Good afternoon. My name is Rachel and I will be your conference operator today. At this time, I would like to welcome everyone to the Southern Company First Quarter 2010 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). I would now like to turn the call over to Mr. Glen Kundert, Vice President of Investor Relations. Please go ahead, sir.

Thank you Rachel and welcome to Southern Company's first quarter 2010 earnings call. Joining me this afternoon are David Ratcliffe, Chairman, President and Chief Executive Officer of Southern Company and Paul Bowers, Chief Financial Officer. Let me remind you that we will make forward-looking statements today in addition to providing historical information. There are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form-10K and subsequent filings. We'll also be including slides as part of today's conference call. These slides provide details on the information that will be discussed in today's call. In addition, these slides provide reconciliations for certain non-GAAP financial information that will be discussed on this call. You can access the slides on our Investor Relations website at, www.southernco.com, if you want to follow along during the presentation. Now, at this time, I'll turn the call over to David Ratcliffe, Southern Company's Chairman, President and Chief Executive Officer.

Thanks Glen, and good afternoon, and thank all of you for joining us. Our excellent first quarter results were significantly influenced by weather and the slow, but steady economic recovery here in the Southeast. On January 11, we set a new winter system peak demand of 37, 224 megawatts. The average temperature across our service territory that day was 18 degrees. This winter peak surpassed our 2009 summer peak of 36,505 megawatts. As you know, our peak period on the Southern system normally occurs in the summer. I'm pleased to note that our generation and transmission system performed extremely well during this period for our 4.4 million customers. Since our last earnings call in January, we've had some significant new developments related to our two new nuclear units under construction at Plant Vogtle. In February, the Department of Energy announced that Georgia Power has been offered a conditional commitment for loan guarantees for the construction of units 3 and 4 at Plant Vogtle. Both the Georgia Public Service Commission and the Georgia Legislature have been very supportive of our plans to build the nation's first new nuclear plant in more than three decades. We believe that the administration support for the nuclear energy is vital in helping meet our nation's future energy requirements. Under the current DOE schedule, we have until mid-May to accept the non-binding conditional commitment. Discussions are underway to secure a one month extension to the schedule, which will give us additional time for further due diligence. The loans are expected to cover approximately $3.4 billion or 70% of Georgia Power's eligible projected cost for Plant Vogtle. It's important to note that the execution of the loan guarantees and actual borrowings will not occur before the Nuclear Regulatory Commission issues the combined construction and operating license of the project. Although specific numbers cannot be determined yet, we expect the loans will save us approximately $15 million to $20 million per year. The loans will benefit our customers and the company through interest savings as well as providing approximately $3.4 billion of committed debt financing. At this point, I'll now turn the call over to Paul Bowers, our Chief Financial Officer, for a discussion of our financial highlights for the first quarter and our earnings guidance for the remainder of 2010.

Thank you, David. As he mentioned, we're off to a good start this year. In the first quarter of 2010, we reported $0.60 a share compared with $0.16 a share in the first quarter of 2009 or an increase of $0.44 a share. The 2009 result includes a Mirant litigation settlement charge of $0.26 per share. Excluding the 2009 Mirant charge, our earnings were $0.60 per share in the first quarter of 2010 compared with $0.42 per share in the first quarter of 2009 or an increase of $0.18 per share. Let's turn now to the major factors that drove our first quarter numbers compared with the first quarter of 2009. First; the negative factors. Non-fuel O&M reduced our earnings by $0.03 a share in the first quarter of 2010 compared with the first quarter of 2009. Increase in maintenance cost for our fossil and hydro fleet, where five of our flagship units underwent scheduled maintenance in the first quarter of 2010 compared with one unit in the first quarter of 2009. Total planned outage days in the first quarter of 2010 were 94 compared to 11 outage days in 2009 for these large units. At Southern Power, the expiration of contracts for two combined-cycle units in Georgia reduced our earnings by $0.02 per share compared with the first quarter of 2009. One of these units will be under contract beginning in June 2010, while the other unit will be sold into the spot and forward energy markets. It's important to note, however, that 84% of Southern Power's generation is currently under long-term contract. Finally, the increase in the number of shares outstanding reduced our earnings by $0.03 a share in the first quarter of 2010 compared with the first quarter of 2009. Now, let's turn to the positive factors…

