GEORGIA POWER CO — Proxy Solicitation & Information Statement 2007

Apr 16, 2007

DEF 14C 1 g05860corresp.htm GEORGIA POWER COMPANY PAGEBREAK

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

INFORMATION REQUIRED IN INFORMATION STATEMENT

SCHEDULE 14C INFORMATION

Information Statement Pursuant To Section 14(c)

of the Securities Exchange Act of 1934

Check the appropriate box:

o	Preliminary information statement
o	Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2))
x	Definitive information statement

GEORGIA POWER COMPANY

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

x No fee required.

o
(1)	Title of each class of securities to which transaction applies:
(2)	Aggregate number of securities to which transaction applies:
(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

	(4)	Proposed maximum aggregate value of transaction:
	(5)	Total fee paid:
o	Fee paid previously with preliminary materials.

o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)	Amount Previously Paid:
(2)	Form, Schedule or Registration Statement No.:
(3)	Filing Party:
(4)	Date Filed:

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NOTICE OF 2007

ANNUAL MEETING

& INFORMATION STATEMENT

www.georgiapower.com

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GEORGIA POWER COMPANY

Atlanta, Georgia

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be held on May 16, 2007

NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Shareholders of Georgia Power Company will be held on May 16, 2007 at 7:30 a.m., Eastern Time, at the Company’s Auditorium, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 30308-3374, to elect 11 members of the board of directors and to transact any other business that may properly come before said meeting or any adjournment or postponement thereof.

Only shareholders of record at the close of business on April 4, 2007 will be entitled to notice of and to vote at said meeting or any adjournment or postponement thereof.

The Information Statement and the 2006 Annual Report are included in this mailing.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

BY ORDER OF THE BOARD OF DIRECTORS

Daniel M. Lowery

Corporate Secretary

Atlanta, Georgia

April 16, 2007

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TOC

TABLE OF CONTENTS

| General
Information | 1 |
| --- | --- |
| Shareholder
Proposals | 1 |
| Nominees for
Election as Directors | 2 |
| Corporate
Governance | 4 |
| Director
Independence | 4 |
| Governance Policies
and Processes | 4 |
| Director
Compensation | 4 |
| Director Deferred
Compensation Plan | 4 |
| Director
Compensation Table | 5 |
| Executive
Sessions | 5 |
| Committees of the
Board | 6 |
| Director
Attendance | 7 |
| Director Nomination
Process | 7 |
| Communicating with
the Board | 7 |
| Board Attendance at
Annual Meeting of Shareholders | 7 |
| Audit Committee
Report | 8 |
| Principal
Independent Registered Public Accounting Firm Fees | 9 |
| Principal
Independent Registered Public Accounting Firm
Representation | 9 |
| Executive
Compensation | 10 |
| Compensation
Discussion and Analysis | 10 |
| Compensation and
Management Succession Committee Report | 22 |
| Summary
Compensation Table for 2006 | 22 |
| Grants of
Plan-Based Awards Made in 2006 | 26 |
| Outstanding Equity
Awards at 2006 Fiscal Year-End | 28 |
| Option Exercises
and Stock Vested in 2006 | 29 |
| Pension Benefits at
2006 Fiscal Year-End | 29 |
| Nonqualified
Deferred Compensation as of 2006 Fiscal Year-End | 32 |
| Potential Payments
Upon Termination or Change In Control | 33 |
| Compensation
Committee Interlocks and Insider Participation | 40 |
| Stock Ownership
Table | 41 |
| Other
Information | 42 |
| Section 16(a)
Beneficial Ownership Reporting Compliance | 42 |
| Certain
Relationships and Related Transactions | 42 |

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INFORMATION STATEMENT

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GENERAL INFORMATION

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This Information Statement is furnished by Georgia Power Company (the “Company”) in connection with the 2007 Annual Meeting of Shareholders and any adjournment or postponement thereof. The meeting will be held on May 16, 2007 at 7:30 a.m., Eastern Time, at the Company’s Auditorium, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 30308-3374. This Information Statement is initially being provided to shareholders on or about April 16, 2007.

At the meeting, we will elect 11 members to the board of directors and transact any other business that may properly come before the meeting. We are not aware of any other matters to be presented at the meeting; however, the holder of the Company’s common stock will be entitled to vote on any other matters properly presented.

All shareholders of record on the record date of April 4, 2007 are entitled to notice of and to vote at the meeting. On that date, there were 9,261,500 shares of common stock outstanding and entitled to vote, all of which are held by The Southern Company (“Southern Company”). There were also 1,800,000 shares of Class A preferred stock outstanding on that date. With respect to the election of directors, all of the outstanding shares of Class A preferred stock are entitled to vote as a single class with the Company’s common stock. Each share of outstanding common stock counts as one vote and each share of outstanding Class A preferred stock counts as one-fourth vote. Neither the Company’s charter nor by-laws provides for cumulative voting rights.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

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SHAREHOLDER PROPOSALS

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Shareholders may present proper proposals for inclusion in the Company’s information statement and for consideration at the next annual meeting of its shareholders by submitting their proposals to the Company in a timely manner. In order to be so included for the 2008 annual meeting, shareholder proposals must be received by the Company no later than February 16, 2008.

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NOMINEES FOR ELECTION AS DIRECTORS

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A board of 11 directors is to be elected at the annual meeting, with each director to hold office until the next annual meeting of shareholders and until the election and qualification of a successor. Each of the named nominees is currently a director, except for Mr. Tallent. If any named nominee becomes unavailable for election, the board may substitute another nominee.

Below is information concerning the nominees for director stating, among other things, their names, ages, positions and offices held and brief descriptions of their business experience. The information is current as of the date of this Information Statement.

Michael D. Garrett – Director since 2004

Mr. Garrett, 57, is president and chief executive officer of the Company. He previously served as president of the Company from January 2004 to April 2004 and president and chief executive officer and director of Mississippi Power Company from May 2001 to December 2003.

Gus H. Bell III – Director since 2006

Mr. Bell, 69, is chairman of the board, president and chief executive officer of Hussey, Gay, Bell and DeYoung, A Bell Company (specializing in environmental, transportation, industrial, structural, architectural and civil engineering), Savannah, Georgia. He is an advisory director of SunTrust Bank of Savannah.

Robert L. Brown, Jr. – Director since 2003

Mr. Brown, 55, is president and chief executive officer of R.L. Brown & Associates Inc. (architectural/construction management company), Decatur, Georgia. He is a director of Citizens Trust Bank.

Ronald D. Brown – Director since 2004

Mr. Brown, 53, is president and chief executive officer of Atlanta Life Financial Group (financial services company), Atlanta, Georgia. He previously served as chief executive officer and managing partner of the Variant Group LLC, Atlanta, Georgia, from 2001 to 2004.

Anna R. Cablik – Director since 2001

Ms. Cablik, 54, is president of Anatek, Inc. and Anasteel & Supply Company, LLC (supplier of fabricated concrete reinforcing steel), Ellenwood, Georgia. She was also president of MassAna Construction LLC (general construction), Marietta, Georgia, until December 2006. She is a partner of PanAmerican Logistics, PanAmerican International and Atlanta International Foods, Atlanta, Georgia. She is a director of Branch Banking and Trust Company (BB&T).

David M. Ratcliffe – Director since 1999

Mr. Ratcliffe, 58, is chairman of the board, president and chief executive officer of Southern Company. He previously served as president of Southern Company from April 2004 until July 2004; president and chief executive officer of the Company from June 1999 to January 2004; chairman and chief executive officer of the Company from January 2004 to April 2004 and executive vice president of Southern Company from May 1999 until April 2004;. He is a director of CSX Corporation and Southern Company system companies – Alabama Power Company and Southern Power Company.

Jimmy C. Tallent

Mr. Tallent, 54, is president, chief executive officer and director of United Community Banks, Inc., Blairsville, Georgia.

D. Gary Thompson – Director since 2003

Mr. Thompson, 60, retired as chief executive officer of Georgia Banking, Wachovia Bank, N.A., Atlanta, Georgia, and executive vice president of Wachovia Corporation, Charlotte, North Carolina, effective December 2004.

Richard W. Ussery – Director since 2001

Mr. Ussery, 59, retired as chairman of the board of Total System Services, Inc. (TSYS) (credit card processing facility), Columbus, Georgia, effective January 2006. He previously served as chief executive officer and chairman of the board of TSYS from 1992 until July 2004. He is a director of TSYS.

William J. Vereen – Director since 1988

Mr. Vereen, 66, is chairman, president and chief executive officer of Riverside Manufacturing Company (manufacturer and sales of uniforms), Moultrie, Georgia. He is a director of Gerber Scientific, Inc.

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E. Jenner Wood, III – Director since 2001

Mr. Wood, 55, is chairman, president and chief executive officer of SunTrust Bank, Central Group and executive vice president of SunTrust Banks Inc., Atlanta, Georgia. He is a director of Oxford Industries, Inc. and Crawford & Company.

Each nominee has served in his or her present position for at least the past five years, unless otherwise noted.

Vote Required

The majority of the votes cast by the shares outstanding and entitled to vote at a meeting at which a quorum is present is required for the election of directors. Southern Company, as the owner of all of the Company’s outstanding common stock, will vote for all of the nominees above.

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CORPORATE GOVERNANCE

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DIRECTOR INDEPENDENCE

The Company is managed by a core group of officers and governed by a board of directors that currently consists of 10 members. The current nominees for election as directors consist of nine independent non-employee directors and Mr. Garrett, the president and chief executive officer of the Company, and Mr. Ratcliffe, the president and chief executive officer of Southern Company, who are not independent.

GOVERNANCE POLICIES AND PROCESSES

Southern Company owns all of the Company’s outstanding common stock, which represents a substantial majority of the overall voting power of the Company’s equity securities, and the Company has listed only debt, preferred stock, and preferred securities on the New York Stock Exchange (the “NYSE”). Accordingly, under the rules of the NYSE, the Company is exempt from most of the NYSE’s listing standards relating to corporate governance. The Company has voluntarily complied with certain of the NYSE’s listing standards relating to corporate governance where such compliance was deemed to be in the best interests of the Company’s shareholders. In addition, under the rules of the Securities and Exchange Commission (the “SEC”), the Company is exempt from the audit committee requirements of Section 301 of the Sarbanes-Oxley Act of 2002 and, therefore, is not required to have an audit committee or an audit committee report on whether it has an audit committee financial expert.

DIRECTOR COMPENSATION

Only non-employee directors of the Company are compensated for service on the board of directors. The pay components for non-employee directors are:

Annual retainers:

•	$22,000 retainer paid in quarterly amounts of $5,500
•	additional $3,000 retainer paid in quarterly amounts of $750 if
serving as chair of a standing board committee

Equity grants:

• 520 shares of Southern Company Common Stock paid in quarterly grants of 130 shares(1)

Meeting fees:

•	$1,800 for participation in a meeting of the board
•	$1,200 for participation in a meeting of a committee of the board
•	$1,200 for each day of a visit to a plant or office of the
Company and for any other business meeting at which the director
participates as a representative of the Company

DIRECTOR DEFERRED COMPENSATION PLAN

If deferred, all quarterly equity grants are required to be deferred in the Deferred Compensation Plan For Directors of Georgia Power Company (the “Director Deferred Compensation Plan”) and are invested in Southern Company Common Stock units which earn dividends as if invested in Southern Company Common Stock. Earnings are reinvested in additional stock units. Upon leaving the board, distributions are made in shares of Southern Company Common Stock.

In addition, directors may elect to defer up to 100 percent of their remaining compensation in the Director Deferred Compensation Plan until membership on the board ends. Deferred compensation may be invested as follows, at the director’s election:

• in Southern Company Common Stock units which earn dividends as if invested in Southern Company Common Stock and are distributed in shares of Southern Company Common Stock upon leaving the board

(1) Equity grants may be deferred at the director’s election.

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| • | in Southern Company Common Stock units which earn dividends as
if invested in Southern Company Common Stock and are distributed
in cash upon leaving the board |
| --- | --- |
| • | at prime interest which is paid in cash upon leaving the board |

All investments and earnings in the Director Deferred Compensation Plan are fully vested and, at the election of the director, may be distributed in a lump sum payment or in up to 10 annual distributions after leaving the board.

DIRECTOR COMPENSATION TABLE

The following table reports all compensation to the Company’s non-employee directors during 2006, including amounts deferred in the Director Deferred Compensation Plan. Non-employee directors do not receive Non-Equity Incentive Plan Compensation or stock option awards, and there is no pension plan for non-employee directors.

			Change in
			Pension
			Value and
			Nonqualified
	Fees Earned		Deferred
	or Paid in	Stock	Compensation	All Other
	Cash	Awards	Earnings	Compensation	Total
Name	($)(1)	($)(2)	($)(3)	($)(4)	($)
Juanita Powell
Baranco(5)	14,068	7,064	0	52	21,184
Gus H.
Bell III(6)	28,850	12,358	369	52	41,629
Robert L.
Brown, Jr.	34,000	17,458	0	93	51,551
Ronald D. Brown	31,600	17,458	0	239	49,297
Anna R. Cablik	38,200	17,458	0	52	55,710
D. Gary Thompson	37,600	17,458	0	116	55,174
Richard W. Ussery	43,023	17,458	0	361	60,842
William Jerry Vereen	49,000	17,458	0	610	67,068
E. Jenner
Wood III	38,200	17,458	0	52	55,710

| (1) | Includes amounts voluntarily deferred in the Director Deferred
Compensation Plan. |
| --- | --- |
| (2) | Includes fair market value of equity grants on grant dates. All
such stock awards are vested immediately upon grant. |
| (3) | Above-market earnings for Mr. Bell on amounts invested in
the Deferred Compensation Plan for Directors of Savannah
Electric and Power Company. Above-market earnings are defined by
the SEC as any amount above 120% of the applicable federal
long-term rate as prescribed under Section 1274(d) of the
Internal Revenue Code. |
| (4) | Consists of “gross-ups” for the reimbursement for taxes on spousal air travel and
gifts/activities provided to attendees at Company-sponsored
events. |
| (5) | Ms. Baranco resigned as a director of the Company effective
February 21, 2006. |
| (6) | Mr. Bell’s compensation includes compensation earned
in 2006 as a director of Savannah Electric and Power Company, a
former wholly-owned subsidiary of Southern Company which merged
with and into the Company, effective July 1, 2006, as well
as compensation earned as a director of the Company.
Mr. Bell was a director of Savannah Electric and Power
Company until the merger was complete, effective July 1,
2006. He became a director of the Company effective May 17,
2006. |

EXECUTIVE SESSIONS

It is the policy of the directors to hold an executive session of the non-employee directors without management participation at each scheduled board of directors meeting. The most tenured member of the board presides over such executive sessions. Information on how to communicate with the non-employee directors is provided under “Communicating with the Board” below.

