September 25, 2000

Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549-0609

RE: File No. S7-13-00

Dear Mr. Katz:

The Southern Company is pleased to have this opportunity to comment on the Commission's proposal regarding Revision of the Commission's Auditor Independence Requirements in the referenced file.

Southern Company (NYSE: SO) is a public utility holding company with operations around the world. We are the largest producer of electricity in the United States and one of the world's largest independent power producers. Southern is the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric. Through our Southern Energy, Inc. subsidiary, we supply electricity in 10 countries on four continents. We also provide energy-related marketing, trading, and technical services and wireless telecommunications through Southern LINC ^®.

Southern has approximately 649 million shares of common stock outstanding that are owned by over 180 thousand record stockholders. As such a widely owned company, Southern has a vital interest in maintaining the confidence of its current and prospective investors in the integrity and reliability of its financial statements. It also believes that auditor independence is an important factor in maintaining that confidence. However, Southern does not believe that the proposed revisions to the Auditor Independence Requirements are necessary to ensure auditor independence.

Accounting firms will more appropriately address most of the Commission's proposed revisions. Southern's comments address two areas -- provision of certain non-audit services and proxy disclosure.

Certain Non-Audit Services

In the course of providing audit services, the independent auditor becomes knowledgeable of its clients' businesses. Consequently, the independent auditor is best suited to perform a variety of functions for a company because of its knowledge of the company's accounting and other financial reporting processes. Although we agree that services unrelated to accounting and tax, such as legal and investment banking, do create independence issues if provided by a company's auditors, we do not believe that essentially all non-audit services should be prohibited. Performance of non-audit services that are clearly related to the auditors' accounting or tax expertise provides significant benefits and efficiencies to the company without impairing the independence of the audit firm.

For example, Southern's operating companies are subject to state-regulated rate proceedings. It is a standard practice for a regulated utility to use its independent auditors as expert witnesses in areas that are subject to state review, such as accounting for income tax timing differences and proper application of GAAP in determining the cost of service for ratemaking purposes. The use of the independent auditor in this capacity is the most cost efficient approach for our operating companies and their ratepayers. The auditors are familiar with their accounting and require much less time and effort to prepare testimony. An auditor also should be permitted to serve as a non-testifying expert for a utility audit client. This is especially true because the regulators have the ability and discretion to audit any filings made with them, thereby adding an additional layer of scrutiny.

The Commission has asked specifically whether the performance of operational audits for its audit client would impair the auditor's independence. We believe it would not and, additionally, we believe that the safeguards set forth in the audit profession's guidelines, such as the AICPA rules concerning internal audit outsourcing, are sufficient for maintaining independence. Again, the independent auditor has a unique knowledge of its audit clients, as well as specific industry expertise that may not be otherwise available, and, as such, is often most qualified to perform this type of work. As there is no requirement per se for a company to even have an internal audit department, we believe this work is a natural extension of the normal external audit services. While the independent auditor obviously sets the scope of work necessary to support its opinion, management of many companies provides input and/ or requests for additional work in specific areas. The proposal excludes nonrecurring evaluations of this type; however, we believe that recurring work should also be allowed. This is more efficient for the companies and, with adequate safeguards, does not impair independence.

Proxy Disclosure

We believe that Item 306 of Regulation SK which requires inclusion of an audit committee report in proxy and information statements, provides adequate disclosure from which an investor can assess the integrity of a company's financial statements and the independence of the independent auditor. The audit committee is required to state whether it has:

• reviewed and discussed the financial statements;

• discussed certain prescribed matters with its independent auditor;

• received written disclosures and discussed the independent auditor's independence with the auditor; and

• recommended to the full board of directors inclusion of the audited financial statements in the Annual Report on Form 10-K based on the foregoing review and discussions.

Most audit committees will perform and disclose these functions. However, the Commission in the current proposal ostensibly does not believe that investors can rely on the audit committee's findings. Southern believes that audit committees can and do evaluate and determine the auditor's independence, including reviewing non-audit services provided, and that investors can rely on audit committee representations in proxy and information statements. Otherwise, the audit committee report requirements serve no purpose.

The Company appreciates the opportunity to comment on the proposed rulemaking. Any questions concerning these comments can be directed to the undersigned at (404) 506-0542.

Sincerely,

Patricia L. Roberts
Assistant Secretary