ML20004F693

Annual Financial Rept 1980

ML20004F693
Person / Time
Site:	Hatch, Vogtle
Issue date:	03/12/1981
From:	SOUTHERN COMPANY SERVICES, INC.
To:
Shared Package
ML20004F688	List: ML20004F687 ML20004F692 ML20004F693
References
NUDOCS 8106220189
Download: ML20004F693 (44)

Text

~~~ ~

CORPORATE INFORMATION The Southern Company The Southem Company is the The Dividend Reinvestment and O eerimeier center eeet pareni firm of ^leeama eower. Siock eurchese eien orovidee e P.O. Box 720071 Georgia Power, Gull Power, convenient method for stock-Atlanta, Georgia 30346 Mississippi Power, arid Southern holders to acquire new shares of Telephone: (404) 393-0650 Cornpany Services, Inc. These Southem Company common t comoanies - in terms of assets stock through the investment of

- make up the nation's largest quarterly dividends and through investor owned electi utility optional cash payments. The -

'N' N"e system. pnce of shares purchased with w - #

_ The Southern Cornpany was reinvested dividends is discounted A,h, ^

' ' the first holding company to be five percent from the average of

.1, sanctioned under legislation the high and low trading prices a3 y> a ' "* known as the Pubhc Utikty published in The Wall Street Jour-  !

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g, Ho! ding Company Act of 1935. nal for the dividend payment

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This legislation established date. The price of stock pur-

..* ~ , - ?p - ; H specific principles regulating the chased with optional cash _

+.6 .f V ownership of electric and gas payments is equal to 100 percent 4 4 utilities. The company's first full of this average. Optional cash

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year of operation was 1949. payments can be made quarterly Today, The Southern from a minimum of $25 to a

, ,, . ... Company's common stock is the maximum of $3,000 per account.

most widely held electric utility The company charges no service -

@ stock in the nation and is among fee or commission. All stock-the 10 most widely held corpo. holders are eligible to participate.

On the Cover there are no antes at transnussion tines rate stocks in America. A prospectus desenbing the plan and an enrollment card may be p,

in the southern electue serem s power The Common Stock of The supply netaorA - a cetaork an,ch obtained from The First National Southern Company is listed and Bank of Atlanta, Dividend i

$c$If$$[c$rNr"r.$,'s'sfo" traded on the New York Stock Reinvestment Service, P.O. Box '

Inrough the mafor metropol, tan areas or Exchange. In addition, the stock 3260, Atlanta, Georgia 30302. '

Dirnungham and Atlanta to the golden tsfes is traded on regional stock ex-s N' '0iI ctc$ II ['d" 'I'[ r e7' changes across the United Cassette Recordings of the 1980 rucity ro accroumarely 95 minon mole States. (The ticker symbol for Southern Company comrr'n annual report are available without charge as a service to

'_ r stock is SO. The symbol SouthCo the visually impaired. Requests is used in newspaper stock should be directed to News and  ;

listings ) Corporate Information, Depart-  !

ment 343. i A Copy of Form 10-K as filed li with the Securities and Exchange The 1981 Annual Meeting of Commission will be provided Stockholders will be held on without charge to stockholders Wednesday, May 27, at 10.00 upon written request to the office a.m. (CDT) at the Mississippi of the Corporate Secretary. A Coast Coliseum and Convention copy of the company's Financial Center, Biloxi, Mississippi.

and Statistical Review also is available on request. -

THIS DOCUMENT CONTAINS -

POOR QUALITY PAGES

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Financial 1980 1979  % Change Operating revenues (o etwsanos; $3,763,483 $3,128,169 20.3

.. Operating expenses on itwsands; $3,080,585 $2,592,073

" 18.8 Consolidated net income on rtwsanos; . $344,395 $219.127 57.2 The Southern Company common stock data:

[ Earnings per share on average number of shares outstanding $2.23 $1.51 47.7 Dividends paid per share $1.56 $1.54 1.3 Book value per share (year end) $16.80 $16.80 -

Macht price (year end closing) $12.25 511.50 6.5 Shaies outstanding:

Average 154,391,807 145.038,087 6.4 L Year end 168,697,130 148,744.837 13.4

} Stockholders of record (year end) 345,335 341,401 1.2 l Construction expenditures enirmsands; . $1,229,932 $1,164,956

' 5.6 Net investment in utility plant * (year end) po rtwsonas; $9,872,246 $9.430.067 4.7

_ Operating Maximum scak hou, demand on itwsands or Aaowarrs) 19,553 18.015 8.5 System capability - at peak on trousands or Asowatts) . 23,695 23,987 (1.2) g Total kilowatthour sales on melons; . 92,460 86.021 7.5

Yotal number of customers served at year end 2,565,461 2.522.284 1.7

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1 1

CONTENTS J

2 TO OUR STOCKHOLDERS 16 STOCKHOLDERS 4 FINANCIAL RESULTS 18 ENERGY CONSERVATION 5 RATES 20 RESEARCH AND DEVELOPMENT 6 OPERATIONS 22 CORPORATE VIEWPOINT 8 ENERGY USAGE 23 FINANCIAL REVIEW 10 ECONOMY OF THE SERVICE AREA 38 AUDITORS' REPORT 12 CONSTRUCTION 39 OFFICERS AND DIRECTORS 14- FINANCING 41 THE SOUTHERN ELECTRIC SYSTEM

it s ()UR Sl(EKilOLIERS ar l

I p- ' - . . . . 4qBpAy.: / hardly begins to offset the effec

}hgh441 g{g.p; MW [K of inHabon dunnq the past thret

3. *{* $ 6 ?? ,,

vears However. Our action doe s sal qs y +s reMesent a commitment to do

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' management - to nantain a I . l4 .h ' h Competitive position in the eyes g.

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s past. Our goal is to achieve fs g,~;+ . ,;> _.Q < +j . .

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' g4.g.4 rw sufhcient growth ul earninos to

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anow meaninaful incnmes in th

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Exhaordinary Heat Results

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35 ., . 3 .. '[ 4., in Record Energy Demands c'L'.,.d3 m $' I.'. 4. [ J ,

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l s. .- < -? One of tre greatest cnanenges S.

