C O R P O R AT E
R E S P O N S I B I L I T Y
R E P O R T
2006
ABOUT THIS REPORT
This report contains information on the corporate, environmental, workplace, and community responsibilities of
Southern Company and its subsidiaries. It’s our first corporate responsibility report and we plan to update it regularly.
The report defines who we are, what we do, how we do it, and where we stand on the issues we face. Our aim is to
share information openly and set a baseline against which you can measure our future progress.
In this report, you can find information about how Southern Company manages issues relating to natural resources,
conventional and renewable sources of energy, clean air and water, work force diversity, community investment, and
economic development.
Figures in this book generally reference data as of December 31, 2005, and five-year trends through December 31,
2005, except where otherwise noted. Environmental data is from our generating plants.
If you are looking for specific Global Reporting Initiative indicators that apply to our business, we have prepared a
reference index in the Table of Contents to help you find sections more easily.
To help us make the report more useful and complete, we incorporated suggestions by outside stakeholders who
reviewed it before publication. We encourage you to add to this feedback and send your comments and questions to:
responsibility@southernco.com.
Cautionary Notice About Forward-Looking Statements
This corporate responsibility report includes forward-looking statements in addition to historical information. Forward-looking information
includes, among other things, statements concerning the strategic goals for Southern Company’s business, estimated expenditures, and
Southern Company’s projections and goals for future operations. Various factors could cause actual results to differ materially from those
indicated in forward-looking statements. Accordingly, there can be no absolute assurance that indicated or projected results will be realized.
For more information on factors that may affect forward-looking statements, see the back cover of this report. Southern Company disclaims
any obligation to update its forward-looking statements.
Southern Company operates 34 hydroelectric plants, some originally licensed more than 100 years ago.
Table of Contents
Section
About this Report
Forward-Looking Statement
A Message from David Ratcliffe, CEO
Executive Summary, Achievements, and Challenges
OUR BUSINESS
Generating and Distributing Electricity
Megawatts and Markets
Fuel
Emerging Generation Technologies
Natural Gas Improvements
Advances in Coal-Fueled Generation
Nuclear Power Development
Renewable Energy Investments
Reliability and Customer Satisfaction Key Performance Indicators
Customer Satisfaction Indices
Equivalent Forced Outage Rate
Transmission Reliability
Financial Performance
Page
IFC
IFC
3
4
GRI*
Section
2.10, 2.11, 2.12, 2.13, 2.17, 2.22, 3.10
OUR CORPORATE RESPONSIBILITY
3.13
1.1, 1.2, 2.2, 2.7, 2.8, 3.7
2.13, 2.21
6
7
8
10
10
10
10
12
13
2.2
14
14
15
16
17
3.19
2.1, 2.4, 2.5, 2.6, 2.7
2.2
2.2, 3.14
3.14
3.14
Page
Values and Business Strategy
Governance
Ethics, Legislative and Regulatory Participation
Stakeholder Engagement
OUR ENVIRONMENTAL RESPONSIBILITY
Air - sulfur dioxide, nitrogen oxides, and mercury
Climate - voluntary initiatives
Water - regulatory standards, discharges, and controls
Solid Waste - regulatory standards, wastes, and recycling
Land and Natural Resource Conservation
GRI*
18
1.1
19
20
22
23
3.1, 3.2, 3.3, 3.6, 3.20, HR10
2.3, 3.4, SO3, SO5
2.9
2.9, 3.10
24
26
29
31
32
34
EN9, EN10
36
LA1
37
38
40
42
43
43
LA5, LA6, PR1
44
3.14, SO1
45
46
47
48
48
51
3.14, EC10
EN8
EN5, EN12, EN13
EN1, EN2, EN11, EN15, EN31
3.14, EN6, EN23, EN27
3.14
3.14, EN7
3.19
3.19
3.19
2.3, 3.19, EC1
OUR WORKPLACE RESPONSIBILITY
Safety
Diversity and Inclusion
Pay, Benefits, and Career Growth
Demographics
Suppliers
Labor Relations
OUR COMMUNITY RESPONSIBILITY
*The Global Reporting Initiative is a multi-stakeholder network of individuals who
developed a reporting framework to help readers compare information across companies.
We’ve referenced the 2002 Global Reporting Initiative framework (the latest available
before finalizing our report). For more on GRI, visit www.globalreporting.org.
Energy Efficiency Programs
Economic Development
Hurricane Restoration
Education
Community Involvement
Contact Us
LA10, LA11, HR4, HR5
EC5, LA2, LA14
LA1
EN33
LA7, LA9
3.14
2.10, 2.22
EN17
3.14, EC12, EC13
2.10, 2.22
FROM DAVID RATCLIFFE, CEO
2
Electricity brings comfort and security to people everywhere. It is the
backbone of the world economy, as vital and necessary as the air we
breathe and the water we drink. Our more than 25,000 employees are
proud to be responsible for the critical infrastructure that generates
and distributes reliable electric service to 4.3 million customers in the
southeastern United States.
To us, electricity is both our business and our responsibility.
It is our business to provide value to shareholders; it is our
responsibility to provide reliable energy to customers. It is our
business to generate affordable power; it is our responsibility
to keep our environment clean. It is our business to compete and serve; it is our responsibility to work ethically
and help communities grow.
There need be no conflict between our business and
our responsibility. They shape each other. Here at
Southern Company they define who we are, what
we do, how we do it, and where we stand on the
issues of our times.
Most fundamental to me is “how we do it.” My
view is that big plans start and run on the ideas,
dedication, and commitment of our individual
employees. So our aim is to offer employees
experiences that help them grow into leadership
roles and at the same time create a framework of
shared values to guide their thinking. We call these
values Southern Style.
Southern Style includes striving to
earn unquestionable trust, dedication to
superior performance throughout our business,
and total commitment to the success of our customers, shareholders,
employees, and the communities we serve.
With trust, performance, and commitment as the core of who we are as
people, we can extend these qualities to become the core of what we do as
a business. It can shape our social, environmental, and economic actions
within the neighborhood, city, state, nation, and world we serve.
We are presented with the challenge of a growing population with growing
energy needs and growing pressure on the environment. Southern Company
can help meet this challenge, not just talk about it. We can provide reliable
energy while being a citizen wherever we serve – sustaining our quality of life,
energizing our economy, and keeping our environment clean and safe.
At the same time, a diverse and inclusive work force is a top priority. We will
help our customers be more efficient in their energy use. And we will lead the
nation to better ways to generate affordable electricity.
Please read more about our progress toward this vision and the challenges we
face in the pages that follow. We welcome your questions and suggestions.
Truly,
David M. Ratcliffe,
Chairman, President, and CEO
Southern Company
3
Achievements
• Continued to reduce overall emissions
of sulfur dioxide, nitrogen oxides, and
mercury per kilowatt-hour produced.
• Selected by the U.S. Department of
Energy to build a coal gasification plant –
the cleanest, most efficient coal-fueled
power plant in the world – in conjunction
with the Orlando Utilities Commission.
• Joined the FutureGen Industrial Alliance
to help design the world’s first near-zero
emissions coal-based power plant. It will
capture and permanently store carbon
dioxide underground.
• Opened the nation’s first mercury-controls
technology research center in Florida.
• Awarded 48 biodiversity and habitat
improvement grants from 2003-2005
through the National Fish and Wildlife
Foundation and other partners.
• Paid our 236th consecutive quarterly
dividend, through October, 2006.
• Outperformed S&P 500 Index and S&P
500 Electric Index for total shareholder
return in 5-year and 10-year periods ended
December 31, 2005.
• Restored power to all customers who
could receive it 12 days after Hurricane
Katrina destroyed 322 transmission towers,
2,500 miles of power lines, 10,376 power
poles, and 65 percent of local transmission
facilities.
Executive Summar y
We operate a business focused on customer service, shareholder value, and community responsibility.
Our business is to provide reliable and affordable energy to more than 4.3 million customers* in the southeastern
United States. In 2005, we ranked among the largest generators of electricity in the United States, with operating
revenues of $13.6 billion and earnings of $1.59 billion. At the same time, it is our responsibility to preserve the
environment and strengthen the communities in which we live, work, and serve.
Our model for corporate and professional values is Southern Style, which includes striving to earn unquestionable trust, dedication to superior performance throughout our business, and a total commitment to the success
of our employees, customers, shareholders, and the communities we serve.
We interact with a range of stakeholders, including customers, employees, investors, suppliers, non-profit organizations, government agencies, community groups, academia, the media, and others to address a variety of social,
economic, and environmental issues.
We help develop effective policies and comply with regulations.
Southern Company meets all environmental, financial, and workplace requirements that govern our operations.
We participate in dialogue to help develop fair and effective policies, communicating our experience and viewpoints on issues that impact the electric utility business while listening to opposing views. We are open to change
based on information from other groups who participate in the process.
We help find better ways to generate electricity while minimizing environmental impact.
In addition to meeting regulations through a comprehensive compliance strategy, Southern Company looks to
develop new technologies to burn fuels more cleanly, expand use of proven nuclear generation, broaden practical
use of renewable fuels, and champion energy efficiency.
Southern Company is spending $3.1 billion over the next three years to add environmental controls to existing
plants to further lower emissions of sulfur dioxide, nitrogen oxides, and mercury.
Southern Company supports voluntary programs and research initiatives to address scientific, economic,
technological, and policy challenges in relation to greenhouse gas emissions. The projects we have undertaken
include: coal gasification to gain generation efficiencies (making less carbon dioxide for each kilowatt-hour
produced); sequestration experiments to see if carbon dioxide can be efficiently removed and permanently stored
* through October 2006
4
Challenges
underground; nuclear planning to add more carbon-free generation; biomass generation energy options that
make economic and engineering sense today; and other initiatives, such as the planting of millions of trees to
absorb carbon dioxide.
We have begun new programs to measure and use water more efficiently. We are also expanding programs to
recycle solids such as coal ash and gypsum into concrete, wallboard, and agricultural products. We are stewards
of the land and lakes we manage, enhancing and protecting habitats for wildlife.
We help our customers make efficient use of energy.
We encourage adoption of energy-efficient products and processes for homes and businesses through ENERGY
STAR® programs, GoodCents® guidelines, energy audits, demand response programs and online energy tracking.
• Meeting the forecasted need for more than
10,000 additional megawatts of generating
capacity over the next 15 years.
• Adding transmission and distribution lines
to meet growing demand.
• Continuously improving safety performance.
• Recruiting and training employees to
maintain an expert work force while
increasing diversity.
• Installing $3.1 billion in environmental
upgrades over the next three years.
We make a safe, diverse, and inclusive work force a top priority.
We act with the highest regard for the health and safety of our employees and the general public while providing
reliable, affordable energy. We have made safety a top priority, stepping up our safety education and awareness
programs for all employees through our Target Zero initiative, which has already led to improvements in our
safety record.
• Developing cost-effective, environmentally
friendly generation technologies.
We’re promoting the benefits of diversity and an inclusive work force on decision-making and performance.
We’re encouraging all employees to value differences in background, culture, race, and gender while improving
our diversity record through recruitment and advancement opportunities. We strive to provide opportunities
through education and leadership development programs for employees to grow, and we offer competitive
benefits and salaries to attract and retain top talent.
• Evaluating the addition of new nuclear
generation units.
We are a citizen wherever we serve.
We serve as volunteers, fund company foundations, and give to programs for education, the environment, health
and human services, civic and community growth, arts, and culture.
• Developing renewable energy sources
within our region.
• Maintaining affordable electricity rates.
• Funding the rising cost of medical benefits
for an aging work force.
• Continuing to improve hurricane
preparedness and recovery plans.
We support economic development activities critical to maintaining the economy of our region. Our local
utilities work with state agencies, chambers of commerce, and development authorities to bring investment
into our region through new jobs and to provide capital spending. Additionally, we work within communities
to broaden opportunities and develop leaders.
After major storms outside our service territory, line
crews help restore service in other communities.
5
OUR BUSINESS
6
At our core, we are a company that makes and sells electricity. Our assets are devoted to, and our people primarily work at, the job of
making electricity and getting it to our customers. If you aren’t familiar with the process, here is a quick primer.
