2.2.0.25falsefalse0401 - Disclosure - Summary of Significant Accounting Policies (Policies)truefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
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<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table1 - so:GeneralPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>General</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Southern Company (the Company) is the parent company of four traditional operating companies,
Southern Power Company (Southern Power), Southern Company Services, Inc. (SCS), Southern
Communications Services, Inc. (SouthernLINC Wireless), Southern Company Holdings, Inc. (Southern
Holdings), Southern Nuclear Operating Company, Inc. (Southern Nuclear), and other direct and
indirect subsidiaries. The traditional operating companies – Alabama Power Company (Alabama
Power), Georgia Power Company (Georgia Power), Gulf Power Company (Gulf Power), and Mississippi
Power Company (Mississippi Power) – are vertically integrated utilities providing electric service
in four Southeastern states. Southern Power constructs, acquires, owns, and manages generation
assets and sells electricity at market-based rates in the wholesale market. SCS, the system
service company, provides, at cost, specialized services to Southern Company and its subsidiary
companies. SouthernLINC Wireless provides digital wireless communications for use by Southern
Company and its subsidiary companies and also markets these services to the public and provides
fiber cable services within the Southeast. Southern Holdings is an intermediate holding company
subsidiary for Southern Company’s investments in leveraged leases. Southern Nuclear operates and
provides services to Southern Company’s nuclear power plants.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The financial statements reflect Southern Company’s investments in the subsidiaries on a
consolidated basis. The equity method is used for entities in which the Company has significant
influence but does not control and for variable interest entities where the Company has an equity
investment, but is not the primary beneficiary. All material intercompany transactions have been
eliminated in consolidation. Certain prior years’ data presented in the financial statements have
been reclassified to conform to the current year presentation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The traditional operating companies, Southern Power, and certain of their subsidiaries are subject
to regulation by the Federal Energy Regulatory Commission (FERC) and the traditional operating
companies are also subject to regulation by their respective state public service commissions
(PSC). The companies follow generally accepted accounting principles (GAAP) in the U.S. and comply
with the accounting policies and practices prescribed by their respective commissions. The
preparation of financial statements in conformity with GAAP requires the use of estimates, and the
actual results may differ from those estimates.
</div>
</div>
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Regulatory Assets and Liabilities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The traditional operating companies are subject to the provisions of the Financial Accounting
Standards Board in accounting for the effects of rate regulation. Regulatory assets represent
probable future revenues associated with certain costs that are expected to be recovered from
customers through the ratemaking process. Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are expected to be credited to customers
through the ratemaking process.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Regulatory assets and (liabilities) reflected in the balance sheets at December 31 relate to:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">Note</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred income tax charges
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>1,204</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,048</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(a</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred income tax charges — Medicare subsidy
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>82</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(k</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement obligations-asset
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>79</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">125</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(a,i</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement obligations-liability
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(82</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(47</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(a,i</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other cost of removal obligations
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(1,188</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,307</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(a</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred income tax credits
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(237</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(249</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(a</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Loss on reacquired debt
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>274</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">255</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(b</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Vacation pay
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>151</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">145</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(c,i</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Under recovered regulatory clause revenues
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>27</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">40</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Over recovered regulatory clause revenues
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(40</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(218</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Building leases
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>45</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">47</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(f</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Generating plant outage costs
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>31</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">39</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Under recovered storm damage costs
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>8</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Property damage reserves
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(216</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(157</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(h</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Fuel hedging-asset
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>211</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">187</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Fuel hedging-liability
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(7</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other assets
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>171</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">156</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(d</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Environmental remediation-asset
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>67</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">68</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(h,i</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Environmental remediation-liability
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(10</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(13</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(h</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Environmental compliance cost recovery
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>—</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(96</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(g</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(13</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(51</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(j</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Retiree benefit plans
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>2,041</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,268</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(e,i</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total assets (liabilities), net
