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<!-- Begin Block Tagged Note 7 - us-gaap:CommitmentsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. COMMITMENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Construction Program</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company is engaged in continuous construction programs, currently estimated to total $4.9
billion in 2010, $5.3 billion in 2011, and $6.2 billion in 2012. These amounts include $271
million, $157 million, and $166 million in 2010, 2011, and 2012, respectively, for construction
expenditures related to contractual purchase commitments for nuclear fuel included herein under
“Fuel and Purchased Power Commitments.” The construction programs are subject to periodic review
and revision, and actual construction costs may vary from these estimates because of numerous
factors. These factors include: changes in business conditions; changes in load projections;
changes in environmental statutes and regulations; changes in nuclear plants to meet new regulatory
requirements; changes in FERC rules and regulations; PSC approvals; changes in legislation; the
cost and efficiency of construction labor, equipment, and materials; project scope and design
changes; and the cost of capital. In addition, there can be no assurance that costs related to
capital expenditures will be fully recovered. At December 31, 2009, significant purchase
commitments were outstanding in connection with the ongoing construction program, which includes
new facilities and capital improvements to transmission, distribution, and generation facilities,
including those to meet environmental standards. See Note 3 under “Retail Regulatory Matters –
Georgia Power – Nuclear Construction” and “Retail Regulatory Matters – Integrated Coal Gasification
Combined Cycle” for additional information.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Long-Term Service Agreements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The traditional operating companies and Southern Power have entered into Long-Term Service
Agreements (LTSAs) with General Electric (GE), Alstom Power, Inc., Mitsubishi Power Systems
Americas, Inc., and Siemens AG for the purpose of securing maintenance support for the combined
cycle and combustion turbine generating facilities owned or under construction by the subsidiaries.
The LTSAs cover all planned inspections on the covered equipment, which generally includes the
cost of all labor and materials. The LTSAs are also obligated to cover the costs of unplanned
maintenance on the covered equipment subject to limits and scope specified in each contract.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- 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">In general, these LTSAs are in effect through two major inspection cycles per unit. Scheduled
payments under the LTSAs, which are subject to price escalation, are made at various intervals
based on actual operating hours or number of gas turbine starts of the respective units. Total
remaining payments under these agreements for facilities owned are currently estimated at
$2.4 billion over the remaining life of the agreements, which are currently estimated to range up
to 24 years. However, the LTSAs contain various cancellation provisions at the option of the
purchasers.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Georgia Power has also entered into an LTSA with GE through 2014 for neutron monitoring system
parts and electronics at Plant Hatch. Total remaining payments to GE under this agreement are
currently estimated at $8 million. The contract contains cancellation provisions at the option of
Georgia Power.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Payments made under the LTSAs prior to the performance of any work are recorded as a prepayment in
the balance sheets. All work performed is capitalized or charged to expense (net of any joint
owner billings), as appropriate based on the nature of the work.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Limestone Commitments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As part of Southern Company’s program to reduce sulfur dioxide emissions from its coal plants, the
traditional operating companies have entered into various long-term commitments for the procurement
of limestone to be used in flue gas desulfurization equipment. Limestone contracts are structured
with tonnage minimums and maximums in order to account for fluctuations in coal burn and sulfur
content. Southern Company has a minimum contractual obligation of 7.0 million tons, equating to
approximately $295 million, through 2019. Estimated expenditures (based on minimum contracted
obligated dollars) over the next five years are $37 million in 2010, $36 million in 2011, $37
million in 2012, $38 million in 2013, and $39 million in 2014.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fuel and Purchased Power Commitments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">To supply a portion of the fuel requirements of the generating plants, Southern Company has entered
into various long-term commitments for the procurement of fossil, biomass fuel, and nuclear fuel.
In most cases, these contracts contain provisions for price escalations, minimum purchase levels,
and other financial commitments. Coal commitments include forward contract purchases for sulfur
dioxide and nitrogen oxide emissions allowances. Natural gas purchase commitments contain fixed
volumes with prices based on various indices at the time of delivery; amounts included in the chart
below represent estimates based on New York Mercantile Exchange future prices at December 31, 2009.