Thank you, Paul. As Paul outlined, we're off to good start in 2010. The economy, as shown by sales to industrial customers, appears to be gaining strength and momentum. While we're optimistic, we're still mindful that we're still in the early stages of this economic recovery. In January, you might recall that we announced a strategic alliance between Southern Company and Ted Turner to pursue development of a renewable energy project in the United States. Last month, Southern-Turner partnership announced the Cimarron project, a 30-megawatt facility capable of supplying electricity to 9,000 homes. That will be one of the nation's largest solar photovoltaic power plants. The plant will be built by First Solar Incorporated and located in Northern New Mexico. The output from this facility will serve a 25-year power purchase agreement with Tri-State Generation and Transmission Association. The Cimarron project is an example of our entry into renewable energy projects which fit our overall business strategy and risk profile. We will take a measured and disciplined approach to potential growth in this business while remaining true to the business model that we use in Southern Power, i.e., long-term contract for output with credit worthy counterparties. At this point, Paul and I are ready to take your questions. So, Rachel, will now take the first question.

(Operator Instructions). Your first question comes from Rudy Tolentino with Morgan Stanley.

Hey, actually, it's Greg Gordon. Two questions. First is, great quarter by the way. It's good to see the economy is coming back. What factors in the data that you see at the end of the first quarter are those that give you the most pause in terms of not wanting to sort of annualize the momentum you're seeing in sales until you actually see some traction going into second and third quarter in terms of earnings guidance?

Greg, this is David. Paul can chime in. I think from my prospective, we saw great results as Paul indicated from the primary metal sector and associated with that in the transportation sector which sort of says this is part and parcel of the automotive rebuild and restock, if you will. What I want to see is continued expansion of that into the rest of the industrial customer base. I'd like to see the difficult industrial supplies to the residential portion of our customer base begin to gear up. We think as Paul said that the residential situation has bottomed out and we're back on a positive note. We talked about a rate of 24,000 [e-connect]. That's a long way from where we were several years ago, four years ago. So I'd like to see a little more strengthening across the entire industrial. I know that if we get the consumer reengaged in automobiles and housing, then obviously that industrial sector will follow. We also know that the commercial sector, typically, is the last to go in and the last to come out, so we would expect as we've said for it to continue to be fairly stagnant, even declines are more before we see it rebound hopefully late this year or early next year.

Greg, only addition I'll make to that is, when you look at the Transportation segment, we saw increase in production of over 73% across our automobile manufacturing facilities. However, when you look at the industrial sales overall, we're still below the '08 peak period and that's one of the items that we're really watching.

One other question on the regulatory front. Can you refresh our memories on what the sort of flexibility of the process is, I know that historically you've had the ability to file for accounting orders instead of for base rate cases. Do you still expect to go through a formal base-rate making process here, or is there a possibility of a settlement? And, if so, at what point in the process does that become viable, as we sort of gear up to monitor your process in going through this rate-making year? What are the milestones need to look for and what flexibility do you have in the process?

Greg, we will always and as we have in the past, we’ll always follow traditional rate case. We may also file for alternatives to that such as an accounting order, but it's hard to say what the milestones will be. Obviously, when we file in a period of interrogatories and questions and then they'll schedule you to public hearings. I think when we get into the public hearings probably in the September - October timeframe, that's when you'll all see what the mood is and the temperature is.

Your next question comes from Jonathan Arnold with Deutsche Bank.

I may have missed this, I apologize, but the drivers in Southern Power, just a couple of cents in the quarter, but when you actually look to the net income numbers, it was down very materially percentage-wise. Could you just help frame that a little bit?

Sure. Jonathan when you look at Southern Power as compared to last year, you had two units of Southern Power that came off contract. One of those units will not go back on contract till June, so you have a period where these two units are just uncovered.

So this was kind of consistent with expectations?

Exactly.

Then maybe I wonder if David might provide us some insights into what your expectations are regarding potential revival of the (inaudible) climate bill after recent events?