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>2,598</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,260</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(a)</td>
<td width="1%"> </td>
<td>Asset retirement and removal assets and liabilities are recorded, deferred income tax assets are recovered, and
deferred income tax liabilities are amortized over the related property lives, which may range up to 65 years. Asset
retirement and other cost of removal liabilities will be settled and trued up following completion of the related
activities. Other cost of removal obligations include $92 million at Georgia Power that will be amortized over a
three-year period beginning January 1, 2011 in accordance with a Georgia PSC order. See Note 3 under “Retail
Regulatory Matters — Georgia Power — Retail Rate Plans” for additional information.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(b)</td>
<td width="1%"> </td>
<td>Recovered over either the remaining life of the original issue or, if refinanced, over the life of the new issue,
which may range up to 50 years.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(c)</td>
<td width="1%"> </td>
<td>Recorded as earned by employees and recovered as paid, generally within one year.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(d)</td>
<td width="1%"> </td>
<td>Recorded and recovered or amortized as approved by the appropriate state PSCs over periods not exceeding 10 years.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(e)</td>
<td width="1%"> </td>
<td>Recovered and amortized over the average remaining service period which may range up to 15 years. See Note 2 for
additional information.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(f)</td>
<td width="1%"> </td>
<td>Recovered over the remaining lives of the buildings through 2026.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(g)</td>
<td width="1%"> </td>
<td>Deferred revenue associated with the levelization of Georgia Power’s environmental compliance cost recovery
(ECCR) tariff revenue for the years 2008 through 2010 in accordance with a Georgia PSC order.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(h)</td>
<td width="1%"> </td>
<td>Recovered as storm restoration or environmental remediation expenses are incurred.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(i)</td>
<td width="1%"> </td>
<td>Not earning a return as offset in rate base by a corresponding asset or liability.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(j)</td>
<td width="1%"> </td>
<td>Recorded and recovered or amortized as approved by the appropriate state PSC over periods up to the life of the
plant or the remaining life of the original issue or, if refinanced, over the life of the new issue which may range
up to 50 years.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left">(k)</td>
<td width="1%"> </td>
<td>Recovered and amortized as approved by the appropriate state PSCs over periods not exceeding 14 years. See Note
5 under “Current and Deferred Income Taxes” for additional information.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In the event that a portion of a traditional operating company’s operations is no longer subject to
applicable accounting rules for rate regulation, such company would be required to write off or
reclassify to accumulated other comprehensive income (OCI) related regulatory assets and
liabilities that are not specifically recoverable through regulated rates. In addition, the
traditional operating company would be required to determine if any impairment to other assets,
including plant, exists and write down the assets, if impaired, to their fair values. All
regulatory assets and liabilities are to be reflected in rates. See Note 3 under “Retail
Regulatory
Matters — Alabama Power,” “Retail Regulatory Matters — Georgia Power,” and “Retail Regulatory
Matters — Mississippi Power Integrated Coal Gasification Combined Cycle” for additional
information.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringMay be used as a block of text to describe all the accounting policies unique to utilities. Examples include a discussion about the scope criteria and appropriateness for and extent of the application of FAS 71 (may include identification of specific business units). Other examples of the disclosures may include: descriptions of the form and economic effects of regulation (for example, recording of regulatory assets and liabilities to the rate setting process); statement about periodic assessments of FAS 71 applicability; information regarding amortization of and return on regulatory assets and liabilities, including the remaining amounts and recovery or settlement periods; accounting for changes to recovery estimates; AFUDC, plant abandonment's and plant disallowances.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 92
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 90
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 71
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 101
falsefalse5false0us-gaap_RevenueRecognitionPolicyTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table3 - us-gaap:RevenueRecognitionPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Revenues</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Wholesale capacity revenues are generally recognized on a levelized basis over the appropriate
contract periods. Energy and other revenues are recognized as services are provided. Unbilled
revenues related to retail sales are accrued at the end of each fiscal period. Electric rates for
the traditional operating companies include provisions to adjust billings for fluctuations in fuel
costs, fuel hedging, the energy component of purchased power costs, and certain other costs.
Revenues are adjusted for differences between these actual costs and amounts billed in current
regulated rates. Under or over recovered regulatory clause revenues are recorded in the balance
sheets and are recovered or returned to customers through adjustments to the billing factors.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company has a diversified base of customers. No single customer or industry comprises 10%
or more of revenues. For all periods presented, uncollectible accounts averaged less than 1% of
revenues.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policy for revenue recognition. If the entity has different policies for different types of revenue transactions, the policy for each material type of transaction should be disclosed. If a sales transaction has multiple element arrangements (for example, delivery of multiple products, services or the rights to use assets) the disclosure may indicate the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. The disclosure may encompass important judgment as to appropriateness of principles related to recognition of revenue. The disclosure also may indicate the entity's treatment of any unearned or deferred revenue that arises from the transaction.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 13
-Section B
-Paragraph Question 1
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 22
-Paragraph 8, 12, 13
falsefalse6false0so_FuelCostsPolicyTextBlocksofalsenadurationFuel Costs.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table4 - so:FuelCostsPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fuel Costs</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Fuel costs are expensed as the fuel is used. Fuel expense generally includes the cost of purchased
emissions allowances as they are used. Fuel expense also includes the amortization of the cost of
nuclear fuel and a charge, based on nuclear generation, for the permanent disposal of spent nuclear
fuel. See Note 3 under “Nuclear Fuel Disposal Costs” for additional information.
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringFuel Costs.No authoritative reference available.falsefalse7false0us-gaap_IncomeTaxPolicyTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table5 - us-gaap:IncomeTaxPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Income and Other Taxes</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company uses the liability method of accounting for deferred income taxes and provides
deferred income taxes for all significant income tax temporary differences. Taxes that are
collected from customers on behalf of governmental agencies to be remitted to these agencies are
presented net on the statements of income.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with regulatory requirements, deferred investment tax credits (ITCs) for the
traditional operating companies are amortized over the lives of the related property with such
amortization normally applied as a credit to reduce depreciation in the statements of income.
