Southern’ s Current Outlook

Chad Hewitt

Fuel Manager

September 2015

• Vertically integrated, Investor Owned Utility serving 4.4 million retail customers

• Nearly 57,000 megawatts of capacity (owned/operated/contracted - includes

retail, wholesale and Southern Power)

• 106 plant sites

• 2014 fossil fuel budget $5.8 B – Coal: $1.6 B Transportation: $1.3 B

– Gas: $2.6B Transportation: $0.2 B Storage: $43M

– Oil: $57M

– Limestone: $34M

• 3rd largest U.S. consumer of coal – 2014 – 48 million tons

• 3rd largest user of natural gas in the U.S. – 2014 – 564 Bcf

– 6.1% of total U.S. consumption

Southern Company Overview

Low prices

High reliability

High customer

satisfaction

Constructive

regulation

Healthy

capital

spending CUSTOMER

VALUE

2

Southern Company Fuel Diversity “All the Arrows in the Quiver”

47 coal-fired units • 18,860 MW capacity • Located at 14 plant sites

103 gas-fired units • 22,830 MW capacity • Located at 32 plant sites

6 nuclear units • 5,818 MW capacity • 3 nuclear plants

106 hydro units • 2,681 MW capacity • 33 hydroelectric plant sites

28 oil-fired units

• 1,122 MW capacity • Located at 10 plant sites

Biomass • 182 MW capacity

Solar • 472 MW capacity

Wind (PPA) • 404 MW

Represents operated/contracted capacity in 2015 3

Kemper County Energy Facility

21st Century Coal

65% Carbon Capture

Environmental signature of a natgas CC

plant

Mine-mouth lignite

4

Mississippi Lignite

• Natural Mississippi Resource

• Estimated 4 billion mineable tons

• ~175 million tons needed for the 40 years

• Low commercial value

~5,000 btu/lb

~45% Moisture

• Not subject to market volatility

• Does not require rail

transportation

• TRIG Technology designed

for coals like lignite

5

The Kemper Project

5

Prebench Operation

Coal Extraction

Dragline Operation

Reclaimed Area

Liberty Mine – Mining Method

6

Liberty Mine

7

Liberty Mine

8

Lignite Delivery Facility

9

Dome Stacker and Reclaimer

10

Plant Vogtle

11

Vogtle Units 3 & 4

• Two Westinghouse AP1000 units with 1,117 MW’s per unit (2,234 total MW’s)

• Expected in-service date is 2019 and 2020

• All 4 Vogtle units will produce enough power for 1,000,000 Georgia homes

and businesses

Southern Company and AGL Resources

• www.doingenergybetter.com

*One or both of the companies operate in portions of each of the shaded states.

12

Investing in Our Existing Coal Fleet

Boilers 3 & 4

Turbine Building

ESP ESP ESP ESP

SCR SCR SCR SCR

3 & 4 Scrubbers

1 & 2 Scrubbers

Scrubber Support

Limestone Receipt &

Grind Boilers 1 & 2

GPC Plant Bowen

3 & 4 Baghouses

• Maintaining our commitment to keep coal as a significant component of our generation portfolio

• Investing ~$12B in capital for environmental compliance, also allowing for an expansion in fuel specs

14% 15% 16% 15% 16% 17% 16% 16%

1% 2%

5% 3% 3% 2% 4% 3%

0% 1%

69% 67% 56%

56% 49%

36% 38% 40%

16% 16% 23% 26%

32%

45% 42% 40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014

Nuclear Hydro Other Coal Gas/Oil

Southern Company Energy Mix

14

Energy Mix

69%

16%

14% 1%

36%

45%

17%

2% 22%

24% 34%

15%

3% 2%

Coal Gas Nuclear Hydro Other

2007 2012 Potential 2020

Southern Company is committed to a diverse energy mix including coal

• Through 2012, $8.7B for environmental compliance

• 2013 - 2015, another $3.6B for existing regulations, including MATS

• By 2016, SO will still operate a coal fleet with ~18,000 MW capacity

COAL COAL

GAS

GAS

GAS

(minimum)

COAL

(minimum)

COAL

OR GAS

(market to

decide)

15

2014 US Energy Generation

Coal 39%

Natural Gas 27%

Nuclear 19%

Hydropower 6%

Renewables 7%

Petroleum 1%

Other Gases <1%

Source: U.S. Energy Information Administration

Total Generation 4,093 Billion kilowatt-hours

Other Renewables 7% • Biomass 1.7% • Geothermal 0.4% • Solar 0.4% • Wind 4.4%

16

World Coal Basins: Total Recoverable Coal

17

No. America:

269 billion short tons

Central & South America:

14 billion short tons

Europe:

84 billion short

tons

Eurasia:

251 billion short tons

Africa:

35 billion short tons

Asia & Oceania

293 billion

short tons

17

US Domestic Coal Basins

Northern App 13%

Southern App 2%

Lignite 8%

Illinois Basin 14%

Colorado 8% CAPP

12%

PRB 43%

Coal Production

2014

2014 Alabama Coal Production (M tons)

Metallurgical 12.0

Steam 3.4

Industrial 1.3

Total 16.7

Total US Production ~997M tons

18

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014

Pe

rce

nt

of

Co

al P

urc

has

ed

Looking Forward, Lower-Cost Basins are Attractive

78M 75M 61M 65M 56M 42M 44M 48M

ENVIRONMENTAL COMPLIANCE INVESTMENTS GIVE US

MORE FLEXIBILITY TO MOVE TO LOWER-COST COAL SOURCES.