Jonathan, my crystal ball is not any better than yours there. I think obviously the dynamic in the Senate is pretty fluid and you've read all the commentary. I think the question is whether Lindsey Graham will reengage in the discussions. And even if he does, remember that's still a very steep hill to climb in a short period of time. They've made significant progress in making what came out of the House much better. But we've said very clearly, at this point, this has all been very behind the scenes discussions of concepts and we haven't seen any legislative language. And we've been clear as a company, as an industry that, until we get the actual legislative language, which they had talked about releasing this week as opposed, but that was prior to the sort of the derailment they had over the weekend, until we get that, it's awfully hard to get comfortable that we actually understand the specifics of what we think has been improved. That means, it's going to be difficult to keep this on track in a short period of time. I think they have something like 40 to 45 legislative days left. They say that they are going to try to do this and immigration, but remember, this has to be scoured through the OMB process. So, it's got a long way to go even if Lindsey does re-engage.

Your next question comes from Ali Agha with SunTrust Robinson.

Paul or David to come back to Georgia power and the way 2010 is supposed to work, as I understand it, you've got the amortization that you can take out and then you have an ROE threshold as well, which I believe gets trued up at the end of the year. So it appeared to me that in the first quarter you had the best of both worlds, the amortization was taken out, as well as the strong sales. And I'm just wondering, as you look through the year, do we run into a situation where either, you run into that ROE cap or you have to stop using the amortization deduction, given the strength we saw in the first quarter?

Absolutely, and finally you have that opportunity, as last year if you recall, we had in the fourth quarter an adjustment that we didn't use all the opportunity on the COR or the cost of removal amortization; so you do have the potential of that for this year.

But it's fair to say, if we were to annualize how Georgia Power earned in the first quarter, that you probably would have been above that threshold, the ROE threshold?

No. Remember, this year we have $216 million or $54 million per quarter that it is amortized. And as you look at the stream of activity one being the O&M spend at each one of the companies, there is - from plan, they are a little bit below plan on O&M spend, so when you true up O&M spend, I can't make that assumption at all.

And one other question going back to Mississippi Power and the IGCC project, obviously, we'll get some clarity on that by early next week, I mean is the Commission relatively, favorably inclined to the IGCC option based on the hearings and the feedback et cetera? Can you give us some color on how you think it's positioned there?

I think it is positioned extraordinarily well. I think, Anthony Topazi and the Mississippi Power team have done an outstanding job of a very thorough presentation of the opportunity. It has all the kind of benefits that you would want for this of project. We think it is positioned very, very well. The industrial customers and the co-ops are very supportive of going forward with the project. So I don't know that there is anything else we can do, but as you know, this is a process of the three people who are - Commissioners have to decide, and until they decide, there's not much way to predict.

Your next question comes from Michael Lapides with Goldman Sachs.

A couple of questions and once again congrats on the good quarter. First of all, can you provide a little bit of guidance just, year-over-year, 2010 versus '09 expectation for consolidated O&M cost? Second, can you talk a little bit about what other rate actions you have coming up across your jurisdictions outside of Georgia?

When you look at O&M, Michael, we have, as you recall in the January earnings presentation, the O&M cost escalation would increase approximately 2.7% if you look at annual rate growth from '08, '09 and '10. When you look at '09 to '10 and you see the amount of maintenance activity that we have within the system, it's approximately 12% to 13%. It all depends on how you want to treat environmental O&M, but there is an escalation between '09 and '10 of that much. The other piece is, as you recall in '09, we were focused on reducing O&M significantly to manage, if you will, the activities of the business to ensure that we provide earning streams that meets our guidance. The other item that I will address is really that when you look at normal O&M, go back to the escalation rate, that's really the normal activity we have on year-by-year basis, of an escalation of 2.7%.

So it strikes me that the year-over-year hike between '09 and '10 is much greater than the normal. Just a little bit surprised, just because when I look at the first quarter O&M, (inaudible) we came in well above your expectation, where you guys actually reported, and just wanted to know if we're missing a big picture trend, or is this just a quarterly fluctuation not having as big of an increase as we would have thought?