Credits amortized in this manner amounted to $23 million in 2010, $24 million in 2009, and $23
million in 2008. At December 31, 2010, all ITCs available to reduce federal income taxes payable
had been utilized.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Under the American Recovery and Reinvestment Act of 2009, certain projects at certain Southern
Company subsidiaries are eligible for ITCs or cash grants. These subsidiaries have elected to
receive ITCs. The credits are recorded as a deferred credit, which will be amortized over the life
of the asset, and the tax basis of the asset is reduced by 50% of the credits received, resulting
in a deferred tax asset. The subsidiaries have elected to recognize the tax benefit of this basis
difference as a reduction to income tax expense as costs are incurred during the construction
period. These basis differences will reverse and be recorded to income tax expense over the useful
life of the asset once placed in service.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with accounting standards related to the uncertainty in income taxes, Southern
Company recognizes tax positions that are “more likely than not” of being sustained upon
examination by the appropriate taxing authorities. See Note 5 under “Unrecognized Tax Benefits”
for additional information.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 4
-Paragraph 11
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 48
-Paragraph 20
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 6-34, 43, 47, 49
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<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table6 - us-gaap:PropertyPlantAndEquipmentPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Property, Plant, and Equipment</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Property, plant, and equipment is stated at original cost less regulatory disallowances and
impairments. Original cost includes: materials; labor; minor items of property; appropriate
administrative and general costs; payroll-related costs such as taxes, pensions, and other
benefits; and the interest capitalized and/or cost of funds used during construction.
</div>
<!-- Folio -->
<!-- /Folio -->
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company’s property, plant, and equipment consisted of the following at December 31:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Generation
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>30,121</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">28,204</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Transmission
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>7,835</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,380</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Distribution
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>14,870</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,335</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">General
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>3,116</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,917</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Plant acquisition adjustment
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>43</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">43</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Utility plant in service
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>55,985</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">52,879</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Information technology equipment and software
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>216</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">182</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Communications equipment
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>423</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">423</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>107</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">104</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other plant in service
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>746</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">709</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total plant in service
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>56,731</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">53,588</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The cost of replacements of property, exclusive of minor items of property, is capitalized. The
cost of maintenance, repairs, and replacement of minor items of property is charged to maintenance
expense as incurred or performed with the exception of nuclear refueling costs, which are recorded
in accordance with specific state PSC orders. Alabama Power and Georgia Power defer and amortize
nuclear refueling costs over the unit’s operating cycle. The refueling cycles for Alabama Power
and Georgia Power range from 18 to 24 months for each unit. In accordance with a Georgia PSC
order, Georgia Power also defers the costs of certain significant inspection costs for the
combustion turbines at Plant McIntosh and amortizes such costs over 10 years, which approximates
the expected maintenance cycle.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The amount of non-cash property
additions recognized for the years ended December 31, 2010, 2009, and
2008 was $427 million, $370 million, and $309 million, respectively. These amounts are comprised of
construction related accounts payable outstanding at each year end together with retention amounts
accrued during the respective year.
</div>
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policy for property, plant and equipment which may include the basis of such assets, depreciation methods used and estimated useful lives, the entity's capitalization policy, including its accounting treatment for costs incurred for repairs and maintenance activities, whether such asset balances include capitalized interest and the method by which such is calculated, how disposals of such assets are accounted for and how impairment of such assets is assessed and recognized.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 9
-Section C
-Paragraph 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 144
-Paragraph 7
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 22
-Paragraph 12, 13
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 34
-Paragraph 8, 9
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 13
-Subparagraph a
-Article 5
Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 5
-Subparagraph d
falsefalse9false0so_DepreciationAndAmortizationPolicyTextBlocksofalsenadurationDepreciation and Amortization.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table7 - so:DepreciationAndAmortizationPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Depreciation and Amortization</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Depreciation of the original cost of utility plant in service is provided primarily by using
composite straight-line rates, which approximated 3.3% in 2010, 3.2% in 2009, and 3.2% in 2008.
Depreciation studies are conducted periodically to update the composite rates. These studies are
filed with the respective state PSC for the traditional operating companies. Accumulated
depreciation for utility plant in service totaled $19.7 billion and $18.7 billion at December 31,
2010 and 2009, respectively. When property subject to composite depreciation is retired or
otherwise disposed of in the normal course of business, its original cost, together with the cost
of removal, less salvage, is charged to accumulated depreciation. For other property dispositions,
the applicable cost and accumulated depreciation are removed from the balance sheet accounts and a
gain or loss is recognized. Minor items of property included in the original cost of the plant are
retired when the related property unit is retired.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In August 2009, the Georgia PSC approved an accounting order allowing Georgia Power to amortize a
portion of its regulatory liability related to other cost of removal obligations. See Note 3 under
“Retail Regulatory Matters — Georgia Power — Retail Rate Plans” for additional information.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Depreciation of the original cost of other plant in service is provided primarily on a
straight-line basis over estimated useful lives ranging from three to 30 years. Accumulated
depreciation for other plant in service totaled $441 million and $419 million at December 31, 2010
and 2009, respectively.
