTION 30. In case of the absence of an officer of the Company, or for any
other reason deemed sufficient, the Board of Directors or the Chairman of the
Board may delegate, for the time being, the powers or duties, or any of them of
such officer to any other officer, or to any Director.


                         Transfer Agents and Registrars

SECTION 31. The Board of Directors may appoint one or more Transfer Agents or
Transfer Clerks and Registrars, and may require all stock certificates and
certificates representing any rights or options to be signed by such Transfer
Agents or Transfer Clerks acting on behalf of the Company and by such
Registrars.


                              Certificates of Stock

SECTION 32. The certificates of stock of the Company shall be of such form and
devise as the Board of Directors may elect; they shall be numbered and shall be
entered in the books of the Company and registered as they are issued. They
shall exhibit the names of the registered holders and shall certify the number
of shares owned by the person in whose name issued, and shall be signed by, or
in the name of the Company by the Chairman of the Board, the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall be sealed with the corporate seal of the Company,
which signatures and seal, in the case of certificates signed by a Transfer
Agent or Transfer Clerk and a Registrar, may be facsimile. In case any officer
or officers who shall have signed any such certificate or certificates, or whose
facsimile signature shall appear thereon, shall cease to be such officer or
officers of the Company, whether because of death, resignation or otherwise, and
before such certificate or certificates shall have been delivered by the
Company, such certificate or certificates may nevertheless be adopted by the
Company and be issued and delivered with the same force and effect as though the
person or persons who signed such certificate or certificates, or whose
facsimile signature appears thereon, had not ceased to be such officer or
officers of the Company, and the issuance and delivery of any such certificate
or certificates shall be conclusive evidence of such adoption.


                               Transfers of Stock

SECTION 33. Transfers of stock shall be made on the books of the Company only by
the person named in the certificate or by attorney lawfully constituted in
writing and upon the surrender of the certificate therefor, which shall be
canceled before the new certificate shall be issued.

SECTION 34. The Board of Directors shall have the power to prescribe a period
not exceeding 50 days prior to any meeting of the stockholders or the date for
payment of any dividend or the date for the allotment of rights of the date when
any change or conversion or exchange of capital stock shall go into effect,
during which no transfer of stock on the books of the Company may be made, or
may fix a day not more than 50 days prior to the holding of any such meeting of
stockholders or such date when any change or conversion or exchange of capital
stock shall go into effect, as a day as of which stockholders of record entitled
to notice of and to vote at such meeting of stockholders, or such date for
payment of any dividend or such date for the allotment of rights or such date
when any change or conversion or exchange of capital stock shall go into effect,
shall be determined, and only stockholders of record on such day entitled to
notice or to vote at such meeting of stockholders or entitled to receive payment
of any such dividend or to any such allotment of rights or to exercise the
rights in respect of any change, conversion or exchange of capital stock, as the
case may be, notwithstanding any transfer of any stock on the books of the
Company after any such record date fixed as aforesaid; provided, however, that
in the case of any meeting of stockholders, such period prescribed or day fixed,
as aforesaid, shall not be less than ten days prior to such meeting of
stockholders.


                             Registered Stockholders

SECTION 35. The Company shall be entitled to treat the holder of record of any
share or shares of stock or of any right or rights or option or options as the
holder in fact thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share, right or option on the
part of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the laws of Georgia.


                     Lost, Stolen or Destroyed Certificates

SECTION 36. No certificate of shares of stock of the Company shall be issued in
place of any certificate alleged to have been lost or stolen or destroyed,
except upon the submission of proper proof by the owner and the delivery to the
Company of a bond of indemnity against such lost or stolen or destroyed
certificate and except under such regulations and restrictions as the Board of
Directors may prescribe.