Let me just add to what Paul said, by definition, we made a conscious decision to move some of the maintenance that would normally have occurred in '09 and into the first quarter of '10. And what Paul said was we should be back on a more normal track of routine O&M.

The other piece, Michael, is that Georgia Power, as you recall, we had a voluntary attrition program that also was enacted in 2009, so the benefits are now showing up in the first quarter as well.

And can you address any potential rate filings or rate actions in the coming 12 months outside of Georgia?

When you look in the year, you have the process within Alabama that starts the RSE the Right Stabilization and Equalization filings that will be at the end of the year. You have the same going on in Mississippi with their PEP filing, and then you have cost balance at Gulf Power, that are the normal process they go through every year.

Your next question comes from Paul Ridzon with KeyBanc.

You're looking for a down quarter in the second quarter, can you talk about some of the drivers?

We are not expecting the down quarter in the second quarter, Paul. When you look at the second quarter of last year, we had lease revenues that provided some uplift to the $0.61 that we achieved in second quarter and we had $0.03 of weather in the second quarter 2009. So you take those out, we're within the same bandwidth of what we did last year.

You had $0.03 of favorable weather relative to normal last year?

Exactly right.

Your next question comes from [Steve O'Connor] with UBS Investment.

$0.10 because of the cold weather, so that would leave me $0.60 minus the $0.10, would be $0.50, so that would be about 20% upside from the $0.42 that you were expecting for this quarter if my math is correct. Obviously, you can't control weather.

Right.

How much of that, I guess, upside would be from the industrial production? Because last quarter it was down about 11.7%, industrial sales. So I guess I'm just looking for some color in terms of if industrial production will, hopefully as the economy gets better, increase, as you've seen a little bit with the numbers you've reported from the automobile industry and the reengagement in the housing sector, what could that do to your earnings per share going forward?

Steve, you want me to get my crystal ball out for that one. When you look at the -

Or another way to phrase it is if you were down 11.7% last year, year-over-year how is it this year? I assume that the industrial sales are getting better.

Yeah, Steve, when you look at our industrial sales forecast for 2010, we said that the industrial sales were increased by 2.6%, but if you compare that increase to 2008 actuals, that would show still a decline of 3% in overall sales. So we're now seeing more positives sales growth in our industrial sector, but I want to be cautious about being too optimistic about that sustained growth.

Your next question comes from [Daniel Fitz, Fedec Research].

I was just curious, what is the cost of the clients at the project in Mississippi? I just was wondering what was the cost per kilowatt?

The total cost of the project is $2.4 billion. Average cost for the plant's in the $3,500 of kilowatt hour, KW.

And same thing for the solar plant that you're planning with Ted Turner?

No, we really don't have any numbers on that that we've made public.

Your next question comes from Annie Tsao with AllianceBernstein.

Can you give me more color in terms of your commercial sales? In terms of kilowatt sales, you mentioned on the call that's the sector you still see some weakness. Do you see that bottom out or you see continued weakness going forward?

Annie, if you recall, when we set the forecast for 2010, we said that the sales year-over-year will increase by 0.5% in our forecast. If you weather normalize the first quarter, we are down 0.3%. So relatively we are on target to our forecast. There are some sectors that are showing some improvement. However, they are the big sectors, if you will, in terms of their overall sales in the commercial sector that are still very weak. I want to point out the grocery store segment is down 2.2% year-over-year.

Your next question comes from [Paul Patterson with Glenrock Associates].

I hope I didn't miss this, but the ROE in Georgia last 12 months, could you give us a flavor for that?

Paul, when we look at the ROE for Georgia, remember we had the cost removal account that was approved by the Georgia Public Service Commission with 9.75 cap for them on the retail basis. So that's what they earned in retail for the company last year. And then you add a 110 basis points to that for the wholesale activity, they are roughly right at 11%.

Can you give us any flavor, I know that we're talking a little vis-a-vis on the upcoming rate case, but can you give us a sense as to what you will be looking at in terms of the potential I guess increase or how we should think about the ROE going into that rate case or projected protestor issues or anything that we should be thinking about?