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COMMITTEES OF THE BOARD

Controls and Compliance Committee:

| • | Members are Mr. Ussery, Chair; Mr. Thompson and
Mr. Vereen |
| --- | --- |
| • | Met four times in 2006 |
| • | Oversees the Company’s internal controls and compliance
matters |

The Controls and Compliance Committee provides, on behalf of the board, oversight of the Company’s system of internal control, compliance, ethics and employee concerns programs and activities. Its responsibilities include review and assessment of such matters as the adequacy of internal controls, the internal control environment, management risk assessment, response to reported internal control weaknesses, internal auditing and ethics and compliance program policies and practices. The Controls and Compliance Committee reports activities and findings to the board of directors and the Southern Company Audit Committee. The Controls and Compliance Committee meets periodically with management, internal auditors and the independent registered public accounting firm to discuss auditing, internal controls and compliance matters.

The Southern Company Audit Committee provides broad oversight of the Company’s financial reporting and control processes. The Southern Company Audit Committee reviews and discusses the Company’s financial statements with management, the internal auditors and the independent registered public accounting firm. Such discussions include critical accounting policies and practices, alternative financial treatments, proposed adjustments and control recommendations. Such discussions also include significant management judgments and estimates, reporting or operational issues and changes in accounting principles, as well as any disagreements with management.

The charter of the Southern Company Audit Committee is available on Southern Company’s website ( www.southerncompany.com ). The Southern Company Audit Committee has authority to appoint, compensate and oversee the work of the independent registered public accounting firm.

Compensation Committee:

| • | Members are Ms. Cablik, Chair; Mr. Robert Brown and
Mr. Ronald Brown |
| --- | --- |
| • | Met one time in 2006 |
| • | Oversees the administration of the Company’s compensation
arrangements |

The Company’s Compensation Committee reviews and provides input to Southern Company’s Compensation and Management Succession Committee on the performance and compensation of its president and chief executive officer and makes recommendations regarding the fees paid to members of the board of directors.

Southern Company’s Compensation and Management Succession Committee approves the corporate performance goals used to determine incentive compensation and establishes the mechanism for setting compensation levels for the Company’s executive officers. It also administers executive compensation plans and reviews management succession plans. The Charter of the Southern Company Compensation and Management Succession Committee is available on Southern Company’s website ( www.southerncompany.com ).

In 2006, the Southern Company Compensation and Management Succession Committee directly retained Hewitt Associates (“Hewitt”) as its outside compensation consultant. The Committee informed Hewitt in writing that it expected Hewitt to advise it if and when there were elements of management proposals to the Committee that Hewitt believed the Committee should not support, set expectations for Hewitt to be honest and direct with the Committee at all times and stated that Hewitt’s ongoing engagement would be determined by the Committee. During 2006, Hewitt assisted the Committee with comprehensive market data and its implications for pay at the Company and various other governance, design and compliance matters.

Executive Committee:

| • | Members are Mr. Garrett, Chair; Mr. Robert Brown,
Mr. Ussery, Mr. Vereen and Mr. Wood |
| --- | --- |
| • | Met one time in 2006 |
| • | Acts in place of full board on matters that require board action
between meetings of the board to the extent permitted by law and
within certain limits set by the board |

Finance Committee:

| • | Members are Mr. Wood, Chair; Mr. Bell, Mr. Robert
Brown and Ms. Cablik |
| --- | --- |
| • | Met three times in 2006 |
| • | Reviews the Company’s financial and fiscal affairs and
recommends/approves actions on behalf of the board to the extent
permitted by law and within certain limits set by the board |

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Nuclear Committee:

| • | Members are Mr. Vereen, Chair; Mr. Ussery and
Mr. Thompson |
| --- | --- |
| • | Met two times in 2006 |
| • | Reviews nuclear operations activities |

DIRECTOR ATTENDANCE

The board of directors met four times in 2006. Director attendance at all applicable board and committee meetings was 100 percent. No nominee attended less than 75 percent of applicable meetings.

DIRECTOR NOMINATION PROCESS

The Company does not have a nominating committee. The full board, with input from the Company’s president and chief executive officer, identifies director nominees. The board evaluates candidates based on the requirements set forth in the Company’s by-laws and regulatory requirements applicable to the Company.

Southern Company owns all of the Company’s common stock and, as a result, Southern Company’s affirmative vote is sufficient to elect director nominees. Consequently, the board does not accept proposals from preferred shareholders regarding potential candidates for director nominees. Southern Company’s president and chief executive officer is on the Company’s board and may propose on behalf of Southern Company potential candidates for director nominees.

COMMUNICATING WITH THE BOARD

Shareholders and other parties interested in communicating directly with the Company’s board of directors can contact them by writing c/o Corporate Secretary, Georgia Power Company, 241 Ralph McGill Boulevard, N.E., Bin 10120, Atlanta, Georgia 30308. The Corporate Secretary will receive the correspondence and forward it to the individual director or directors to whom the correspondence is directed. The Corporate Secretary will not forward any correspondence that is unduly hostile, threatening, illegal, not reasonably related to the Company or its business or similarly inappropriate.

BOARD ATTENDANCE AT ANNUAL MEETING OF SHAREHOLDERS

The Company does not have a policy relating to attendance at the Company’s annual meeting of shareholders by directors. The Company does not solicit proxies for the election of directors because the affirmative vote of Southern Company is sufficient to elect the nominees and, therefore, holders of the Company’s preferred stock rarely attend the annual meeting. Consequently, a policy encouraging directors to attend the annual meeting of shareholders is not necessary. Because the Company did not have any preferred stock outstanding at December 31, 2005, Southern Company took action by written consent in lieu of an annual meeting of shareholders in 2006.

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AUDIT COMMITTEE REPORT

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The Southern Company Audit Committee (the “Audit Committee”) oversees the Company’s financial reporting process on behalf of the board of directors of Southern Company. The Company’s management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements of the Company in the Annual Report with management. The Audit Committee also reviews the Company’s quarterly and annual reporting on Forms 10-Q and 10-K prior to filing with the SEC. The Audit Committee’s review process included discussions of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and estimates and the clarity of disclosures in the financial statements.

The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the those audited financial statements with accounting principles generally accepted in the United States. The Audit Committee reviewed with the independent registered public accounting firm their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards, rules and regulations of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and the NYSE corporate governance rules. In addition, the Audit Committee has discussed with the independent registered public accounting firm their independence from management and the Company including the matters in the written disclosures made under Rule 3600T of the PCAOB, which, on an interim basis, has adopted Independence Standards Board No. 1, “Independence Discussions with Audit Committees.” The Audit Committee also has considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with maintaining the firm’s independence.

The Audit Committee discussed the overall scopes and plans with the Company’s internal auditors and independent registered public accounting firm for their respective audits. The Audit Committee meets with the internal auditors and independent registered public accounting firm with and without management present, to discuss the results of their audits, their evaluations of the Company’s internal control and the overall quality of the Company’s financial reporting. The Audit Committee also meets privately with Southern Company’s compliance officer. The Audit Committee held 10 meetings during 2006.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the board of directors of Southern Company (and the board approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 and filed with the SEC. The Audit Committee also reappointed Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2007. At the 2007 annual meeting of the Southern Company’s stockholders, the stockholders will be asked to ratify the Audit Committee’s selection of the independent registered public accounting firm.

Members of the Audit Committee:

J. Neal Purcell, Chair

Juanita Powell Baranco

Francis S. Blake

Zack T. Pate

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PRINCIPAL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

The following represents the fees billed to the Company for the two most recent fiscal years by Deloitte & Touche LLP (“Deloitte & Touche”) — the Company’s principal independent registered public accounting firm for 2005 and 2006:

	2005	2006
	(in thousands)
Audit Fees(1)	$ 3,128	$ 3,101
Audit-Related Fees(2)	8	8
Tax Fees	0	0
All Other Fees	0	0
Total	$ 3,136	$ 3,109

| (1) | Includes services performed in connection with financing
transactions. |
| --- | --- |
| (2) | Includes internal control review services and accounting
consultations. |

The Audit Committee (on behalf of Southern Company and all of its subsidiaries, including the Company) has adopted a Policy on Engagement of the Independent Auditor for Audit and Non-Audit Services that includes requirements for the Audit Committee to pre-approve services provided by Deloitte & Touche. This policy was initially adopted in July 2002 and since that time, all services included in the chart above have been pre-approved by the Audit Committee.

Under the policy, the independent registered public accounting firm delivers an annual arrangements letter which provides a description of services anticipated to be rendered to the Company by the independent registered public accounting firm for the Audit Committee to approve. The Audit Committee’s approval of the independent registered public accounting firm’s annual arrangements letter constitutes pre-approval of all services covered in the letter. In addition, under the policy, the Audit Committee has pre-approved the engagement of the independent registered public accounting firm to provide services related to the issuance of comfort letters and consents required for securities sales by the Company and services related to consultation on routine accounting and tax matters. The Audit Committee has delegated pre-approval authority to the chair of the Audit Committee with respect to permissible services up to a limit of $50,000 per engagement. The chair of the Audit Committee is required to report any pre-approval decisions at the next scheduled Audit Committee meeting.

Under the policy, prohibited non-audit services are services prohibited by the SEC to be performed by the Company’s independent auditors. These services include bookkeeping or other services related to the preparation of accounting records of the Company, financial information systems design and implementation, appraisal or valuation services, fairness opinions or contribution-in-kind reports, actuarial services, internal audit outsourcing services, management functions or human resources, broker-dealer, investment advisor or investment banking services, legal services and expert services unrelated to the audit and any other service that the PCAOB determines is impermissible. In addition, officers of the Company may not engage the independent registered public accounting firm to perform any personal services, such as personal financial planning or personal income tax services.

PRINCIPAL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPRESENTATION

No representative of Deloitte & Touche is expected to be present at the 2007 Annual Meeting of Shareholders unless, no later than three business days prior to the day of the meeting, the Company’s Corporate Secretary has received written notice from a shareholder addressed to the Corporate Secretary at Georgia Power Company, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 30308 that such shareholder will attend the meeting and wishes to ask questions of a representative of Deloitte & Touche. In such a case, a representative of Deloitte & Touche will be present at the Annual Meeting to respond to questions and will have an opportunity to make a statement if they so desire.

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EXECUTIVE COMPENSATION

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COMPENSATION DISCUSSION AND ANALYSIS

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In this Compensation Discussion and Analysis (the “CD&A”) and elsewhere in this Information Statement, references to the “Compensation Committee” are to the Compensation and Management Succession Committee of Southern Company’s Board of Directors.

GUIDING PRINCIPLES AND POLICIES

Southern Company’s executive compensation program is based on a philosophy that total executive compensation must be competitive with the companies in our industry, must be tied to and motivate our executives to meet our short- and long-term performance goals and must foster and encourage alignment of executive interests with the interests of our stockholders and our customers. The program generally is designed to motivate all employees, including executives, and to achieve operational excellence while maintaining a safe work environment.

The executive compensation program places significant focus on rewarding performance. The program is performance-based in several respects:

| • | Southern Company’s actual earnings per share
(“EPS”) and the Company’s business unit
performance, which includes return on equity (“ROE”),
compared to target performance levels established early in the
year, determine the ultimate short-term (annual) incentive
payouts. |
| --- | --- |
| • | Southern Company common stock (“Common Stock”) price
changes result in higher or lower ultimate values of stock
options. |
| • | Southern Company’s dividend payout and total shareholder
return (“TSR”) compared to those of industry peers
lead to higher or lower payouts under the Performance Dividend
Program (“PDP”). |

In support of the performance-based pay philosophy, we have no employment contracts. Also, we only enter into severance agreements on a case-by-case basis, except upon a change in control (“CIC”), and no pay is conditioned solely upon continued employment with any of the named executive officers, other than base salary.

The pay-for-performance principles apply not only to the named executive officers, but to thousands of employees. The short-term incentive program covers over 9,000 Company employees, which is almost all of our employees and our CIC protection program covers all Company employees not part of a collective bargaining unit. Stock options and PDP cover approximately 1,500 Company employees. These programs engage our people in our business, which ultimately is good not only for them, but for our customers and our stockholders.