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,;  ;, T .* ,.- has : aced in the past .n.eral

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e 7 4 r years waF; broug;11 about ny the

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ommme neannar goed &

bith fy much of JMy Dunna

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this penod our con panies were

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k mkf.,m

- u -[.j m ,y de nlinds for e ectraty in their

% m oC1 p , energy de" nds set ne/ records on fc l ast year. my lotter to you ended SeDaf Te oLCaSiODS if) IFld duly This cuhstantiai improvement t o a note of @hnm;m on The me record of 10 % 3 100 resulted f rom three poma'v f m W : i r/ @; v' N / 6 percent above Id!Nhf f) tri ths' S 'ud H arf) eleC hlC tOf5 f ate U Cea9 2% V.f bCh M M e

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sshan- . it e t , h > r espond '< the granted to ntch cf tne cpm i' q u ,'. N ttuih>nge,(;fthe l'60s ur W reco'd summer energy v e 'augh it at our GeneratO" T he f m,! ve ir <>fthe, ne w ;tnd m' A arl I'5 Of (A t ' 1%

per 01 r, no h hun) us

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a  ; ne Qr t vl'ma uNmes ',wh M e 'o nn cy ten NtN in;h ;nere wt>

ye 5 jr r!h trb t q } t 4 < t ili" id itpl(j .

l'Dihit,0f1 Ui Se%4'r j! h i' ;Q hffOl ' ' l .t 2 /[f f f 1 o!1f Opt M d!ng j , r t!e c t intLIN s; and t;y i ret ;r d p /, t " t,t tpsy can'racts

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h1 ' cht < f 'ne 7cntyny' .m:c 6 e ; ms a porcent on

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['t." !x )r f T n l' + st % tl . il ( I. i\ S obf CoITpantes j It 'O lh I f 11 ph 15t 4 ) ii ) r e' Of t th,(( M 1, > t a it' j x if (j.h T' ;f S e d "' e T n:.ULhP$j ') nh'eiah Iu5Ilmer y:;ur n >nipiny pe n h:rn e : Wou hL t h >t N J h t ,m U 10 (ICh ho 11 n eehna vo'en T y; e 't;ents L r Wectrty

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il ti) par G L U e n h kle d 's  : *

d. B .d 't n d e 9 tr l a 00 Earnings Recovery Sustained: ,e n o Janu , m '

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Construction Plans Reviewed A decision on the request As of the date of this writing, Given a return to normal weather, which Mississippi Power has filed system coal reserves stood at 12 we do not expect the peak ener; for a $39.3-million annual in- million tons - sufficient for ap-gy demand for 1981 to reach last crease in revenues is expected proximately 127 days of operation

. year's level. As we look to the re- by April 20,1981. at average burn rates.

mainder of the 1980s, however,

• Although no dates have yet we're projecting a growth rate been determined, Alabama Again this year, I would like to w averaging 3.2 percent annually - Power, Georgia Power, and Gulf close my letter to you on a note a rate that is significantly less Power also plan to seek higher of optimism. The new administra-than the five-percent annual electric rates during the first half tion in Washington has called for growth experienced during the of the year. an era of national renewal. And, w 1970s and the 9.5-percent yearly In Georgia, the state of utility it's clear that this administration growth of the 1960s. regulation has been a matter of is willing to rely on the resource-We are reviewing our con- extensive public debate during fulness of the private sector in an struction plans continuously, and the past few months. The Georgia effort to revitalize the American we have adopted what we believe General Assembly voted in mid- economy.

is the most realistic course in February,1981, to establish a The management of your com-4 light of these reduced projections. number of guidelines that the pany welcomes the opportunity to Our plans are to proceed at a state public service commission share in this responsibility. We slower pace - building only what must follow in setting electric recognize fully that if our com-

is reasonable for us to finance rates. For example, the commis- panies are to help make a stable a However, it is our intention to- sion now must judge requests for economy a reality once again, complete all the facilities on higher rates on the basis of a then we must concentrate on which work currently is under utLily's estimated operating costs productivity; we must work to im-way. If we chose now to cancel for an upcoming year.

' prove the quality of service; and construction of these projects - We believe this legi9ation will projects which were initiated as we must make every effort to be bring a greater degree of ra- responsive to the needs of our far back as the early 1970s - tionality to the ratemaking pro-the penalties and cancellatiori customers. I ask for your support cess in Georgia. as we renew our commitment to

fees would be enormous. And, these goals in the year ahead.

the output of these generating

! UMWA Strike PossiNet plants surely will be needed in the Coal Supplies Slockpiled Sincerely, years ahead. In fact, even at the One other significant factor which slower rate c! growth we're now could affect our operations in projecting, our companes still will have to double their generating capacity over the next 22 years 1981 is the possibility of a strike by the United Mine Workers

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- simply to keep pace. when the union contract with coal suppliers expires on March 27.

Yet, it's extremely important to Alvin W. Vogtle, Jr.

point out, as I did in my letter to Because coal is the primary fuel of the Southem electric President you last year, that our companies The Southem Company system, extensive efforts were will begin no new power plant March 12,1981 made during 1980 to increase the construction unW we are stockpiles at our 20 coal-fired reasonably assured of earning an adequate retum on the invest- generating plants. Similar steps ment which would be required. were taken prior to the last miners' strike, which extended liigher Rates Needed from December 6,1977, to The continuing pressure of infla- March 28,1978. As a result of tion and the need to reflect the that advance planning, the cost of fwo major new generating Southern electric system was units in the price of electric able to provide essential service service will underscore the - without interruption - through importance of obtaining higher the longest coal stnke in modern rates in 1981. history.

3

i in a year marked by recovery, $2.27 per share for the 12-month At their January 19,1981, The Southem Company recorded period ending October 31. meeting, the directors of The net income of $344.4 milhon - Additional revenues from Southern Company again an increase of 57.2 percent over higMr rates which were granted declared a quarterly dividend of the depressed results of 1979. to each of The Southern Com- 40% cents per share, payable m Based an 154,391,807 average pany's operating units, record March 6 to stockholders of shares of common stock out- summer energy use, and signifi- record February 2.

-4 standing in 1980, camings per l cant sales of electricity through The Southern Company now

/ share were $2.23. In 1979, earn- long term contracts with r eigh- has paid a dividend to its com-ings were $1.51, based on boring utilities were the major 145.038.087 average shares mon stockholders for 133 con-factors contobuting to the upturn secutive quarters.

outstanding. in system eamings.

In addition to significant gains in net income and earnings per Revenues Rise to $3.8 Hillion Dividend Rate Increased Revenues were 20.3 percent share, substantial improvement During each of the first three was achieved during 1980 in the higher in 1980 - advancing fron quarters of 1980, the dividend $3.1 billion to $3.8 billion. This company's return on common rate was continued at 38% cents growth in revenues resulted from l stockholder investment (con- per share - the same level solidated retum on average com- increases in certain retail and which had been paid since the who!esale rates, a 7.5 percent mon equity). This important final quarter of 1977. The fourth rise in kilowatthour sales, and measure of linancial performance quarter dredend payment was in-recovery of higher fuel and pur-rose to 12.9 percent for the year. creased by two cents per share d Retum on stockholder investment to 40% cents, bringing the new chased energy costs.

At December 31,1980, ap-was 89 percent in 1979.