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDepreciation and Amortization.No authoritative reference available.falsefalse10false0us-gaap_AssetRetirementObligationsAndEnvironmentalCostPolicyTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table8 - us-gaap:AssetRetirementObligationsAndEnvironmentalCostPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Asset Retirement Obligations and Other Costs of Removal</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Asset retirement obligations are computed as the present value of the ultimate costs for an asset’s
future retirement and are recorded in the period in which the liability is incurred. The costs are
capitalized as part of the related long-lived asset and depreciated over the asset’s useful life.
The Company has received accounting guidance from the various state PSCs allowing the continued
accrual of other future retirement costs for long-lived assets that the Company does not have a
legal obligation to retire. Accordingly, the accumulated removal costs for these obligations are
reflected in the balance sheets as a regulatory liability. See Note 3 under “Retail Regulatory
Matters — Georgia Power — Retail Rate Plans” for additional information related to Georgia
Power’s cost of removal regulatory liability.
</div>
<!-- Folio -->
<!-- /Folio -->
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The liability recognized to retire long-lived assets primarily relates to the Company’s nuclear
facilities, Plants Farley, Hatch, and Vogtle. In addition, the Company has retirement obligations
related to various landfill sites, ash ponds, underground storage tanks, asbestos removal, and
disposal of polychlorinated biphenyls in certain transformers. The Company also has identified
retirement obligations related to certain transmission and distribution facilities, co-generation
facilities, certain wireless communication towers, and certain structures authorized by the U.S.
Army Corps of Engineers. However, liabilities for the removal of these assets have not been
recorded because the range of time over which the Company may settle these obligations is unknown
and cannot be reasonably estimated. The Company will continue to recognize in the statements of
income allowed removal costs in accordance with its regulatory treatment. Any differences between
costs recognized in accordance with accounting standards related to asset retirement and
environmental obligations and those reflected in rates are recognized as either a regulatory asset
or liability, as ordered by the various state PSCs, and are reflected in the balance sheets. See
“Nuclear Decommissioning” herein for further information on amounts included in rates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Details of the asset retirement obligations included in the balance sheets are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at beginning of year
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>1,206</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,185</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Liabilities incurred
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>—</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Liabilities settled
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(16</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accretion
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>78</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">77</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash flow revisions
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(2</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(48</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at end of year
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>1,266</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,206</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policy for (1) legal obligations associated with the disposal or removal of a long-lived asset from service that result from the acquisition, construction, or development or from the normal operation of a long-lived asset (except obligations of a lessee in connection with leased property that are minimum lease payments or contingent rentals, or obligations that arise solely from a plan to sell or otherwise dispose of a long-lived asset); and (2) certain environmental remediation liabilities that resulted from the improper or other-than-normal operation of a long-lived asset. This accounting policy may address (1) whether the related remediation costs are expensed or capitalized, (2) whether the obligation is measured on a discounted basis, (3) the event, situation, or set of circumstances that generally triggers recognition of loss contingencies arising from the entity's environmental remediation-related obligations, and (4) the timing of recognition of any recoveries.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 47
-Paragraph 3
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 143
-Paragraph 2-3, 11-15, 22, A13
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 96-1
-Paragraph 99, 100, 101, 147, 148, 149, 150, 152, 153, 154
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 89-13
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 90-8
falsefalse11false0so_NuclearDecommissioningPolicyTextBlocksofalsenadurationNuclear Decommissioning.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table9 - so:NuclearDecommissioningPolicyTextBlock-->
<div align="left" style="font-size: 8pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Nuclear Decommissioning</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Nuclear Regulatory Commission (NRC) requires licensees of commercial nuclear power reactors to
establish a plan for providing reasonable assurance of funds for future decommissioning. Alabama
Power and Georgia Power have external trust funds (the Funds) to comply with the NRC’s regulations.
Use of the Funds is restricted to nuclear decommissioning activities and the Funds are managed and
invested in accordance with applicable requirements of various regulatory bodies, including the
NRC, the FERC, and state PSCs, as well as the Internal Revenue Service (IRS). The Funds are
required to be held by one or more trustees with an individual net worth of at least $100 million.
The FERC requires the Funds’ managers to exercise the standard of care in investing that a “prudent
investor” would use in the same circumstances. The FERC regulations also require, except for
investments tied to market indices or other mutual funds, that the Funds’ managers may not invest
in any securities of the utility for which it manages funds or its affiliates. In addition, the
NRC prohibits investments in securities of power reactor licensees. While Southern Company is
allowed to prescribe an overall investment policy to the Funds’ managers, neither Southern Company
nor its subsidiaries or affiliates are allowed to engage in the day-to-day management of the Funds
or to mandate individual investment decisions. Day-to-day management of the investments in the
Funds is delegated to unrelated third party managers with oversight by Southern Company, Alabama
Power, and Georgia Power management. The Funds’ managers are authorized, within broad limits, to
actively buy and sell securities at their own discretion in order to maximize the return on the
Funds’ investments. The Funds are invested in a tax-efficient manner in a diversified mix of
equity and fixed income securities and are reported as trading securities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company records the investment securities held in the Funds at fair value, as disclosed in
Note 10. Gains and losses, whether realized or unrealized, are recorded in the regulatory
liability for asset retirement obligations in the balance sheets and are not included in net income
or OCI. Fair value adjustments and realized gains and losses are determined on a specific
identification basis.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Funds at Georgia Power participate in a securities lending program through the managers of the
Funds. Under this program, the Funds’ investment securities are loaned to investment brokers for a
fee. Securities so loaned are fully collateralized by cash, letters of credit, and securities
issued or guaranteed by the U.S. government, its agencies, and the instrumentalities. As of
December 31, 2010 and 2009, approximately $141 million and $14 million, respectively, of the fair
market value of the Funds’ securities were on loan and pledged to creditors under the Funds’
managers’ securities lending program. The fair value of the collateral received
was approximately $144 million and $14 million at
December 31, 2010 and 2009, respectively,
and can only be sold upon the return of the loaned securities. The collateral received is treated as a non-cash item in
the statements of cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At December 31, 2010, investment securities in the Funds totaled $1.4 billion consisting of equity
securities of $664 million, debt securities of $632 million, and $74 million of other securities.