OVERVIEW OF EXECUTIVE COMPENSATION COMPONENTS

The executive compensation program for the named executive officers is composed of several elements, each of which plays a different role. The table below discusses the intended role of each material pay element, what it rewards and why we use it. Following the table is additional information that describes how we arrived at 2006 pay decisions.

| Pay Element | Intended Role and — What the Element
Rewards | Why We Use the
Element |
| --- | --- | --- |
| Base Salary | Base salary is pay for competence
in the executive role, with a focus on scope of responsibilities. | • Market practice. • Provides a threshold level of cash compensation for
job performance. |
| Short-Term Incentive | The Company’s Performance Pay
Program (the “PPP”) rewards achievement of
operational, EPS and Company financial goals. | • Market practice. • Focuses attention on achievement of short-term goals
that ultimately works to fulfill our mission to customers and
lead to increased stockholder value in the long-term. |

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| Pay Element | Intended Role and — What the Element
Rewards | Why We Use the Element |
| --- | --- | --- |
| Long-Term Incentive: Stock
Options | Stock options reward price
increases in Common Stock over the market price on date of
grant, over a 10-year term. | • Represents
performance-based compensation. • Aligns executives’ interests with those of
Southern Company stockholders. |
| Long-Term Incentive:
Performance Dividend Program | The PDP provides cash compensation
dependent on the number of stock options held at year end,
Southern Company’s declared dividends during the year and
Southern Company’s four-year TSR versus industry peers. | • Performance-based
compensation. • Enhances the value of stock options and focuses
executives on maintaining a significant dividend yield for
Southern Company’s stockholders. • Aligns executives’ interests with Southern
Company’s stockholder interests since payouts are dependent
on performance, defined as Southern Company stock performance
vs. industry peers. • Competitive market practice. |
| Discretionary Bonus | • An employee’s
supervisor, may make discretionary bonus payments to an
individual based on extraordinary performance. • Awards are not tied to pre-established performance
goals. | Provides a means of rewarding, on
a current basis, extraordinary performance of individuals. |
| Retirement Benefits | • The Deferred
Compensation Plan (the “DCP”) provides the opportunity
to defer to future years all or part of base salary and bonus in
either a prime interest rate or Common Stock account. • Executives participate in employee benefit plans
available to all employees of the Company, including a 401(k)
savings plan and the funded Southern Company Pension Plan (the
“Pension Plan”). • The Supplemental Benefit Plan (the “SBP”)
counts pay ineligible to be counted under the Pension Plan and
the 401(k) plan due to Internal Revenue Service rules,
including deferred salary. • The Supplemental Executive Retirement Plan (the
“SERP”) counts short-term incentive pay above 15% of
base salary for pension purposes. | • The DCP is a
cost-effective method of providing additional cash flow to the
Company while enhancing the retirement savings of executives. • The effect of the SBP and the SERP is to eliminate
the effect of tax limitations on the payment of retirement
benefits. • Represents market practice for companies in Southern
Company’s peer group and generally. |
| Perquisites and Other Personal
Benefits | • Personal financial
planning maximizes the perceived value of our executive
compensation program to executives and allows executives to
focus on Company operations. • Home security systems lower our risk of harm to
executives. • Club memberships are provided primarily for business
use. | Perquisites benefit both the
Company and executives, at low cost to us. |

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| Pay Element | Intended Role and — What the Element
Rewards | Why We Use the Element |
| --- | --- | --- |
| Post-Termination Pay | • CIC plans and
agreements provide severance pay, accelerated vesting and
payment of short- and long-term incentive awards upon a CIC of
the Company or Southern Company coupled with involuntary
termination not for “Cause” or a voluntary termination
for “Good Reason.” • Severance agreements provide compensation to
employees who retire early conditioned on execution of standard
releases and non-compete requirements. | • Providing protections
to senior executives upon a CIC minimizes disruption during a
pending or anticipated CIC. • Payment and vesting occur only upon the occurrence
of both an actual CIC and loss of the executive’s
position. • Providing severance rewards to employees who retire
early protects the Company by providing standard legal releases
and non-compete requirements. |

MARKET DATA

For the named executive officers, we review compensation data from electric and gas utilities. The data is developed and analyzed by Hewitt Associates, the compensation consultant retained by the Compensation Committee. The companies included each year in the primary peer group are those whose data is available through the consultant’s database. Those companies are drawn from this list of regulated utilities of $2 billion in revenues and up. Proxy data for the entire list of companies below also is used for Mr. Garrett’s compensation. This market data is used to establish total compensation opportunities for all elements of pay based on each named executive officer’s position with the Company.

Allegheny Energy, Inc.	Entergy Corporation	PNM Resources, Inc.
Alliant Energy Corporation	Exelon Corporation	PPL Corporation
Ameren Corporation	FirstEnergy Corp.	Progress Energy, Inc.
American Electric Power Company,
Inc.	FPL Group, Inc.	Public Service Enterprise Group
Incorporated
Centerpoint Energy, Inc.	Great Plains Energy Incorporated	Puget Energy, Inc.
Cinergy Corp.	Hawaiian Electric Industries, Inc.	SCANA Corporation
CMS Energy Corporation	KeySpan Corporation	Sempra Energy
Consolidated Edison, Inc.	NiSource Inc.	Sierra Pacific Resources
Constellation Energy Group,
Inc.	Northeast Utilities	TECO Energy, Inc.
Dominion Resources, Inc.	NSTAR	TXU Corp.
DTE Energy Company	OGE Energy Corp.	Wisconsin Energy Corporation
Duke Energy Corporation	Pepco Holdings, Inc.	WPS Resources Corporation
Edison International	PG&E Corporation	Xcel Energy Inc.
Energy East Corporation	Pinnacle West Capital Corporation

Southern Company is one of the largest U.S. utility companies in revenues and market capitalization, and its largest business units, including the Company, are some of the largest in the industry as well. For that reason, the consultant size-adjusts the market data in order to fit it to the scope of our business.

In using market data, market is defined as the size-adjusted 50th percentile of the data, with a focus on pay opportunities at target performance (rather than actual plan payouts). We provide pay opportunities (base salary, target PPP payouts, stock option awards and target PDP payouts) at market and design our incentive plans to pay significantly more or less than the target amount when actual performance is above or below target performance levels. As a result, our plans are designed to result in payouts that are market-appropriate given our performance for that year or period.

The Company does not target a specified weight for base salary or short-term or long-term incentives as a percent of total compensation, nor did amounts realizable from prior compensation serve to increase or decrease 2006 compensation amounts. The competitive posture of one element of pay affects the targeted competitive posture of other elements such that total compensation opportunities for senior management as a group are

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managed to be at the median of the market for companies our size and in our industry. The market data influenced executive officer base salary and incentive opportunities as follows for 2006:

| • | Base salaries for senior executives were targeted at market,
though individual salaries may be above or below that level for
reasons of time in position, criticality to the business,
individual performance or internal equity. |
| --- | --- |
| • | Target PPP opportunities were somewhat higher than market
because in 2000, a long-term incentive plan (the Productivity
Improvement Plan) was terminated and its award opportunities
folded in with PPP. Target opportunities are set at a percentage
of base salary. |
| • | To counterbalance the above-market PPP opportunities, stock
option award sizes were set to be somewhat below market after
taking into account the related PDP opportunity. |

For purposes of comparing the value of our program to the market data, stock options are valued at 15%, and PDP targets at 10%, of the average daily Common Stock price for the year preceding the grant, both of which represent risk-adjusted present values on the date of grant and are consistent with the methodologies used to develop the market data. For the 2006 grant of stock options and the PDP targets established for the 2006-2009 performance period, this value was $8.53 per stock option granted. The stock option value used for market data comparisons exceeds the value reported in the Grants of Plan-Based Awards Table because it assumes that the options are held for their full 10-year term. The Black-Scholes value reported in the table uses historical holding period averages of approximately five years.

| • | As discussed above, we target total compensation opportunities
for senior executives as a group at market. Therefore, some
senior executives may be paid somewhat above and others somewhat
below market. This practice allows for minor differentiation
based on time in the position, individual performance and
internal equity. The average total target compensation
opportunities for the named executive officers for 2006 were 12%
above the market data described above. |
| --- | --- |
| • | In 2004, the Compensation Committee received a detailed
comparison of Southern Company’s executive benefits program
to the benefits of a group of other large utilities and general
industry companies. The results indicated that Southern
Company’s executive benefits program was slightly below
market. |
| • | In addition to the components described above, an
employee’s supervisor may make discretionary bonuses. These
discretionary bonuses are not tied to the achievement of
pre-established performance goals. They are used to reward
extraordinary performance on a current basis. |

DESCRIPTION OF KEY COMPENSATION COMPONENTS

2006 Base Salary

Base salaries for each of the named executive officers for 2006 were recommended by Mr. Garrett to Mr. David M. Ratcliffe, the Southern Company President and Chief Executive Officer, except for his own salary. Mr. Garrett also is an executive officer of Southern Company. His base salary is recommended by Mr. Ratcliffe to the Compensation Committee and was influenced by the above-described market data and his time in the position and individual performance.

The other named executive officers are each within a position level with a base salary range that is established under the direction of the Compensation Committee using the market data described above. The actual base salary levels set for each of the named executive officers are within those pre-established salary ranges. In recommending the specific base salary level for each named executive officer, Mr. Garrett also considers the need to retain an experienced team, internal equity, time in position and individual performance. This analysis of individual performance included the degree of competence and initiative exhibited and the individual’s relative contribution to the results of operations in prior years. The base salaries recommended by Mr. Garrett were approved by Mr. Ratcliffe.

2006 Incentive Compensation

Achieving Operational and Financial Goals — Our Guiding Principle for Incentive Compensation

Our number one priority is to provide our customers outstanding reliability and superior service at low prices while achieving a level of financial performance that benefits our stockholders in the short- and long-term.

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In 2006, we strove for and rewarded:

| • | Continued industry-leading reliability and customer
satisfaction, while maintaining our low retail prices relative
to the national average; and |
| --- | --- |
| • | Meeting increased energy demand with the best economic and
environmental choices. |

In 2006, we also focused on and rewarded:

| • | Southern Company EPS Growth — A continuation of
growing EPS an average of five percent per year from a base,
excluding synfuel earnings, established in 2002. The target goal
shown below is five percent greater than the goal established
for 2005. |
| --- | --- |
| • | Company ROE in the top quartile of comparable electric utilities. |
| • | Common Stock Dividend Growth. |
| • | Long-term, risk-adjusted Southern Company TSR. |
| • | Financial Integrity — An attractive risk-adjusted
return, sound financial policy and a stable ‘A’ credit
rating. |

The incentive compensation program is designed to encourage the Company to achieve these goals.

The Southern Company Chief Executive Officer with the assistance of Southern Company’s Human Resources staff recommends to the Compensation Committee program design and award amounts for senior executives.

2006 PPP

Program Design

PPP is Southern Company’s annual cash incentive plan. Almost all employees of the Company are participants, including the named executive officers, a total of over 9,000 Company participants.

The performance measured by the program uses goals set at the beginning of each year by the Compensation Committee.

An illustration of the PPP goal structure for 2006 is provided below.

| • | Operational goals for 2006 were safety, customer service, plant
availability, transmission and distribution system reliability,
inclusion and capital expenditures. Each of these operational
goals is explained in more detail under “Goal Details”
below. The result of all operational goals is averaged and
multiplied by the bonus impact of the EPS and Company financial
goals. The amount for each goal can range from 0.90 to 1.10 or 0
if a threshold performance level of goal is not achieved as more
fully described below. The level of achievement for each
operational goal is determined and the results are averaged. |
| --- | --- |
| • | Southern Company EPS is weighted at 50% of the financial goals.
EPS is defined as earnings from continuing operations divided by
average shares outstanding during the year, excluding synthetic
fuel earnings (“synfuel earnings”). The EPS
performance measure is applicable to all participants in the
PPP, including the named executive officers. |

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| • | Company Financial Performance is weighted at 50% of the
financial goals. The Company financial performance goal is ROE,
which is defined as the Company’s net income divided by
average equity for the year. The Company’s ROE goal
established by the Compensation Committee in early 2006 provided
for the Southern Company Chief Executive Officer to assess the
Company’s merger with Savannah Electric and Power Company
and to adjust the ROE goal performance based on that assessment.
Please see the section entitled “PPP Goal Achievement”
below for discussion on the impact of that exclusion on reported
ROE. |
| --- | --- |
| • | In addition, superior individual performance can increase an
individual’s payout by up to 10% of base salary, at the
discretion of the Compensation Committee in the case of
Mr. Garrett, or in the discretion of Messrs. Garrett
and Ratcliffe in the case of the other named executive officers. |

The Compensation Committee may make adjustments, both positive and negative, to goal achievement for purposes of determining payouts. Such adjustments include the impact of items considered one time or outside of normal operations or not anticipated in the business plan when the earnings goal was established, and of sufficient magnitude to warrant recognition. For the payout based on 2006 performance, no such adjustments were made.

Under the terms of the program, no payout can be made if Southern Company’s current earnings are not sufficient to fund its Common Stock dividend at the same level as the prior year.

Goal Details

Operational Goals:

Customer Service — The Company uses customer satisfaction surveys to evaluate the Company’s performance. The survey results provide an overall ranking for the Company, as well as a ranking for each customer segment: residential, commercial and industrial.

Reliability — Transmission and distribution system reliability performance is measured by the frequency and duration of outages. Performance targets for reliability are set internally based on historical performance, expected weather conditions and expected capital expenditures.

Availability — Peak season equivalent forced outage rate is an indicator of fossil/hydro plant availability and efficient generation fleet operations during the months when generation needs are greatest. The rate is calculated by dividing the number of hours of forced outages by total generation hours.

Safety — Southern Company’s Target Zero program is focused on continuous improvement in having a safe work environment. The performance is measured by the Occupational Safety and Health Administration recordable incident rate.

Inclusion/Diversity — The inclusion program seeks to improve our inclusive workplace. This goal includes measures for work environment (employee satisfaction survey), representation of minorities and females in leadership roles and supplier diversity.

Capital expenditures — We aim to manage capital expenditures to meet customer commitments without sacrificing financial integrity.

Southern Company capital expenditures “gate” or threshold goal — Southern Company strives to manage total capital expenditures for the participating business units at or below $2.7 billion for 2006, excluding nuclear fuel. If the capital expenditure target is exceeded, total operational goal performance is capped at 0.90 regardless of the actual operational goal results. Adjustments to the goal may occur due to significant events not anticipated in Southern Company’s business plan established early in 2006, such as acquisitions or disposition of assets, new capital projects and other events.

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The range of performance levels established for the operational goals are detailed below.

Level of — Performance	Customer — Service	Reliability	Availability	Safety	Inclusion	Capital
Maximum (1.10)	Top quartile	Improve historical performance	2.00 %	1.25	Significant improvement	Below budget
Target (1.00)	2nd quartile	Maintain historical performance	2.75 %	1.75	Improve	Slightly above budget
Threshold (0.90)	3rd quartile	Below historical performance	3.75 %	2.50	Below expectations	Above budget
0 Trigger	4th quartile	Significant issues	6.00 %	>2.50	Significant issues	See gate goal

EPS and Company Financial Performance:

The range of EPS and Company financial performance goals for 2006 is shown below. The ROE goal varies from the allowed retail ROE range due to state regulatory accounting requirements, wholesale activities, other non-jurisdictional revenues and expenses and other activities not subject to state regulation.