LOOKING AHEAD
Generating Electricity
“In my view, our
By the laws of physics, energy cannot be created, only changed in form. In a generating plant, the energy in the fuel changes to
biggest challenges lie
electricity. Electricity is a more useful form of energy because it can be transmitted over distances and easily converted to heat, light,
or mechanical motion.
in meeting the growing
demand
for
energy;
Because electricity is expected to be available all the time and in whatever quantity required at that moment, fuel must be on
maintaining a competent,
hand in sufficient quantity to supply it. This requirement has led to the use of coal, natural gas, and nuclear fuels, which have
professional, experienced
been affordable and largely available in the United States in mass quantity to meet demand.
work force as many of our
people reach retirement age;
Generators and Turbines
minimizing our environmental
The force of electricity used in homes and businesses comes from the collective movement of billions of electrons from
atom to atom. This movement is created at power plants in a generator, a spinning device made up of copper wires and
impact, including finding the right
magnets. To get enough electrical force to power cities, generators are the size of locomotives and the plants that house
solutions to the issue of climate
them can be eight stories tall and wider than a football field.
change; and growing our company
to add value for our shareholders.”
In most power plants, a turbine turns the generator. The turbine has fan blades usually driven by high pressure steam.
To make heat to turn water into steam, many plants burn fossil fuels, like coal or natural gas. Nuclear plants use the
process of fission to make heat. Hydroelectric plants use the force of falling water to turn turbines. Wind turbines use
- David Ratcliffe
moving air to make generators spin. For illustrations of fossil, hydro, and nuclear power plants in action, visit
www.southerncompany.com/learningpower/howplants.asp.
The Grid
Electric plants are connected to a network of transmission wires that carry electricity long distances to distribution
wires that connect to buildings, offices, and homes. Substations and transformers change the force in the wires at
points in the journey between plant and plug, converting the electricity from high voltage, which travels best, to the
lower-level voltage used by the electrical device.
Energy demand in the Southeast is expected to grow by 30 percent through 2018.
7
1
Southern Company ranked
highest in the electric
utility industry for providing a quality commuter
program for its employees,
according to the
Environmental Protection
Agency’s recent “Best
Workplace for
Commuters” list of
FORTUNE 500 companies.
The companies on the list
have met EPA’s 2005
National Standard of
Excellence.
1
Power is generated at plants where
energy resources, such as natural gas
and coal, are converted to electricity.
2
2
Large transmission lines
move electricity from power
plants at high voltage.
3
3
At substations, voltage is
stepped-down or reduced, to
deliver to homes and businesses.
4
4
At individual transformers farther down
the line, power is stepped-down again so
it can be used in homes and businesses.
Generators and the grid cannot store electric power. For the system to work reliably, electricity must be “pumped”
into the wires by plants at the same rate it is removed by end-use devices or lost in transmission. Plants must convert fuel to electricity on the grid every moment in the exact amount devices need to use. Many plants work
together to make enough electricity for any one moment and enough generators must be on standby to meet peak
demand, like on a hot summer day. Also, intermittent sources of electricity, like wind, solar, and hydro, must be
backed up by steady sources, like coal or gas, to meet demand when they aren’t available, like on calm or cloudy days.
Megawatts and Markets
Based in Atlanta, Southern Company is one of the largest generators of electricity in the nation, serving both
regulated and competitive markets across the southeastern United States. We participate in all phases of the
electric utility business with more than 41,000 megawatts of electric generating capacity and a grid of
transmission and distribution lines that would more than circle the earth. Southern Company and its subsidiaries
have been serving the Southeast for more than 100 years.
Southern Company provides retail electric service as regulated by the public service commissions in the states we
serve and by federal energy agencies. Public service commissions determine fair electric rates, oversee what project
costs can be recovered (for environmental controls or plant construction), and define the profit margin utilities can
make in retail markets. Our four electric utilities – Alabama Power, Georgia Power, Gulf Power, and Mississippi
Power – serve more than 4.3 million retail customers (through October 2006).
Monitoring operations at Plant Branch, near Milledgeville, Ga.
8
We also sell power in the wholesale market and transmit wholesale power for other providers. Our higher-growth
competitive wholesale generation business comprises more than 7,400 megawatts and serves about 75 investor-owned
utilities, electric cooperatives, and municipalities in Alabama, Florida, Georgia, Mississippi, and the Carolinas.
Southern Company has responsibility for approximately $5.4 billion in transmission assets including more than
27,000 miles of transmission lines, 3,400 substations, and more than 300,000 acres of right of way. The transmission system meets North American Electric Reliability Council standards and provides a safe and reliable grid.
We plan, design, build, operate, and maintain our system to meet growing demand, budgeting $2.3 billion in
transmission expenditures through 2008.
Other major subsidiaries and business units include Southern Nuclear, the licensed operator of Southern
Company’s three nuclear generating plants in Alabama and Georgia; SouthernLINC Wireless, a communications
network with about 300,000 subscribers in the Southeast; and Southern Telecom, a fiber optic wholesaler in the
Southeast.
To operate successfully, we balance the earnings interests of shareholders; rates and reliability interests of
customers; growth and impact interests of communities; and policy interests of regulators. With financial
success, we have the operating income to meet our environmental, workplace, and community responsibilities.
Southern Company regulated regional
electric utilities include Alabama
Power, Georgia Power, Gulf Power,
and Mississippi Power. Our competitive
generation business extends to markets
in six southeastern states. Through
October 2006, we operate 77 electric
generating plants across the Southeast.
Photo ©2005 wc heerman
Electric Generating Plants
Coal-Fueled, Gas-Fueled
Hydroelectric
Nuclear
Hydroelectric generators at Lay
Dam, near Clanton, Ala.
9
Fuel
Sources of Generation, 2005
HYDRO
3%
Fuel constitutes our single largest expense. The mix of fuel sources used to generate electricity at any given time
is determined by demand, the cost of replacement fuel, available capacity of individual generating units, and
other factors. Coal currently produces more than half the nation’s electricity and about 70 percent of Southern
Company’s.
GAS
11%
Emerging Generation Technologies
NUCLEAR
15%
COAL
71%
Southern Company is pursuing promising coal, natural gas, nuclear, and renewable generation technologies. We
have spent nearly $400 million on environmental research and development over the past decade. The most
practical technology options offer cost-effective operation, large-scale availability, and on-demand reliability while
preserving fuel options. New technologies for coal, natural gas, and nuclear power have the potential to meet
these criteria. Renewable generation technologies may provide additional options.
Natural Gas Improvements
The Power Systems Development Facility in Wilsonville, Ala.
Since 2000, Southern Company has added 8,500 MW of natural-gas fired generation. Natural gas-fired combined
cycle power plants continue to grow in efficiency through advances in turbine technology. Although natural gas
prices have increased in the past few years and may continue to fluctuate, natural gas-fueled power plants will
remain a viable option because they are clean and relatively fast and less costly to build.
Advances in Coal-Fueled Generation
Coal is our nation’s most abundant and affordable fossil fuel. We are developing and installing new coal-based
generation technologies to enable us to continue to use coal in a cost-effective, environmentally sensitive manner.
• Gasification
Over the past decade, Southern Company, with the Department of Energy, has been developing cleaner, less
expensive, more reliable methods for power production from coal. The Power Systems Development Facility
near Wilsonville, Alabama, has developed promising gasification technologies with near-term practical applications.
20
Rather than burning coal directly to make electricity, gasification first breaks coal down into chemical components. Gases that result from this chemical breakdown can be used to fuel power plants using integrated
gasification combined cycle technology.
15
10
10
5
Southern Company, in conjunction with our partner KBR, has further developed the gasification process to
work even more efficiently for sub-bituminous and other low-rank coals. Low-rank coals have less energy per
pound but account for half of worldwide reserves. This gasification process, developed at the Power Systems
Development Facility, is called Transport Integrated Gasification (TRIGTM).
TRIG is adapted from a proven technology used to refine oil and turns low-rank coal into a viable fuel for
modern gas turbine power generators. The process uses air-blown gasification rather than the more commonly
used oxygen-blown approach, which reduces the cost of power production.
Southern Company, along with the Orlando Utilities Commission, was selected by the Department of Energy
to realize the potential of this new technology by building a working commercial TRIG unit at a 285megawatt power generation facility near Orlando, Florida. It promises to be the cleanest coal-fueled plant in
the world.
Because of its increased efficiency – the plant will operate at nearly 40 percent efficiency compared with 35
percent for conventional coal plants operating today – this facility will produce the same amount of electricity
as existing pulverized coal plants with significantly lower emissions of sulfur dioxide, nitrogen oxides, and
mercury. Subsequent units would likely increase efficiencies further. Because of its more efficient conversion
of the fuel to energy, the plant should also emit 20-25 percent less carbon dioxide per kilowatt than current
pulverized coal plants. Commercial operation is planned for the summer of 2010.
• Improvements to Conventional Technology
We are looking to implement better conventional power plant technology. Improved pulverized coal plants
have extremely low sulfur dioxide, nitrogen oxide, and mercury emissions and are 5-10 percent more efficient
in converting coal to electricity, which leads to lower emissions. We are also adding baghouses, scrubbers, and
SCRs to many of our existing plants (see page 27).
• Future Low Carbon Coal-Based Generation Technologies
Southern Company is working to develop and demonstrate carbon dioxide capture and storage (or sequestration)
from coal-based generation into deep underground formations. We are a founding member and a key participant
with the U.S. Department of Energy and others in FutureGen. This project entails design, construction and
operation of a gasification-based plant that will capture and sequester carbon dioxide at full-scale. We have
joined the Department of Energy-sponsored Southeast Regional Carbon Sequestration Partnership which
plans to test the injection of carbon dioxide into a deep saline reservoir and an unmineable coal seam. The
Department of Energy and Southern Company are also funding tests using carbon dioxide to enhance the
production from oil wells in the Southeast. Plus, with the Electric Power Research Institute and others, we are
working to evaluate ways to capture carbon dioxide from conventional pulverized coal plants. Carbon dioxide
capture and sequestration costs are projected to be much higher than the costs to control nitrogen oxides or
sulfur dioxide emissions. One of our goals is to reduce these costs.
ENVIRONMENTAL
ASSESSMENT –
REPORT TO
SHAREHOLDERS
Find more information
on climate policy,
technology options,
assessment results, and our testimony on
renewables in our Environmental Assessment
– Report to Shareholders.
The report, published in May 2005, shows
how we address air emissions requirements,
including an analysis of potential price signals
for carbon dioxide emissions that might result
from policies to address climate change. The
report finds technology development to be
more productive than mandatory carbonreduction policies.
Southern Company will continue to develop
large-scale, cost-effective, low-emitting
technologies and explore, evaluate, and
undertake additional voluntary actions to
reduce, prevent, or sequester greenhouse
gas emissions. Find the full report at
www.southernco.com/planetpower/report.asp.
11
Nuclear Power Development
Nuclear power is re-emerging as a viable way to meet new demand for electricity with the added benefit of no air
emissions, including CO2.
Southern Company is a member of NuStart, a nuclear technology energy consortium comprised of power generation companies and reactor vendors. The group is pursuing a new combined construction and operating
license process and advancing new nuclear technologies. Southern Company is moving to make nuclear power
an option to meet growing demand for electricity by 2015-2016.
In August 2006, Southern Company filed an application with the U.S. Nuclear Regulatory Commission for an
Early Site Permit for new units at Plant Vogtle, located near Waynesboro, Georgia. The permit will allow the
Nuclear Regulatory Commission to review and pre-approve the plant site for future construction of new nuclear
units and allow Southern Company to conduct design, construction, and other site-specific evaluations before we
make the decision to build. We also would need approval from the Georgia Public Service Commission before
making a final decision to build the new units.
Hyperbolic cooling towers frame Plant Vogtle, near
Waynesboro, Ga.
The Nuclear Energy
Institute awarded
Southern Nuclear its Top
Industry Practice Award
for Plant Farley’s cooling
tower replacement project
in 2004, for Plant Vogtle’s
safer and more accurate
alignment tools in 2005,
and Plant Farley’s vessel
head testing program in
2006. Plants Hatch,
Vogtle, and Farley are all
certified by the Wildlife
Habitat Council for
conservation efforts.