                      Annual Report and Inspection of Books

SECTION 37. The Chairman of the Board and the President shall make and present
to the annual meeting of stockholders a report showing a Balance Sheet and
Income Statement for the preceding fiscal year. A copy of such report shall be
mailed to each stockholder of the Company at least fifteen days in advance of
the annual meeting of the Company. Such report may also contain such other
information and may be in such detail as the Chairman of the Board and the
President and the Board of Directors may determine in their absolute discretion.
The stockholders of the Company entitled to vote, by a majority vote at any
meeting duly called, or in case such stockholders shall fail to act, the Board
of Directors, shall have the power from time to time to determine whether and to
what extent and at what times and places and under what conditions and
regulations the accounts and books of the Company (other than the stock ledger)
or any of them, shall be open to the inspection of stockholders; and no
stockholder shall have any right to inspect any account or book or document of
the Company, except as conferred by statute or authorized by the Board of
Directors or by a resolution of such stockholders.


                         Depositories, Checks and Notes

SECTION 38. The Board of Directors are authorized to select such Depositories as
they shall deem proper for the funds of the Company. All checks, drafts and
demands for money against such deposited funds and all notes of the Company
shall be signed by such officers or persons as the Board of Directors may from
time to time designate.


                                   Fiscal Year

SECTION 39. The fiscal year shall begin the first day of January in each year,
and shall end on the thirty-first day of December of such year.


                                     Notices

SECTION 40. Whenever under the provisions of these Bylaws notice is required to
be given to any director, officer or stockholder, it shall not be construed to
mean personal notice, unless otherwise provided in these Bylaws, but such notice
may be given in writing, by mail, by depositing the same in the post office or
letter box, in a postpaid wrapper, addressed to such stockholder, officer or
director at such address as appears on the books of the Company, or, in default
in other address, to such director, officer or stockholder at the General Post
Office in the City of Atlanta, Georgia, and such notice shall be deemed to be
given at the time when the same shall be thus mailed.

Notice need not be given of any adjourned meeting, special or regular, of
stockholders or directors other than by announcement at the meeting which is
being adjourned.

Any stockholder, director or officer may waive any notice required to be given
by statute or under the provisions of the Certificate of Incorporation or under
these Bylaws, and such waiver shall be deemed equivalent to the notice so
required; provided, always, that such waiver shall be in writing and signed by
such stockholder, officer or director, or by his duly authorized attorney,
whether before or after the meeting or the time stated therein, notice of which
is being waived.


                       Indemnification and Related Matters

SECTION 41. Each person who is or was a director or officer of the Company or is
or was an employee of the Company holding one or more positions of management
through and inclusive of department managers (but not positions below the level
of department managers) (such positions being hereinafter referred to as
"Management Positions") and who was or is a party or was or is threatened to be
made a party to any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer of the Company or is or was
an employee of the Company holding one or more Management Positions, or is or
was serving at the request of the Company as a director, officer, employee,
agent or trustee of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, shall be indemnified by the Company
as a matter of right against any and all expenses (including attorneys' fees)
actually and reasonably incurred by him and against any and all claims,
judgments, fines, penalties, liabilities and amounts paid in settlement actually
incurred by him in defense of such claim, action, suit or proceeding, including
appeals, to the full extent permitted by applicable law. The indemnification
provided by this Section shall inure to the benefit of the heirs, executors and
administrators of such person.

Expenses (including attorneys' fees) incurred by a director or officer of the
Company or employee of the Company holding one or more Management Positions with
respect to the defense of any such claim, action, suit or proceeding may be
advanced by the Company prior to the final disposition of such claim, action,
suit or proceeding, as authorized by the Board of Directors in the specific
case, upon receipt of an under taking by or on behalf of such person to repay
such amount unless it shall ultimately be determined that such person is
entitled to be indemnified by the Company under this Section or otherwise;
provided, however, that the advancement of such expenses shall not be deemed to
be indemnification unless and until it shall ultimately be determined that such
person is entitled to be indemnified by the Company.
The Company may purchase and maintain insurance at the expense of the Company on
behalf of any person who is or was a director, officer, employee, or agent of
the Company, or any person who is or was serving at the request of the Company
as a director (or the equivalent), officer, employee, agent or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against any liability or expense (including attorneys' fees)
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Company would have the power to indemnify
him against such liability or expense under this Section or otherwise.