	Southern			Payout — Factor at	Payout
	Company			Highest	Below
	EPS	Company		Level of	Threshold for
	Excluding	Financial		Operational	Operational
Level of	Synfuel	Performance	Payout	Goal	Goal
Performance	Earnings	ROE	Factor	Achievement	Achievement
Maximum	$2.11	14.25%	2.00	2.20	0
Target	$2.055	13.25%	1.00	1.10	0
Threshold	$1.97	10.50%	0.25	0.275	0
Below threshold	<$1.97	<10.50%	0	0	0

2006 Achievement

Each named executive officer had a target PPP opportunity, based on his position, set by the Compensation Committee at the beginning of 2006. Targets are set as a percentage of base salary. Mr. Garrett’s target was set at 75%. For Messrs. Thrasher, Archer, Brown, Miller and Womack, it was set at 50%. Actual PPP payouts were developed by adding the payouts derived from EPS and Company financial performance goal achievement for 2006 and multiplying that sum by the result of the operational goal achievement. The gate goal target was not exceeded and therefore had no impact on payouts. Actual 2006 goal achievement is shown in the table below.

					Total
					Weighted
Operational	EPS,	EPS Goal			Financial
Goal	Excluding	Performance	Company	Company Financial	Performance
Multiplier	Synfuel	Factor	Financial	Performance Factor	Factor	Total PPP Factor
(A)	Earnings	(50% Weight)	Performance	(50% Weight)	(B)	(A x B)
1.08	$ 2.10	1.84	14.02 %	1.77	1.80	1.95

Note that the Total PPP Factor may vary from the Total Weighted Performance multiplied by the Operational Goal Multiplier due to rounding. To calculate a PPP payout, the target opportunity (PPP target times base salary)is multiplied by the Total PPP Factor.

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PPP payouts were determined using EPS and the Company’s ROE performance results which differ somewhat from the results reported in the financial statements in Southern Company’s 2006 Annual Report to Stockholders and in the Company’s 2006 Annual Report, respectively. These differences are described below.

EPS excluding synfuel earnings — Southern Company’s synthetic fuel investments generate tax credits as a result of synthetic fuel production. Due to higher oil prices in 2006, such tax credits were partially phased out and one synfuel investment was terminated. As a result, Southern Company’s synthetic fuel investments did not contribute significantly to earnings and EPS during 2006. These tax credits will no longer be available after December 31, 2007. Southern Company management uses EPS, excluding synfuel earnings, to evaluate the performance of Southern Company’s ongoing business activities. We believe the presentation of earnings and EPS, excluding the results of the synthetic fuel investments, also is useful for investors because it provides additional information for purposes of comparing our performance for such periods. For 2006, reported EPS was $2.12 per share including synfuel earnings, and $2.10 per share excluding synfuel earnings. As established by the Compensation Committee in early 2006, the PPP goal for 2006 measures the EPS performance, excluding synfuel earnings.

The Company’s 2006 reported ROE was 13.80%. The Company’s ROE performance for PPP was 14.02%, due to the adjustment made to mitigate the ROE impact of the merger of the Company and Savannah Electric and Power Company during 2006. This adjustment was approved by the Compensation Committee at the time the ROE goal for the Company was established.

Pursuant to its discretion mentioned above, for superior individual performance in 2006, the Compensation Committee increased the payout for Mr. Garrett by five percent of his base salary. The actual amount of this additional payout is reported in the Bonus column in the Summary Compensation Table.

Stock Options

Options to purchase Common Stock are granted annually and were granted in 2006 to the named executive officers and about 1,500 other Company employees. Options have a 10-year term, vest over a three-year period, fully vest upon retirement or termination of employment following a change in control and expire at the earlier of five years from the date of retirement or the end of the 10-year term.

Stock option award sizes for 2006 were calculated using guidelines set by the Compensation Committee as a percent of base salary. These guidelines are kept stable from year to year unless the market data indicates a clear need to change them.

The number of options granted is the guideline figure divided by Southern Company’s average daily Common Stock price for the year preceding the grant. This is done to mitigate volatility in the number of options granted and to provide a standard formula to determine the size of quarterly new-hire grants.

PDP

All option holders (about 1,500 Company employees), including the named executive officers, can receive performance-based dividend equivalents on stock options held at the end of the year. Dividend equivalents can range from 0% to 100% of the Common Stock dividend paid during the year per option held at the end of the year. Actual payout will depend on Southern Company’s TSR over a four-year performance measurement period compared to a group of other electric and gas utility companies listed below.

TSR is calculated by measuring the ending value of a hypothetical $100 invested in each company’s common stock at the beginning of each of 16 quarters.

No PDP amounts are paid if Southern Company’s earnings are not sufficient to fund a Common Stock dividend at least equal to that paid in the prior year.

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2003-2006 Payout

The peer group used to determine the payout for the 2003-2006 performance measurement period was made up of utilities with revenues of $2 billion or more with regulated revenues of 70% or more. Those companies are listed below.

Allegheny Energy, Inc.	Exelon Corporation	Progress Energy, Inc.
Alliant Energy Corporation	FirstEnergy Corporation	Public Service Enterprise Group
Incorporated
Ameren Corporation	FPL Group, Inc.	Puget Energy, Inc.
American Electric Power Company,
Inc.	NiSource Inc.	SCANA Corporation
Avista Corporation	Northeast Utilities	Sempra Energy
Cinergy Corp.	NorthWestern Corporation	Sierra Pacific Resources
Consolidated Edison, Inc.	NSTAR	Westar Energy, Inc.
DTE Energy Company	OGE Energy Corp.	Wisconsin Energy Corporation
Energy East Corporation	PEPCO Holdings, Inc.	Xcel Energy Inc.
Entergy Corporation	Pinnacle West Capital Corporation

The scale below determined the percent of the full year’s dividend paid on each option held at December 31, 2006 based on performance during 2003-2006. Payout for performance between points was interpolated on a straight-line basis.

	Payout (% of A Full
Performance vs. Peer
Group	Year’s Dividend
Paid)
90th percentile or higher	100 %
50th percentile	50 %
10th percentile or lower	0 %

The above payout scale, when established in 2003, paid 25% of the dividend at the 30th percentile and zero below that. The scale was extended to the 10th percentile on a straight-line basis by the Compensation Committee in October 2005, in order to avoid the earnings volatility and employee relations issues that the payout cliff created. (About 1,500 Company employees receive PDP awards.)

TSR was calculated by measuring the ending value of a hypothetical $100 invested in each company’s stock at the beginning of each of 16 quarters.

For tax purposes, the Compensation Committee approved a scale for Mr. Garrett of two times the scale shown above (as originally established) and used negative discretion to arrive at a payout commensurate with the scale shown.

Southern Company’s TSR performance during the four-year period ending with 2006 was the 32nd percentile, resulting in a payout of 27.5% of the full year’s Common Stock dividend, or $0.42. This figure was multiplied by each named executive officer’s outstanding stock options at December 31, 2006 to calculate the payout under the program. The amount paid is included in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.

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2006-2009 Opportunity

The peer group for the period 2006-2009 is made up of utility companies with revenues of $1.2 billion or more with regulated revenues of approximately 60% or more. Those companies are listed below.

The guideline used to establish the peer group for the 2003-2006 performance measurement period was somewhat different from that used in 2006 to establish the peer group for the 2006-2009 performance measurement period. The guideline for inclusion in the peer group is reevaluated annually as needed to assist in identifying 25 to 30 companies similar to Southern Company. While the guideline does vary somewhat, 22 of the 29 companies in the peer group for the 2003-2006 performance measurement period also were in the peer group established for the 2006-2009 period.

Allegheny Energy, Inc.	Edison International	PG&E Corporation
Alliant Energy Corporation	Energy East Corporation	Pinnacle West Capital Corporation
Ameren Corporation	Entergy Corporation	Progress Energy, Inc.
American Electric Power Company,
Inc.	Exelon Corporation	Puget Energy, Inc.
Aquila, Inc.	FPL Group, Inc.	SCANA Corporation
Centerpoint Energy, Inc.	KeySpan Corporation	Sempra Energy
Cinergy Corp.	NiSource Inc.	Sierra Pacific Resources
CMS Energy Corporation	Northeast Utilities	Westar Energy, Inc.
Consolidated Edison, Inc.	NSTAR	Wisconsin Energy Corporation
DPL Inc.	Pepco Holdings, Inc.	Xcel Energy Inc.

The scale below will determine the percent of the full year’s dividend paid on each option held at December 31, 2009, based on performance during 2006-2009. Payout for performance between points is interpolated on a straight-line basis.

	Payout (% of a Full
Performance vs. Peer
Group	Year’s Dividend
Paid)
90th percentile or higher	100 %
50th percentile	50 %
10th percentile or lower	0 %

See the Grants of Plan-Based Awards Table and the accompanying information following it for more information about threshold, target and maximum payout opportunities for the 2006-2009 PDP.

Discretionary Bonuses

Under the discretion mentioned above, Mr. Ratcliffe approved a discretionary bonus for Mr. Garrett based on his performance and Mr. Garrett approved discretionary bonuses to Messrs. Brown, Miller and Thrasher in 2006 for their leadership in overseeing the successful merger with Savannah Electric and Power Company. The amounts paid are reported in the Bonus column in the Summary Compensation Table.

Timing of Incentive Compensation

As discussed above, Southern Company EPS and Company financial performance goals for the 2006 PPP were established at the February 2006 Compensation Committee meeting. Annual stock option grants were also made at that meeting. The establishment of incentive compensation goals and the granting of stock options were not timed with the release of non-public material information. This procedure was consistent with prior practices. Stock option grants are made to new hires or newly-eligible participants on preset, regular quarterly dates that were approved by the Compensation Committee. The exercise price of options granted to employees in 2006, and in all prior years, was the average of the high and low market price of the Common Stock on the date of grant. Beginning with the grant made in February 2007, the exercise price is or will be no lower than the closing market price on the date of grant. The date of grant is the date the Compensation Committee approved the stock option awards or the last trading day prior to the approval date if the NYSE is closed on the approval date.

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Post-Employment Compensation

As mentioned above, we provide certain post-employment compensation to employees, including the named executive officers:

Retirement Benefits

Generally, all full-time employees of the Company, including the named executive officers, participate in the Pension Plan after completing one year of service. Normal retirement benefits become payable when participants both attain age 65 and complete five years of participation. We also provide unfunded benefits that count salary and short-term incentive pay that is ineligible to be counted under the funded pension plan. (These plans are the SBP and the SERP that are mentioned in the chart above.) See the Pension Benefits Table and the information accompanying it for more information about pension-related benefits.

The Company also provides the DCP which is an unfunded plan that permits participants to defer income as well as certain federal, state and local taxes until a specified date or their retirement, disability, death or other separation from service. Up to 50% of base salary and up to 100% of PPP and PDP may be deferred, at the election of eligible employees. All of the named executive officers are eligible to participate in the DCP. See the Nonqualified Deferred Compensation Table and the information accompanying it for more information about the DCP.

CIC Protections

Providing certain protections to senior executives upon a CIC allows them to negotiate aggressively with a prospective purchaser. Providing such protections to our employees in general minimizes disruption during a pending or anticipated CIC. For all participants, payment and vesting occur only upon the occurrence of both a true CIC and loss of the individual’s position.

CIC protections including severance pay and, in some situations, vesting or payment of long-term incentive awards, are provided upon a CIC of Southern Company or the Company coupled with an involuntary termination not for “Cause” or a voluntary termination for “Good Reason.” This means there is a “double trigger” before severance benefits are paid; i.e., there must be both a CIC and a termination of employment.

More information about post-employment compensation, including severance arrangements under Southern Company’s CIC program, is included below under the heading Potential Payments upon Termination or Change in Control below.

Other Post-Employment Compensation

The Company and Mr. Archer entered into a severance agreement and a three-year consulting agreement in connection with his retirement from the Company in March 2006. The severance agreement provided a severance payment of $789,400. The consulting agreement provides for payment of a retainer of $200,000 per year and reimbursement of reasonable expenses in exchange for providing professional consulting service and advice as requested by the Company.

Executive Stock Ownership Requirements

Effective January 1, 2006, the Compensation Committee adopted Common Stock ownership requirements for officers of Southern Company and its subsidiaries that are in a position of Vice President or above. All of the named executive officers are covered by the requirements. The guidelines were implemented to further align the interest of officers and Southern Company stockholders by promoting a long-term focus and long-term share ownership.

The types of ownership arrangements counted toward the requirements are shares owned outright, those held in Southern Company-sponsored plans and Common Stock accounts in the DCP and the SBP. One-third of vested Southern Company stock options may be counted, but if so, the ownership target is doubled.

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The requirements are expressed as a multiple of base salary as per the table below.

	Multiple of Salary Without	Multiple of Salary Counting
Position	Counting Stock
Options	1 / 3 of Vested Options
M. D. Garrett	3 Times	6 Times
C. S. Thrasher	3 Times	6 Times
M. A. Brown	3 Times	6 Times
J. H. Miller, III	2 Times	4 Times
C. C. Womack	3 Times	6 Times

The ownership requirement is reduced by one half for officers that are over 60 years of age. This reduction allows the officer to diversify his or her holdings in anticipation of retirement in five years or less.

Current officers have until September 30, 2011 to meet the applicable ownership requirement. Newly-elected officers will have five years to meet the applicable ownership requirement.

Impact of Accounting and Tax Treatments on Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the tax deductibility of Mr. Garrett’s compensation that exceeds $1 million per year unless the compensation is paid under a performance-based plan as defined in the Code and that has been approved by Southern Company’s stockholders. Southern Company has obtained stockholder approval of the Omnibus Incentive Compensation Plan, under which all of our incentive compensation is paid. For tax purposes, in order to ensure that PPP and PDP payouts are fully deductible under Section 162(m) of the Code, the Compensation Committee approved in February 2006 a formula that represented a maximum PPP amount payable (defined as 0.6% of Southern Company’s net income), and the maximum 2006-2009 PDP amount payable (also defined as 0.6% of the Southern Company’s net income). In 2006, the Compensation Committee used (for PPP), or will use (for PDP), negative discretion from those amounts to determine the actual payouts pursuant to the methodologies described above.

Because our policy is to maximize long-term stockholder value, as described fully in this CD&A, tax deductibility is not the only factor considered in setting compensation.