At December 31, 2009, investment securities in the Funds totaled $1.1 billion consisting of equity
securities of $774 million, debt securities of $272 million, and $22 million of other securities.
These amounts include the investment securities pledged to creditors and collateral received, and
exclude receivables related to investment income and pending investment sales, and payables related
to pending investment purchases and the lending pool.
</div>
<!-- Folio -->
<!-- /Folio -->
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Sales of the securities held in the Funds resulted in cash proceeds of $2.0 billion, $1.2 billion,
and $712 million in 2010, 2009, and 2008, respectively, all of which were reinvested. For 2010,
fair value increases, including reinvested interest and dividends and excluding the Funds’
expenses, were $139 million, of which $6 million related to securities held in the Funds at
December 31, 2010. For 2009, fair value increases, including reinvested interest and dividends and
excluding the Funds’ expenses, were $215 million, of which $198 million related to securities held
in the Funds at December 31, 2009. For 2008, fair value reductions, including reinvested interest
and dividends and excluding the Funds’ expenses, were $(278) million. While the investment
securities held in the Funds are reported as trading securities, the Funds continue to be managed
with a long-term focus. Accordingly, all purchases and sales within the Funds are presented
separately in the statements of cash flows as investing cash flows, consistent with the nature of
and purpose for which the securities were acquired.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Amounts previously recorded in internal reserves are being transferred into the external trust
funds over periods approved by the Alabama PSC. The NRC’s minimum external funding requirements
are based on a generic estimate of the cost to decommission only the radioactive portions of a
nuclear unit based on the size and type of reactor. Alabama Power and Georgia Power have filed
plans with the NRC designed to ensure that, over time, the deposits and earnings of the Funds will
provide the minimum funding amounts prescribed by the NRC.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At December 31, 2010, the accumulated provisions for decommissioning were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>Plant Farley</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>Plant Hatch</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>Plant Vogtle</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">External trust funds
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">553</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">360</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">206</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Internal reserves
</div></td>
<td> </td>
<td> </td>
<td align="right">24</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">577</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">360</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">206</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Site study cost is the estimate to decommission a specific facility as of the site study year. The
estimated costs of decommissioning based on the most current studies, which were performed in 2008
for Alabama Power’s Plant Farley and in 2009 for the Georgia Power plants, were as follows for
Alabama Power’s Plant Farley and Georgia Power’s ownership interests in Plants Hatch and Vogtle:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>Plant Farley</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>Plant Hatch</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>Plant Vogtle</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Decommissioning periods:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Beginning year
</div></td>
<td> </td>
<td> </td>
<td align="right">2037</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2034</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2047</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Completion year
</div></td>
<td> </td>
<td> </td>
<td align="right">2065</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2063</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2067</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td> </td>
<td> </td>
<td colspan="11" align="center"><i style="font-size: 8pt">(in millions)</i><br /></td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Site study costs:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Radiated structures
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,060</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">583</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">500</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Non-radiated structures
</div></td>
<td> </td>
<td> </td>
<td align="right">72</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">46</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">71</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,132</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">629</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">571</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The decommissioning periods and site study costs for Plant Vogtle reflect the extended operating
license approved by the NRC in June 2009. The decommissioning cost estimates are based on prompt
dismantlement and removal of the plant from service. The actual decommissioning costs may vary
from the above estimates because of changes in the assumed date of decommissioning, changes in NRC
requirements, or changes in the assumptions used in making these estimates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For ratemaking purposes, Alabama Power’s decommissioning costs are based on the site study, and
Georgia Power’s decommissioning costs are based on the NRC generic estimate to decommission the
radioactive portion of the facilities as of 2006. The estimates used in current rates are $575
million and $420 million for Plant Hatch and Plant Vogtle Units 1 and 2, respectively. Amounts
expensed were $3 million annually for Plant Vogtle Units 1 and 2 for 2008 through 2010. Effective
for the years 2011 through 2013, the annual decommissioning cost for ratemaking is $2 million for
Plant Hatch. Georgia Power projects the external trust funds for Plant Vogtle Units 1 and 2 would
be adequate to meet the decommissioning obligations of the NRC with no further contributions.