Without limiting the generality of the foregoing provisions, no present or
future director or officer of the Company, or his heirs, executors, or
administrators, shall be liable for any act, omission, step, or conduct taken or
had in good faith, which is required, authorized, or approved by any order or
orders issued pursuant to the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any federal or state statute or municipal ordinance
regulating the Company or its parent by reason of their being holding or
investment companies, public utility companies, public utility holding
companies, or subsidiaries of public utility holding companies. In any action,
suit, or proceeding based on any act, omission, step, or conduct, as in this
paragraph described, the provisions hereof shall be brought to the attention of
the court. In the event that the foregoing provisions of this paragraph are
found by the court not to constitute a valid defense on the grounds of not being
applicable to the particular class of plaintiff, each such director and officer,
and his heirs, executors, and administrators, shall be reimbursed for, or
indemnified against, all expenses and liabilities incurred by him or imposed on
him, in connection with, or arising out of, any such action, suit, or proceeding
based on any act, omission, step, or conduct taken or had in good faith as in
this paragraph described. Such expenses and liabilities shall include, but shall
not be limited to, judgments, court costs, and attorneys' fees.

The foregoing rights shall not be exclusive of any other rights to which any
such director or officer or employee may otherwise be entitled and shall be
available whether or not the director or officer or employee continues to be a
director or officer or employee at the time of incurring any such expenses and
liabilities.

If any word, clause or provision of the Bylaws or any indemnification made under
this Section 41 shall for any reason be determined to be invalid, the provisions
of the Bylaws shall not otherwise be affected thereby but shall remain in full
force and effect. The masculine pronoun, as used in the Bylaws, means the
masculine and feminine wherever applicable.


                                   Amendments

SECTION 42. The Bylaws of the Company may be altered, amended or repealed at any
meeting of the Board of Directors, by the vote of a majority of the entire Board
then in office, or at any meeting of the stockholders by the vote of the holders
of the majority of the stock issued and outstanding and entitled to vote at such
meeting, in accordance with the provisions of the Charter and of these Bylaws.

EX-31.A.1

                                                                  Exhibit 31(a)1
                              THE SOUTHERN COMPANY

                    Certification Of Chief Executive Officer

I, Allen Franklin, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of The Southern Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/H. Allen Franklin
                                 Allen Franklin
                      Chairman and Chief Executive Officer

EX-31.A.2

                                                                  Exhibit 31(a)2

                              THE SOUTHERN COMPANY

                    Certification Of Chief Financial Officer

I, Thomas A. Fanning, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of The Southern Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/Thomas A. Fanning
                                Thomas A. Fanning
         Executive Vice President, Chief Financial Officer and Treasurer

EX-31.B.1

                                                                 Exhibit 31(b)1
                              ALABAMA POWER COMPANY

                    Certification Of Chief Executive Officer


I, Charles D. McCrary, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Alabama Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/Charles D. McCrary
                               Charles D. McCrary
                      President and Chief Executive Officer

EX-31.B.2

                                                                 Exhibit 31(b)2

                              ALABAMA POWER COMPANY

                    Certification Of Chief Financial Officer


I, William B. Hutchins, III, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Alabama Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                           /s/William B. Hutchins, III
                            William B. Hutchins, III
        Executive Vice President, Chief Financial Officer and Treasurer

EX-31.C.1

                                                                  Exhibit 31(c)1
                              GEORGIA POWER COMPANY

                    Certification Of Chief Executive Officer


I, Michael D. Garrett, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Georgia Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/Michael D. Garrett
                               Michael D. Garrett
                      President and Chief Executive Officer

EX-31.C.2

                                                                  Exhibit 31(c)2

                              GEORGIA POWER COMPANY

                    Certification Of Chief Financial Officer


I, C. B. Harreld, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Georgia Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                                /s/C. B. Harreld
                                  C. B. Harreld
         Executive Vice President, Chief Financial Officer and Treasurer

EX-31.D.1

                                                                  Exhibit 31(d)1

                               GULF POWER COMPANY

                    Certification Of Chief Executive Officer


I, Susan N. Story, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Gulf Power Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