12
We have proposed the light-water Westinghouse AP1000 reactors for new units at Plant Vogtle. More than 28
new nuclear plants are under construction in 10 countries around the world – almost all using U.S. light-water
reactor technology. The new reactors are safe, efficient, and simpler than current models.
In March 2006, Southern Company reached an agreement with Duke Energy to jointly evaluate building a
nuclear plant in Cherokee County, South Carolina. Southern Company will work with Duke Energy to apply to
the Nuclear Regulatory Commission for a combined Construction and Operating License for the Cherokee
County site. Duke Energy would develop and operate the plant. Southern Company would be co-owner of the
facility. Application to the Nuclear Regulatory Commission is planned for late 2007 or early 2008; the companies will decide whether to proceed with construction at a later date.
Southern Company is also exploring a partnership with the Tennessee Valley Authority to add new nuclear
generation at TVA’s Bellefonte site in north Alabama.
Renewable Energy Investments
For renewable energy to make a larger contribution toward meeting overall demand and achieve its associated
environmental benefits, Southern Company will:
• Pursue equity investments in renewable energy projects, such as wind, solar, biomass, and geothermal,
throughout the country where they are economically feasible.
• Research renewable energy technologies, such as biomass, solar, and wind.
• Identify and implement economically feasible renewable technologies that take advantage of native
resources and work well in the Southeast.
• Pursuing Wind, Solar, Biomass, and Geothermal throughout the Country
Mississippi Power received
the Keep Mississippi
Beautiful Award in recognition of its significant
contributions to protecting
the environment and
promoting environmental
awareness, 2002-2005.
Renewables like solar power and wind turbines often catch the public eye, but challenges with their consistent
and widespread use in the Southeast persist. Solar energy is expensive to capture, and solar generation equipment often requires large tracts of open land to install. Cloud cover and night skies limit its reliability. Wind
turbines also require acres of land. Calm conditions prevail frequently in the Southeast, making viable wind
power sites scarce and operation intermittent. However, these limitations don’t apply everywhere. So we are
evaluating investments in renewable generation projects throughout the country.
Working with Ormat, one of the largest geothermal corporations in the world, Southern Company is gaining
experience with geothermal generation in Hawaii. We own a 30-megawatt geothermal generation project
providing about 15 percent of the power for the Island of Hawaii.
• Researching Renewable Energy Technologies
Southern Company has invested $6 million over the past five years in research and development of renewable
energy. Nearly 20 research and development projects are in progress, including one that uses switchgrass as a
biomass fuel. The switchgrass tests have shown lower emissions of carbon dioxide, sulfur dioxide, and mercury.
We’ve also expanded research into biomass gasification, a technology based on coal gasification, which could
be more economical than biomass combustion.
Southern Company joined the Georgia Institute of Technology to study the viability of offshore wind turbines
in the Southeast. The study found technology limitations and regulatory restrictions that will make development of offshore wind projects difficult in the Southeast.
We are also a member of the American Wind Energy Association, the American Council for Renewable
Energy, the Utility Wind Integration Group, the Solar Electric Power Association, and the Electric Power
Research Institute Biomass Interest Group.
Southern Company owns a geothermal
plant in Hilo, Hawaii.
13
• Identifying and Implementing Renewables for the Southeast
Alabama Power, Georgia Power, and Mississippi Power currently offer customers a renewable energy choice.
The energy is produced from biomass sources such as sawdust, switchgrass, and landfill gas. To cover the additional cost of the renewable energy, customers elect to pay a $4.50 to $6 surcharge per 100 kilowatt-hours.
Energy from this renewable source is then added to the electric grid.
Gulf Power’s photovoltaic program offers customers the opportunity to purchase blocks of solar kilowatthours. Gulf Power hopes to expand the program, using landfill gas as an energy source.
Additionally, Southern Company hydroelectric plants produce three percent of our generation. This output
accounts for roughly all the practical sources for hydroelectric power within our service territory and balances
recreational use and habitat conservation around streams and rivers.
Energy Efficiency
For information on energy efficiency programs, see page 45.
Reliability and Customer Satisfaction
Key Performance Indicators
Among electric utilities, Southern Company maintains one of the highest reliability records – 99.95 percent – in
the nation.
American Customer Satisfaction Index
We have been the highest-scoring utility in customer satisfaction in the American Customer Satisfaction Index
for the past five years.
American Customer Satisfaction Index*
2001
2002
2003
2004
2005
Southern Company
80
81
82
81
79
Utility Average
69
73
73
72
73
*ACSI scores customers’ expectations and perceptions of quality for products and services using telephone and Internet surveys.
14
Customer service representatives handle calls around the clock.
J.D. Power and Associates Electric Utility Residential and
Business Customer Satisfaction Study – Southern Region
J.D. Power quality and satisfaction measurements are based on actual customer responses. Customer satisfaction
is measured by factors including company image; price and value; billing and payment; field service; and
customer service.
American Customer
Satisfaction Index has
ranked Southern Company
the Highest Scoring Utility
in Customer Satisfaction
since 2000.
J.D. Power Rankings
2001
2002
2003
2004
2005
Business*
1
1
1
1
1
Residential
1
3(tie)
2(tie)
1
2(tie)
*Defined as midsize business prior to 2004
Peak Season Equivalent Forced Outage Rate
Equivalent Forced Outage Rate indicates generation unit unavailability during times when demand is highest
and is calculated from May 1 through September 30. Lower rates are better. For comparison (as compiled by the
North American Electric Reliability Council, excluding nuclear generation and adjusted for catastrophic damage
caused by hurricanes), the Equivalent Forced Outage Rate for companies larger than 5,000 MW, like ours, run
at about six to eight percent.
Equivalent Forced Outage Rate*
2001
2002
2003
2004
Target
2.80%
2.80%
3.00%
3.00%
2.25%
Actual
1.97%
1.96%
1.68%
1.32%
2.83%**
* Figures exclude impact of hurricanes and outages caused by manufacturer defects.
**Higher than targeted EFOR due to an outage event at three units.
2005
J.D. Power and Associates
has ranked Southern
Company highest in
Overall Satisfaction for
Electric Service to
Business Customers in
the Southern United
States since 2000.
According to 2006 North
American Electric
Reliability Council data,
Southern Company EFOR
of 1.11 percent ranked
first among other electric
generating companies
with more than 5,000
megawatts of capacity.
15
Transmission Reliability
Southern Company calculates transmission reliability by measuring the duration and frequency of interruptions.
Indices are calculated on interruptions greater than five minutes. Scheduled or planned outages, named storms,
customer-caused outages, and trouble attributable to other utilities are excluded from the indices.
Sustained Average Interruption Frequency Index
Number of Sustained MVA Interruptions
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
2001
2002
2003
2004
2005
Minutes of Sustained MVA Interruptions
Sustained Average Interruption Duration Index
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
2001
2002
2003
MVA: Megavolt ampere is a unit of apparent power.
Transmission towers carry high-voltage lines.
16
2004
2005
Financial Performance
Southern Company is publicly traded (NYSE: SO) with $39.9 billion in assets and more than 500,000
shareholders. We have paid a dividend to shareholders for 236 consecutive quarters, dating from 1948
through October 2006.
Total Return (percent)*
1-Year
5-Year
10-Year
30+
Southern Company
7.6
16.7
14.3
15.6
S & P 500 Electric Utility Index
17.7
5.5
9.4
NA
S & P 500 Index
4.9
0.5
9.1
12.7
*Compound annual growth rates for periods ending December 31, 2005. Assumes dividends were reinvested and returns compounded daily.
2005 Operations (as of December 31)
Total KWh sales
Industrial
Commercial
Residential
Wholesale
Other
Operating revenues
Earnings
Earnings Per Share
Assets
196.9 billion
55.1 billion
51.9 billion
51.1 billion
37.8 billion
1 billion
$13.55 billion
$1.59 billion
$2.14
$39.9 billion
Customers
4.2 million
Residential:
3.6 million
Commercial:
586,000
Industrial:
15,000
Other (includes wholesale): 5,000
Employees
25,554
Generating plants
75
Miles of transmission lines 27,000
Honors from the
Southeastern Electric
Exchange 2005 Industry
Excellence Awards included:
• Southern Company for
environmental excellence
for the fine particulate
agglomerator at Plant
Watson.
• Alabama Power for
transmission excellence
for a program designed
to improve the reliability
of an aged line.
• Georgia Power for
customer service and
billing excellence for its
enhanced service initiative program.
• Gulf Power for production excellence for
its Plant Crist Unit 6
storm damage recovery
project.
• Mississippi Power for
rates and regulations
excellence for the
development of Rate
Manager software.
17
OUR CORPORATE RESPONSIBILITY
18
Photo ©2005 wc heerman
Corporate Responsibility
Values and Business Strateg y
The actions of our people define our company. Our model for corporate and professional values is
called Southern Style, which includes these principles:
LEADERSHIP
Unquestionable Trust
Honesty, respect, fairness, and integrity drive our behavior. We keep our promises and ethical
“Southern Company
behavior is our standard.
will remain focused on
Superior Performance
customer service and
We are dedicated to superior performance throughout our business. Our priorities
community responsibility.
are safety first, teamwork, diversity, and continuous improvement through strong
We will help work through
leadership.
issues of growth and regulaTotal Commitment
tion. We will lead the nation to
We are committed to the success of our employees, customers, and shareholders
better ways of generating elecand to citizenship and stewardship in all our actions.
tricity while reducing our impact
on the environment. We will make a
Business Strateg y
diverse and inclusive work force a
• Live Southern Style in all aspects of our business.
top priority. And we will help our
• Lead the industry in customer satisfaction and service.
• Continue to earn top-quartile returns with one of the lowest-risk profiles in
customers be more efficient in their
the electric utility industry.
energy use.”
• Achieve a long-term earnings-per-share growth rate of 4-6 percent while
delivering a sustainable and growing dividend to our shareholders.
- David Ratcliffe
• Make the communities we serve better places to live and work.
Southern Company corporate headquarters in Atlanta, Ga.
Southern Company was
named among the top 10
best managed utilities by
Forbes from 2003-2006.
19
Governance
Chief Executive Officer
®
FORTUNE Magazine
ranked Southern Company
the ”Most Admired
Electric and Gas Utility”
from 2002-2004.
In July 2004, David Ratcliffe became Southern Company’s chairman, president, and CEO. Ratcliffe, who joined
Southern Company as a biologist in the environmental area, has worked for the company for 33 years. In addition to his time in the environmental organization, Ratcliffe’s executive level service includes vice president, fuel
services; executive vice president, external affairs; and president and CEO of both Mississippi Power and Georgia
Power. He serves on the boards of the Georgia and metro Atlanta chambers of commerce and is chairman of the
board of directors of the Federal Reserve Bank of Atlanta.
Management Council
Ratcliffe heads Southern Company’s management council, which is responsible for developing, communicating,
and implementing the company’s strategies and vision.
David Ratcliffe - chairman, president, and CEO
Barnie Beasley - president and CEO, Southern Nuclear
Paul Bowers - president, Southern Company Generation
Bob Dawson - president and CEO, SouthernLINC Wireless
Andy Dearman - executive vice president and chief transmission officer
Dwight Evans - executive vice president
Tom Fanning - executive vice president, chief financial officer, and treasurer
Mike Garrett - executive vice president; president and CEO, Georgia Power
Ed Holland - executive vice president, general counsel, and corporate secretary
Anthony James - executive vice president and president of shared services
Charles McCrary - executive vice president; president and CEO, Alabama Power
Susan Story - president and CEO, Gulf Power
Anthony Topazi - president and CEO, Mississippi Power
Board of Directors
By policy, Southern Company must have a majority of independent directors. Audit, governance, finance, and
compensation and management succession committees must be comprised entirely of independent directors.
Currently, only one member of the 10-member board – Southern Company CEO David Ratcliffe – is employed
by the company.
Management Council member Tom Fanning pitches in at a community service project.
20
The board establishes committees as needed to facilitate and assist in the execution of its responsibilities. The
governance committee evaluates the expertise and needs of the board at least annually to determine its proper
membership and size.