annual dividend rate to $1.62 proximately $6 million of The Southern Company's finan- per share.

cial results began to improve in revenues bilied during the year j Total dividends paid to tha i the fourth quarter of 1979, ending company's common stockholders was subject to refund pending

' final regulatory decisions on two a severe two year decline. during 1980 were $1.56 per Recovery was sustained through rate increase requests.

share. The entire amount of the first 10 months of 1980, with dividends paid for the year was j earnings reaching a peak of taxable as dividend income.

} Net income Earnings Per share M m <AGArM -

Wars)

, sg Dividends Per share WAvs) 32S m.I5 Mr i 2 23 y , 54 . '

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Each of the operating companies decision is expected from the ordered a phased in, $208-million sought rate increases during state public service commission annual rate increase - a deci-1980 - rate increases which by Apnl 20,1981. sion which the company ap-j were necessary to ensure that pealed to the state supreme

the full cost of providing electric Georgia Power To Seek court. In August,1980, the court i service was recovered and a liigher Retail Rates retumed the case to the commit reasonable retum on investment While no request for higher retai

^

sion with instructions to " enter a could be earned. rates was submitted by Georgia order based on the evidence."

Power during 1980, that company As a result of the settlement

$40Million Awarded currently plans to seek higher that was reached, $19.7 million <

Gulf Power; $39.3 Millian rates during the first half of 1981. revenues wnich Alabama Power Sought by Mississippi Power billed under bond from October, On November 10, the Florida Final Settlement Reached 1979, to January,1980, are no Public Service Commission On Two Rate Cases in Alabama longer subject to refund.

I awarded Gull Power an annual in early March,1981, the J Alabama Power's 1979 re-retail rate increase of $40 million Alabama Public Service Commis- quest for higher rates sought

- approximately 86 percent of sion made a final ruling on rate the amount which the company increase requests which had $122.3 million in annual revenue:

had requested. (See Note 2 to the Tne commission granted the been filed by Alabama Power in company a $30.6-million increast financial statements on page 31.) 1978 and 1979. The order placed jj ' The company plans to seek a fur- and the company appealed that into effect a settlement agree- ruling to the state supreme court ther increase in retail rates in the ment which had been reached first half of 1981. The court allowed Alabama among the commission, the com- Pow r to place into effect the en Mississippi Power filed a re. pany, and a number of other par-quest for an additional $39.3 mil. ties in the proceedings. tire $122.3-million rate increase lion in annual revenues on Oc- as of July 30,1980. That portion In its 1978 request, Alabama tober 20. The new retail rates of the increase not granted by Power had asked for an addi-were placed into effect, subject the commission was billed sub-tional $288.8 million in annual ject to refund, pending a final rut-to refund, one month later. A

] revenues. The commission ing on the case.

Retall Rate increase Applications The final settlement gave Alabama Power a $92.5-million Annual Amount Date By Which annual increase from July 30, I Company Requested Date Filed Status Decision is Due 1980, to February 28,1981. This Alabama $288 8 million 12/20/78 $208 milkon Power will result in the company refund-granted 7/19/79' ing approximately $17 million to

$122.3 milhon 12/28/79 $80 million -

its retail customers. In addition, granted ef fective a 3/1/81' the $92.5-million increase was Georgia $225 6 milhon' 11/20/78 reduced to $80 million annually,

$122.9 milhon -

effective March 1,1981.

Power granted 8/15/79

$46.1 milhon granted 1/10/80 New Wholesale Rates Filed Gull Power in addition to seeking higher

$46.3 milhon 3/3/80 $40 milhon -

granted 11/10/80 retail rates in 1980, the operating Mississippi companies filed applications with

$25/J minion 9/10/79 $1G 8 milhon -

Power granted 3/7/80 Ihe Federal Energy Regulatory Commission for increases in the

~

$ W 3 minion 10/20/80 Placed into effect, 4/20/81 rates charged to wholesale subject to refund-n/20/80 customers. Final decisions on these requests, which total Notes:

m Ibe $.m nen rate oaease orgnalty (1) in a set 11ement agreement reachas n early

$67.3 million annually, still were

,a3 g,an,1y ,n in,co poses go c,c,, , ua,cn, i33, A,anama powe, was granteo pending at the date of this a settkmmt agreement reactum n eany a $92 5 mm annual increase, effectee March.1961, Alatoma Powa: was allowed 7/30/80 to 22W61 The increase was Writing.

10 retan $19 7 rnmon n revenues wtuch reduced to $80 meon annualty, effective had tren collected - by court order - 3/1/81 three months atwad of the tcw niialty (3) Georga Power later revised this request to l isikwWtt! Dy the State phleC senoce $217 million OvivTWJul 51

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l 1pration and maintenance ex- Southern electric system, con- Nuclear Unit Readied conses for 1980 were $2 2 billion siderable emphasis is being For Commercial Operation

- 17.6 percent higher than the placed on improving the perfor- In October,1980, the Nuclear

, $1.9 billion spent in 1979. The in- mance of each of the system's w Regulatory Commission (NRC) crease was due in largs part to 20 coal fired generating facilities. issuet' an operating license for the effects of inflation. However, A maintenance program was initi. unit 2 of the Farley Nuclear Elec-a sharp rise in tctal fuel expenses ated in the mid 1970s to increase tric Generating Plant. The licenst

- caused primarily by a greater the productivity of these units, use of coal to meel record sum- allows fuel to be loaded and low-and each year positive results power testing to begin at this mer power demands - also had have been recorded.

a substantial impact. 860,00r kilowatt facility - which Average operating availability will become the fourth operating Some 36 million tons of coal reached 86.1 percent for !980.

were bumed in 1980, making the nuclear unit in the Southern elec-I This compares with ratings of tric system. Additional approval system one of the nation's three 83.5 percent for 1979,82.7 per-

' by the NRC is required for full-largest users of coal. Thirty-three cent for 1978, and 78.2 percent power operation. The unit is million tons of coal were used to for 1977. The current level of expected to be placed in com-

' tuel system generating plants performance at the system's in 1979. mercial operation in mid-1981.

coal fired generating facilities i The avemge ccst per ton of compares very favorably with j Energy Exchange Results coal consumed during 1980 rose awlability records of other com- In Signil~icant Savings i to $39 - an increase of 10.4 panies in the industry and because of the improved avail-percent over the pfevious year. matches the goals for optimum ability of existing facilities and the Mines in Alabama, Illinois, and performance which management addition of new generating Kentucky provided the majority of has set.

l the coal which was purchased capacity during the year, the The system's three nuclear Southern electric system's in 1980. units achieved an average economy and emergency sales o operating availability of 69.6 per- power to neighboring utilities ex-Availability improved cent in 1980 - 4.6 percentage At Generating Facilities ceeded the amount of energy points higher than the national J Because coal is and will continue average for nuclear power plant which the system purcMsed.