Significant assumptions used to determine these costs for ratemaking were an inflation rate of 4.5%
and 2.4% for Alabama Power and Georgia Power, respectively, and a trust earnings rate of 7.0% and
4.4% for Alabama Power and Georgia Power, respectively. As a result of license extensions, amounts
previously contributed to the external trust funds for Plant Farley are currently projected to be
adequate to meet the decommissioning obligations.
</div>
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringNuclear Decommissioning.No authoritative reference available.falsefalse12false0so_AllowanceForFundsUsedDuringConstructionAndInterestCapitalizedPolicyTextBlocksofalsenadurationAllowance for Funds Used During Construction and Interest Capitalized.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table10 - so:AllowanceForFundsUsedDuringConstructionAndInterestCapitalizedPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Allowance for Funds Used During Construction (AFUDC) and Interest Capitalized</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with regulatory treatment, the traditional operating companies record AFUDC, which
represents the estimated debt and equity costs of capital funds that are necessary to finance the
construction of new regulated facilities. While cash is not realized currently from such
allowance, it increases the revenue requirement over the service life of the plant through a higher
rate base and higher depreciation. The equity component of AFUDC is not included in calculating
taxable income. Interest related to the construction of new facilities not included in the
traditional operating companies’ regulated rates is capitalized in accordance with standard
interest capitalization requirements. AFUDC and interest capitalized, net of income taxes were
12.5%, 15.3%, and 11.2% of net income for 2010, 2009, and 2008, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Cash payments for interest totaled $789 million, $788 million, and $787 million in 2010, 2009, and
2008, respectively, net of amounts capitalized of $86 million, $84 million, and $71 million,
respectively.
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringAllowance for Funds Used During Construction and Interest Capitalized.No authoritative reference available.falsefalse13false0us-gaap_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table11 - us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Impairment of Long-Lived Assets and Intangibles</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company evaluates long-lived assets for impairment when events or changes in circumstances
indicate that the carrying value of such assets may not be recoverable. The determination of
whether an impairment has occurred is based on either a specific regulatory disallowance or an
estimate of undiscounted future cash flows attributable to the assets, as compared with the
carrying value of the assets. If an impairment has occurred, the amount of the impairment
recognized is determined by either the amount of regulatory disallowance or by estimating the fair
value of the assets and recording a loss if the carrying value is greater than the fair value. For
assets identified as held for sale, the carrying value is compared to the estimated fair value less
the cost to sell in order to determine if an impairment loss is required. Until the assets are
disposed of, their estimated fair value is re-evaluated when circumstances or events change.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policy for recognizing and measuring the impairment of long-lived assets. An entity also may disclose its accounting policy for long-lived assets to be sold. This policy excludes goodwill and intangible assets.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 5
-Section CC
-Subsection 3
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 144
-Paragraph 7-15, 26, 30-37
falsefalse14false0so_StormDamageReservesPolicyTextBlocksofalsenadurationStorm Damage Reserves.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table12 - so:StormDamageReservesPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Storm Damage Reserves</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Each traditional operating company maintains a reserve to cover the cost of damages from major
storms to its transmission and distribution lines and generally the cost of uninsured damages to
its generation facilities and other property. In accordance with their respective state PSC
orders, the traditional operating companies accrued $32 million in 2010 and $44 million in 2009.
Alabama Power, Gulf Power, and Mississippi Power also have discretionary authority from their state
PSCs to accrue certain additional amounts as circumstances warrant. In 2010 and 2009, such
additional accruals totaled $48 million and $40 million, respectively, all at Alabama Power. There
were no material accruals for 2008. See Note 3 under “Retail Regulatory Matters — Alabama Power
— Natural Disaster Reserve” for additional information regarding Alabama Power’s natural disaster
reserve.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringStorm Damage Reserves.No authoritative reference available.falsefalse15false0us-gaap_LeasePolicyTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table13 - us-gaap:LeasePolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Leveraged Leases</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company has several leveraged lease agreements, with terms ranging up to 45 years, which
relate to international and domestic energy generation, distribution, and transportation assets.
Southern Company receives federal income tax deductions for depreciation and amortization, as well
as interest on long-term debt related to these investments. The Company reviews all important
lease assumptions at least annually, or more frequently if events or changes in circumstances
indicate that a change in assumptions has occurred or may occur. These assumptions include the
effective tax rate, the residual value, the credit quality of the lessees, and the timing of
expected tax cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company’s net investment in domestic leveraged leases consists of the following at
December 31:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net rentals receivable
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>475</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">487</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unearned income
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(207</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(218</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Investment in leveraged leases
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>268</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">269</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred taxes from leveraged leases
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(223</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(211</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net investment in leveraged leases
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>45</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">58</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the components of income from domestic leveraged leases was as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Pretax leveraged lease income
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>4</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">14</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Income tax expense
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(3</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(6</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net leveraged lease income
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>1</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company’s net investment in international leveraged leases consists of the following at
December 31:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net rentals receivable
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>733</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">734</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unearned income
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(377</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(393</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Investment in leveraged leases
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>356</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">341</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current taxes payable
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>—</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred taxes from leveraged leases
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(40</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(40</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net investment in leveraged leases
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>316</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">301</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the components of income from international leveraged leases was as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10"><i style="font-size: 8pt">(in millions)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Pretax leveraged lease income (loss)
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>14</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(99</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(5</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">35</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net leveraged lease income (loss)
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>9</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(64</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="13" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company terminated two international leveraged lease investments during 2009. The proceeds
were used to extinguish all debt related to leveraged lease investments, a portion of which had
make-whole redemption provisions. This resulted in a $17 million loss which partially offset a $26
million gain on the terminations.