Policy on Recovery of Awards

The Company’s 2006 Omnibus Incentive Compensation Plan provides that, if Southern Company or the Company is required to prepare an accounting restatement due to material noncompliance as a result of misconduct, and if an executive knowingly or grossly negligently engaged in or failed to prevent the misconduct or is subject to automatic forfeiture under the Sarbanes-Oxley Act of 2002, the executive will reimburse the Company the amount of any payment in settlement of awards earned or accrued during the 12-month period following the first public issuance or filing that was restated.

Southern Company Policy Regarding Hedging the Economic Risk of Stock Ownership

Southern Company’s policy is that insiders, including outside directors, will not trade in Southern Company options on the options market and will not engage in short sales.

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COMPENSATION AND MANAGEMENT SUCCESSION COMMITTEE REPORT

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The Compensation Committee met with management to review and discuss the CD&A. Based on such review and discussion, the Compensation Committee recommended to the Southern Company Board of Directors that the CD&A be included in the Company’s Annual Report on Form 10-K covering the 2006 fiscal year and in this Information Statement. The Southern Company Board of Directors approved that recommendation.

Members of the Compensation Committee:

Gerald J. St. Pé, Chair

Thomas F. Chapman

Donald M. James

William G. Smith, Jr.

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SUMMARY COMPENSATION TABLE FOR 2006

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The Summary Compensation Table shows the amount and type of compensation received or earned in 2006 for the Chief Executive Officer, the Chief Financial Officer, the next three most highly-paid executive officers of the Company and Mr. Archer, an executive officer who retired in March 2006. Collectively, these six officers are referred to as the “named executive officers.”

							Change in
							Pension
							Value and
						Non-Equity	Nonqualified
						Incentive	Deferred
				Stock	Option	Plan	Compensation	All Other
Name and Principal		Salary	Bonus	Awards	Awards	Compensation	Earnings	Compensation	Total
Position	Year	($)	($)	($)	($)	($)	($)	($)	($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
Michael D. Garrett	2006	575,100	29,288	0	391,843	967,002	880,636	47,183	2,891,052
President, CEO and Director
Cliff S. Thrasher	2006	252,473	7,500	0	85,258	271,025	153,762	24,174	794,192
Executive Vice President, CFO and
Treasurer
James H.
Miller, III	2006	309,877	7,500	0	104,451	372,419	71,082	40,438	905,767
Senior Vice President and General
Counsel
Christopher C. Womack	2006	312,912	0	0	96,449	375,424	35,972	30,106	850,863
Executive Vice President
Mickey A. Brown	2006	302,197	10,000	0	102,049	334,310	258,079	31,503	1,038,138
Executive Vice President
William C. Archer	2006	105,535	0	0	102,542	141,894	366,502	1,005,991	1,722,464
Executive Vice President, retired
in March 2006

Column (d)

The amounts reported in this column were for individual performance during 2006 by Messrs. Garrett, Thrasher, Brown and Miller. These amounts were not based on achievement of pre-determined performance goals. Please see the CD&A for more information about discretionary awards. Payouts under the Company’s short- and long-term incentive compensation programs (PPP and PDP) are reported in Column (g).

Column (e)

No equity-based compensation has been awarded to the named executive officers, or any other employees of the Company, other than Stock Option Awards which are reported in Column (f).

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Column (f)

This column reports the dollar amounts recognized for financial statement reporting purposes with respect to 2006 in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123, (revised 2004) (“FAS 123R”) disregarding any estimates of forfeitures relating to service-based vesting conditions. The assumptions used in calculating these amounts are discussed in Note 1 to the financial statements in the Company’s 2006 Annual Report.

For Messrs. Garrett, Thrasher, Brown and Miller, the amounts shown equal the grant date fair value for the 2006 options granted in 2006, as reported in the Grants of Plan-Based Awards Table because these named executive officers have been retirement eligible for several years and therefore their options will vest in full upon termination. Accordingly, under FAS 123R, the full grant date fair value of their option awards is expensed in the year of grant. However, for Mr. Womack, the amount reported reflects the amounts expensed in 2006 attributable to the following stock option grants made in 2006 and in prior years because he was not retirement eligible on the grant dates. Therefore, the grant date fair value for options granted to Mr. Womack is amortized over the vesting period of each option. The grant date fair value for the grant made in 2006 is reported in the Grants of Plan-Based Awards Table.

	Amount Expensed in 2006
	(Christopher C. Womack)
Grant Date	($)
2003	3,965
2004	28,801
2005	34,306
2006	29,377
TOTAL	96,449

Column (g)

The amounts in this column are the aggregate of the payouts under the PPP and the PDP that are discussed in detail in the CD&A. The amounts paid under each program to the named executive officers are shown below:

	PPP	PDP	Total
Name	($)	($)	($)
M. D. Garrett	856,660	110,342	967,002
C. S. Thrasher	248,528	22,497	271,025
J. H. Miller, III	304,471	67,948	372,419
C. C. Womack	307,231	68,193	375,424
M. A. Brown	297,476	36,834	334,310
W. C. Archer, III	62,175	79,719	141,894

Column (h)

This column reports the aggregate change in the actuarial present value of each named executive officer’s accumulated benefit under the Pension Plan and the supplemental pension plans (collectively, the “Pension Benefits”) that are described more fully following the Pension Benefits Table.

The amounts reported are earned through September 30, 2006 over the comparable amounts computed as of September 30, 2005. September 30 was the measurement date used for the Company’s financial statement reporting purposes for fiscal years 2005 and 2006. For information on the assumptions used to calculate the actuarial present value of accumulated benefits as of September 30, 2006, see the information following the Pension Benefits Table. The amounts computed as of September 30, 2005 used the same assumptions except that the discount rate used was 5.5% per year, the rate used in the Company’s 2005 financial statements, rather than six percent per year. The discount rate change was prompted by the pension accounting standards which require this assumption to be reselected each year based on fixed income investments’ market yields. The assumptions

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used to calculate the September 30, 2005 values differ from those used to derive pension obligations reported in the 2005 financial statements in one respect: the obligations were calculated assuming that a portion of the pension benefits would be paid out through the purchase of a third-party annuity. That program has been eliminated and annuities were never purchased so that assumption was not used when computing the benefit values above.

This column also reports the above-market earnings on deferred compensation. Above-market earnings are defined by the SEC as any amount above 120% of the applicable federal long-term rate as prescribed under Section 1274(d) of the Code.

Under the DCP, eligible employees are permitted to defer up to 50% of their salary and 100% of payments under the PPP or the PDP. The deferred amounts are then treated as if invested in one of two investment options — at the election of the participant. Amounts may be treated as if invested in the Common Stock (“Stock Equivalent Account”) or the prime interest rate as published in the Wall Street Journal as the base rate on corporate loans posted as of the last business day of each month by at least 75% of the United States’ largest banks (“Prime Equivalent Account”).

The amounts invested in the Stock Equivalent Account are treated as if dividends are paid and reinvested at the same rate as that paid to Southern Company’s stockholders. That amount is not considered “above-market” as defined by the SEC.

In 2006, the prime interest rate used in the Prime Equivalent Account exceeded 120% of the applicable long-term rate in effect at the measurement point required under the SEC’s rules. Therefore, earnings that exceed the amount calculated at that rate are reported here. The range of interest rates under the Prime Equivalent Account was 7.25% to 8.25% in 2006 and the applicable long-term rate was 7.14%.

The table below itemizes the amounts reported in this column.

		Above-Market
		Earnings on
	Change in	Deferred
	Pension Value	Compensation	Total
Name	($)	($)	($)
M. D. Garrett	872,674	7,962	880,636
C. S. Thrasher	148,301	5,461	153,762
J. H. Miller, III	71,082	0	71,082
C. C. Womack	27,385	8,587	35,972
M. A. Brown	257,064	1,015	258,079
W. C. Archer, III	338,465	28,037	366,502

Column (i)

This column reports the following items: perquisites; tax reimbursements by the Company and Company contributions in 2006 to the Southern Company Employee Savings Plan (the “ESP”), which is a tax-qualified defined contribution plan intended to meet requirements of Section 401(k) of the Code and contributions in 2006 under the Southern Company Supplemental Benefit Plan (Non-Pension Related) (the “SBP-N”). The SBP-N is described more fully in the information following the Nonqualified Deferred Compensation Table. Miscellaneous payments to Mr. Archer as a result of his retirement in March 2006 included separation pay of $789,400 and consulting fee of $200,000.

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The amounts reported are itemized below.

	Perquisites	Tax — Reimbursements	ESP	SBP-N	Miscellaneous — Payments	Total
Name	($)	($)	($)	($)	($)	($)
M. D. Garrett	10,437	10,326	9,900	16,520	0	47,183
C. S. Thrasher	5,198	7,380	9,940	1,656	0	24,174
J. H. Miller, III	13,914	12,291	9,900	4,333	0	40,438
C. C. Womack	11,243	5,920	9,900	3,043	0	30,106
M. A. Brown	6,559	11,063	9,688	4,193	0	31,503
W. C. Archer, III	7,692	5,556	3,343	0	989,400	1,005,991

Description of Perquisites

Personal Financial Planning is provided for most officers of the Company, including all of the named executive officers. The Company pays for the services of the financial planner on behalf of the officers, up to a maximum amount of $7,000 per year, after the initial year that the benefit is first provided. In the initial year the amount is $15,000. The Company also provides a five-year allowance of $6,000 for estate planning and tax return preparation fees. The full cost paid by the Company in 2006 is reported here.

Home Security Monitoring is provided by the Company’s security personnel. The amount of the benefit reported here represents the incremental cost of the Company-provided monitoring. The incremental cost is the full cost of providing security monitoring at Company-owned facilities and covered employees’ residences divided by the number of security systems monitored.

Personal Use of Company-Provided Club Memberships. The Company provides club memberships to certain officers, including all of the named executive officers. The memberships are provided for business use; however, personal use is permitted. The amount included reflects the pro-rata portion of the membership fees paid by the Company that are attributable to the named executive officers’ personal use. Direct costs associated with any personal use, such as meals, are paid for or reimbursed by the employee and therefore are not included.

Personal Use of Corporate-Owned Aircraft. Southern Company owns aircraft that are used to facilitate business travel. All flights on these aircraft must have a business purpose. Also, if seating is available, the Southern Company permits a spouse or other family member to accompany a Company employee on a flight. However, because in such cases the aircraft is being used for a business purpose, there is no incremental cost associated with the spousal travel and no amounts are included for such travel. Any additional expenses incurred that are related to spousal travel are included.

Other Miscellaneous Perquisites. The amount included reflects the full cost to the Company of providing the following items: personal use of Company-provided tickets for sporting and other entertainment events, gifts distributed to and activities provided to attendees at Company-sponsored events.

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GRANTS OF PLAN-BASED AWARDS MADE IN 2006

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The Grants of Plan-Based Awards Table provides information on stock option grants made and goals established for future payouts under the Company’s incentive compensation programs during 2006 by the Compensation Committee.

					Option		Closing
					Awards:	Exercise or	Price on Last	Grant Date
		Estimated Possible Payouts Under			Number of	Base Price	Trading Date	Fair Value of
		Non-Equity Incentive Plan Awards			Securities	of Option	Prior to	Stock and
		Threshold	Target	Maximum	Underlying	Awards	Grant Date	Option Awards
Name	Grant Date	($)	($)	($)	Options (#)	($/Sh)	($/Sh)	($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)
M. D. Garrett	2/20/2006	PPP	98,845	439,313	966,489	94,420	33.81	33.86	391,843
		PDP	20,164	201,636	403,272
C. S. Thrasher	2/20/2006	PPP	28,676	127,450	280,390	20,544	33.81	33.86	85,258
		PDP	4,111	41,111	82,222
J. H. Miller, III	2/20/2006	PPP	35,131	156,139	343,507	25,169	33.81	33.86	104,451
		PDP	12,417	124,168	248,335
C. C. Womack	2/20/2006	PPP	35,817	159,187	350,212	24,673	33.81	33.86	102,393
		PDP	12,461	124,614	249,229
M. A. Brown	2/20/2006	PPP	34,324	152,552	335,614	24,590	33.81	33.86	102,049
		PDP	6,731	67,310	134,620
W. C. Archer, III	2/20/2006	PPP	34,490	153,291	337,240	24,709	33.81	33.86	102,542
		PDP	14,568	145,676	291,352

Columns (c), (d) and (e)

The amounts reported as PPP reflect the amounts established by the Compensation Committee in early 2006 to be paid for certain levels of performance as of December 31, 2006 under the PPP, the Company’s short-term incentive program. The Compensation Committee assigns each named executive officer a target incentive opportunity, expressed as a percentage of base salary, that is paid for target-level performance under the PPP. The target incentive opportunities established for the named executive officers for 2006 performance was 75% for Mr. Garrett and 50% for Messrs. Thrasher, Miller, Womack, Brown and Archer. The payout factor for threshold performance was set at 0.225 times the target incentive opportunity and the maximum amount payable was set at 2.20 times the target. The amount paid to each named executive officer under the PPP for actual 2006 performance is included in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table and is itemized in the notes following that table. More information about the PPP, including the applicable performance criteria established by the Compensation Committee, is provided in the CD&A.

The Company also has a long-term incentive program, the PDP, that pays performance-based dividend equivalents based on Southern Company’s TSR compared with the TSR of its peer companies over a four-year performance measurement period. The Compensation Committee establishes the level of payout for prescribed levels of performance over the measurement period.

In February 2006, the Compensation Committee established the PDP goal for the four-year performance measurement period beginning on January 1, 2006 and ending on December 31, 2009. The amount earned based on performance over that period will be paid following the end of the period. However, no amount is earned and paid unless the Compensation Committee approves the payment at the beginning of the final year of the performance measurement period. Also, nothing is earned unless Southern Company’s earnings are sufficient to fund a Common Stock dividend at the same level as the prior year.

The PDP pays to all option holders a percentage of the Common Stock dividend paid to the Southern Company’s stockholders in the last year of the performance measurement period. It can range from approximately five percent for performance above the 10th percentile compared with the performance of the peer companies to 100% of the dividend if Southern Company’s TSR is at or above the 90th percentile. That amount is then paid per option held at the end of the four-year period. The amount, if any, ultimately paid to the option holders, including the named executive officers, at the end of the 2006 – 2009 performance measurement period will be based on (1) Southern Company’s TSR compared to that of its peer companies as of December 31, 2009,

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(2) the actual dividend paid in 2009 to Southern Company’s stockholders, if any, and (3) the number of options held by the named executive officers on December 31, 2009.