to be the primary fuel of the Economy and emergency sales availability.

are sales made to other utilities when and if sufficient power is avadable. These sales reduced operating expenses by $9.5 mil-Sources of System Power Generation n- - lion in 1980 - a marked im-

, provement over the $8-million ad dition to expenses which was

~ recorced for the purchase of power in 1979.

e

~ 7. . m ow m -

es ne to ' lm-An unprecedented heat wave blanketed the ts co n o,. _ c Southeast tot much of July, resulting in y, ,

y"' ~n , record breaking demands for electnCaty h

• dIInimunl JCros: the region At the heJtt of the Southern eleCIHC system's efforts to keep ae s

, pace soth !!.350 demands was the power

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' Coordonation CentJt in Batmongham in this highly Sophisticated facahly. Computer pro grams. display Screens. and onstruments knaan as S!np ChJtt recordets enable Olviators to coord:nate the flow of power a w .v M 40 so so from more th.m 10 no va nuo generating units In Alabarra Georg>J florida, and k!*SSISS!DDI When the blistenng hc31 findfly subSKled.

the Southern c!ecinc System hJd met all te quirements for Service without Intettuotton and n,thout having to tesort to the purchaw Of cWnSh* powet hom other uitlfreS t 6

ENERGY lEAGE An increase in overall energy long-term contracts 'or the sale of which determines the need to sales of 7.5 percent was recorded 700,000 kilowatts of capacity - bund costly new electric gen-by the Southem electnc system in and the energy output associated erating plants.

1980. Some 92 billion kilowatt- with that capacity - to utihties The Southern electric system' hours of electricity were sold dur- that are heavily dependent on e new peak demand was set durin

' ing the year, compared with 86 as a fuel source. Additional cor; an unprecedented heat wave billion kilowatthours sold in 1979. tracts were negotiated in which blanketed the four state February,1981, for the sale o. , service area in July. Until this liigher Sales Recorded to 1,400,000 kilowatts of capacuy. period, the highest demand whic inThree Customer Qitegories These contracts with two Florida had ever been placed on the Although conservation practices utikties cover a 10-year period system's generating units was and reaction to higher e7ergy from 1983 to 1992. 18,172,900 kilowatts.* That peak paces continue to have an im-occurred on June 28,1978. The pact on sales to residential Sales to Industrial, customers, in-home use of elec- new record demand for electrici-Whciesale Sertors Decline ty, set on July 14, was 19,553,10 tricity during 1980 rose almost in the industrial sector of the kilowatts * - 7.6 percent above nine percent - from 22.6 billion system's service area, electricity i

the 1978 mark.

kilowatthours to E4 7 billion use for the year dropped one-kilowatthours, fourth of one percent - an in- Growth Projected for 1980s Bainess use of electricity in- dication of the effect d the 1980 J creased by 5 2 percent in 1980, recession on the operanons of a The most recent projections in.

dicate that systemwide growth in as the energy needs of the broad range of industnes in the system's commercial customers peak demand will average ap-region, particularly automotive, proximately 3.2 percent a year rose to 17.3 billion kilowatthours. chemical, paper, and steel In 1979, sales to commercial from 1981 through 1990. The l mariufacturers. Sales to inchstrial overall use of electricity also is

customers totaled 16.4 billion customers were 34.8 billior i kilowatthours. expects J to grow at an average kilowatthours in 1980, as ccm-OfI system power cales - annual rate of 3.2 percent outing pared with 34.9 billion kilowatt- this 10-year period.

sales covered by long-term con- hours in 1979.

tracts with non allikated, neigh- Continuing a tre.aa which began boring utilities - amounted to n%s a.nem% .we cosiome,w two years ago, sales to wholesale 7lfll,ly*," g,*'O"g""Zljd;",_

four bill,an kilowatthours in 1980. customers - municipalities and j This total reflects the initiation of m Wnesnwenme wna m m cooperatives with their own elec- c%CCO3,"ED,Z7,'c71

', tric distribution systems - de- " " "

Peak Demand clined by three percent, from wm. e ,w * ~

11.4 billion kilowatIhours in 1979 otten cayeo ,ne cap,ta, c,1y of ,nc to 11 billion kilowatthours in southeast. Atlanta ,s the center of business

_.: 1980. Many of these customers

'" act,v,ty - and business use of energy - 1, 1 - primarily in Georgia - are '"" ' "' 5'"'" '*9' " S*'""d D Y "'o S ""'o" producing an increasing portion oi. elecinc system Over the nett three years on,ce space ,n the c,1y and ,ts soeuros is their energy requirements. expecrea to increase oy more than 25 per cent Atlanta's shhne siti be a!!ered t'y the "od*" ' " Ce 'o"e's ""'Ca *'" se'"e ""

Summer ireat wave Resuiis the new corporate headquarters of Georga in Record Peak Demand Pacshc Corporahan and AHanta ble In-The increase in overall energy surance in additon. twin rowers are oeing l sales during 1980 was matched usuucted / r use by the state govert) by the increase in peak demand- ment Ihree new tunury high use hotels also are planned for downtoso Atlanta - hotels Peak demand, of course, is the wn,cn a,n enhance the city s ao,hty to ac-

~o maximum requirement for elec- C*'"* dd'* S 'dP'd'Y 9'

"'"9 C ""0"'*"

11afbc is r. ,, ,,, r,, .o tricity as measured over a one-hour period and is the yardstick 8

~ _ _ _ ._ .

f I.umMY W TliE3ERVKWDA Economic growth - a major However, automobile and mobile factor in determining future re- Industrial Growth Strong home production were not as im- In Florida,Mississip[n quirements for electricity - mune to the recession, and the sfowed during 1980 as the nation. Few effects of the recession J nationwide slowdown in housing were felt in Florida, where wide recession was felt in the had a ripple elfect on Georgia's j four state area served by the carpet industry as well.

tourism - the state's primary i dustry - remained strong. In !!

Southern efectric system. How-q ever, the impact of the recession northwest portion of the state, impact of Recession Felt was not as severe in the South- which is the area served by Gu In Many Alabama Industries cast as in other parts of the Power, the pulpwood industry p.

Durable goods manufacturers formed well, and a major expan country, and Cntlicant progress often encounter difficulties during sion project was under way at t.

was recordt in many sectors of the region's economy. times of recession, and that por- deep-water port in Pensacola. It in 1980, some 600 manufac- tion of Alabama's industrial sector 1981, approval is expected for ;

was hard hit during 1980. Steel large, new industrial park which turers completed new or expand-plants in Birmingham, for exam- would be located at Ellyson Fiel ed facilities in the areas where pte, were forced to lay off the system companies provide -- a former Naval base. The pa i workers as product orders de. would lead to the creation of electricity. These additions to the clined sharply. At the and of the 11,000 new jobs or r the next industrial base resulted in a capital investment of $2.6 billion year, however, conditions in the 15 years.