Also, Southern Company has entered into various long-term commitments for the purchase of capacity
and electricity. Total estimated minimum long-term obligations at December 31, 2009 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="40%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </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 nowrap="nowrap" align="center" colspan="19" style="border-bottom: 1px solid #000000"><b>Commitments</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">Natural Gas</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Coal</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Nuclear Fuel</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Biomass Fuel</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Purchased Power*</td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="19" style="font-size: 8pt"><i>(in millions)</i></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2010
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">1,349</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4,490</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">271</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">253</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">1,266</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,135</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">157</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">258</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">926</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,572</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">166</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">266</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">816</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,063</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">148</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">235</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">688</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">850</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">83</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">267</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2015 and thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">4,153</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,508</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">297</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">128</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,742</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" 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="right">$</td>
<td align="right">9,198</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">13,618</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,122</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">180</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4,021</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="21" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div style="margin-top: 3pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">*</td>
<td> </td>
<td>Certain PPAs reflected in the table are accounted for as
operating leases.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Additional commitments for fuel will be required to supply Southern Company’s future
needs. Total charges for nuclear fuel included in fuel expense amounted to $160 million
in 2009, $147 million in 2008, and $144 million in 2007.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Operating Leases</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In 2001, Mississippi Power began the initial 10-year term of a lease agreement for a combined cycle
generating facility built at Plant Daniel for approximately $370 million. In 2003, the generating
facility was acquired by Juniper Capital L.P. (Juniper), whose partners are unaffiliated with
Mississippi Power. Simultaneously, Juniper entered into a restructured lease agreement with
Mississippi Power. Juniper has also entered into leases with other parties unrelated to
Mississippi Power. The assets leased by Mississippi Power comprise less than 50% of Juniper’s
assets. Mississippi Power is not required to consolidate the leased assets and related
liabilities, and the lease with Juniper is considered an operating lease. The initial lease term
ends in 2011, and the lease includes a purchase and
renewal option based on the cost of the facility at the inception of the lease. Mississippi Power
is required to amortize approximately 4% of the initial acquisition cost over the initial lease
term. In April 2010, 18 months prior to the end of the initial lease term, Mississippi Power must
notify Juniper if the lease will be terminated. Mississippi Power may elect to renew the lease for
10 years. If the lease is renewed, the agreement calls for Mississippi Power to amortize an
additional 17% of the initial completion cost over the renewal period. Upon termination of the
lease, at Mississippi Power’s option, it may either exercise its purchase option or the facility
can be sold to a third party. If Mississippi Power does not exercise either its purchase option or
its renewal option, Mississippi Power could lose its rights to some or all of the 1,064 MWs of
capacity at that time.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The lease provides for a residual value guarantee, approximately 73% of the acquisition cost, by
Mississippi Power that is due upon termination of the lease in the event that Mississippi Power
does not renew the lease or purchase the assets and that the fair market value is less than the
unamortized cost of the asset. A liability of approximately $3 million, $5 million, and $7 million
for the fair market value of this residual value guarantee is included in the balance sheets as of
December 31, 2009, 2008, and 2007, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Southern Company also has other operating lease agreements with various terms and expiration dates.
Total operating lease expenses were $186 million, $184 million, and $187 million for 2009, 2008,
and 2007, respectively. Southern Company includes any step rents, escalations, and lease
concessions in its computation of minimum lease payments, which are recognized on a straight-line
basis over the minimum lease term.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At December 31, 2009, estimated minimum lease payments for noncancelable operating leases 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="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </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="15" style="border-bottom: 1px solid #000000"><b>Minimum Lease Payments</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">Plant Daniel</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Barges & Rail Cars</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Other</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="font-size: 8pt"><i>(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">2010
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">28</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">70</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">46</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">144</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2011
</div></td>
<td> </td>
<td> </td>
<td align="right">28</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">57</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">123</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2012
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">40</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">29</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">69</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2013
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">32</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">54</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">2014
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">27</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">45</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">2015 and thereafter
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">28</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">96</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">124</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">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">56</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">254</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">249</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">559</td>
<td> </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 align="left" style="font-size: 10pt; margin-top: 6pt">For the traditional operating companies, a majority of the barge and rail car lease expenses are
recoverable through fuel cost recovery provisions. In addition to the above rental commitments,
Alabama Power and Georgia Power have obligations upon expiration of certain leases with respect to
the residual value of the leased property. These leases expire in 2010, 2011, and 2013, and the
maximum obligations are $61 million, $40 million, and $19 million, respectively. At the
termination of the leases, the lessee may either exercise its purchase option, or the property can
be sold to a third party. Alabama Power and Georgia Power expect that the fair market value of the
leased property would substantially reduce or eliminate the payments under the residual value
obligations. However, due to the recessionary economy, it is possible that the fair market value
of the leased property would not eliminate the payments under the residual value obligations on the
leases expiring in 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Guarantees</b>
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<div align="left" style="font-size: 10pt; margin-top: 6pt">As discussed earlier in this Note under “Operating Leases,” Alabama Power, Georgia Power, and
Mississippi Power have entered into certain residual value guarantees.
</div>
</div>
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