Date:  May 6, 2004

                                /s/Susan N. Story
                                 Susan N. Story
                      President and Chief Executive Officer

EX-31.D.2

                                                                  Exhibit 31(d)2
                               GULF POWER COMPANY

                    Certification Of Chief Financial Officer


I, Ronnie R. Labrato, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Gulf Power Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/Ronnie R. Labrato
                                Ronnie R. Labrato
             Vice President, Chief Financial Officer and Comptroller

EX-31.E.1

                                                                 Exhibit 31(e)1

                            MISSISSIPPI POWER COMPANY

                    Certification Of Chief Executive Officer


I, Anthony J. Topazi, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Mississippi Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/Anthony J. Topazi
                                Anthony J. Topazi
                      President and Chief Executive Officer

EX-31.E.2

                                                                  Exhibit 31(e)2
                            MISSISSIPPI POWER COMPANY

                    Certification Of Chief Financial Officer


I, Michael W. Southern, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Mississippi Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                             /s/Michael W. Southern
                               Michael W. Southern
              Vice President, Treasurer and Chief Financial Officer

EX-31.F.1

                                                                  Exhibit 31(f)1
                       SAVANNAH ELECTRIC AND POWER COMPANY

                    Certification Of Chief Executive Officer


I, A. R. James, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Savannah Electric and
     Power Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                                 /s/A. R. James
                                   A. R. James
                      President and Chief Executive Officer

EX-31.F.2

                                                                  Exhibit 31(f)2

                       SAVANNAH ELECTRIC AND POWER COMPANY

                    Certification Of Chief Financial Officer


I, Kirby R. Willis, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Savannah Electric and
     Power Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                               /s/Kirby R. Willis
                                 Kirby R. Willis
              Vice President, Chief Financial Officer and Treasurer

EX-31.G.1

                                                                  Exhibit 31(g)1
                             SOUTHERN POWER COMPANY

                    Certification Of Chief Executive Officer

I, William P. Bowers, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Southern Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/William P. Bowers
                                William P. Bowers
                      President and Chief Executive Officer

EX-31.G.2

                                                                  Exhibit 31(g)2
                             SOUTHERN POWER COMPANY

                    Certification Of Chief Financial Officer

I, Cliff S. Thrasher, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Southern Power
     Company;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

     (c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date:  May 6, 2004

                              /s/Cliff S. Thrasher
                                Cliff S. Thrasher
         Senior Vice President, Comptroller and Chief Financial Officer

EX-32.A

                                                                   Exhibit 32(a)
                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of The
Southern Company for the quarter ended March 31, 2004, we, the undersigned,
hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual
knowledge and belief, that:

(1)           such Quarterly Report on Form 10-Q of The Southern Company for the
              quarter ended March 31, 2004, which this statement accompanies,
              fully complies with the requirements of Section 13(a) or 15(d) of
              the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              The Southern Company for the quarter ended March 31, 2004, fairly
              presents, in all material respects, the financial condition and
              results of operations of The Southern Company.



                              /s/H. Allen Franklin
                                 Allen Franklin
                      Chairman and Chief Executive Officer



                              /s/Thomas A. Fanning
                                Thomas A. Fanning
                            Executive Vice President,
                      Chief Financial Officer and Treasurer

Date:  May 6, 2004

EX-32.B

                                                                   Exhibit 32(b)
                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of Alabama
Power Company for the quarter ended March 31, 2004, we, the undersigned, hereby
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and
belief, that:

(1)           such Quarterly Report on Form 10-Q of Alabama Power Company for
              the quarter ended March 31, 2004, which this statement
              accompanies, fully complies with the requirements of Section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              Alabama Power Company for the quarter ended March 31, 2004, fairly
              presents, in all material respects, the financial condition and
              results of operations of Alabama Power Company.