during the year and the creation steel industry had improved and a The state of Mississippi - wi of 22,700 new jobs. number of workers were being its large number of durable goot The population of the service recalled.

Makers of rubber products in manufacturers - did not fare a area increased by 402,000 - well as Florida in 1980. Howeve y growing from 9.3 million to 9.7 the state also suffered durinq 1980, primarity because of the the Gulf Coast area - where q milhon. And housing starts- Mississippi Power is the major

although low in companson with downturn in new car sales. supplier of electricity - was the previous years, remained well Alabama ranks as the third fastest growing region of the above the national average. Con- largest tire producer in the coun-l state. During 1980, the Chevron j struction was initiated on some try, with each of the five leadin9 manufacturers operating plants in U.S.A. oil refinery at Pascagoula 41,000 single and multi family began constru; tion on a $1 billio; i dwellings in 1900, with the the state.

The diversity of the state's expansion to its existing facility'

, strongest activity urder way in and major plant expansions wer(

northwest Florida. economy, however - which in-announced by Westinghouse Co>

cludes paper and chemical pro-poration and by a construction Georgia Gains Strength duction as well as a heavy equipment division of the As Transimrlation Center agricultural base - helped to Fruehauf Corporation.

Georgia long has been con. limit the impact of the problems

_ sidered the transportation center at er perienced by it 3 of the Southeast. This position

• was strengthened in 1980 with In Mobile, the economy re- Flond.t condomonium and moteldevelop-the completion of the world's men, con,,nues at a rapid pace The Na ceived a substantial boost with r,onai moning Associata profects rhar th largest passenger terminal at the receipt of more than $1.5 bil.

Harisfield Atlanta Internationa; ay gths ,

her c nI lion in insurance settlements to Airport - already the second compensate for the homes and ,o us,gs, g,,,ng ,gg,ons in rne united stares cunng the 79 sos oult Power - 7tu busiest airport in the world. In ad. buildings which were destroyed Southem Company's operartng unir en nom dihon to the $500-million terminal when Hurricane Frederic struck

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complex, more than $250 million the city in 1979. In addition, ma-

[5' {' 3,'gl Wde8 3e'"Ce ' edC" o' of cargo and support facilities jor improvements were being were construc d at the airport. made at the state docks in Elsewhere in the state, the Mobile - improvements which textile manufacturers which include the expenditure of some dominate the industrial sector re- $60 million for the expansion of mained relatively strong. grain and coal handling facilities.

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4 The Southem Company and its generating capacRy was The operation dates of units 3 cperating subsidiaries invested . 23,222,735 kilowatts - more and 4 were delayed four years -

$1.2 billion in 1980 for the con- than any other investor-owned until 1989 and 1991, respectiveb linuation of power plant construc- electric utility group in the United J Although the operating sub-tion and for the building and States.

upgrading of transmission and sidiaries plan to complete those U

distobution lines, substations, and projects already under way, it is Complefion Dates Delayed

• possible that further scheduling

, other service facilities. Joint Ownerships Planned adjustments will be made. Cur.

By late fall, reconstruction of The companies of the Southem rent plans also call for expandins Alabama Power's Bouldin Dam electric system have made a had been completed. Work on the the ownership of two major gen.

number of changes in their con- erating plants wl&h Georgia three hydroelectric generating struction timetables over the past units at that facility had been Power is constructing.

several years as the rate of in- Negotiations continued in 18 under way since 1975 when a crease in the demand for elec-break resulted in extensive with electric utilities in Flori da fo tricity has slowed and as the the sale of a 16.5-percent intere:

damage and removal of the plant system's abi ty to obtain

' rom service. in the Vogtle Electric Generating necessary financing has been Plant. The Florida utilities, which Georgia Power's Wallace Dam reevaluated. are heavily dependent on oil,

- a new hydroelectric facility in During 1980, Alabama Power middle Georgia - also was com- could join the Vogtle nuclear pro delayed the completion dates of ect by 1982.

j pteted during 1980. units 2,3, and 4 of the Miller in February,1981, Gulf Powei Facilities brought into service Electric Generating Plant. The in-

! during 1980 added 318,300 signed a contract to purchase a service date of unit 2 at this coal- 25-percent interest in units 3 kilowatts of capacity, and, at fired facility was postponed for i year end, the system's total and 4 of the Scherer Electric two years, from 1983 to 1985. Generating Plant - a coal-fired I

4 facility in middle Georgia.

i Generating Estimated Capacity Date of Type of Construction Hudget Sef

,j Company Plant Construction expenditures for

" (kilowatts) Completion Fuel / Plant Alatsama Farley, Unit No. 2 860.000 1981 and 1982 currently are pro-1981 Nuclea' P wet jected to be $1.5 billion per year M $Dar" iand 135.000 1983 Hydro The Construction budget f0r 1982

, Mdler, Unit No. 2 660.000 1985 Coai is expected to total $1.7 billion, Mitchell Dam, Unit Nos. 5,6, and 7 150.000' bringing expenditures for the 1985 Hydro Mdler, Unit No. 3 660.000 1989 Coal three-year period 19811983 to Maler, Unit No. 4 660.000 1991 Coal $4.7 billion. (The construction Georgia Scherer, Unit No. I 68.712' budget for 1982 and 1983 is I 1982 Coal Power Scherer, Unit No. 2 68,7123 based on the assumption that J 19a4 Coal Vogtle, Unit No.1 396,7205 Banietis rety. Unit 1985 Nuclear Georgia Power's ownership of Nos. 5 and 6 100,000 1985 Plant Vogtle will be reduced by Hydro 16.5 percent.)

~ Rocky Mountain, Und Pumped Nos.1,2, and 3 675,000 1987 Storage Scherer Unit No. 3 818.000* 1987 Coal Vogtle. Unit No. 2 396,7205 1987 construchon is under nay at nocAy Moon Goat nock, Unnt Nuclear fa,n in non/mest Georaia on the systenrs Nos. 7 and 8 67,000 1988 Hydro I,rst hydroelectnc generahng plant to rely Scherer, Unit No. 4 818.000* 1989 solely on a technology Anoan as pumpeo

~ Coal storage in th,s meunt of poner producto.