There are currently five standing committees of the board:
• Audit
• Compensation and Management Succession
• Finance
• Governance
• Nuclear Oversight
The audit committee oversees environmental compliance. Broader environmental policy is discussed by the
entire board.
As of May 2006, Southern Company directors are:
• Juanita P. Baranco - executive vice president and
chief operating officer, Baranco Automotive Group
(automobile sales). Morrow, Georgia
• Zack T. Pate - chairman emeritus, World
Association of Nuclear Operators (nuclear power
industry). Atlanta, Georgia
• Dorrit J. Bern - chairman, president, and chief
executive officer, Charming Shoppes Incorporated
(retail). Bensalem, Pennsylvania
• J. Neal Purcell - retired vice chairman audit operations, KPMG (audit and accounting). Duluth,
Georgia
• Francis S. Blake - executive vice president of business development and corporate operations, The
Home Depot Incorporated (retail). Atlanta, Georgia
• David M. Ratcliffe - chairman, president, and chief
executive officer, Southern Company. Atlanta,
Georgia
• Thomas F. Chapman - retired chairman and chief
executive officer, Equifax Incorporated (information
services and transaction processing). Atlanta,
Georgia
• William G. Smith Jr. - chairman, president and
chief executive officer, Capital City Bank Group
Incorporated (banking). Tallahassee, Florida
• Donald M. James - chairman and chief executive
officer, Vulcan Materials Company (construction
materials). Birmingham, Alabama
• Jerry St. Pé - former president, Ingalls Shipbuilding;
retired executive vice president, Litton Industries
(shipbuilding). Pascagoula, Mississippi
Find additional information about board members, guidelines, and governance at:
http://investor.southerncompany.com/governance/directors.cfm.
David Ratcliffe, CEO, at an executive forum.
21
Ethics
Southern Company’s code of ethics applies to directors, officers, and employees of Southern Company and its
subsidiaries. The code addresses behavior, safety and health, environmental performance, compliance, confidentiality, conflicts of interest, gifts and gratuities, political activities, competitive practices, financial integrity, and
relationships with customers, vendors, shareholders, regulators, and others. Each year, employees complete a
questionnaire affirming their personal compliance with the code of ethics. The company also requires periodic
online ethics and compliance training for all employees and directors.
a
Employee concerns may be reported using a confidential concerns line or Web site. Further information and detail
on the company’s code of ethics can be found at: http://investor.southerncompany.com/governance/ethics.cfm.
Legislative and Regulator y Participation
Southern Company participates in the legislative and regulatory process, especially related to proposed laws or
rules that impact our customers and shareholders. We work closely with both national and state leaders.
b
c
Southern Company maintains an office and staff in Washington, D.C., to interact with Congress and with
agencies, including the Federal Energy Regulatory Commission, the Securities and Exchange Commission,
the Nuclear Regulatory Commission, the Department of Energy, the Department of Defense, and the
Environmental Protection Agency. We use outside firms to assist our efforts, and we support a number of trade
organizations that engage in lobbying activities as well. The total expense associated with operating our federal
affairs program is approximately $10 million annually. We also work with state and local legislators and policymakers.
d
Southern Company sponsors Political Action Committees that make contributions to candidates for public office
using funds voluntarily donated by employees. For the 2004 election, the total amount of voluntary contributions from employees to Political Action Committees was $1,242,028. The total amount given to federal candidates from company Political Action Committees was slightly more than $983,500. This money was contributed
to various Republican and Democratic candidates, other Political Action Committees, and political organizations
such as the Republican and Democratic national committees. Information on Political Action Committee federal
contributions is publicly available through the Federal Elections Commission at www.fec.gov.
We interact with stakeholders in many ways,
including our Web sites. Planet Power (a) features information about energy and the environment. Learning Power (b) offers educational
information. Find financial (c), career, operations, and customer service information at (d)
www.southerncompany.com.
22
In addition, we participate in or serve on industry groups and committees such as the Utility Air Regulatory
Group, the Utility Water Act Group, the Utility Solid Waste Activities Group, and several committees sponsored
by the Edison Electric Institute.
Stakeholder Engagement
In response to requests by shareholders, we have enhanced our corporate reporting and disclosure materials to be
more transparent as to our plans and measurable as to our accomplishments. We welcome opportunities to meet
with key stakeholders to learn more about their interests, challenges, and opportunities. We also welcome outside
perspectives on how to improve our performance.
We encourage open dialogues on national policy and on issues that impact local residents and business people.
We also foster collaborative partnerships with specific objectives like conserving habitat, protecting wildlife,
developing new technology, educating children, providing recreation areas, developing community resources,
and removing trash from waterways. We work with partners at all levels from the grass roots in field offices and
power plants up through corporate channels at each of our subsidiaries and headquarters. For examples of our
active partnerships, visit www.planetpower.com.
In addition to partnerships, our success depends on active engagement and participation with community
groups, government agencies, non-profit organizations, shareholders, media, academia, customers, employees,
and suppliers. Participation includes attendance at local group meetings, safety education, service on boards,
plant tours, charitable support, speaking engagements, research support, informational surveys, membership in
community organizations, reporting, and media support.
Contact us at responsibility@southernco.com.
David Ratcliffe at the annual shareholders meeting.
23
OUR ENVIRONMENTAL RESPONSIBILITY
24
MAKING COAL
CLEANER
Our challenge is to meet ever-growing demand for electricity – projected to grow about two percent per year in the Southeast – while
“Managing greencontinuing to minimize the impact of electricity production on the environment. Annually, we develop a compliance strategy and budget
house gas emissions
based on emerging laws and rules, fuel prices and availability, unit characteristics, control costs, and financial impacts. These principles
in a world that still
shape our environmental strategy:
depends on fossil fuels
necessitates new tech• Management and Employee Commitment - We take
• Research and Innovation - We invest in research and innovative
responsibility
for
implementing
our
environmental
policy
technologies to provide cleaner energy options for our customers.
nologies. To lower emisand committing the resources to make it happen.
That commitment extends to providing customers with renewable
sions at conventional
energy choices and pursuing alternative generation options.
plants, we have tested co• Compliance - We meet or surpass all environburning
switchgrass,
a
mental laws and regulations. We conduct all of
• Stewardship - We demonstrate our commitment to the communities
our
operations
in
an
environmentally
sound
and
we serve and the environment through education, partnerships, and
renewable fuel. At the same
responsible manner.
projects that result in conservation, preservation, and increased
time, we’re putting research into
environmental awareness.
practice. Backed by federal fundWe use our Environmental Management System
ing and with strong partners, we
• Public Policy - We work with government agencies, non-government
– formalized in the 1990s with elements from
organizations, scientists, policy leaders, and other interested stakeholdmanagement
programs
developed
by
national
developed Transport Integrated
ers to ensure environmental laws and regulations are based on sound
and international regulatory and standardGasification, an innovative coal
scientific information and meet environmental, economic, and social
making organizations – to stay in compligasification technology. With federal
objectives. We seek to balance economic, energy supply, reliability,
ance with regulations and direct voluntary
funding, we and our partners are
environmental efforts.
and environmental needs and factor in the time needed to develop
and implement solutions.
building a full-scale TRIG plant that will
• Continuous Improvement - We monitor
begin operation in 2010. It promises to
and assess the environmental impact of
• Accountability - We integrate our environmental policy into our
be the cleanest, most efficient coalour operations, using the results to
business operations by establishing goals and measuring our
fueled plant in the world and have
improve our efforts. We continually seek
performance against goals. These results will be reported to our
opportunities
to
prevent
pollution
and
environmental executive committee and board of directors.
25 percent lower carbon dioxide emisconserve natural resources in balance
sions than an average coal plant in
with maintaining reliability and low-cost
• Transparency - We publicly communicate our environmental goals
our existing fleet.”
service to our customers.
and performance. We foster open, effective dialogue with stakeholders
to build collaborative partnerships.
- David Ratcliffe
We stockpile switchgrass at Plant Gadsden in Alabama for co-burning with coal to reduce emissions of carbon dioxide,
sulfur dioxide, and mercury. Switchgrass, a renewable fuel, is a native prairie grass grown easily in the South.
25
Investment of Resources
Southern Company has been investing resources into environmental protection since the 1970s. Every day, more
than 200 people work to ensure our facilities operate in an environmentally sound manner.
Current Air-Related Regulatory Requirements
• National Ambient Air Quality Standards
• One-Hour Ozone Ambient Air
Quality Standard
• Eight-Hour Ozone Ambient Air
Quality Standard
• PM2.5 Ambient Air Quality
Standard
• Clean Air Interstate Rule
• Clean Air Mercury Rule
• Clean Air Visibility Rule
• Acid Rain Program
• State Standards and Regulations
To learn the details about these regulations, visit
www.epa.gov/air/oaqps/index.html.
Since the 1990s, we’ve spent nearly $2 billion on environmental controls. Southern Company is spending an
additional $3.1 billion over the next three years to further lower emissions of sulfur dioxide (SO2), nitrogen
oxides (NOx), and mercury.
Air
Nitrogen oxides, sulfur dioxide, particulate matter, and mercury emissions from power plants are monitored
and regulated by federal, state, and in some cases, local agencies. Southern Company annually reports the
amount of emissions from its power plants to the EPA, the Department of Energy, and state agencies as required.
Since 1990, emissions of nitrogen oxides and sulfur dioxide have declined by 33 percent while generation has
increased by 37 percent. Additional reductions are planned over the next decade. Mercury emissions will also
drop as new technologies are implemented.
The EPA has recently finalized requirements to further reduce SO2 and NOx emissions from power plants under
the Clean Air Interstate Rule. Another new EPA program, the Clean Air Mercury Rule, will reduce mercury
emissions from coal-fueled power plants. Installation of control devices now in progress will reduce SO2, NOx,
and mercury emissions by about 70 percent from today’s levels while the demand for electricity in the Southeast
is projected to grow by more than 30 percent through 2018.
Sulfur Dioxide
SCRs remove nitrogen oxides from emissions at Plant
Bowen, near Cartersville, Ga.
Sulfur dioxide is released primarily from burning fuels like coal, oil, and diesel fuel. Because coal-fueled power
plants, steel mills, refineries, pulp and paper mills, and nonferrous smelters combust large amounts of fuel, they
tend to be at the top of the list for SO2 emissions. SO2 is regulated under the Clean Air Act because of concerns
about health effects at high concentrations. SO2 also contributes to acid rain and limited outdoor visibility in
some areas.
20
18
16
14
12
10
8
6
4
2
0
1,600
Tons shown in thousands
1,400
1,200
1,000
800
600
1
200
2
200
3
200
4
200
5
200
0
201
projected
400
0
199
26
Sulfur Dioxide Emissions Total
projected
In pounds per megawatt hour
Sulfur Dioxide Emissions Rate
200
0
0
199
1
200
2
200
3
200
4
200
5
200
0
201
SO2 emissions are controlled by burning lower-sulfur fuels and by installing pollution-control devices called scrubbers.
Over the next decade, Southern Company
plans to install more than two dozen additional scrubbers, more than a dozen SCRs,
and several baghouses at power plants
throughout our service territory.
Southern Company has reduced SO2 emissions by about 30 percent since 1990. By 2015, we forecast reductions
of another 80 percent from current levels.
Nitrogen Oxides
Nitrogen oxides form when gasoline, natural gas, coal, or oil is burned at high temperatures. Motor vehicles are
the biggest source of NOx. Other sources include cement kilns, power plants, chemical facilities, and industrial
boilers. NOx compounds, along with volatile organic compounds and sunlight, react in the atmosphere to form
ozone. Ozone, a major component of smog, can cause respiratory problems at high concentrations. Ozone is
regulated under the Clean Air Act.
Scrubbers remove up to 95 percent of SO 2
Emissions from burning coal contain
sulfur dioxide. In a scrubber, we spray
the combustion emissions with a water
and limestone mixture. The sulfur dioxide
reacts with the limestone to form gypsum,
a reusable compound. The remaining
water vapor rises out of the stack.
Southern Company has reduced NOx emissions by 43 percent since 1990. By 2015, we forecast reductions of
another 60 percent from today’s levels using selective catalytic reduction and other technologies.