It's too early to really get into that discussion, the Georgia folks are still working on the details of the filings, so I think we ought to wait until we actually make the filing. When we make the filing, we probably will have a separate call just to go over the fundamentals of the filing

And then also just, has there been any change in the RTP outlook, with sort of this boost in industrial usage and all the other many factors that go into RTP, which is sort of hard for us to, at least hard for me to model, could you give us a sense as to if there's any change in that or if you guys have pretty much about the same outlook as you had earlier?

Yeah, Paul, it's pretty much the same outlook. As you recall, in January, we said it'd be relatively flat to a positive $0.01 for the year. If you look at the first quarter its $0.002 on earnings per share basis for quarter. And that's really driven by just increased usage.

Your next question comes from Dan Jenkins with State of Wisconsin.

I just wonder if you could update us on how much CapEx you spent in the first quarter and then how lumpy do you expect that spending to be going forward?

When you look at the first quarter Dan, we spent $1.1 billion, and it really is lumpy relative to the addition of new environmental projects coming online and the spending curve for Plant Vogtle as well.

Will it mostly be in the second and third quarter, is it somewhat seasonal due to construction or how should we think about that?

For the year we're saying for Vogtle about $700 million for the year, and it really is just a timing question, it's not backend loaded or summer loaded. Projects associated with Kemper County, you'll see cost of about $341 million during the year. You have projects associated with environmental controls that are close to $600 million for the year. So it's really the timing. First part of the year, January to April, you'll see the major capital expenditures around environmental and then during the later part of the year; you'll have the environmental CapEx spend. Transmission and distribution is relatively spread throughout the year, except for the summer months, that's when you do not want to mess, if you will, with the lines during our peak period.

Kind of related to that. What are the financing plans? Will it kind of correlate with CapEx spends?

When you look at our slides in the appendix, we have an update of where we are relative to the capital that we've spend plus the financing of that capital. We've gotten to - for debt financing, we have achieved roughly $525 million so far this year on a basis of $1.6 billion that we'll need for the year.

I'm trying to get a little more color on the industrial. I think you mentioned that, you have Kia plant that wasn't in production last year that's now in full production and the steel plant in Alabama. How much of the additional industrial sales is related to those new facilities as opposed to just increased demand from prior customers? Do you have a sense?

Most of the demand is from our prior customers. Kia, if you look at it on a quarter-by-quarter basis, it's a huge number almost 426% increase year-over-year. So that tells you about the ramping up during the year until the fourth quarter when Kia came online. But in general terms, those kilowatt hours for those automobile manufacturing facilities are not real large in terms of total megawatts that we produce for the industrial sector. The chemical sector, pulp and papers grew and the steel group are the primary drivers overall for us in terms of our sales.

Then the last thing I was wondering, I just want to verify, I thought I heard you say that you did more maintenance in the first quarter on the fossil plants that something that maybe have been deferred in '09. Is that pretty much caught up then? Are you saying the maintenance going forward will pretty much be comparable to what we saw in '09 for the last three quarters?

Dan, it will not be comparable to '09. We are back on schedule in terms our overall maintenance plan for the company relative to our plants and our distribution transmission activities.

How should we think about them comparing 2010 to 2009 going forward? What we saw in the first quarter is similar to what we'll see going forward?

Again, some of that is timing, but go back to the response we just had on O&M spend, when you look at our O&M spend on an annualized basis over '09, it's going to be increasing by 13%. Again, we're back on the average if you look at '08, '09 and '10 of 2.7% compounded average annual growth rate if you take the 08 and compound it 2.7%, okay?

(Operator Instructions) Your next question comes from Nathan Judge with Atlantic Equities.

Couple of questions, there has been more transactions done for various natural gas generation plants across the country and I believe you still have some money slotted for potential transactions, despite doing some recently. Could you just give us an idea, an update on your view on that, those potential?

Nathan, we're always looking for a good deal. And if we find one, we're willing to make an acquisition. It has to meet our conservative criteria. We won't buy something just to own an asset. We want it backed by contracts with credit worthy counterparties. That's sort of our disciplined approach. We've maintained a pretty active radar screen, as you know, looking at opportunities and we have made acquisitions in the past. We're certainly willing to do that as you point out. I think we've budgeted money if and when we find the right opportunity.