Gull Power Daniel. Unit No. 2 500.000$ 1981 *d'" 'S 'eleased ti m an upper reservoir Coal Notes: and afloacd to flow down a s!cep grade n) When these Units are plJCed an serWCe. through the plant's turbines A laser reser- \

• 16 5 percent interests proposed to be sold 52 ',00 kilowath of enesting capacity at to municipaidres in Fionda vort holds the water until demand for elec IMctell Dam wea te vetaed (4) includes the capacity of the 25 percent in- Incity is low Then, the turbines are re-m tachides the capacity of the 91.6 percent terest sold to Gulf Power vessed and the water is pumped Dack to th<

interests sold to cooperabves and (5) When completed. the Daniel Electne umcipahbes in Georgu " # ## # " " #d' '# # "9d'd Generat n.; ILnt, consishng of units No 1 Service is emected to bearn at Rocky

( h I auntes the tapacity of the 49 3 perceni (placed in seruce ty Mssasippe Power in enterests sok1 to coopetabves and DUUld'" 'D 198/

1977) and 2. will be lointly owned by Gull municipahbes in Georgia and the Power and Mississippi Power 12

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4 TJ provide a major portion of the . $30 million in new common equi- accepted bids on $50 million of money needed in 1980 for new ty capital raised by The Southern first mortgage bonds. The net an-construction, $468 million was Company. nual interest cosi to the company raised from outside financing and U $387 million from the sale of Bonds, Preferred Stock Sold; will be 16.3 percent'

-a facilities. Funds from these ex. Short-Term Debt Reduced Financing Plans Outlined 1

temal sources accounted for 70 The coerating companies raised in addition to the $190 million of i

percent of the $1.2 billion needed additional capital for construction securities sold in the first 2%

for construction. The remaining during 1980 through the sale of months of 1981, several other 30 percent, or $375 million, came $400 million of first mortgage public offerings of long-term debt from intemal sources. bonds and $10 million of pre- and preferred stock are tentative-ferred stock. In addition, Alabama ly being planned. For the full New Common Stock Issued Power was involved in the sale by year, systemwide sales of first On November 12,1980,The the Industrial Development Bord mortgage bonds, pollution control Southern Company held its first of the City of Mobile of $4.3 mil- revenue bonds, and preferred public sale of common stock in lion of tax exempt pollution con- stock are expected to total some three years. A nationwide group trol revenue bonds. $670 million.

of securities underwriters led by Unstable conditions and in. The Southern Company's near-Merrill Lynch, Pierce, Fenner & terest rates which were among term goal is a capital structure of Smith incorporated submitted the the highest in recent history 55 to 57 percent debt 10 to 12

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winning bid for the stock which characterized the financial percent preferred rtock, and 31 was offered for resale to the markets in 1980. As a result, the to 33 percent common equity. At public at a price of $11.80 per carrying costs for the securities the close of 1980, the compan/s share. The company's proceeds which were sold during the year capdal structure was 58.1 per-1 from the sale were $11.43 per are significantly higher than have cent debt,8.7 percent preferred l share - a total of $125.7 million. been incurred in previous years. stock,1.7 percent preferred stock

, An additional $102 million in in 17.' 1980, uncertainty in the subject to mandaiory redemption,

! cr umon equity capGI was real. bond r arket forced Alabama and 31.5 percent common equity.

9d during 1980 through the divi. Power to postpone a sale of To achieve the targeted capital

- cend reinvestment plan and the securities which had been structure and to provice the employee savings and stock scheduled for competitive bidding operating companies with the ownership plans. on December 10. The $100-mil- equity funds needed to continue The current Dividend Reinvest. lion issue of first mortgage bonds their construction activities, addi.

ment and Stock Purchase Plan - originally planned to mature in tional sales of Southem Company for stockholders was established 30 years - was rescheduled for common stock will be requ!'ed.

in 1975, and participation has in. January 6,1981. At that time, tha However, the timing and amount I creased during each successive bonds were sold with a 10-year of the next public issue of year. At the end of 1980, more maturity at a net annua l cost to Southem Company shares have than 88.000 stockholders - the company of 14.9 percent. not yet been decided.

some 26 percer.t of the On February 26,1981, Ala-company's stockholder population bama Power completed a negoti-

- were enrolled ated sale of $40 m5on of pre- # 8'9"C3' *"*" ""* S "*'" *c

The plan provided the com. system s construction program ,s devoted la ferred stock at a net annuai cost ,ne ou,,,,ny and vog,ao,ng or transm,ss,on pany with $72 million of new to the company of 16.4 percent. hoes suostarzons. and aistnouron racibt,es common equity capital during the Proceeds from these sales J year. Reinvested dividends ac. were used to eliminate Alabama

[, ][cy,j,7c,]ylycfc'Q, n pena,tures . - was seni corrpng our this counted for $50 million of tnis Power's short term debt. That won for the rnree year pered 19s7.s3 amount, and supplemental cash company had relied heavily on Some 30 Wecent of the $4 7 hilhon purchases of stock provided bank loans during 1979 and early [ffy,$,'"g"o*M "d "" "n 0 r$'Nlc"m s

$22 million. 1980 when its financial condition pow dehvery netwoa The Employee Savings Plan prohibited the sale of first mort-and the Employee Stock Owner- gage bonds or preferred stock.

ship Plan provided the remaining in early March, Georgia Power 14

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The total number of Southem Individual Owrwrship Cited tional magazines. Collectively, tht Company stockholders rose to The overwhelming majority of The 345,335 at the end of 1980. 1981 advertisements will be ap-Southem Company's stockholders pearing in more than 30 million Some 4,000 stockholders of s

are individuals - as opposed to issues of these publications.

record were added during the institutional holders of stock. At year,largely as a result of the the close of 1980, individuals had i company's public sale of new Ads Note Accomplishments voting control of an estimated 85 While Southem Company adver common stock in November. percent of the outstanding shares Since the early 1970s, owner- tising continues to emphasize the of Southern Company stock. support which stockholders pro-ship in The Southern Company The importance of individual in-has expanded significantly. In vide for building tomorrow's elec-vestors - and the vital role they tric service facilities, attention fact, the period 1970-1980 saw play in assuring an adequate sup- also is being directed toward the the number of stockholders in the ply of electricity for the South - important achievements of the company more than triple, is one of the primary messages Because of the growth in its Southem electric system.

which The Southem Company is in each ad it is noted that, stockholder population, The conveying in its corporate adver-Southem Company r,ow has tha more than 25 years ago, the lising. The need for this com- Southern electnc system in-ninth most widely held common munication is underscored by troduced the world's first stock in Amenca. In addition The recent survey data which indicate Southem Company's common computer-directed energy dis-

,a that more than hau of the adult patch center. And, it is pointed stock has become the most wide population in the system service ly held electric utility stock in the out that the savings which result area does not recognize that from coordinated planning and nation. stockholders provide the com-Southem Company stock- operations are estimated at more pany with funds to finance new than $75 million per year.

! holders live in all 50 states and in power plant construction.