Nitrogen Oxide Emissions Total
Nitrogen Oxides Emission Rate
400
350
Tons shown in thousands
5
4
3
2
300
250
SCRs remove up to 85 percent of NOx
200
150
1
0
1
200
0
199
2
200
3
200
4
200
50
0
0
199
0
201
5
200
projected
100
projected
In pounds per megawatt hour
6
100
80
60
40
20
0
-20
-40
-60
-80
-100
1
200
Electricity (MWh)
2
200
3
200
4
200
5
200
0
201
projected
Percent change from 1990 baseline
Generation Growth and Relative Change in Emissions Since 1990
1
200
Another emission from burning coal is
nitrogen oxide. An SCR, or selective catalytic reduction system, adds ammonia to
the emissions exiting the boiler. A catalyzed chemical reaction breaks the nitrogen oxides down to harmless nitrogen and
water. Catalytic converters in autos are
similar devices. Performance of Southern
Company’s 13 SCRs was judged to be the
best in the industry, according to a study
by the Electric Power Research Institute.
2
200
NOx
3
200
SO2
4
200
5
200
0
201
Mercury
27
Mercury
The EPA has recently established reduction standards for mercury emissions from coal-fueled power plants. By
2018, we project that Southern Company’s total mercury emissions will be about 70 percent below today’s levels.
Mercury Emissions Total
Mercury Emissions Rate
12,000
6
10,000
5
4
3
2
1
0
8
199
1
200
2
200
3
200
4
200
5
200
0
201
8,000
6,000
4,000
projected
Emissions in pounds
7
projected
In pounds per 100,000 megawatt-hours
Southern Company and
Georgia Power’s Plant
Yates received EPRI
honors for leadership in
mercury emissions
control technology
in 2003.
Mercury is a metal that occurs naturally in the environment. It is an element that is part of the Earth’s crust.
Mercury is also released as a by-product of the combustion of fossil fuels, especially coal. Mercury can accumulate in the environment and in plants and animals, moving up through the food chain. Combined, U.S. power
plants produce about one percent of global mercury emissions.
2,000
0
8
199
1
200
2
200
3
200
4
200
5
200
0
201
Mercury Control Research
Southern Company conducted the first full-scale tests of activated carbon injection for mercury control. We also
built and are using the first integrated research facility, near Pensacola, Florida, to develop and test new power plant
mercury control technologies. Our research work has tested new full-scale methods to control mercury emissions
and has improved the accuracy of mercury continuous emissions monitors.
28
The Mercury Research Center, the first of its kind,
opened in 2005 at Plant Crist, near Pensacola, Fla.
ENVIRONMENTAL AND EMISSIONS
CONTROL ACHIEVEMENTS
Climate
We manage a varying portfolio of about 50
environmental, emissions-control, and renewable energy research projects. These efforts
include pilot-scale developmental work as well
as full-scale demonstrations of pre-commercial
technology. Our researchers, partners, and
engineers have:
Carbon dioxide is a naturally occurring atmospheric gas that, along with other greenhouse gases, helps warm the
Earth by trapping the sun’s infrared radiation. There is concern that human releases of greenhouse gases, including CO2 released from the burning of coal, oil, and natural gas, are impacting this natural warming.
Addressing concerns about CO2 emissions will require achievable and cost-effective actions based on ongoing
scientific study, consideration of economic and energy supply impacts, and the development of new energy
technologies.
While Southern Company encourages additional scientific study, we also support policies to stimulate development
of technologies to address the climate change issue. We favor this approach over mandatory caps or taxes, which
are likely to raise energy costs and slow economic growth. Consistent with this commitment, Southern Company
is engaged in voluntary programs to reduce, avoid, or sequester greenhouse gas emissions, and in research initiatives to develop and commercialize large-scale, cost-effective, low-emitting power generation technologies.
0
199
1
200
2
200
3
200
4
200
5
200
0
201
180
160
140
120
100
80
60
40
20
0
• Improved cooling tower fill efficiency, improving plant performance and reliability.
• Studied offshore wind power generation.
• Built a pilot-scale combustor that can
evaluate how variations in fuel, combustion, and hardware will reduce emissions.
projected
Tons shown in millions
projected
In pounds per megawatt-hour
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
• Designed and built the industry’s first
integrated Mercury Research Center to
test new mercury control options.
• Developed and are implementing a project
to co-burn switchgrass, a renewable fuel, to
lower emissions and increase fuel diversity.
Carbon Dioxide Emissions Total
Carbon Dioxide Emissions Rate
• Developed a coal gasification process for
lower-rank coals.
0
199
1
200
2
200
3
200
4
200
5
200
Carbon dioxide projections may vary significantly from actual performance data. Projections for total carbon dioxide emissions are dependent on interrelated factors
including the demand for electricity, fuel mix, and the cost and availability of future technologies. These variables are difficult to predict with certainty.
0
201
• Designed and built a pilot selective catalytic
NOx reduction facility to test emission
controls for Powder River Basin and highsulfur coals.
• Applied the first fine particulate agglomerator to increase fly ash collection by an
existing electrostatic precipitator.
29
Cumulative Carbon Dioxide Reduced,
Offset, or Sequestered, in Metric Tons
1995
Voluntary Initiatives
• Department of Energy Climate Challenge and Climate Vision
1996
Since 1994, as a charter member of Climate Challenge, Southern Company has developed many voluntary
programs and joined several industry initiatives. We are a leader in Power Partners, the electric utility industry’s
climate change initiative that pledges additional industry-wide greenhouse gas reduction of 3-5 percent per
megawatt-hour of generation by 2010-2012. As of December 31, 2005, Southern Company’s reductions,
sequestrations, and offsets total 140 million metric tons of carbon dioxide. Programs include:
• Upgrading nuclear capacity
• Plant and transmission line efficiency gains
• Biomass use
• New combined cycle units
• Tree planting (35 million trees planted)
1997
1998
1999
2000
2001
2002
2003
2004
2005
projected
2010
0
50
100
150
200
250
300
CO2 in millions of metric tons.
Chart shows cumulative reductions from Climate Change projects
relative to a baseline year (1990), as reported to the Department
of Energy.
• Southeast Regional Carbon Sequestration Partnership
As discussed on page 11, we’re working with the Department of Energy and others to evaluate CO2 capture
technologies and underground injection sites.
• Other Government Initiatives
Southern Company is also a partner in technology-focused programs implemented under the Energy Policy
Act of 2005, and the Asia-Pacific Partnership on Clean Development and Climate.
• Research
Development of Transport Integrated Gasification power plants and new nuclear generation hold promise for
electricity generation with lower or no CO2 emissions and are detailed on page 10.
• Sulfur Hexafluoride
Sulfur hexafluoride is a greenhouse gas. Southern Company has about 500 transmission substations with
1,740 breakers that use SF6 for its essential insulating properties. In 1999, Southern Company joined a
voluntary EPA program to reduce SF6 emissions by better detecting and repairing leaks. By replacing
equipment and implementing the program, SF6 emissions have been reduced by more than 80 percent.
We’re working to make native longleaf pine forests a more common sight.
30
Water
The southeastern United States has abundant rainfall and waterways to supply water for power plants. As with
any natural resource, we strive to use water responsibly.
Electricity generation requires large amounts of water to produce steam, remove heat, or power hydroelectric
turbines. Some of the water naturally evaporates – what you see rising out of the large cooling towers at power
plants is water vapor. Some of the water at power plants is cooled and reused. Most of the water is returned back
to its source.
Environmental concerns regarding water principally relate to the quantity of water withdrawn and consumed
from rivers and lakes, the quality of the water returned to the source, and any effects on aquatic life. While
Southern Company power plants withdraw, on average, more than 6 billion gallons of water per day, about
96 percent of that water is returned to the river or lake.
Water Use at Southern Company Power Plants
Withdrawals Annual Avg. (million gals/day)
2003
2004
2005
6,903
7,298
6,630
Consumed Annual Avg. (million gals/day)
249
261
301
Percent Returned
97%
96%
96%
Intakes
In early 2004, the EPA finalized a new rule, known as the 316(b) Phase II Regulations, to protect fish and other
aquatic life that might be affected by cooling water intake structures at existing power plants. As a result,
Southern Company is conducting biological studies to identify how different aquatic species are affected by
plant operations. To preserve aquatic species, we are evaluating options such as intake barrier nets, strobe lights,
acoustic systems, and restoration.
Discharges
The National Pollutant Discharge Elimination System controls water quality by regulating point source discharges
into U.S. waterways. Southern Company power plants have permits for water discharges within agreed levels
for pH, suspended solids, oil and grease, chlorine, temperature, iron, and other parameters. Typical permitted
discharges include cooling water, ash ponds, coal pile runoff ponds, metal cleaning waste ponds, sump overflows,
and oil/water separators. These points are monitored or sampled periodically in accordance with permit requirements. When exceedances occur, they must be reported and may result in fines. Southern Company’s goal is
first to prevent exceedances, but if they occur, to quickly remedy them and bring discharges back within agreed
limits.
We test water discharges from our plants to make sure we
comply with federal, state and local water regulations.
31
Solid Waste
The regulatory definition of solid waste includes residential trash, wastes generated by restaurants and office
buildings, manufacturing companies, wastewater treatment plants, and waste generated by constructing or tearing down buildings and other structures. Most solid wastes from the production of energy are by-products of
combustion.
Coal Ash and Gypsum
After combustion of coal and other fuels, some solid by-products remain. In coal-fueled plants, for example, up
to 10 percent of the coal volume remains as ash after combustion.
Scrubbers remove sulfur dioxide from emissions. The
resulting by-product, gypsum, has many commercial uses
including wallboard.
Year
Coal Combustion
By-Product Recycling (tons)
Amount
2001
1,635,542
2002
1,638,779
2003
1,881,294
2004
1,682,090
2005
1,659,449
Includes coal ash and gypsum.
Some of these solids have beneficial uses in products. The remaining solids are managed on plant sites or are
collected and removed to designated offsite landfills.
To reduce the volume of solid waste at our plants, we’re making safe use of coal ash in concrete, cement ,and
road beds. We’re aiming to reuse 50 percent of the coal ash generated by our plants by 2010 – up from 30
percent today – diverting approximately 3.6 million tons from landfills.
By adding scrubbers – emission control technology that removes sulfur dioxide from plant emissions – we
produce gypsum, a reusable by-product. Gypsum can be used in wallboard, cement, and in agriculture.
Nuclear Wastes
Nuclear power plants produce two levels of radioactive waste. Nearly all high-level waste is used fuel. Low-level
waste includes such things as protective clothing, tools, and equipment that may contain small amounts of
radioactive material. Low-level waste can be shipped to a licensed disposal facility or stored at the plant.
Used fuel is handled by remote control and safely stored inside the most highly secured area of the plant in
steel-lined, concrete pools filled with water or on the plant property in steel-lined, concrete containers.
Used fuel accumulates at a much lower volume than many people imagine. A thimble-sized nuclear fuel pellet
produces the equivalent energy of one ton of coal. An average nuclear plant unit retires about 20 tons of fuel
each year which, in volume, could fit in a small room.
Alabama Power and Georgia Power have contracts with the Department of Energy for the permanent disposal of
used fuel. The Department of Energy failed to begin disposing of used fuel in 1998 as required by the contracts.
Until the contract is fulfilled, used fuel continues to be stored safely on-site, as prescribed in operating licenses.
32
Hazardous Waste Generated
Southern Company operates three nuclear power plants, Vogtle, Farley and Hatch. Sufficient pool storage capacity
for used fuel is available at Plant Vogtle into 2014, with an on-site dry storage facility to be completed in time to
maintain normal fueling operations. At plants Hatch and Farley, on-site dry storage facilities are being used to
house spent fuel once it reaches a lower level of radioactivity, and can be expanded to accommodate used fuel
through the life of each plant. The casks are constructed of steel-reinforced concrete, proven to safely protect the
fuel under extreme conditions such as earthquakes, tornadoes, hurricanes, floods, and explosions.