                              /s/Charles D. McCrary
                               Charles D. McCrary
                      President and Chief Executive Officer



                           /s/William B. Hutchins, III
                            William B. Hutchins, III
                            Executive Vice President,
                      Chief Financial Officer and Treasurer

Date:  May 6, 2004

EX-32.C

                                                                   Exhibit 32(c)
                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of Georgia
Power Company for the quarter ended March 31, 2004, we, the undersigned, hereby
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and
belief, that:

(1)           such Quarterly Report on Form 10-Q of Georgia Power Company for
              the quarter ended March 31, 2004, which this statement
              accompanies, fully complies with the requirements of Section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              Georgia Power Company for the quarter ended March 31, 2004, fairly
              presents, in all material respects, the financial condition and
              results of operations of Georgia Power Company.



                              /s/Michael D. Garrett
                               Michael D. Garrett
                      President and Chief Executive Officer



                                /s/C. B. Harreld
                                  C. B. Harreld
                            Executive Vice President,
                      Chief Financial Officer and Treasurer

Date:  May 6, 2004

EX-32.D

                                                                   Exhibit 32(d)
                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of Gulf Power
Company for the quarter ended March 31, 2004, we, the undersigned, hereby
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and
belief, that:

(1)           such Quarterly Report on Form 10-Q of Gulf Power Company for the
              quarter ended March 31, 2004, which this statement accompanies,
              fully complies with the requirements of Section 13(a) or 15(d) of
              the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              Gulf Power Company for the quarter ended March 31, 2004, fairly
              presents, in all material respects, the financial condition and
              results of operations of Gulf Power Company.



                                /s/Susan N. Story
                                 Susan N. Story
                      President and Chief Executive Officer



                              /s/Ronnie R. Labrato
                                Ronnie R. Labrato
                     Vice President, Chief Financial Officer
                                 and Comptroller

Date:  May 6, 2004

EX-32.E

                                                                   Exhibit 32(e)

                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of Mississippi
Power Company for the quarter ended March 31, 2004, we, the undersigned, hereby
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and
belief, that:

(1)           such Quarterly Report on Form 10-Q of Mississippi Power Company
              for the quarter ended March 31, 2004, which this statement
              accompanies, fully complies with the requirements of Section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              Mississippi Power Company for the quarter ended March 31, 2004,
              fairly presents, in all material respects, the financial condition
              and results of operations of Mississippi Power Company.



                              /s/Anthony J. Topazi
                                Anthony J. Topazi
                      President and Chief Executive Officer



                             /s/Michael W. Southern
                               Michael W. Southern
                          Vice President, Treasurer and
                             Chief Financial Officer

Date:  May 6, 2004

EX-32.F

                                                                   Exhibit 32(f)

                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of Savannah
Electric and Power Company for the quarter ended March 31, 2004, we, the
undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our
individual knowledge and belief, that:

(1)           such Quarterly Report on Form 10-Q of Savannah Electric and Power
              Company for the quarter ended March 31, 2004, which this statement
              accompanies, fully complies with the requirements of Section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              Savannah Electric and Power Company for the quarter ended March
              31, 2004, fairly presents, in all material respects, the financial
              condition and results of operations of Savannah Electric and Power
              Company.



                                 /s/A. R. James
                                   A. R. James
                      President and Chief Executive Officer



                               /s/Kirby R. Willis
                                 Kirby R. Willis
                     Vice President, Chief Financial Officer
                                  and Treasurer

Date:  May 6, 2004

EX-32.G

                                                                   Exhibit 32(g)
                                  CERTIFICATION

                             18 U.S.C. SECTION 1350
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report on Form 10-Q of Southern
Power Company for the quarter ended March 31, 2004, we, the undersigned, hereby
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and
belief, that:

(1)           such Quarterly Report on Form 10-Q of Southern Power Company for
              the quarter ended March 31, 2004, which this statement
              accompanies, fully complies with the requirements of Section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

(2)           the information contained in such Quarterly Report on Form 10-Q of
              Southern Power Company for the quarter ended March 31, 2004,
              fairly presents, in all material respects, the financial condition
              and results of operations of Southern Power Company.



                              /s/William P. Bowers
                                William P. Bowers
                      President and Chief Executive Officer



                              /s/Cliff S. Thrasher
                                Cliff S. Thrasher
                     Senior Vice President, Comptroller and
                             Chief Financial Officer

Date: May 6, 2004