Fitch Affirms Ratings of Southern Co. and Subsidiaries; Outlook Stable

NEW YORK--(Business Wire)--Fitch has affirmed the ratings of Southern Company (Southern, IDR
'A') and each of its subsidiaries. The Rating Outlook of Southern and
its subsidiaries: Georgia Power Company (GPC, IDR 'A'), Alabama Power
Company (APC, IDR 'A'), Mississippi Power Co. (MPC, IDR 'A+'), Gulf
Power Company (Gulf, IDR 'A-') and Southern Power Co. (SPC, IDR
'BBB+') is Stable. Approximately $16.8 billion of debt and preferred
securities are affected by today's rating actions.

Southern's rating strengths include: constructive state
regulation; low business risk, above average growth of economically
vibrant territories; strong performance of the mainly coal and nuclear
based capacity and conservative strategy and access to capital markets
and manageable debt maturities. In addition, Southern and its
subsidiaries have strong liquidity. The stability of cash flows and
timeliness of cost recovery at the utility subsidiaries are supported
by numerous annual tariff adjustment mechanisms at subsidiaries. No
base rate filings for any of the four utilities are expected to be
necessary for several years, limiting regulatory risk.

Rating concerns for the Southern group include: some weakening of
consolidated ratio trends, risks of delays in recovery or
under-recovery of operating costs or capital projects; environmental
related risks such as stricter laws or adverse legal outcomes; and the
location of service territories in hurricane-prone regions. Fuel and
purchased power costs have persistently been deferred for future
recovery as a result of fuel cost increases above those forecast in
annual regulatory setting of fuel factors and below normal hydro
conditions, but Southern expects to recover prior under-recovered fuel
and purchased power costs by the end of 2009. While coal is a
relatively low-cost fuel compared to natural gas, the impact of any
carbon legislation cannot be predicted and could result in significant
capital spending requirements and adversely affect their constructive
regulatory relations. Credit metrics at the subsidiaries are currently
reasonable relative to Fitch guidelines and their business risk, but
the parent financial ratios are somewhat weak relative to Fitch's
targets for companies of low business risk.

Southern's Subsidiaries:

GPC's ratings reflect the continued strong operating performance
of a mostly coal and nuclear fleet, growing service territory economy,
and strong, stable financial condition and good base rate and
environmental cost recovery visibility through 2010. Fitch's primary
credit rating concerns are the lack of an environmental
cost-adjustment mechanism in the face of rising emissions
compliance-related spending, and rising prices for fuel, operations
and maintenance, and other expenses in a growing service territory.
Georgia Power will require ongoing regulatory support to maintain
credit quality, as capital spending, operating expenses, and capacity
needs continue to trend upwards.

The terms of GPC's December 2007 settlement of its base rate
proceeding are considered supportive. The three year accounting order
became effective in January 2008 and permits an ROE range of
10.25%-12.25% and recovery of forecasted costs of environmental
capital projects scheduled to enter service during the three year
settlement period. However, if GPC starts construction on any
additional scrubber projects that would enter service after the end of
the settlement period, GPC must seek recovery of that investment in a
future environmental cost recovery tariff order (i.e., no construction
work in progress). That could pressure credit ratios during the period
of heavy environmental compliance capital spending.

The ratings of APC are supported by a relatively low cost
generation, stable coverage ratios that are consistent with rating
category guidelines, and a constructive state regulatory environment.
Fitch's rating concerns relate to the higher than average
concentration of industrial customers, lags in the recovery of rising
fuel (affected by the drought), risk of higher than anticipated
increases in operating and maintenance costs, the susceptibility of
the territory to hurricanes, and significant capital spending
associated with environmental matters and system growth and
reliability.

MPC's ratings are supported by constructive regulation, low
operating costs and strong partnerships with wholesale customers. In
addition, the conservative capitalization provides flexibility. MPC
received strong government support to recover storm costs. Proceeds
from Community Development Block Grants were $276.4 million and a
State of Mississippi tariff bond provided $121 million for storm
restoration and repair costs and to build a storm center in 2007.
Concerns include the relatively high industrial customer concentration
and demand from residential and small commercial customers has not yet
recovered to pre-Katrina levels. MPC is considering construction of an
integrated gas combined cycle (IGCC) plant, which would materially
increase capital spending.

Gulf's ratings are supported by constructive regulation, stable
credit profile, above average territory growth and affiliation with
the Southern group. Rating concerns include growing opposition to
coal-fired generation, generation unit concentration, stricter
environmental regulations in Florida, and location of the service
territory along a hurricane prone coast.

SPC's ratings are supported by the low-risk, contracted business
strategy, membership in the Southern power pool and current internal
funding of capital needs. The cancellation of the Orlando IGCC project
evidenced management's aversion to risk. Risks include debt
refinancing risk in 2012, re-marketing risk at the expiry of current
long-dated contracts, and regulatory risks.

Fitch has affirmed the following ratings with a Stable Outlook:

Southern Company:

--IDR at 'A';

--Senior unsecured debt at 'A';

--Short-term at 'F1'.

Southern Company Capital Funding Inc. (guaranteed by Southern
Co.):

-- IDR at 'A';

--Senior unsecured notes at 'A'.

Southern Company Funding Corp.:

--Short term IDR at 'F1'

--Commercial paper at 'F1';

Georgia Power Company:

--IDR at 'A';

--Short-term rating at 'F1';

--Senior unsecured debt and unsecured PCBs at 'A+';

--Preferred securities at 'A';

--Trust preferred securities (issued thru various trusts) at 'A'.

Alabama Power Company:

--Short-term at 'F1';

--IDR at 'A';

--Senior unsecured notes and PCBs at 'A+';

--Trust preferred securities (issued through various trusts) at
'A'.

Mississippi Power Company:

--Short-term at 'F1+';

--IDR at 'A+';

--Senior unsecured debt and PCBs at 'AA-';

--Preferred securities at A+'.

Gulf Power Company:

--Short-term at 'F1';

--IDR at 'A-';

--First mortgage bonds at 'A+';

--Senior unsecured notes and unsecured PCBs at 'A';

--Subordinated notes at 'A-';

--Preferred securities at 'A-'.

Southern Power Company:

--Short term at 'F2';

--IDR at 'BBB+';

--Senior unsecured debt and bank facility at 'BBB+'.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Karen Anderson, +1-312-368-3165 (Chicago)
Ellen Lapson, +1-212-908-0504 (New York)
Sharon Bonelli, +1-212-908-0581 (New York)
Brian Bertsch, +1-212-908-0549 (Media Relations,
New York)

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