The number of options held on December 31, 2009 will be affected by the number of additional options granted to the named executive officers prior to December 31, 2009, if any, and the number of options exercised by the named executive officers prior to December 31, 2009, if any. None of these components necessary to calculate the range of payout under the PDP for the 2006-2009 performance measurement period is known at the time the goal is established.

The amounts reported as PDP in columns (c), (d) and (e) were calculated based on the number of options held by the named executive officers on December 31, 2006, as reported in columns (b) and (c) of the Outstanding Equity Awards at Fiscal Year-End Table and the Common Stock dividend of $1.535 per share paid to stockholders in 2006. These factors are itemized below.

	Stock — Options Held	Performance Dividend	Performance Dividend	Performance Dividend
	as of	Equivalent Per Option	Equivalent Per	Per Option Paid at
	December 31,	Paid at Threshold	Option Paid at Target	Maximum
	2006	Performance	Performance	Performance
Name	(#)	($)	($)	($)
M. D. Garrett	262,718	0.07675	0.7675	1.535
C. S. Thrasher	53,565	0.07675	0.7675	1.535
J. H. Miller, III	161,782	0.07675	0.7675	1.535
C. C. Womack	162,364	0.07675	0.7675	1.535
M. A. Brown	87,700	0.07675	0.7675	1.535
W. C. Archer, III	189,806	0.07675	0.7675	1.535

More information about the PDP is provided in the CD&A.

Column (f), (g) and (h)

The stock options vest at the rate of one-third per year, on the anniversary date of the grant. Also, grants fully vest upon termination as a result of death, total disability or retirement and expire five years after retirement, three years after death or total disability, or their normal expiration date if earlier. Please see Potential Payments Upon Termination or Change in Control for more information about the treatment of stock options under different termination and CIC events.

The Compensation Committee granted these stock options to the named executive officers at its regularly scheduled meeting on February 20, 2006. February 20, 2006 was a holiday (Presidents’ Day) and the NYSE was closed. Therefore, under the terms of the Omnibus Incentive Compensation Plan, the exercise price was determined as of the last trading day prior to the grant date. As has been the long-standing practice of the Compensation Committee, the exercise price was set at the average of the high and the low price on that date ($33.81 per share), which was five cents lower than the closing price on that date ($33.86 per share).

Column (i)

The value of stock options granted in 2006 were derived using the Black-Scholes stock option pricing model. The assumptions used in calculating these amounts are discussed in Note 1 to the financial statements in the Company’s 2006 Annual Report.

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OUTSTANDING EQUITY AWARDS AT 2006 FISCAL YEAR-END

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This table provides information pertaining to all outstanding stock options held by the named executive officers as of December 31, 2006.

	Option Awards					Stock Awards
								Equity	Equity
			Equity					Incentive	Incentive
			Incentive					Plan	Plan Awards:
			Plan					Awards:	Market or
	Number		Awards:				Market	Number of	Payout Value
	of	Number of	Number of			Number of	Value of	Unearned	of Unearned
	Securities	Securities	Securities			Shares or	Shares or	Shares, Units	Shares, Units
	Underlying	Underlying	Underlying			Units of	Units of	or Other	or Other
	Unexercised	Unexercised	Unexercised	Option		Stock That	Stock That	Rights That	Rights That
	Options	Options	Unearned	Exercise	Option	Have Not	Have Not	Have Not	Have Not
	(#)	(#)	Options	Price	Expiration	Vested	Vested	Vested	Vested
Name	Exercisable	Unexercisable	(#)	($)	Date	(#)	($)	(#)	($)
M. D. Garrett	36,314	0	0	27.975	02/14/2013	0	0	0	0
	35,613	17,806		29.50	02/13/2014
	26,819	52,376		32.70	02/18/2015
	0	94,420		33.81	02/20/2016
C. S. Thrasher	10,959	5,480	0	29.50	02/13/2014	0	0	0	0
	5,528	11,054		32.70	02/18/2015
	0	20,544		33.81	02/20/2016
J. H. Miller, III	20,600	0	0	22.425	04/16/2011	0	0	0	0
	32,611	0		25.26	02/15/2012
	28,968	0		27.975	02/14/2013
	18,241	9,120		29.50	02/13/2014
	9,025	18,048		32.70	02/18/2015
	0	25,169		33.81	02/20/2016
C. C. Womack	28,027	0	0	22.425	04/16/2011	0	0	0	0
	30,018	0		25.26	02/15/2012
	26,923	0		27.975	02/14/2013
	17,540	8,770		29.50	02/13/2014
	8,805	17,608		32.70	02/18/2015
	0	24,673		33.81	02/20/2016
M. A. Brown	18,091	0	0	27.975	02/14/2013	0	0	0	0
	12,547	6,273		29.50	02/13/2014
	8,733	17,466		32.70	02/18/2015
	0	24,590		33.81	02/20/2006
W. C. Archer, III	25,764	0	0	19.0762	03/20/2011	0	0	0	0
	30,871	0		22.425	03/20/2011
	29,741	0		25.26	03/20/2011
	26,560	0		27.975	03/20/2011
	25,582	0		29.50	03/20/2011
	26,579	0		32.70	03/20/2011
	24,709	0		33.81	03/20/2011

Stock options vest one-third per year on the anniversary of the grant date. Options granted in 2002 and 2003, with an expiration date in 2012 and 2013, respectively, were fully vested as of December 31, 2006. The options granted in 2004, 2005 and 2006 become fully vested as shown below, except for those held by Mr. Archer. He retired in 2006; therefore all of his options are vested.

Expiration Date	Date Fully Vested
February 13, 2014	February 13, 2007
February 18, 2015	February 18, 2008
February 20, 2016	February 20, 2009

Options also fully vest upon death, total disability or retirement and expire three years following death or total disability or five years following retirement, or on the original expiration date if earlier. Please see Potential Payments Upon Termination or Change in Control below for more information about the treatment of stock options under different termination and CIC events.

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OPTION EXERCISES AND STOCK VESTED IN 2006

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None of the named executive officers were granted Stock Awards. Of the named executive officers, only Messrs. Thrasher, Miller, Womack and Brown exercised options in 2006.

	Option Awards — Number of Shares	Value Realized	Stock Awards — Number of Shares	Value Realized on
	Acquired on	on Exercise	Acquired on Vesting	Vesting
Name	Exercise (#)	($)	(#)	($)
(a)	(b)	(c)	(d)	(e)
M. D. Garrett	0	0	0	0
C. S. Thrasher	16,742	132,011	0	0
J. H. Miller, III	20,000	257,422	0	0
C. C. Womack	25,245	378,097	0	0
M. A. Brown	20,061	214,452	0	0
W. C. Archer, III	0	0	0	0

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PENSION BENEFITS AT 2006 FISCAL YEAR-END

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		Number of — Years Credited	Present Value of — Accumulated	Payments During
		Service	Benefit	Last Fiscal Year
Name	Plan Name	(#)	($)	($)
(a)	(b)	(c)	(d)	(e)
M. D. Garrett	Pension Plan	37.67	828,741	0
	SBP-P	37.67	2,875,057	0
	SERP	37.67	976,029	0
C. S. Thrasher	Pension Plan	35.17	756,437	0
	SBP-P	35.17	484,957	0
	SERP	35.17	263,681	0
J. H. Miller, III	Pension Plan	11.75	255,826	0
	SBP-P	11.75	314,423	0
	SERP	11.75	130,149	0
	Supplemental Pension Benefit
Agreement	10.00	606,569	0
C. C. Womack	Pension Plan	17.92	242,905	0
	SBP-P	17.92	254,265	0
	SERP	17.92	112,086	0
	Supplemental Pension Benefit
Agreement	8.00	275,609	0
M. A. Brown	Pension Plan	36.42	900,318	0
	SBP-P	36.42	866,262	0
	SERP	36.42	386,849	0
W. C. Archer, III	Pension Plan	34.08	953,483	51,362
	SBP-P	34.08	1,000,199	53,879
	SERP	34.08	435,810	23,476

The named executive officers earn Company-paid pension benefits from three integrated retirement plans. More information about pension benefits is provided in the CD&A.

The Pension Plan

The Pension Plan is a funded, tax-qualified plan. It is the Company’s primary retirement plan. Generally, all full-time employees participate in this plan after one year of service. Normal retirement benefits become payable when participants both attain age 65 and complete five years of participation. The plan benefit equals the greater

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of amounts computed using a “1.7% offset formula” and a “1.25% formula,” as described below. Benefits are limited to a statutory maximum.

The 1.7% offset formula amount equals 1.7% of final average base rate of pay times years of credited service less an offset related to Social Security benefits. The offset equals a service ratio times 50% of the anticipated Social Security benefits in excess of $4,200. The service ratio adjusts the offset for the portion of a full career that a participant has worked. To determine final average base rate of pay for this formula, an amount is associated with each of the last 10 calendar years of a participant’s service, and the three largest amounts are averaged. The amount associated with each calendar year is the participant’s highest base salary rate during the calendar year reduced for any voluntary deferrals under the DCP. A statutory limit restricts the amount considered each year; the limit for 2006 was $220,000.

The 1.25% formula amount equals 1.25% of final average pay level times years of credited service. For this formula, the final average pay computation is the same as described above for the 1.7% offset formula, but PPP amounts paid during each calendar year are added to the base rates of pay.

Early retirement benefits become payable once plan participants have during employment both attained age 50 and completed 10 years of credited service. Participants who retire early from active service receive benefits equal to the amounts computed using the same formulas employed at normal retirement. However, a 0.3% reduction applies for each month (3.6% for each year) prior to normal retirement that benefit payments commence. For example, 64% of the formula benefits are payable starting at age 55. As of December 31, 2006, all the named executive officers, except Mr. Womack, were eligible to retire immediately and Mr. Archer retired during 2006.

At retirement, plan participants can choose to receive their benefits in one of six alternative forms of payment. All six forms pay benefits monthly over the lifetime of the retiree or the joint lifetimes of the retiree and a spouse. A reduction applies if a retiring participant chooses a payment form other than a single life annuity which provides equal payments over a participant’s post-retirement life. The reduction makes the value of the benefits paid in the form chosen comparable to what it would have been if benefits were paid as a single life annuity.

Participants vest in the Pension Plan benefits after completing five years of service. All the named executive officers are vested in their Pension Plan benefits. Participants who terminate employment after vesting are entitled to a pension benefit commencing at age 65. Vested participants who earn 10 or more years of credited service can elect to have their Pension Plan benefits commence as early as age 50. If such an election is made, the early retirement reductions that apply are actuarially determined factors and are larger than 0.3% per month.

If a vested participant dies while actively employed, benefits will be paid to a surviving spouse. A survivor’s benefit equals 45% of the monthly benefit that the participant had earned before his or her death. Payments to a surviving spouse of a participant who attained age 50 prior to death will begin receiving benefits immediately; otherwise, survivor payments begin when the deceased participant would have attained age 50. After commencing, survivor benefits are payable monthly for the remainder of a survivor’s life. Participants who are age 50 or older may opt to have an 80%, instead of 45%, survivor benefit paid if they die; however, there is a charge associated with this election. Surviving spouses of vested participants who have terminated employment and not yet elected to start receiving benefits receive smaller benefits.

If vested participants become totally disabled, periods that Social Security Disability Income or Company disability income benefits are paid will count as service for benefit calculation purposes. The crediting of this additional service ceases at the point a disabled participant dies, stops receiving disability income benefits or elects to commence retirement payments. Outside of the extra service crediting, the normal plan provisions apply to disabled participants.

SBP-Pension Related (the “SBP-P”)

The same SBP that provides for deferred compensation related to contributions the Company cannot make to the ESP due to various limits under the Code also provides for a supplemental defined benefit pension. Please see the description of the non-pension component of the SBP following the Nonqualified Deferred Compensation Table. The SBP-P is an unfunded retirement plan that is not tax qualified. This plan pays more highly compensated employees, including each of the named executive officers, benefits that equal the excess of what their Pension Plan benefits would be if statutory compensation/benefit limits and voluntary pay deferrals under the DCP were ignored over what their Pension Plan benefits actually are. In 2006, the form of payment election made for Pension Plan benefits also applies to SBP-P benefits. The SBP-P’s vesting, early retirement, survivor benefit and disability provisions mirror those of the Pension Plan.

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SERP

The SERP also is an unfunded retirement plan that is not tax qualified. This plan provides more highly compensated employees, including each of the named executive officers, additional benefits that the Pension Plan would pay if the 1.7% offset formula calculations reflected a portion of annual cash incentives under the PPP. To derive the SERP benefits, a final average pay is determined reflecting participants’ base salary level and their payouts under the PPP to the extent such PPP payouts exceed 15% of those base salary levels (ignoring statutory limits and voluntary pay deferrals under the DCP). This final average pay is used in the 1.7% offset formula to derive a gross benefit. The Pension Plan and the SBP-P benefits are subtracted from the gross benefit to calculate the SERP benefit payable. In 2006, the form of payment election made for Pension Plan benefits also applies to SERP benefits. The SERP’s early retirement, survivor benefit and disability provisions match the Pension Plan’s provisions. SERP benefits do not vest until participants retire.

Supplemental Pension Benefit Agreements (“SPBA”)

Supplemental Pension Benefit Agreements provide additional pension benefits. These agreements provide certain executives the benefits that Southern Company’s other three pension plans would pay if the participant had worked additional years. These agreements are usually entered into on an as needed basis to attract and retain executives. The number of additional years of service is most often based on periods of relevant employment with another company. For example, service may be awarded for employment with an accounting or law firm.

Changes Effective in 2007 to the SBP-P and the SERP

In early 2007, changes were made to the SBP-P and the SERP to comply with Section 409A of the Code. One of the changes made affects the form of payment for the SBP-P and the SERP. Participants will elect to receive a lifetime of monthly benefits, as is currently provided for, or the single-sum value of those monthly payments for an average lifetime paid out in 10 annual installments.