The recent transactions, some of them don't have backing with contracts. It sounds like to me that that's not even an area of interest that Southern would be willing to consider even though those multiple seem to be fairly low. Is that right?

It would be unusual for us to do that, very unusual. I think we did make a swap of swords with West Georgia asset purchase. It didn't have backing, but we felt like it was a much better strategic play for us than just an outright acquisition like you're describing. So it'd be very unusual for us to make that kind of acquisition.

Nathan, let me add to that. When you think about assets that are uncovered, the question immediately comes to the front where, can we place a contract with that asset pretty quickly? That's one of our business drivers as we assess the assets. The other on the West Georgia, if you recall, we swapped two uncovered assets in Florida for these assets in West Georgia.

Could you give some commentary on the derivatives legislation that's shuffling through Congress? As kind of an associated question, if there is a requirement for industrial users to post collateral for the customers in Georgia that do shop, could that potentially be a positive catalyst for Southern or how would that play out for Southern Company generally and even Southern Power?

Nathan, when you look at the industrial customers in Georgia, they do not shop, if you will, after they have one-time decision. So the competitive platform is for the instate utility suppliers to compete for loads over 900 KW and once that decision is made, they are locked for that supplier.

Do you have a view on how the derivatives legislation will play out? Is there any potential impact if there is a requirement for customers to post collateral?

Nathan, we have assessed that legislation, but it's been primarily from a focus of what it would do in our fuels markets, and posting any collateral associated with that. As you recall, we have through [EEI] active to try to carve out that element, which I think we have succeeded in carving that out. I haven't seen the final language on this proposed legislation, but I think everybody recognizes that we have these types of transactions an ongoing basis.

And without that exemption, we would seize the hedging program in all likelihood.

And actually as it comes to your fuel situation, could you just give us an update on where you stand with coal inventories and what you see in the coal markets?

Nathan, currently we are at 52 days of inventory for this system. We were at a peak at the end of the year at 59 days. So, the weather has benefited us in terms of coal burn. As we look at the fuel markets, they have moved up in terms of overall price. Some of that is driven by Central App for export markets, primarily for the met market metallurgical coal. So, that is sustaining a higher price rate now in the cap and Central Appalachian markets. And as you're seeing the gas markets continue to fluctuate in the $4 to $5 range.

Your next question comes from Michael Lapides with Goldman Sachs.

Real quick follow-up. Someone asked this, I wasn't sure I understood the answer. How do you think about what your earnings guidance sensitivity is to every percentage change in realized demand?

When you look at 1%, it roughly depends on what sector, associated with the residential, commercial and industrial. When you look at industrial, that impact of 1% is roughly $0.02 earnings per share. And if you look at 1% for the residential and commercial, it's significantly higher around $0.04 per share.

Your next question comes from [Danielle Fust] with (inaudible) Research.

Wondering and maybe you already have that, but in order to recover the cost of the nuclear project, would you ask for a rider so that you do not have to file as often or this is already been considered and refused?

I'm not sure exactly what you're speaking to. The Georgian Legislature passed a construction work in progress bill which allows us the opportunity to recover some of that money as we're building the plant.

But you had to file for it, right? You have to file a rate case for that?

No, we will file with a commission a status report every six months on the status of the construction project and the cost against the budget. At some point in the future, obviously, when the plant is commercially operable, then it will be the subject of a rate case.

And at this time, there are no further questions. Mr. Ratcliffe, are there any closing remarks?

Thank you Rachel. Let me just say, again, thanks to all of you for joining us and thanks to those of you who were complementary. We were fortunate with a very strong first quarter and as we said we're comfortable. We're off to a good. We think we can see some legs in the economy that we're optimistic about, look forward to another call with you on the Georgia rate case. We'll also keep you informed about the decision with regard to Kemper County and then we'll be back again with the second quarter call in July. So thank you very much.

Thank you, sir. Ladies and gentlemen, this does conclude the Southern Company first quarter 2010 earnings call. You may now disconnect.