1 51 foreign countries. Approxi- The system's pioneering A series of six advertisements research into solvent refined coat

{ mately 26 percent live in the four- - advertisements which feature also is cited, as are two other ac-state area served t>y the Southern individuals who have invested a complishments: an 85-percent electric system. There are 40,879 portion of their savings in

. Southern Company stockholders reduction in the ese of oil to Southem Company stock - has generate electricity and a in Florida; 27.341 in Georgia; been developed for use in daily 16,843 in Alabama; and 3,693 in 10 percent improvement in the newspapers across the Southeast productivity of the system's coal-Mississippi.

and in the regional editions of na- fired power plants stathern Company 3.,o in aca, tion to rehred ImtDa'I coach Ma rcolm stockholdets nt Record A~"2 O O mm,.,,,4 343 ' 34' " "' tancy, the Southem company's 1981 ad 3,,

• vetttsements feature Joe Bignarn, a pilot for Reimblic Antienes. hetyn Darn, a project

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engineer at Southwest forest Industries in

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Court judge on Ilatt:est>urg Missossippt. John m i t Y 1 2"*

Stook. a schoolhand daector on Rome, Georga and Jano 3tav,4 a physical educa l l k toon textw on Augusta Georga y t ,so 183 the Souttiern Comtuny os gratervi for the 9 b] '-

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iNERGV CONSERVATKjN A number of cxisting energy con- house with advanced solar space of energy use in their homes.

servation programs were expand- and water heating systems, as ed during 1980 and several new Energy audits also are con-well as the standard energy- ducted for commercial and in-crograms were injtiated, as the saving features such as super-w operating companies continued to dustrial customers, and special thick wall and ceiling insulation programs have been developed j promote the efficient use of elec. and double-paned glass for 4

tricity. The immediate impact of to meet their needs. For examp!(

windows.

v these efforts is likely to reduce in 1981, Nabama Power will Alabama Power has established .

Centsable Action ProgrLm for the growth rate in total energy be measuring the effectiveness of sales. For the long term, how.

Agriculture - which includes an this application of solar energy. on site inspection by an agri-ever, conservation programs hold The resuite - which are ex-the promise of limiting increasen cultural engineer who studies the pected to show as much as a use of electricity on a farm, tests in the peak demand for electricity 50-percent reduction in energy re-

- and, thus, minimizing the need electrical equipment and wiring.

quirements for space and water and makes recommendations to to build costly new energy pro- heating - will be shared with duction facilities. improve overall energy efficiency electric utilities , ,roughout the All of the operating companies United States. also offer their customers free Efficienc3 Standards Urged Georgia Power also combined literature on energy conservation.

For New Residential Sinx:tures solar energy with its energy effi-Since the mid 1970s, each of the One of the most popular cient construction techniques. In brochures which has been pro-operating companies has been

- December of 1980, the company duced is Mississippi Power's working with architects, builders, began oliering a booklet ca!!ed s

Energy Management Handbook.*

, and manufacturers to ensure that " Passive Solar Good Cents Home At the end of 1980, some new homes and apartments are Plans."* The 15 different homes 120.000 copies of this brochure built and equipped according to in the booklet - ranging in size the highest standards of energy had been distributed to that com-frorn 1,200 to 2,500 square feet pany's customers.

et';ciency. Gutt Power led the - have been designed to receive Southern electric system in devel-maximum heat from the sun in sow, my ,,,,,me,,,,nm oping this program and was one J winter without adding to cooling sem cm, o wm,.ni m of the first electric utilities in the requirements in summer. The nation to promote energy saving changes in construction which i guidelines for new structures. once a company represenfahve has are necessary to achieve this gathered the ,ntormation reavired for an By the end of 1980, more than goal do not add appreciably to coe'97 dod 'he da'a Ca" be 'ta"S*ted 5.000 single family homes and the initial building costs and are ' 8 '

5,800 apartment units across the $73,,'ea'"c'oy,p",l77c"c*ns#',"$5r ya expected to reduce average terminal which is easdy set ur in a four state service area had been heating requirements from 20 to customer's home Wethin a few minutes, the 1 built to specifications outlined by 32 percent' '"'*'"d' #""'8 "' 3 C *P'*'* *"0'*

j the o,.erating companies. In addi-economic analysis that shows a customer tion, Gull Power's Good Cents .nar energy sowng ,mprovements could oe Ownputerized Audits Continued: made in his home. the cost of maAing these Home was recommended by the Florida legislature as a model for Conservation Literaturo Offered *hd"9CS 3"d '"" '*S"'"9 SJ""95 " *C '

~ Computerized home energy * sst$em company serwces ocr other electric utilities in the state audits - initiated by the ained av provat in 1980 from the secunhes and Er to follow in their conservation Southern electric system two change Commission to market to &ctnc prcgrams. utdahes - and otUr interested companies years ago - ccntinued to be of-

_. ,ne spec,any deverped comparer pro-fered to customers throughout gram which was created for the automated SolarOwwxyts Aikkxl 1980. Response again was coe'97 aud't To Gomi Cents lionWs favorable, with some 20,000 Alabama Power took the Good customers requesting an analysis Cents Home program one step further during 1980 The company constructed a demonstration 18

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KiMARCil AND DEVELOPMENT Tnroughout the 1970s. The Institute (EPRI) - the research Environmental Protection Agency Southern Company guided the and development arm of the elec-development of one of the - tested the feasibility of adding tric utility industry.

i nation's most promising synthetic sodium sulfate to low sulfur coal before it is burned. Although the fuel technologies - a technology Other Technologies Studied final report on the experiment will j which turns high-sulfur coal into Clean-buming coal offers electric clean buming solid and liquid not be completed until April, find-utihties an alternative for meeting ings to de3 are encouraging.

fuels. In 1980, when the solvent the new, stricter environmental During abnost a full year of refined coal process (SRC1) had standards which will be applied to been brought to the threshold of testing, the introduction of sodium the generating facilities planned sulfate has dramatically improved commercial reality, management fc.' service in the late 1980s and of the program was turned over precipitator performance - and, early 1990s. Another option for thus, the overall performance of to the Intemational Coal Refining meeting these standards is to the generating unit.

Company - a new corporation equip new power plants with ad-formed by two firms that had Additional research will be car-ditional pollution controi facilities ried out in 1981 to determine worked on portions of the project known as scrubbers, whether this procedure can be

• with researchers at The Southem Since 1972, the Southern elec- used successfully at other power Company's engineering and tric system has been conducting plants which are experiencing special services subsidiary. research on various types of Over the next three years, the similar performance problems.

scrubbers to ensure that the n ost Southem electric system plans to economic and reliable units are Solar Power Tested q continue its involvement with the developed. Tesis were under way

,j coal refining technology - carry- during 1980 at Gulf Power's Plant The Southern electric system also is continuing its commitment to ing out additional research at Scholz on a modified scrubber iurther the development of solar Southem Company Services' system wNch uses limestone -

SRC l pilot plant near Wilsonville, technology. For example, Georgia rather than more costly lime - Power is applying new solar tech-Alabama.

