See BUSINESS – “Rate Matters – Rate Structure and Cost Recovery Plans” of The Southern Company (“Southern Company”) in Item 1 and MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “PSC Matters – Alabama Power” and “PSC Matters – Fuel Cost Recovery” of Southern Company in Item 7 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and BUSINESS – “Rate Matters – Rate Structure and Cost Recovery Plans” of Alabama Power Company (“Alabama Power”) in Item 1 and MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “PSC Matters – Retail Fuel Cost Recovery” of Alabama Power in Item 7 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2007 for information regarding the rate structure and design and the retail rate plans of Alabama Power. For additional information, see MANAGEMENT’S DISCUSSION AND ANALYSIS – FUTURE EARNINGS POTENTIAL – “FERC and Alabama PSC Matters – Retail Fuel Cost Recovery” in Alabama Power’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.

On October 7, 2008, the Alabama Public Service Commission (the “APSC”) voted to approve an increase in Alabama Power’s Rate Energy Cost Recovery (“ECR”) factor to 3.983 cents per kilowatt hour (“KWH”) for a 24-month period beginning with October 9, 2008 billings. Thereafter, the Rate ECR factor shall be 5.910 cents per KWH, absent a contrary order by the APSC. Rate ECR revenues, as recorded on the financial statements, are adjusted for the difference in actual recoverable costs and amounts billed in current regulated rates. Accordingly, this approved increase in the billing factor will have no significant effect on revenues or net income, but will increase annual cash flow.