Hazardous Waste
Year
Amount (lbs)
2001
312,901
2002
332,701
2003
420,074
2004
77,927
2005
114,153
Hazardous wastes can be the by-products of industrial processes or simply discarded commercial products, like
cleaning fluids or pesticides. Southern Company has reduced hazardous waste generation by decreasing use of
hazardous materials and by substituting safer options such as non-chlorinated cleaners and water-based paints
(see chart at right).
Insulating Oil
Substations and other facilities have electrical equipment that contains oil for its insulation properties. These
facilities have procedures in place to prevent oil spills. Spill prevention, control, and countermeasures are built
into new substations and are being retrofitted on existing facilities. After evaluating almost 2,800 substations,
Southern Company identified more than 500 requiring retrofits. More than 170 retrofits are complete; the
remainder will be completed within five years.
Office and Metal Recycling
Southern Company recycles paper, cardboard, wood, aluminum cans, and scrap metal locally. Over the past five
years in Georgia alone, we have recycled about 3.2 million pounds of paper, 1.4 million pounds of cardboard, 24
million pounds of wood, and 112 million pounds of scrap metal.
The average household
contains between three
and ten gallons of materials that are hazardous to
human health. To ensure
proper disposal of household hazardous waste,
Mississippi Power’s Plant
Watson in Gulfport hosts
an annual Household
Hazardous Waste
Collection Day.
33
LAND MANAGEMENT
Company foresters and employee volunteers
manage the land surrounding our power
plants and along our transmission rights of
way to conserve native plants and wildlife
habitats. Southern Company has actively
managed more than 467,000 acres of forests,
lakes, and parks and more than 300,000
acres of rights of way.
• Trees - We’ve planted more than 4.6 million
trees on 7,180 acres of corporate land since
2000 and 2.4 million trees on more than
4,850 acres of public and private land
through the Longleaf Legacy program.
• Forests - We manage more than 222,000
acres of forest land.
• Parks - We manage 50,680 acres as state
parks and wildlife management areas for
public hunting and wildlife viewing
in Georgia, Alabama, and South Carolina.
• Recreation - We manage more than
195,000 acres of public lakes that feed
hydroelectric facilities, help ensure water
supply, and provide recreational areas.
• Wetlands - We’ve started a program to
create and enhance a Georgia wetlands
bank.
• Rights of Way - We manage more than
300,000 acres of rights of way.
Additionally, our support of Wildlife
Incentive Non-Game Subsidy in Georgia
has fostered the conversion of more than
15,000 acres; and Wild Power in Alabama
has converted more than 1,500 acres to
support wildlife.
34
Land and Natural Resource Conservation
To improve wildlife habitats and biodiversity, Southern Company enhances company-controlled land, transmission rights of way, and other areas in partnership with owners, stewards, and various conservation groups,
including the National Wild Turkey Federation, The Nature Conservancy, and the Wildlife Habitat Council.
Our efforts are anchored by three major programs, Power of Flight, Longleaf Legacy, and Five Star Restoration,
all in partnership with the National Fish and Wildlife Foundation. (Visit www.planetpower.com to see a list of
specific projects and grantees.) Southern Company has committed $10.5 million through 2013 to undertake
conservation and biodiversity projects through these three programs. With matching funds from the National
Fish and Wildlife Foundation and project grantees, more than $33 million will go toward conservation in the
Southeast. Through 2005, 48 grants were awarded and are in action.
Our land management and partnership activities contribute to many conservation efforts, including: North
American Wetlands Conservation Act; the North American Waterfowl Management Plans; the State
Comprehensive Wildlife Conservation Plans; Georgia’s Forestry for Wildlife Program; the Wildlife Habitat
Council’s certification program; The Nature Conservancy’s Heritage Program; U.S. Fish & Wildlife’s
Red-Cockaded Woodpecker Recovery Plan; Quail Unlimited’s Northern Bobwhite Quail Initiative; and the
National Wild Turkey Federation’s Energy for Wildlife program.
Power of Flight
The Power of Flight program protects birds through habitat and species restoration and environmental education. It focuses on Southern birds, such as bobwhite quail, the endangered red-cockaded woodpecker, terns,
plovers, swallow-tailed kites, and Bachman’s sparrows. The program, enacted in partnership with the National
Fish and Wildlife Foundation, has opened quail habitats on more than 37,000 acres across the region plus habitats for endangered Mississippi sandhill cranes, beach-nesting shorebirds, waterfowl, and wading birds. Southern
Company has committed $3.3 million in matching funds over 10 years for projects in our region.
Longleaf Legacy
The abundant wildlife and lush landscapes of the longleaf forest were once commonplace in the South. Now only
a few remnants of this ancient forest remain. Longleaf Legacy supports restoration of longleaf pine forests, home
to many endangered species like the red-cockaded woodpecker. Longleaf Legacy also helps sequester carbon
through tree planting. To help bring back longleaf pine forests, Southern Company, with the National Fish and
Wildlife Foundation, is funding the planting of millions of longleaf pine seedlings. As these trees grow, they will
nurture an ecosystem of more than 600 species of plants, rivaling the diversity of a tropical rainforest. Southern
Company has committed $6 million in matching funds over 10 years for projects in our region.
Five Star Restoration
Southern Company serves as the Southern region lead corporate sponsor of Five Star Restoration, a national
conservation program that provides grants and technical support for riparian (land-bordering waterways), coastal,
or wetlands restoration projects. Current Five Star partners include the Environmental Protection Agency,
National Association of Counties, and Wildlife Habitat Council. The National Fish and Wildlife Foundation
administers this program. Southern Company has committed $1.2 million in matching funds over five years for
projects in our region.
Avian Protection Program
Sanctioned by the U.S. Fish and Wildlife Service, the Avian Protection Program helps keep migratory birds safe
from electrical equipment, including transmission lines and distribution substations. In addition to taking steps to
reduce mortality risk to avian species, the program also encourages ways to enhance avian populations or habitats,
such as developing safe nesting platforms. Southern Company follows transmission standards that are avian safe,
especially on smaller lines where conductors are closer together and insulator strings are shorter.
Energy for Wildlife
The National Wild Turkey Federation’s Energy for Wildlife program was established to help manage and improve
wildlife habitat on rights of way and other property controlled by energy companies. Southern Company is a
charter member of this organization and in 2006 was certified for managing its transmission rights of way in a
manner that is environmentally responsible.
Wildlife Habitat Council
The Wildlife Habitat Council helps landowners manage unused land for the benefit of wildlife. Employees of
Southern Company’s three nuclear facilities, in conjunction with community members, local conservation groups,
and government agencies, maintain Wildlife Habitat Council certification for nearly 5,400 acres of land.
A catch-and-relocate program helps the endangered redcockaded woodpecker reproduce and increase its population.
35
OUR WORKPLACE RESPONSIBILITY
36
OSHA Recordable Incidence Rate*
3.0
The actions of our people impact our workplace, our industry, and the communities in which we
serve. We ask employees to exhibit unquestionable trust, superior performance, and total commitment, our Southern Style behaviors (see page 19).
DEVELOPING
TALENT
2.5
2.0
1.5
Safety
1.0
Our business employs people who routinely work near energized wires, intense heat, nuclear
fuel, heavy equipment, moving vehicles, pressurized equipment, and under other conditions
that require exceptional safety attitudes and measures. Though it is vitally important to
provide energy to our customers, there is no occupation worth risking the safety of an
individual employee.
“Our greatest strength
is our people, their experience, their dedication to
the local communities they
serve, and their willingness
Prior to 2005, results for our regional utilities, as compiled by the Southeastern Electric
to meet challenges like those
Exchange (a non-profit trade association of more than 20 investor-owned electric
utilities) indicated subpar safety performance. To reach top quartile rankings, we
presented by hurricanes Ivan
increased emphasis on safety in 2005 through a program called Target Zero. In
and Katrina. We have a deep
2005, we reduced our Occupational Safety and Health Administration recordable
pool of management talent and
injury incidence rate by 22 percent. Across our system, we reduced the number
some of the finest minds in the
of recordable injuries by 25 percent, and lost workday injuries were reduced by
40 percent.
industry. We will continue to develop
our work force, maintain the skill sets
Target Zero
and management experience we
No one ever plans to get injured at work. Target Zero challenges the attitude
need, and move toward a more
that accidents are inevitable and acceptable, replacing it with the expectation
diverse, inclusive work environment.”
that every day, every job can be accomplished safely. Zero may seem like an
unrealistic goal but most of our employees work their entire careers without
- David Ratcliffe
sustaining an occupational injury. We have numerous work groups that work
years without a crew member sustaining an injury. Zero reflects a real and
achievable personal, and therefore organizational, goal.
Target Zero emphasizes starting any job with safety in mind. We identify
hazards and determine how to avoid them. We go over safety details with all
employees who will perform the work. While working, we watch out for each
other and start corrective actions if we see unsafe conditions.
Skilled workers string new transmission lines to meet growing demand.
0.5
0
2
200
SEE Companies
3
200
4
200
5
200
Southern Company
* With some exceptions, injuries requiring medical treatment
beyond first aid or that involve loss of consciousness or inability
to complete normal job duties are recordable in accordance with
OSHA rules. The recordable incidence rate is used to compare
injury records from company to company. The rate reflects the
number of recorded injuries per 100 employees in a calendar
year. Consult www.osha.gov for details.
Lost Workday Case Incidence Rate**
.6
.5
.4
.3
.2
.1
0
2
200
SEE Companies
3
200
4
200
5
200
Southern Company
** Generally, a lost workday case is a recordable case that resulted
in time away from work.
OSHA clarified injury recordkeeping standards in January 2002,
making 2001 data irregular; thus it is omitted here.
37
Diversity and Inclusion
Our goal is to attract and retain a diverse, highly skilled, fully engaged work force. Emphasis on diversity and
inclusion enhances our ability to make sound business decisions by engaging people from diverse backgrounds
and perspectives. Making diversity and inclusion a part of how we do business is not just a corporate performance goal, it is a business imperative. Our focus on sustaining an inclusive and diverse work force and actively
engaging community partners and diverse suppliers helps make our business stronger.
Profiles in Diversity
Journal awarded Georgia
Power the International
Innovation in Diversity
Award, 2005.
To heighten the focus on excellence through inclusion, Southern Company named a chief diversity officer in
2005 and merged the diversity and talent management organizations in 2006 to better integrate work force
strategy and planning, talent acquisition, and talent development. This brings all of the functions in the lifecycle
of employment – hiring, orientation, career development, retention, work force planning, and retirement –
under one umbrella.
To keep the diversity effort moving forward, we are raising the bar on expectations, more strongly linking
diversity to the business, aligning systems and processes internally and externally, moving from activities to
results, and strengthening accountability around performance standards to track and guide success.
The effort is led by the Southern Company CEO, with the CEOs of each operating company taking ownership
and leading the effort at their respective companies. The overarching objective is to execute business strategies
with precision through competent leadership, technically skilled teams, and engaged individuals who feel valued
and respected for their ideas, experiences, and backgrounds.
Southern Company’s focus on diversity and inclusion is based on Southern Style, our core values. As the foundation from which we operate, Southern Style demonstrates our pledge to earn unquestionable trust, our dedication to superior performance, and our total commitment to the success of everyone touched by our business.
Embracing diversity and inclusion requires that we value differences and treat people as unique individuals.
Uniqueness manifests itself in much broader terms than the visible aspects of race and gender. It includes creativity, experience, upbringing, and educational background – all the things that shape us and make us individuals.
Southern Company employees have a wide variety of occupations, from
meter readers to engineers, troublemen to customer service representatives.
38
Putting Diversity and Inclusion into Practice
From the board of directors to frontline employees, Southern Company enlists talent that meets our business
needs and is representative of communities we serve and the changing demographics of the marketplace.
Once employees come to work at Southern Company, we strive to ensure that resources are in place to support
and encourage professional development. We have an active focus on individual and group mentoring programs,
leadership and high potential assessments, performance management, tuition reimbursement, and numerous
development courses.
By nurturing relationships with diverse suppliers, including female and minority-owned businesses, Southern
Company broadens its access to products and services while demonstrating commitment to economic inclusion.
Across the system, our operating companies engage diverse suppliers and, in some instances, mentor them to
help them compete for opportunities to become a part of our supply chain.
