See MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “Environmental Matters—New Source Review Litigation” of The Southern Company (“Southern Company”) and Note (B) to the Condensed Consolidated Financial Statements of Southern Company in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, as amended, and MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “Environmental Matters–New Source Review Litigation” of Alabama Power Company (“Alabama Power”) and Note (B) to the Condensed Financial Statements of Alabama Power in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 for information regarding a civil action brought by the Environmental Protection Agency against Alabama Power. For additional information, see MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “Environmental Matters–New Source Review Actions” of Southern Company and Alabama Power in Item 7 and Note 3 to the financial statements of Southern Company and Alabama Power under “Environmental Matters–New Source Review Actions,” respectively, in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

In October 2007, the U.S. District Court for the Northern District of Alabama issued an order in the Alabama Power case indicating a willingness to re-evaluate its previous decision in light of the U.S. Supreme Court’s Duke Energy opinion. On December 21, 2007, the U.S. Court of Appeals for the Eleventh Circuit vacated the district court’s decision in the Alabama Power case and remanded the case back to the district court for consideration of the legal issues in light of the Supreme Court’s decision