</div>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policy for leasing arrangements (both lessor and lessee). This description may address (1) lease classification (that is, operating versus capital), (2) how the term of a lease is determined (for example, the circumstances in which a renewal option is considered part of the lease term), (3) how rental revenue or expense is recognized for a lease that contains rent escalations, (4) an entity's accounting treatment for deferred rent, including that which arises from lease incentives, rent abatements, rent holidays, or tenant allowances (5) an entity's accounting treatment for contingent rental payments and (6) an entity's policy for reviewing, at least annually, the residual values of sales-type and direct-finance leases. The description also may indicate how the entity accounts for its capital leases, leveraged leases or sale-leaseback transactions.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 13
-Paragraph 6, 7-15, 17, 18, 19, 32, 34, 43-47
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 34
-Paragraph 1
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 98
-Paragraph 7
falsefalse16false0us-gaap_CashAndCashEquivalentsPolicyTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Cash and Cash Equivalents</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For purposes of the financial statements, temporary cash investments are considered cash
equivalents. Temporary cash investments are securities with original maturities of 90 days or
less.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringA description of a company's cash and cash equivalents accounting policy. An entity shall disclose its policy for determining which items are treated as cash equivalents. Other information that may be disclosed includes (1) the nature of any restrictions on the entity's use of its cash and cash equivalents, (2) whether the entity's cash and cash equivalents are insured or expose the entity to credit risk, (3) the classification of any negative balance accounts (overdrafts), and (4) the carrying basis of cash equivalents (for example, at cost) and whether the carrying amount of cash equivalents approximates fair value. Cash includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. In addition, cash equivalents include short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three-years ago does not become a cash equivalent when its remaining maturity is three months. For a bank, may include explanation and amount of requirement to maintain reserves against deposits.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Financial Reporting Release (FRR)
-Number 203
-Paragraph 02-03
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 1
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7, 8, 9, 10
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Technical Practice Aid (TPA)
-Number 2110
-Paragraph 6
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Materials and Supplies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Generally, materials and supplies include the average costs of transmission, distribution, and
generating plant materials. Materials are charged to inventory when purchased and then expensed or
capitalized to plant, as appropriate, at weighted average cost when installed.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fuel Inventory</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Fuel inventory includes the average costs of oil, coal, natural gas, and emissions allowances.
Fuel is charged to inventory when purchased and then expensed as used and recovered by the
traditional operating companies through fuel cost recovery rates approved by each state PSC.
Emissions allowances granted by the Environmental Protection Agency (EPA) are included in inventory
at zero cost.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policies covering its major classes of inventories, bases of stating inventories (for example lower of cost or market), methods by which amounts are added and removed from inventory classes (for example FIFO, LIFO, or average cost), loss recognition on impairment of inventories, and situations in which inventories are stated above cost. If inventory is carried at cost, this description includes the nature of the cost elements included in inventory.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Financial Reporting Release (FRR)
-Number 206
-Chapter 2
-Paragraph b
-Subparagraph i, ii
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 4
-Paragraph 3, 5-10, 15, 16, 17
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 6
-Subparagraph a
-Article 5
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 3
-Section A
-Paragraph 9
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 81-1
-Paragraph 69-75
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<!-- Begin Block Tagged Accounting Policy: SO-20101231_note1_accounting_policy_table16 - us-gaap:DerivativesPolicyTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Financial Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company uses derivative financial instruments to limit exposure to fluctuations in
interest rates, the prices of certain fuel purchases, electricity purchases and sales, and
occasionally foreign currency exchange rates. All derivative financial instruments are recognized
as either assets or liabilities (included in “Other” or shown separately as “Risk Management
Activities”) and are measured at fair value. See Note 10 for additional information.