Description of Assumptions in Calculating Present Value of Accumulated Pension Benefits

The amounts in column (d) of this Pension Benefit Table show the present values of accumulated benefits each named executive officer has earned as of September 30, 2006. September 30, 2006 is the measurement date used in the Company’s audited financial statements.

Each present value of pension benefits is a weighted sum of the present values of the full benefit paid monthly over the named executive officer’s post-retirement lifetime and reduced amounts payable over the joint lifetimes of the named executive officer and a spouse. The weights are the form of payment assumptions described below.

The present values of pension benefits in each form of payment equals the sum of all the expected monthly payments after being discounted to reflect the time value of money between the measurement date and the expected payment dates. The expected monthly payments are based on the benefits payable to the named executive officer, and to a spouse for forms paid over joint lifetimes, times the probability that the named executive officer or spouse will survive from the named executive officer’s normal retirement age to the payment date. The probabilities of survival were derived from a table of actuarial mortality rates.

The following assumptions were used in the present value calculations:

| • | Discount rate — six percent as of September 30,
2006 |
| --- | --- |
| • | Retirement date — Normal retirement age (65 for all
named executive officers) |
| • | Mortality after normal retirement — RP2000 Combined
Healthy mortality rate table |
| • | Mortality, withdrawal, disability and retirement rates prior to
normal retirement — None |
| • | Form of payment |

•	Unmarried retirees: 100% elect a single life annuity
•	Married retirees: 20% elect a single life annuity; 40% elect a
joint and 50% survivor annuity; and 40% elect a joint and 100%
survivor annuity

| • | Percent married at retirement — 80% of males and 70%
of females |
| --- | --- |
| • | Spouse ages — Wives two years younger than their
husbands |
| • | Incentives earned but unpaid as of the measurement
date — 130% of target percentages times base rate of
pay for year incentive is earned |

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callerid=999 iwidth=479 length=0

NONQUALIFIED DEFERRED COMPENSATION AS OF 2006 FISCAL YEAR-END

callerid=999 iwidth=479 length=0

	Executive	Registrant	Aggregate	Aggregate
	Contributions	Contributions	Earnings	Withdrawals/	Aggregate Balance
	in Last FY	in Last FY	in Last FY	Distributions	at Last FYE
Name	($)	($)	($)	($)	($)
(a)	(b)	(c)	(d)	(e)	(f)
M. D. Garrett	0	16,520	90,606	0	1,114,170
C. S. Thrasher	0	1,656	54,165	0	686,238
J. H. Miller, III	0	4,333	15,497	0	151,832
C. C. Womack	109,769	3,043	118,088	0	1,364,315
M. A. Brown	27,613	4,193	14,014	0	171,896
W. C. Archer, III	0	0	270,920	754,966	3,272,980

The Company provides the DCP which is designed to permit participants to defer income as well as certain federal, state and local taxes until a specified date or their retirement, disability, death or other separation from service. Up to 50% of base salary and up to 100% of PPP and PDP may be deferred, at the election of eligible employees. All of the named executive officers are eligible to participate in the DCP.

Participants have two options for the deemed investments of the amounts deferred — the Stock Equivalent Account and the Prime Equivalent Account. Under the terms of the DCP, participants are permitted to transfer between investments at any time.

The amounts deferred in the Stock Equivalent Account are treated as if invested at an equivalent rate of return to that of an actual investment in Common Stock, including the crediting of dividend equivalents as such are paid by Southern Company from time to time. It provides participants with an equivalent opportunity for the capital appreciation (or loss) and income held by a Southern Company stockholder. During 2006, the rate of return in the Stock Equivalent Account was 11.7%, which was Southern Company’s TSR for 2006.

Alternatively, participants may elect to have their deferred compensation deemed invested in the Prime Equivalent Account which is treated as if invested at a prime interest rate compounded monthly, as published in the Wall Street Journal as the base rate on corporate loans posted as of the last business day of each month by at least 75% of the United States’ largest banks. The range of interest rates earned on amounts deferred during 2006 in the Prime Equivalent Account was 7.25% to 8.25%.

Column (b)

This column reports the actual amounts of compensation deferred under the DCP by each named executive officer in 2006. The amount of salary deferred by each of the named executive officers, if any, is included in the Salary column in the Summary Compensation Table. The amount of incentive compensation deferred in 2006 was the amount paid for performance under the PPP and the PDP that were earned as of December 31, 2005 but not payable until the first quarter of 2006. This amount is not reflected in the Summary Compensation Table because that table reports incentive compensation that was earned in 2006, but not payable until early 2007. These deferred amounts may be distributed in a lump sum or in up to 10 annual installments at termination of employment or in a lump sum at a specified date, at the election of the participant.

Column (c)

This column reflects the Company’s contributions under the SBP-N. Under the Code, the Company is prohibited from making matching contributions under the ESP on employee contributions above stated limits in the ESP, and, if applicable, above legal limits set forth in the Code. The SBP-N is a nonqualified deferred compensation plan under which the Company contributes the amount of Company contributions that it is prohibited from making in the ESP. The contributions are treated as if invested in Common Stock and are payable in cash upon termination of employment in a lump sum or in up to 20 annual installments, at the election of the participant. The amounts reported in this column also were reported in the All Other Compensation column in the Summary Compensation Table.

Column (d)

This column reports earnings on both compensation the named executive officers elected to defer and earnings on Company contributions under the SBP-N. See the notes to column (h) of the Summary Compensation Table for

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a discussion of amounts of nonqualified deferred compensation earnings included in the Summary Compensation Table.

Column (f)

This column includes amounts that were deferred under the DCP and contributions under the SBP-N in prior years and reported in prior years’ Information Statements or Annual Reports on Form 10-K. The chart below shows the amounts reported in prior years’ Information Statements or Annual Reports on Form 10-K for the Company.

	Amounts Deferred under — the DCP Prior to 2006	Amounts Contributed by the — Company under the SBP-N
	and Reported in Prior	Prior to 2006 and Reported
	Years’ Information	in Prior Years’ Information
	Statements or Annual	Statements or Annual
	Reports on Form 10-K	Reports on Form 10-K	Total
Name	($)	($)	($)
M. D. Garrett	0	33,651	33,651
C. S. Thrasher	56,881	0	56,881
J. H. Miller, III	0	11,454	11,454
C. C. Womack	664,730	25,489	690,219
M. A. Brown	104,801	14,139	118,940
W. C. Archer, III	2,781,464	52,257	2,833,721

callerid=999 iwidth=479 length=0

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

callerid=999 iwidth=479 length=0

This section describes and estimates payments that could be made to the named executive officers under different termination and CIC events. The estimated payments would be made under the terms of the Company compensation and benefits programs or the CIC program. The amount of potential payments is calculated as if the triggering events occurred as of December 31, 2006 and assumes that the price of the Common Stock is the closing market price as of December 29, 2006.

Description of Termination and CIC Events

The following charts list different types of termination and CIC events that can affect the treatment of payments under the Company’s compensation and benefit programs. These events also affect payments to the named executive officers under their CIC severance agreements. No payments are made under the CIC program unless, within two years of the CIC, the named executive officer is involuntarily terminated or he or she voluntarily terminates for Good Reason. (See the description of Good Reason below.)

Traditional Termination Events

| • | Retirement or Retirement Eligible — Termination of a
named executive officer who is at least 50 years old and
has at least 10 years of credited service. |
| --- | --- |
| • | Resignation — Voluntary termination of a named
executive officer who is not retirement eligible. |
| • | Lay Off — Involuntary termination of a named executive
officer not for cause, who is not retirement eligible. |
| • | Involuntary Termination — Involuntary termination of a
named executive officer for cause. Cause includes individual
performance below minimum performance standards and misconduct,
such as violation of the Company’s Drug and Alcohol Policy. |
| • | Death or Disability — Termination of a named executive
officer due to death or disability. |

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CIC-Related Events

At the Southern Company or the Company level:

| • | Southern Company CIC I — Acquisition by another entity
of 20% or more of Common Stock, or following a merger with
another entity the Southern Company’s stockholders own 65%
or less of the company surviving the merger. |
| --- | --- |
| • | Southern Company CIC II — Acquisition by another
entity of 35% or more of Common Stock, or following a merger
with another entity the Southern Company’s stockholders own
less than 50% of the company surviving the merger. |
| • | Southern Company Termination — A merger or other event
and the Southern Company is not the surviving company or the
Common Stock is no longer publicly traded. |
| • | Company CIC — Acquisition by another entity, other
than another subsidiary of the Southern Company, of 50% or more
of the stock of the Company, a merger with another entity and
the Company is not the surviving company or the sale of
substantially all the assets of the Company. |

At the employee level:

• Involuntary CIC Termination or Voluntary CIC Termination for Good Reason — Employment is terminated within two years of a CIC, other than for cause, or the employee voluntary terminates for Good Reason. Good Reason for voluntarily termination within two years of a CIC is generally satisfied when there is a reduction in salary, incentive compensation opportunity or benefits, relocation of over 50 miles or a diminution in duties and responsibilities.

The following chart describes the treatment of different pay and benefit elements in connection with the Traditional Termination Events described above.

	Retirement/	Lay Off — (Involuntary			Involuntary
	Retirement	Termination			Termination
Program	Eligible	Not For Cause)	Resignation	Death or Disability	(For Cause)
Pension
Benefits: • Pension Plan • SBP-P • SERP	Lifetime of monthly benefits paid.
Reductions apply if payments start prior to age 65.	SERP-related benefits forfeited.
Other vested benefits paid monthly for lifetime after executive
reaches retirement eligibility. Reductions apply if payments
start prior to age 65.	Same as Lay Off.	At death, surviving spouse
receives a lifetime of monthly payments equal to 45% (or 80% if
participant has made that election) of benefits earned. If
vested under the Pension Plan, all pension benefits continue to
accumulate while disabled. Lifetime of monthly payments after
executive becomes retirement eligible and elects commencement.	Same as for retirement and
resignation, as the case may be.
PPP	Pro-rated if terminate before 12/31.	Pro-rated if terminate before 12/31.	Forfeit.	Pro-rated if terminate before 12/31.	Forfeit.
PDP	Paid year of retirement plus two
additional years.	Forfeit.	Forfeit.	Payable until options expire or
exercised.	Forfeit.

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	Retirement/	Lay Off — (Involuntary			Involuntary
	Retirement	Termination			Termination
Program	Eligible	Not For Cause)	Resignation	Death or Disability	(For Cause)
Stock Options	Vest; expire earlier of original
expiration date or five years.	Vested options expire in
90 days; unvested are forfeited.	Vested options expire in
90 days; unvested are forfeited.	Vest; expire earlier of original
expiration or three years.	Forfeit.
Financial Planning
Perquisite	Continues for one year.	Terminates.	Terminates.	Continues for one year.	Terminates.
DCP	Payable per prior elections (lump
sum or up to 10 annual installments).	Same as Retirement.	Same as Retirement.	Payable to beneficiary or disabled
participant per prior elections; amounts deferred prior to 2005
can be paid as a lump sum at the DCP administrative
committee’s discretion.	Same as Retirement.
SBP-N	Payable per prior elections (lump
sum or up to 20 annual installments).	Same as Retirement.	Same as Retirement.	Same as the DCP, above.	Same as Retirement.

The chart below describes the treatment of payments under pay and benefit programs under different CIC events, except the Pension Plan (the “CIC Chart”). The Pension Plan is not affected by CIC events.

				Involuntary CIC-
				Related Termination
				or Voluntary CIC-
			Southern Company	Related Termination
	Southern Company	Southern Company	Termination or	for
Program	CIC I	CIC II	Company CIC	Good Reason
Nonqualified Pension
Benefits: • SBP-P • SERP • SPBA	All SERP-related benefits vest if
participant vested in Pension Plan benefits; otherwise, no
impact.	Vesting called for upon a Southern
Company CIC I, and benefits paid as a lump sum following
termination or retirement.	Same as Southern Company
CIC II.	Based on type of CIC Event.
PPP	No plan termination is paid at
greater of target or actual performance. If plan terminated
within two years of CIC, pro-rated at target performance level.	Same as Southern Company CIC I.	Pro-rated at target performance
level.	If not otherwise eligible for
payment, if PPP still in effect, pro-rated at target performance
level.

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				Involuntary CIC-
				Related Termination
				or Voluntary CIC-
			Southern Company	Related Termination
	Southern Company	Southern Company	Termination or	for
Program	CIC I	CIC II	Company CIC	Good Reason
PDP	No plan termination is paid at
greater of target or actual performance. If plan terminated
within two years of CIC, pro-rated at greater of target or
actual performance level.	Same as Southern Company CIC I.	Pro-rated at greater of actual or
target performance level.	If not otherwise eligible for
payment, if the PDP still in effect, greater of actual or target
performance level for year of severance only.
Stock Options	Not affected by CIC events.	Not affected by CIC events.	Vest and convert to surviving
company’s securities if there is a Southern Company
Termination; if cannot convert, pay spread in cash; not affected
by a Company Termination.	Vest.
DCP	Not affected by CIC events.	Payable in lump sum following
termination.	Same as Southern Company
CIC II.	Based on type of CIC event.
SBP-N	Not affected by CIC events.	Participant provided opportunity
to elect lump sum payment.	Participant provided opportunity
to elect lump sum payment.	Based on type of CIC event.
Severance Benefits	Not applicable.	Not applicable.	Not applicable.	Two or three times base salary
plus target PPP plus tax gross up for certain named executive
officers if severance amounts exceed Code Section 280G
“excess parachute payment” by 10% or more.
Health Benefits	Not applicable.	Not applicable.	Not applicable.	Up to five years participation in
group health plan plus payment of two or three years’
premium amounts.
Outplacement Services	Not applicable.	Not applicable.	Not applicable.	Six months.

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Potential Payments

This section describes and estimates payments that would become payable to the named executive officers, except Mr. Archer, upon a termination or CIC as of December 31, 2006. Mr. Archer retired in March 2006; therefore, actual payments made to Mr. Archer in connection with his retirement are described below.