Community partnerships ensure the growth and vitality of the diverse communities in which we serve, work, and
live and create alliances around business issues.
Measuring Diversity and Inclusion
We measure performance on a quarterly basis for diversity and inclusion and report this information to the CEO
along with other key performance metrics. Employees can track the company’s performance around key performance goals each quarter through our intranet.
Since 2001, Southern Company has surveyed its employees annually to analyze our progress on our efforts to
ensure an inclusive work environment. Areas targeted on the survey include fairness and openness within
individual work groups, management and supervision, the selection and development process, and valuing
differences. In 2005, more than 60 percent of our employees participated in the survey. The results are reported
for each business unit, which then develops action plans to address opportunities for improvement and build
upon areas of success.
Southern Company subsidiaries have one of the lowest turnover rates in the industry, in large part because of our
work environment, pay and benefits, and employee development and training.
More than 200 employees are dedicated to environmental activities like monitoring water quality.
39
Pay, Benefits and Career Growth
Turnover
10%
Percent of employee population
9%
8%
7%
6%
5%
Southern Company and its subsidiaries offer Total Rewards, a comprehensive compensation package.
• Competitive Base Salary – Base salary depends on job classification, market pay levels, and individual
performance. It may be adjusted in consideration of individual performance, through the annual merit
increase program and promotions.
• Short-Term Incentives – Short-term incentives reward employees for meeting specified goals. We offer a
performance pay plan, target incentives, top performer awards, spot awards, and sales-based incentives.
• Long-Term Incentives – Long-term incentives reward employees for company performance through stock
appreciation and stock dividend payout performance. Long-term incentives include the Stock Option
Program and the Performance Dividend Program.
4%
3%
Health Care and Wellness
2%
Employees choose from an array of insurance and health care plans – including Health Maintenance
Organizations, and Preferred Provider Organizations – for single or family coverage, with prescription drug plans
and dental coverage. We have provisions for employee assistance, accident and sickness insurance, and disability
and life insurance for employees, spouses, and children, as well as flexible (health care and dependent care)
spending accounts. A new medical option, Build Your Own, introduced in 2006, enables participants to choose a
customized combination of medical and prescription deductibles, copayments, and coinsurance levels.
1%
0%
1
200
2
200
3
200
4
200
5
200
Tenure Profile
60%
Southern LifeStyle is an enhanced health and wellness program for all eligible employees. Southern LifeStyle
includes an annual company-paid health and lab profile, health education, and customized wellness and health
management programs.
Percent of work force
50%
Southern Company also has a systemwide random drug testing program for employees and contractors to help
keep our workplace free from illegal drugs and alcohol.
40%
30%
20%
Pension and Savings
10%
We offer a defined benefit pension plan as well as an employee savings plan (401K) with a company match and
access to retiree medical and life insurance. We offer convenient banking services through a credit union.
0%
0-5
6-10
11-15
Years
16-20
20+
Workplace Opportunities and Education
We encourage employees to capitalize on opportunities to learn, grow, and advance in their careers. Southern
Company subsidiaries offer a variety of in-house instructor-taught, Web-based and self-help courses for
employees. Courses cover areas such as communication, consulting, finance, leadership development, performance
management, and specific job-related skills.
40
Southern Company also offers programs that help prepare employees for advancement opportunities through
job and career assistance, including tuition-reimbursement and scholarship programs for college, graduate school,
prep courses, and professional certification. For reimbursement, employees must achieve a C grade or better. In
the past five years, we’ve provided more than $6.3 million to 4,358 deserving employees.
Work Force Education Profile
50%
Company classes include safety training in CPR.
Percent of work force
40%
30%
20%
10%
0%
HS Grad
Some
College
Technical Bachelor’s
2/Yr Degree
Degree
Master’s Not Indicated
Degree
or Higher
Succession Planning
Our success can be traced, in large part, to consistent, capable leadership with deep knowledge of the company
and the energy industry. Succession planning leads to long-term stability – more than 70 percent of Southern
Company officers have been promoted from succession plans.
To develop successful upper-level managers and executives, we give them experiences across organizational and
company lines. For example, of the 258 employees at upper management and executive levels, more than 80
were moved into a different organization or company during 2005.
Southern Company was
named Organization of
the Year in 2005 by the
Southeast Chapter of
the International Human
Resources Information
Management organization.
The award recognizes
improved recruiting,
hiring, record-keeping,
customer service and
other processes.
Identifying diversity among succession candidates is an added focus. We have had a steady increase in women
and minority candidates and leaders.
41
Leadership Gender and Ethnicity
Leadership - Time in Position
40%
20%
15%
Percent of leadership
Percent of leadership
35%
10%
30%
25%
20%
15%
10%
5%
5%
0%
0%
2001
2002
2003
Women
Minority
2004
2005
Less Than
1 Year
Sr. Management
1-3 Years
3-5 years
Greater Than
5 Years
First Level Management
Promotions 2005: 30 percent women; 24 percent minority
Demographics
Southern Company has 25,554 employees. Employees average 45 years of age and have an average tenure of
19 years. The mean age and tenure are higher than the national average for large businesses, prompting us to
step up recruitment and foster leadership development.
Work Force Gender
MINORITY
21%
WOMEN
24%
NON- MINORITY
79%
MEN
76%
New hires, 2005: 37 percent women
20
Plant engineers monitor equipment to maintain reliability.
15
10
42
Work Force Ethnicity
5
New hires, 2005: 31 percent minority
Supplier Diversity Expenditures
Age Profile
50%
400
Expenditures shown in millions
Percent of work force
40%
30%
20%
350
300
250
200
150
100
10%
50
0%
Under 25
25-34
35-44
Years
45-54
Over 54
0
1
200
2
200
3
200
4
200
5
200
Suppliers
Southern Company maintains ethical standards in all business practices, including relationships with suppliers.
We contractually hold our suppliers to these standards when performing work for us. Suppliers must meet
policies for legal compliance, equal employment, harassment, workplace threats and violence, electronic
communications, safety, the environment, drugs and alcohol, and conflicts of interest. More information
on each of these areas and expectations can be found at www.southerncompany.com/suppliers/policies.asp.
Southern Company awards business based on best overall value. We have established a mentoring program
to help suppliers understand and follow our conventions and policies, qualify for opportunities, and excel
in performance.
We strive to develop and maintain relationships with small businesses and firms owned by minorities or women.
Spending with such businesses has risen consistently since 2001. Southern Company achieved 185 percent of our
supplier diversity expenditure goal of $202 million in 2005, spending $370 million with women- and minorityowned firms, compared with $280 million in 2004. That is 12 percent of the company’s total procurement
for 2005.
A number of Southern Company employees are members of
the National Guard and Reserve. We support their endeavors in protecting our nation.
FIVE-STAR SUPPORT FOR
NATIONAL GUARD
THE
In 2005, Southern Company was honored to
sign a “5-Star Statement of Support” for the
National Guard and Reserve. Less than
one percent of employers of guardsmen and
reservists in the United States have achieved
the 5-Star level of recognition by the
Department of Defense. The “5-Star
Statement of Support” certifies compliance
with the Uniformed Services Employment
and Re-Employment Rights Act, recognizes
effective management of employees who
serve, and confirms support for service in
the armed forces.
Labor Relations
We recognize the right of our employees to bargain collectively through representatives of their own choosing
and recognize unions as the exclusive representatives of these employees to collectively bargain for rates of pay,
wages, hours of employment, working conditions, and other matters of employment.
Approximately one-third of Southern Company employees are covered under union agreements. We have
contracts with nine unions across a four-state service area. The last strike by a union against a Southern
Company subsidiary occurred in 1995.
43
OUR COMMUNITY RESPONSIBILITY
44
BEING A GOOD
CITIZEN
Energ y Efficiency Programs
“Eighty years ago,
To help decrease the amount of electricity used by household appliances, building heating, cooling
Preston Arkwright,
and lighting, and industrial processes, we promote many federal and state programs, including
president of Georgia
appliance-efficiency standards, financial incentives for purchase and installation of energyefficient products, demand-response programs, and information-sharing programs. Examples
Power, defined his
include the Department of Energy’s Climate Challenge and the Environmental Protection
view of the company’s
Agency’s ENERGY STAR programs.
responsibility as being
‘a citizen wherever we
Demand-side programs for Southern Company’s regional utilities are governed by state
laws and public service commission requirements. These laws and requirements allow
serve.’ It is just as true
utilities to undertake programs only if the program cost is less than the cost of new
today. We have an obligation
generation. Energy efficiency programs typically must pass these cost-effectiveness
to keep the lights on and we
tests to assure the best use of resources and the least impact on rates. Additionally,
work hard to meet it. But we
we must make sure sponsored energy efficiency programs do not impact customers
who cannot, or choose not to, participate.
also work hard as a member of
the community to improve the
economic health and environmental well-being of the places we serve.
We constantly pursue more efficient
ways to bring energy to our customers, to keep the environment clean,
and to keep electric bills affordable.
Being a good citizen extends into the
future, too, planning our actions to
ensure our children and grandchildren
have the resources they need to enjoy
this place in their time.”
Programs Offered by Southern Company Regional Utilities
• ENERGY STAR encourages adoption of energy efficient products and
processes for homes and businesses. This EPA program is promoted
in marketing materials and on our Web sites. Americans, with the
help of ENERGY STAR, saved $12 billion on their utility bills
and avoided greenhouse gas emissions equivalent to those from
23 million cars over one year. ENERGY STAR makes recommendations for
household products, home construction, and business energy management.
More information about the program can be found at www.energystar.gov.
Southern Company
endorses the
Environmental Protection
Agency’s National Energy
Efficiency Action Plan.
The plan recommends
ways to meet the challenges of high energy
prices, energy security
and independence, air
pollution, and global
climate change through
electric and natural gas
energy efficiency.
• Direct load control pays customers for allowing us to cycle air condition-
ing on and off during periods of peak demand. Customers receive a credit
to their bill for signing up. As of December 2005, 50,548 customers
have joined.
- David Ratcliffe
Our community support includes sponsorship of the River Scout exhibit
at the Georgia Aquarium, a major attraction in downtown Atlanta.
45
LINES
RURAL
THAT STRETCH ACROSS
AMERICA
Our power lines reach many out-of-the-way
places. Where they go, we go, to help communities find new opportunities. Across a 12county swath of middle Alabama, Alabama
Power and the Alabama Power Foundation
are working with the Governor’s Black Belt
Action Commission to support programs to
bring this region opportunity. The region first
prospered from growing cotton, today it proves
fertile ground for a talented group of artists,
craftsmen and entrepreneurs. For example,
bolstered with a grant from Alabama Power,
Black Belt Treasures, a non-profit retail
gallery, offers artwork, sculpture, pottery,
woodwork, baskets, jewelry, and books by
local residents. Grants have also seeded industrial parks in the area, bringing new jobs and
diversifying opportunities.
A new program, the Child Caring
Foundation, in conjunction with local universities and Blue Cross, helps provide coverage for medical services for children who don’t
qualify for Medicaid or have access to private
insurance. In Hale County, we helped raise
more than $30,000 to start a Habitat for
Humanity chapter to improve housing in the
area. Foundation grants also support
Community Care Network, an organization
that puts health care on wheels to reach poor
families.
Alabama Power supports the Tuskegee Human
and Civil Rights Multicultural Center to preserve the legacy of the native culture and
bring visitors to the area. And in Moundville,
Alabama, Alabama Power in partnership
with the University of Alabama has started
improvements to help draw tourists to the
nearby Native American burial mounds.
46
• Demand-response and interruptible programs send a signal to participating industrial customers to encourage
or require them to shift energy use to non-peak periods. With this program, we have reduced demand on our
system by 850 megawatts, avoiding the need for a new power plant.
• EnergyDirect.com offers businesses energy load tracking to enable power-use planning and timely use.
• Weatherization assistance for low-income customers provides insulation and weather-proofing to low-
income housing.
• Low-interest loans enable residential customers to make energy efficiency improvements to their homes.
• Energy audits and surveys are conducted for residential and business customers, delivering free information
on energy efficiency and one-on-one assistance to business customers to help them improve energy efficiency.