ANNUAL BURN

PRB IB Colorado Alabama CAPP Import NAPP

19

Powder River Basin Operation

60-80 Feet

Remove

Overburden

up to 250 feet

Truck

&

Shovel

Drill and

Blast

20

Alabama Operation

180 ft Overburden

21

Alabama Power Coal Plants

ALABAMA

ARKANSAS

FLORIDA

GEORGIA

LOUISIANA

MISSISSIPPI

NORTH CAROLINA

SOUTH CAROLINA

TENNESSEE

Barry

Greene

County

Gorgas Miller

Gadsden

Gaston

Barge/

Truck

Truck

Rail

Rail

Barge

Barge

22

PRB ~11 M Tons

Western 0 Tons

Illinois Basin ~2 M Tons

CAPP ~150K Tons

Import ~2.5 M tons

(Colombian via Port at Mobile)

Alabama ~3.5 M Tons

APC Coal Generation: 6 Coal Plants (23 units) ~19 million tons 2014

APC Diversity of Coal Purchases 2014

23

23

US Gas Supply

24

Jan

-08

Ap

r-08

Jul-

08O

ct-0

8Ja

n-0

9A

pr-

09Ju

l-09

Oct

-09

Jan

-10

Ap

r-10

Jul-

10O

ct-1

0Ja

n-1

1A

pr-

11Ju

l-11

Oct

-11

Jan

-12

Ap

r-12

Jul-

12O

ct-1

2Ja

n-1

3A

pr-

13Ju

l-13

Oct

-13

Jan

-14

Ap

r-14

Jul-

14O

ct-1

4Ja

n-1

5A

pr-

15Ju

l-15

Oct

-15

Jan

-16

Ap

r-16

Jul-

16O

ct-1

6Ja

n-1

7A

pr-

17Ju

l-17

Oct

-17

Jan

-18

Dis

pat

ch C

ost

, $

/ MW

-hr

Estimated Dispatch Cost in the Southeast (based on commodity spot prices and estimated transportation)

Powder River Basin Coal Combined Cycle Gas Central Appalachian Coal Illinois Basin Coal Nuclear

Fuel Prices Drive Generation Costs

If the price of natural gas is… Then natural gas…

below $3-4 Economically displaces most Powder River Basin

below $5-6 Economically displaces most Central Appalachian/Illinois Basin

above $7 Displaces little to no coal

25

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014

An

nu

al A

vera

ge

Cap

acit

y F

acto

rUnit Capacity Factors Respond to the Market

Combined Cycle Units vs Coal Units

26

PRB Coal

Bituminous Coal

Combined Cycle Fleet

• PRB and CCs continue to compete

• Bituminous CFs shift due to completion of conversions/retirement of less competitive units

26

Current Environment and Outlook

• We have aggressively returned to lower-cost Illinois Basin coal and are

expanding Powder River Basin coal supplies, while moving away from

Central Appalachia and import coals.

– Environmental controls on our coal fleet have enabled the return to cheaper Illinois

Basin coal

– Increased coal demand has at times resulted in an increase use of CAPP and

Import coals

• Dynamic markets persist driven by volatile natural gas prices and

weather events

• Coal generation on the margin results in burn volatility

• More flexibility from coal producers and more optionality in coal and rail

contracts continues to be needed

27

Headwinds

Environmental

• SO retired over 3000 MW due to MATS, another ~3000 MW converted from coal to gas. Gone, not coming back

• Ash/Water

• CPP? Post-2020……

Natural gas prices

• Short-Term variability can swing coal consumption (see Polar Vortex period). Longer-term, the projections “chill” a decision to invest in base-load generation.

• How long does it last?

Other generation types

• Impacts of solar and wind (intermittent resources) are just beginning to be felt. Other generation types (both gas and coal) will feel the swing in operations once these become a larger player in our portfolio.

• For coal? More variability

28

Summary

29

A diverse generation fleet provides flexibility to optimize the use of the lowest

cost energy source and keeps customers’ rates affordable

Healthy

Capital

Investments

Constructive

Regulation

High Reliability

Low Prices

High Customer Satisfaction

Customers

4 Simple Rules

Keep the lights on

Make it affordable

Give great service

Be a positive force

29

Questions