Pension Benefits

The monthly amounts that would have become payable to the named executive officers if the Traditional Termination Events occurred as of December 31, 2006 under the Pension Plan, the SBP-P and the SERP are itemized in the chart below. The amounts shown in the chart are monthly benefit amounts whereas the pension values shown in the Summary Compensation and Pension Benefit Tables are present values of all the monthly values anticipated to be paid over the lifetimes of the named executive officers and their spouses. These plans are described in the notes following the Pension Benefits Table. Mr. Archer retired effective in March 2006. All the other named executive officers, with the exception of Mr. Womack, were retirement eligible on December 31, 2006. Mr. Womack will become retirement eligible in February 2008. The benefits were determined using the same assumptions used to compute benefit values in the Pension Benefit Table with three exceptions: the amounts have been determined as of December 31, 2006 instead of as of September 30, 2006; the benefit payments were assumed to commence as soon as possible instead of at normal retirement and, as such, appropriate early retirement reductions were applied; and the benefits were not adjusted to reflect optional forms of payment such that all benefits are the amounts that would have been paid monthly over the named executive officer’s life.

	Retirement		Resignation or — Involuntary Retirement	Death — (monthly payments to
	(monthly payments)		(monthly payments)	a spouse)
Name	($)		($)	($)
M. D. Garrett	Pension Plan	7,699	All plans treated as retiring	4,806
	SBP-P	26,711		16,671
	SERP	10,903		6,805
C. S. Thrasher	Pension Plan	7,047	All plans treated as retiring	4,473
	SBP-P	4,518		2,867
	SERP	2,457		1,559
J. H. Miller, III	Pension Plan	2,390	All plans treated as retiring	1,498
	SBP-P	2,937		1,841
	SERP	1,216		762
	SPBA	5,627		3,527
C. C. Womack	Pension Plan	N/A	1,404	2,305
	SBP-P	N/A	1,469	2,414
	SERP	N/A	0	1,064
	SPBA	N/A	1,277	2,604
M. A. Brown	Pension Plan	8,179	All plans treated as retiring	4,624
	SBP-P	7,871		4,450
	SERP	3,515		1,987

As described in the CIC Chart, the only change in the form of payment, acceleration or enhancement of the pension benefits is the lump-sum payment of nonqualified pensions that normally would have been paid monthly over the lifetimes of the named executive officers and their spouses at termination following certain CIC events and the vesting of SERP-related benefits. Estimates of the lump-sum payments that would have been made to the named executive officers, assuming termination as of December 31, 2006 following a CIC event, other than a Southern Company CIC I (which does not impact pension benefits), are itemized below. These lump-sum amounts are not in addition to the amounts shown in the Pension Benefits Table. These amounts would have been in lieu of the monthly payments whose values are represented in the Pension Benefits Table under the circumstances described above.

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	SBP-P	SERP	Total
Name	($)	($)	($)
M. D. Garrett	4,165,085	1,700,121	5,865,206
C. S. Thrasher	708,551	385,328	1,093,879
J. H. Miller, III	458,634	189,887	648,521
C. C. Womack	237,858	104,923	342,781
M. A. Brown	1,181,886	527,802	1,709,688

Mr. Archer retired in 2006 and, therefore, would not be eligible for lump-sum payments in the event of a CIC. The lump-sum amounts in the table above are calculated using the same basic methodology used to compute the values in the Pension Benefits Table. However, amounts were computed as of December 31, 2006 instead of September 30, 2006. In addition, certain assumptions were changed to those that have been selected by the Company for lump-sum calculations following a CIC. Benefit payments were assumed to commence at the earliest date monthly payments would have been available instead of deferred to the named executive officers’ normal retirement dates; therefore, appropriate early retirement reductions apply. Also, only the form of payment providing monthly benefits over the named executive officer’s lifetime is considered. A 5.75% discount rate is assumed instead of 6.00%, and mortality rates specified by the Internal Revenue Service in Revenue Ruling 2001-62 were assumed instead of those disclosed in the information following the Pension Benefits Table.

PPP

Because this section assumes that a termination or CIC event occurred on December 31, 2006, there is no amount that would be payable other than the amount reported and described in the Summary Compensation Table because actual performance in 2006 exceeded target performance.

PDP

Because the assumed termination date is December 31, 2006, there is no additional amount that would be payable other than what was reported in the Summary Compensation Table under the Traditional Termination Events. As described in the Traditional Termination Events chart, there is some continuation of benefits under the PDP for retirees.

However, under the CIC-Related Events, PDP is payable at the greater of target performance or actual performance. For the 2003-2006 performance period, actual performance was less than target performance. The table below estimates the additional amount that would have been payable under the PDP if a CIC occurred as of December 31, 2006.

	Additional PDP
Name	($)
M. D. Garrett	91,294
C. S. Thrasher	18,614
J. H. Miller, III	56,220
C. C. Womack	56,421
M. A. Brown	30,476

Stock Options

Stock options would be treated as described in the Termination and CIC Charts above. Under a Southern Company Termination, all stock options vest. In addition, if there is an Involuntary CIC Termination or Voluntary CIC Termination for Good Reason, stock options vest. There is no payment associated with stock options unless there is a Southern Company Termination and the participants’ stock options cannot be converted into surviving company stock options. In that event, the excess of the exercise price and the closing price of the Common Stock on December 29, 2006 would have been paid in cash for all stock options held by the named executive officers. The chart below shows the number of stock options for which vesting would be accelerated

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under a Southern Company Termination and the amount that would be payable under a Southern Company Termination if there were no conversion to surviving company stock options.

	Number of	Total Number of — Options Following	Total Payable in Cash — under a Southern
	Options with	Accelerated Vesting	Company Termination
	Accelerated	under a Southern	without Conversion of
	Vesting	Company Termination	Stock Options
Name	(#)	(#)	($)
M. D. Garrett	164,602	262,718	1,330,625
C. S. Thrasher	37,078	53,565	252,631
J. H. Miller, III	69,688	161,782	1,477,955
C. C. Womack	51,051	162,364	1,370,762
M. A. Brown	48,329	87,700	483,241

DCP and SBP-N

The aggregate balances reported in the Nonqualified Deferred Compensation Table would be payable to the named executive officers as described in the Traditional Termination and CIC-Related Events charts above. There is no enhancement or acceleration of payments under these plans associated with termination or CIC events, other than the lump-sum payment opportunity described in the above charts. The lump sums that would be payable are those that are reported in the Nonqualified Deferred Compensation Table.

Health Benefits

Because Mr. Archer retired in March 2006 and Messrs. Garrett, Thrasher, Miller and Brown are retirement eligible and health care benefits are provided to retirees, there is no incremental payment associated with the termination or CIC events. At the end of 2006, Mr. Womack was not retirement eligible and thus health care benefits would not become available until he reached age 50, except in the case of a CIC-Related Termination, as described in the CIC-Related Events chart. The estimated cost of providing two years of group health insurance premiums for Mr. Womack is $27,870.

Financial Planning Perquisite

For Mr. Archer who retired in March 2006 and because Messrs. Garrett, Thrasher, Miller and Brown are retirement eligible, an additional year of the Financial Planning perquisite which is set at a maximum of $7,000 per year is provided after retirement or will be provided after retirement. Mr. Womack is not retirement eligible.

There are no other perquisites provided to the named executive officers under any of the traditional termination or CIC-related events.

Severance Benefits

The Company has entered into an individual CIC severance agreement with Mr. Garrett. The other named executive officers except Mr. Archer, are participants in a CIC severance plan. In addition to the treatment of Health Benefits, PPP and PDP described above, the named executive officers are entitled to a severance benefit, including outplacement services, if within two years of a CIC they an involuntarily terminated, not for Cause, or they voluntarily terminate for Good Reason. The severance benefits are not paid unless the named executive officer releases the Company from any claims he may have against the Company.

The estimated cost of providing the six months of outplacement services is $6,000 per named executive officer. The severance payment is two times the named executive officer’s base salary plus target payout under the PPP except for Mr. Garrett, whose severance payment is three times his base salary plus target payout under the PPP. If any portion of Mr. Garrett’s severance payment is an “excess parachute payment” as defined under Section 280G of the Code, the Company will pay him an additional amount to cover the taxes that would be due on the excess parachute payment — a “tax gross-up.” However, that additional amount will not be paid unless the severance amount plus all other amounts that are considered parachute payments under the Code exceed 110% of the severance payment.

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The table below estimates the severance payments that would be made to the named executive officers if they were terminated as of December 31, 2006 in connection with a CIC. There is no estimated tax gross-up included for any of the named executive officers because their respective estimated severance amounts payable are below the amounts considered excess parachute payments under the Code.

	Severance Amount
Name	($ )
M. D. Garrett	3,076,500
C. S. Thrasher	764,700
J. H. Miller, III	936,836
C. C. Womack	955,123
M. A. Brown	915,310

Retirement of William C. Archer, III

Mr. Archer retired in March 2006. As described in the CD&A, the Company entered into a severance agreement and a consulting agreement with Mr. Archer in connection with his retirement. The amounts payable under those agreements is detailed in the CD&A. Mr. Archer received a pro-rated PPP payout as described in the Termination Events Chart, above, and as shown in the Summary Compensation Table. Also as described in the chart, all stock options held by Mr. Archer became fully vested upon his retirement, as shown in the Outstanding Equity Awards Table. Under the terms of the Pension Plan, the SBP-P and the SERP, Mr. Archer began receiving monthly distributions of $5,707, $5,987 and $2,608, respectively.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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The Compensation Committee is made up of non-employee directors of Southern Company who have never served as executive officers of Southern Company or the Company. During 2006, none of Southern Company’s or the Company’s executive officers served on the board of directors of any entities whose directors or officers serve on the Compensation Committee.

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STOCK OWNERSHIP TABLE

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Southern Company is the beneficial owner of 100 percent of the outstanding common stock of the Company. The following table shows the number of shares of Common Stock owned by directors, nominees and executive officers as of December 31, 2006. It is based on information furnished by the directors, nominees and executive officers. The shares owned by all directors, nominees and executive officers as a group constitute less than one percent of the total number of shares of Common Stock outstanding on December 31, 2006.

		Shares Beneficially Owned Include:
			Shares
			Individuals
	Shares		Have Rights to	Shares Held
Name of Directors, Nominees	Beneficially	Deferred Stock	Acquire Within	by Family
and Executive Officers	Owned(1)	Units(2)	60 Days(3)	Members(4)
Gus H. Bell, III	3,218	2,715
Robert L. Brown, Jr.	6,059	6,059
Ronald D. Brown	1,027	951
Anna R. Cablik	3,517	3,017		500
Michael D. Garrett	175,427		173,584
David M. Ratcliffe	996,256		980,167
D. Gary Thompson	14,338	4,339
Richard W. Ussery	30,096
William J. Vereen	5,216	2,768
E. Jenner Wood, III	4,292	3,467
Cliff S. Thrasher	39,215		34,342	1,000
James H. Miller, III	141,477		135,979
Christopher C. Womack	138,732		137,112
Mickey A. Brown	76,796		62,574
Judy M. Anderson	97,227		91,404
Douglas E. Jones	96,635		88,669
Directors, Nominees and Executive
Officers as a group (16 people)	1,829,528	23,316	1,703,831	1,500

| (1) | “Beneficial ownership” means the sole or shared power
to vote, or to direct the voting of, a security, and/or investment power with respect to a security or any combination
thereof. |
| --- | --- |
| (2) | Indicates the number of Deferred Stock Units held under the
Director Deferred Compensation Plan. |
| (3) | Indicates shares of Common Stock that certain executive officers
have the right to acquire within 60 days. Shares indicated
are included in the Shares Beneficially Owned column. |
| (4) | Each director and/or executive officer disclaims any interest in shares held by
family members. Shares indicated are included in the
Shares Beneficially Owned column. |

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OTHER INFORMATION

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Section 16(a) Beneficial Ownership Reporting Compliance

No reporting person of the Company failed to file, on a timely basis, the reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

Certain Relationships And Related Transactions

Mr. E. Jenner Wood, III, a director of the Company, is chairman, president and chief executive officer of SunTrust Bank, Central Banking Group and executive vice president of SunTrust Banks, Inc. Ms. Anna R. Cablik, a director of the Company, is a director of BB&T. During 2006, these banks furnished a number of regular banking services in the ordinary course of business to the Company. The Company intends to maintain normal banking relations with all of the aforesaid banks in the future.

Mr. Ronald D. Brown, a director of the Company, is president and chief executive officer of Atlanta Life Financial Group, which recently acquired Jackson Securities LLC. Mr. Brown is also chairman of the board of governors of Jackson Securities LLC. Atlanta Life Financial Group and its affiliates engage in transactions with and perform services for the Company in the ordinary course of business and have engaged and may in the future engage in commercial banking and/or investment banking transactions with the Company.

During 2006, the Company leased a building for $83,700 and purchased uniforms for $261,451 from Riverside Manufacturing Company. Mr. William J. Vereen, a director of the Company, is chairman, president and chief executive officer of Riverside Manufacturing Company.

Also, in 2006, the Company purchased reinforced steel from Anasteel & Supply Company, LLC for $1,302,222 and paid $362,548 to MassAna Construction, LLC for site preparation and foundation construction services at plant sites. Ms. Anna R. Cablik is president of Anasteel & Supply Company, LLC and was formerly the president of MassAna Construction, LLC, which was sold in December 2006.

In 2006, Mr. Norman Dennis, the son-in-law of Mr. Richard Ussery, a director of the Company, was employed by the Company as an Environmental Manager and received compensation of $245,976. For Mr. Dennis this amount included $7,876 in connection with his exercise of Southern Company stock options in 2006, which were granted in prior years.

In 2006, Ms. Judy Anderson and Mr. Douglas Jones, both executive officers of the Company received compensation of $551,467 and $869,469 respectively. For Mr. Jones, this amount included $194,964 in connection with his exercise of Southern Company stock options in 2006, which were granted in prior years.

The Company does not have a written policy pertaining solely to the approval or ratification of “related party transactions.” However, Southern Company has a Code of Ethics as well as employment and compensation policies that govern the hiring and compensating of all employees including those named above. Southern Company also has a Contract Guidance Manual and other formal written procurement policies and procedures that guide the purchase of goods and services, including requiring competitive bids for most transactions above $10,000 or approval based on documented business needs for sole sourcing arrangements.

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