Additionally, residential customers can complete an online Energy Check-Up to find ways to become more
energy efficient. In 2005, we completed more than 20,000 in-home and online audits and check-ups.
• GoodCents provides thermal and HVAC efficiency standards for new construction. Customers in Florida can
sign up for GoodCents Select, which enables them to program their largest energy-using appliances to automatically respond to varying prices. GoodCents Select serves more than 7,300 customers in Florida.
• Geothermal heating and cooling and high-efficiency electric water heating use temperature differences
between the air and ground (beneath the surface) to heat and cool buildings and heat water. We promote
geothermal heat pumps, electric water heating, and recovery ventilators.
Together, Southern Company demand-side and energy efficiency programs have avoided the need for nearly
3,000 megawatts of new generating capacity in 2005 – about the size of a large generating plant.
Economic Development
Our performance is tied to the economic health of the
Southeast, specifically to the prosperity of the communities we serve. A growing economy means more jobs
and a higher quality of life for the people in our region.
Economic Development
Jobs Created
Capital
Investment Realized
2005
16,500
$3.0 billion
2001-2005
90,000
$11.8 billion
For about 80 years, our local utilities have been working with state agencies, chambers of commerce, and
development authorities to attract capital investment and new jobs to our region.
Economic development activities are critical to maintain the economy of a region and community, and to help
it compete for high-quality jobs and industry. New development can increase earning potential for community
members and decrease unemployment. It leads to stronger tax bases that can fund investments in education,
police and fire departments, parks and recreation, and community services. Southern Company also encourages
community development, supporting activities from environmental stewardship to community leadership in
clubs, chambers, volunteer groups, and associations. We work within communities to develop leaders and local
infrastructure to improve local earning potential and broaden opportunities.
Hurricane Restoration
In the late summers of 2004 and 2005, two massive hurricanes – Ivan and Katrina – slammed the Gulf Coast.
More than half of Gulf Power’s transmission and distribution system was damaged by Ivan in September 2004.
Some 1.6 million Southern Company customers were left without power, and the company sustained more than
$40 million in financial loss. In late August 2005, Katrina crashed into the Alabama, Mississippi, Louisiana, and
Florida coastline, bringing unprecedented catastrophe. Mississippi Power lost more than 70 percent of its transmission and distribution system. One of its main generation facilities – Plant Watson – was flooded, and all
196,000 customers lost power.
In both storms, entire neighborhoods and towns were wiped out. Many people – among them Southern
Company employees – lost everything. What was not destroyed, however, was the spirit and determination of
Southern Company employees who came to the aid of customers, community members, and their colleagues.
Employees supported one another, giving individual donations totaling more than $700,000 to our Employee
Relief Effort. That total was matched by the company foundation, raising nearly $1.6 million to help remake
homes and lives.
With Ivan, 94 percent of all customers who could receive power had power restored within a week. After
Katrina’s widespread destruction, we restored service to 99 percent of our Alabama customers in nine days and
power was back on for all customers able to receive it in Mississippi in 12 days, an unprecedented feat. With
electricity came the beginning of recovery and resolve, in communities like Pensacola, Mobile, and Biloxi.
Hurricane Katrina toppled 8,900 Mississippi Power poles,
300 transmission towers, and 1,000 miles of power lines,
creating a mammoth restoration challenge met in 12 days.
Alabama Power, Georgia
Power, Gulf Power, and
Mississippi Power all
received awards from the
Edison Electric Institute
(EEI) for their response
and assistance efforts
following the devastation
of recent hurricanes
Dennis, Ivan, Wilma,
Rita, and Katrina.
47
Employee volunteers present safety demonstrations to schools and
community groups.
Education
Teaching children about electricity and electric safety has been a long-standing commitment of Southern
Company. For example, The Teacher Corps in Georgia is made up of company volunteers who come to schools
and present programs designed for students in kindergarten through fifth grade. The programs teach environmental awareness in areas such as recycling, water use, habitats, air quality, and energy resource management.
The Water Course, in Clanton, Alabama, includes interactive, hands-on exhibits that help teach visitors about
Alabama’s waterways and reservoirs, the state’s geography, and its influence on water distribution and how water
affects our lives. Science suitcases are also available to teachers for use in their classrooms.
Power Town, Safety City, and Safe-Tee-Opolis show children the dangers of downed power lines through an
interactive three-dimensional model at schools, clubs, and meetings.
A Safe-Tee-Opolis demonstration.
Gulf Power Academy
earned Gulf Power the
2003 “Florida’s Best”
award, a statewide honor
given jointly by the Office
of Work Force Education,
the Florida Department of
Education, and the Florida
Chamber of Commerce.
Gulf Power Academy is a
three-year magnet high
school program that helps
students prepare for
careers in energy-related
occupations.
48
Our award-winning educational Web site, Learning Power (www.southerncompany.com/learningpower),
provides information on how electricity is produced and sent to homes and businesses as well as how power
plants work. The site offers lesson plans for teachers and includes interactive games and colorful illustrations to
help visitors, students, and others learn about the world of energy. Southern Company and its subsidiaries also
support local and state education, including local technical schools, colleges, and universities, giving more than
$1 million in 2005 (included in corporate and foundation chart, below).
Community Involvement
The spirit of community involvement extends beyond our business
goals to a genuine desire to improve the quality of life where we serve.
Southern Company and its employees actively engage in community
service and philanthropy. We encourage volunteerism, take on leadership
roles, and apply our time and experience to furthering good causes.
Charitable Giving
Corporate
Foundation
2003
$6,034,526
$11,363,288
2004
$6,766,274
$13,134,776
2005
$5,245,800
$13,921,443
At Southern Company and at our operating companies, we endow and
fund independent, non-profit company foundations that contribute to a
variety of areas: arts and culture, health and human services, civic and community projects, education, and
environment. We also make direct corporate contributions, including $2.8 million in 2005 to the United Way.
In addition to grants and charitable donations, Southern Company subsidiaries offer opportunities for employees
to volunteer time in instances such as hurricane relief and community outreach. For example, in 2005, nearly
100,000 volunteer hours were spent in metro Atlanta alone, serving communities, schools, neighbors in need,
and health causes like Relay for Life and March of Dimes WalkAmerica. On Martin Luther King Jr. Day,
employees participate in a company-sponsored program to make it “a day on, not a day off ” and work with
community groups in the spirit of service, activism, and diversity.
Project SHARE
Project SHARE provides emergency assistance to customers who need help with basic necessities – housing,
food, medical care, and utility services. Project SHARE assists the elderly, the disabled, the unemployed, the sick
and others who are experiencing financial hardship. The program is administered by The Salvation Army in
Georgia and The American Red Cross in Alabama. Contributions are made by customers through electricity
bills and by employees through payroll deduction. Some contributions are matched by Southern Company,
depending on local policy. In 2005, Southern Company subsidiaries collected more than $2.8 million, matched
more than $1 million, and provided nearly a million dollars in promotional value to gain awareness for the
program. More than 55,000 households received funds from the program.
Payne Stewart Award
The Payne Stewart Award is presented annually by the PGA TOUR Policy Board and Southern Company to
a PGA TOUR player sharing Stewart’s respect for the traditions of golf and his commitment to uphold the
game’s heritage of charitable support. The $300,000 Payne Stewart Award Grant is awarded in November at
THE TOUR Championship and supports the First Tee organization, the Tracey Stewart Foundation, and
charities named by the winner. The First Tee helps young people of all backgrounds develop character through
golf and scholarship.
Employees volunteer for a “day on” during their Martin Luther
King, Jr. holiday to help renew neighborhood parks.
49
Renew Our Rivers
The Renew Our Rivers program is a grassroots effort that brings volunteers
together to remove debris and litter from rivers, lakes, and other waterways
throughout the Southeast. Conceived by an employee, it began in 1999 as a local
cleanup of the Coosa River around Alabama Power’s Gadsden Steam Plant. Over the
next six years, it grew to include the entire Coosa, Tallapoosa, and Black Warrior river
systems in Alabama, the upper Coosa in Georgia near Georgia Power’s Plant Hammond,
and other waterways in seven watersheds in Georgia. In 2005, for the first time as part of
Renew Our Rivers, waterways within the boundaries of Gulf Power and Mississippi
Power were included in the cleanups. The program exceeded its goal to remove 5 million
pounds (2,500 tons) of man-made debris and litter by 2005 and continues to grow.
Since 2001, Renew Our Rivers volunteers have removed more than
2,700 tons of trash from local waterways.
Southern Company
received the National
Hydro Power Outstanding
Stewardship of American
Rivers commendation
in 2006.
“Community spirit –
whether the community is an environment, a workplace,
or the town where
you live – rests in
the genuine desire
to improve the quality
Man-Made Debris Removed (in tons)
of life. We have not
2001
2002
2003
2004
2005
TOTAL
only reduced the envi142.67*
262.00** 492.57** 757.87** 1,071.54*** 2,726.30
ronmental impact of
*
From three river systems in Alabama.
our operations but also
** From waterways in Alabama and Georgia.
*** From waterways throughout Southern Company’s service territory.
stand near the top of
Total includes debris removed in 2000 (43.5 tons from waterways in Alabama).
our industry in research,
conservation, restoration,
Lakes and Recreation
education, and wildlife protecSouthern Company is the largest non-government provider of recreation
tion.
We engage in community
facilities in Alabama and Georgia. Some 31 lakes lie behind our hydroservice and philanthropy. We
electric plants, which provide power, economic opportunity, flood
control, irrigation, drinking water, fish and wildlife habitats, and
encourage volunteerism, take on
recreation on nearly 4,500 miles of shoreline. In addition to
leadership roles, and apply our time
swimming, fishing, and boating on the lakes, nearby areas have
and
experience to furthering good
picturesque scenery, hiking trails, picnic areas, and campgrounds,
causes. We have achieved all these
many of which are accessible to people with physical disabilities.
In conjunction with the Georgia State Parks, our spring and fall
things while generating more and
water release program in Tallulah Gorge renews the spectacle of
more electricity every year to meet
rushing water and provides a challenging kayak waterway. We also
the
growing energy needs of our
open more than 50,000 acres of wildlife areas for use through state
customers.”
conservation and natural resources agencies.
Construction of the Tallulah Gorge State Park suspension
bridge was funded in part by Georgia Power.
50
COMMUNITY SPIRIT
- David Ratcliffe
HOW
TO
C O N TA C T U S
If you have questions or comments about
this report, would like additional copies
or need further information, e-mail
responsibility@southernco.com or write:
Corporate Responsibility Report
Southern Company
30 Ivan Allen Jr. Blvd., NW
BIN SC1506
Atlanta, GA 30308
For additional information and an
electronic version of this report, visit
www.southerncompany.com.
Photo ©2005 wc heerman
51
Some of the factors that may cause results to differ materially from those reflected in the forward-looking statements in this report include:
the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility
industry and also changes in environmental, tax, and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of
existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries, including the pending EPA civil actions against certain Southern
Company subsidiaries, FERC matters, Mirant matters, and current IRS audits; the effects, extent, and timing of the entry of additional competition in the markets in which Southern
Company’s subsidiaries operate; the impact of fluctuations in commodity prices, interest rates, and customer demand; available sources and costs of fuels; ability to control costs;
investment performance of Southern Company’s employee benefit plans; advances in technology; state and federal rate regulations and pending and future rate cases and negotiations;
the performance of projects undertaken by the non-utility business and the success of efforts to invest in and develop new opportunities; internal restructuring or other restructuring
options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to
Southern Company or its subsidiaries; the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due; the ability to obtain new shortand long-term contracts with neighboring utilities; the direct or indirect effects on Southern Company’s business resulting from terrorist incidents and the threat of terrorist incidents;
interest rate fluctuations on financial market conditions and the results of financing efforts, including Southern Company’s and its subsidiaries’ credit ratings; the ability of Southern
Company and its subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, or other
similar occurrences; the direct or indirect effects on Southern Company’s business resulting from power outages or any similar incidents; the effect of accounting pronouncements
issued periodically by standard-setting bodies; other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed from time to time with the SEC.
This report was printed on Astrolite PC 100, a 100% process chlorine-free, postconsumer recycled paper, certified by the Forest Stewardship Council.