Substantially all of Southern Company’s bulk energy purchases and sales contracts that meet the
definition of a derivative are excluded from fair value accounting requirements because they
qualify for the “normal” scope exception, and are accounted for under the accrual method. Other
derivative contracts qualify as cash flow hedges of anticipated transactions or are recoverable
through the traditional operating companies’ fuel hedging programs. This results in the deferral
of related gains and losses in OCI or regulatory assets and liabilities, respectively, until the
hedged transactions occur. Any
ineffectiveness arising from cash flow hedges is recognized currently in net income. Other
derivative contracts are marked to market through current period income and are recorded on a net
basis in the statements of income. See Note 11 for additional information.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company does not offset fair value amounts recognized for multiple derivative instruments
executed with the same counterparty under a master netting arrangement. At December 31, 2010, the
amount included in accounts payable in the balance sheets that the Company has recognized for the
obligation to return cash collateral arising from derivative instruments was not material.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company is exposed to losses related to financial instruments in the event of
counterparties’ nonperformance. The Company has established controls to determine and monitor the
creditworthiness of counterparties in order to mitigate the Company’s exposure to counterparty
credit risk.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes an entity's accounting policies for its derivative instruments and hedging activities. Disclosure may include: (1) Each method used to account for derivative financial instruments and derivative commodity instruments ("derivatives"); (2) the types of derivatives accounted for under each method; (3) the criteria required to be met for each accounting method used, including a discussion of the criteria required to be met for hedge or deferral accounting and accrual or settlement accounting (for example: whether and how risk reduction, correlation, designation, and effectiveness tests are applied); (4) the accounting method used if the criteria specified for hedge accounting are not met; (5) the method used to account for termination of derivatives designated as hedges or derivatives used to affect directly or indirectly the terms, fair values, or cash flows of a designated item; (6) the method used to account for derivatives when the designated item matures, is sold, is extinguished, or is terminated. In addition, the method used to account for derivatives designated to an anticipated transaction, when the anticipated transaction is no longer likely to occur; and (7) where and when derivatives, and their related gains (losses) are reported in the statement of financial position, cash flows, and results of operations and (8) an accounting policy decision to offset fair value amounts with counterparties. An entity should also consider describing its embedded derivatives, and the method(s) used to determine the fair values of derivatives and any significant assumptions used in such valuations.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph n
-Article 4
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 39
-Paragraph 10
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Comprehensive Income</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The objective of comprehensive income is to report a measure of all changes in common stock equity
of an enterprise that result from transactions and other economic events of the period other than
transactions with owners. Comprehensive income consists of net income, changes in the fair value
of qualifying cash flow hedges and marketable securities, certain changes in pension and other
postretirement benefit plans, and reclassifications for amounts included in net income.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Accumulated OCI (loss) balances, net of tax effects, were as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="32%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Pension and Other</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Accumulated Other</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Qualifying</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Marketable</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Postretirement</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Comprehensive</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Hedges</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="right" colspan="3" style="border-bottom: 1px solid #000000"><b>Securities</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Benefit Plans</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Income (Loss)</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15"><i style="font-size: 8pt">(in millions)</i></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at December 31, 2009
</div></td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(49</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">10</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(49</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(88</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current period change
</div></td>
<td> </td>
<td> </td>
<td align="right">14</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Balance at December 31, 2010</b>
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"><b>$</b></td>
<td align="right"><b>(35</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>7</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right"><b>$</b></td>
<td align="right"><b>(42</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="right"><b>$</b></td>
<td align="right"><b>(70</b></td>
<td nowrap="nowrap"><b>)</b></td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis label may include the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains and losses on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains and losses on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain or loss and net prior service cost or credit for pension plans and other postretirement benefit plans.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14-26
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<div align="left" style="font-size: 8pt; font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Variable Interest Entities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Effective January 1, 2010, the traditional operating companies and Southern Power adopted new
accounting guidance which modified the consolidation model and expanded disclosures related to
variable interest entities (VIE). The primary beneficiary of a VIE is required to consolidate the
VIE when it has both the power to direct the activities of the VIE that most significantly impact
the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits
from the VIE that could potentially be significant to the VIE. The adoption of this new accounting
guidance did not result in the traditional operating companies or Southern Power consolidating any
VIEs that were not already consolidated under previous guidance, nor deconsolidating any VIEs.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Certain of the traditional operating companies have established certain wholly-owned trusts to
issue preferred securities. See Note 6 under “Long-Term Debt Payable to Affiliated Trusts” for
additional information. However, Southern Company and the applicable traditional operating
companies are not considered the primary beneficiaries of the trusts. Therefore, the investments
in these trusts are reflected as other investments, and the related loans from the trusts are
reflected in long-term debt in the balance sheets.
</div>
</div>
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<!-- Begin Block TaggedfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDisclosure of variable interest entities (VIE), including, but not limited to the nature, purpose, size, and activities of the VIE, the carrying amount and classification of consolidated assets that are collateral for the VIE's obligations, lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary. An enterprise that holds a significant variable interest in a VIE but is not the primary beneficiary may disclose the nature of its involvement with the VIE and when that involvement began, the nature, purpose, size, and activities of the VIE and the enterprise's maximum exposure to loss as a result of its involvement with the VIE.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 140
-Paragraph 35
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 46R
-Paragraph 2, 14, 15, 16, 23, 24, 25, 26
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 46R
-Paragraph 4
-Subparagraph g
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS140-4 and FIN46(R)-8
-Paragraph C4
-Subparagraph d
falsefalse119Summary of Significant Accounting Policies (Policies)UnKnownUnKnownUnKnownUnKnownfalsetrue