to remove sulfur dioxide from niques in its recently completed power plant emissions. corporate headquarters office in DOE Test Indicates y Potential New Use Atlanta -- a facility which will Improved Productivny Sought serve as a laboratory for energy For Clean Coal For Generating Plants i

A test burn of solid selvent re. Hurning Inv-Sulfur Coal conservation. The collectors

, lined coal produced at the Wil- which suppoit the building's solar To meet existing environmental space and water heating systems sonwile facihty was conducted by regulations, several of the the Department of Energy (DOE) are among the largest ever con-generating facilities in the structed. The use of solar power in the latter part of 1980. Pre- Southem electric system now liminary results from the experi- - combined with other energy-burn low-sulfur coal. In a number saving devices - is expected to ment indicate that solid SRC l of instances, the performance of luel can be fed directly into boil- reduce the buildhg's energy re-these plants has suffered quirements by 60 percent.

ers originally designed to burn only oil. DOE estimates that boil- because of a marked reduction in

~ the efficiency of electrostatic ers of this type - used across precipitators - the equipment ReSeJrch c#odS a'e co""u'"9 of fhe the country by many industries which traps the ash produced 8" 8

- now consume 150,000 to e 0l"p$"n,"[#$$ n p*,$(c'"e3 7c$'n*[o when coal is bumed. A wash- synthetic luci Anonn as sorvent rer,ned cooi 200,000 barreir of oil per day. In down to clean the precipitators isaco in imo a $5 7maron hyarorreater 1981, larger scale tests will be has been necessary after six to

-; performed by DOE to determine eight weeks of full-power opera-l ,a' [,'"ll'$ra$

c , es a"[n$gn s 850 aegrees ranienne,r w,it ailor y rne p,ior the extent to which SRC l can be lion. This cleaning process re- o/ ant to moduca higher quality solid luci substituted for this oil. quires that the entire generating Federal funding is expected to unit be taken out of service for up Q',3 "Sjl[gsiggrytf3a neanngog continue for the Southern electric to three days. the nyarotreater is expecteu to ce opera-system's work with solvent refin. To solve this problem, "o"J' '" cav '981 ing. SupporI also will be provided Southern Company Services - in by the Electric Power Research cooperation with EPRI and the 20

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CWPMATE VIEWPOlNT ~ ~

• T

- ;y The following are excerpts The second piece of legislation f } .,

. . . . I,. from reme ks dehvered donng which I beheve wotdd help revive r~;. . .- : ,~., 1980 oy Southern Company investment and productivity is

, , .; President Alvin W Vogt!e Jr l-- y . 4c . , ,. . ,,;- . e-

.; known as the Diviaena Reinv(n ment Act At the present time.

! ,. g y~65. History has shown us that - stockholders must pay taxes

+

[ p *' f f,',>. above all else - rising produchv. each year cn the dedends they

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'.;g. q ity is the key to an improved sian.

' receive Th:s proposal. however

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f dard of hving But as we IcLk to i - -

would allow a stockholder to

- i

,r,i- g- the decade ahead. significant in- defer the payment of federal in.

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creases in productivity Wdl t-e dif- come taes on dividends which

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ficun to realize if existing laws were rernveste d in new shares of

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Conhnue to la work, s;tvina conntn;n stuck

enterpnse and excellence .c Recently. The Southern Com-f -

. k!" .. ' h never before pany polled its inoividual

, ., [y c If the new administrahon is to stockhc ders to determine what a .

ls j q ,.g rnike economic wellleng a reah effect this type of legislation

, ,. . s . y , . ty once again. then it must het mK;ht have un then investment 9 ' < p . av .

... ' T ;y 4

to bong about new intentives to decisons The results of the l

7 -

'M. P'liffN .fstimulSte prcxjuctive gnJwth survey indicate that the number

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• new incentives to encouraue in (:t strokholders who patiapate n, Steps which will be taMn over dividuals and inshtutt )ns to invost our dividond reinvestment plan m

the next sevenil years to resolve um o kn wunW wm: nme w h4 d tam

, the nata nd energy and econonuc on reum!ed Ot ah"m were pr( A den ts will af fect dnjnkiticahy an p () e O uhN!

the futum of the Southem electnc eMUWFuopa nwy he thud legislative action systern. Its stocknolders. Custom We%ntataw to De Ox gem W h woA N un mt a ,m di.

ers. and emt doyees Throuonaut I * "" D'UP"h # S W h'C h " " * "I" '" D ds n.itoni to pohcv

, 1TO. the management of The behem mhM go a long way a redictm ni the rate of tax b)uthe yr him[t uly conhnued its m nMvun the q'owth Y prn io! c u d unu Many econo-ellorts tu pmInap de as ac , duA % nahu Me n O' t *Wve that a n >duuhon ly.ts p N Ole ni dr;cu% ions meawe 6 cahed UC N ni .H penner J to 1) percent in I that w!U shar e pubhc PJhcy '" V'U" I"V"SI"I INC""I'V" b '

In' Il'"S Ch UGUd Of' CdPlldl In nhiny <'f the presentations mum pmude a 4 ons c dd pn Mde a strong n',n wh:oh wt qe male to groups of W pement b Codt up to a u%tu nny stenulus for our (1 union ieaue' Drow the nWununi of 9 M for a 1v in + "'a h ,n N h a d he s t ,i m. e i,iqt n ient Iocused &Mua! do inwt ui He 4 a Ls

~ on (fle nee >d h a passage of (H hn ub d An cocan cong a c ne , Thne s no auedior) that we haw speufr leqMition legn;latu n1 Sunnar legs du,n lew de r te" sharked h a Gn cuq hlany that z< >uk t shnnilate new ;ny,-a d"6 mwmds intestment (4 r L dn : J pn 2 denb no que

_ liit t lt ,ptJ (b (H inn HG growitt ip)(j l' CIR ( F h D (h +'r I4 "I Ll! Iht Ar!1e uia: cat ttle ei mot aaqo the i t :r neshc pn x tuc a f ro dv hm tie,41 p m s ! 1 'O k ur s_telwer d a h a'rhi ma-

!H)rl hi t'n e n;\ hl < j hlition Ule *' 1"U F ince Ja; un. e a t" r > W it h sh()& U C i + "s f ound 1 C ;l fll b ir ly [ H t ",tr dt % j lestirlk d lV " 1 ' 1t " h" '! " !(

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beh m the liot se Ways ,p u t 7'" 'h" ' W H h n h N D h '

da 1' -( n : de > of ide sis hr

~

' ' Nins ( a ann utt+ >e concemula tax " "" '" P * " " M "EP V "1 t m ul h b .' A pe U t d a new n a' r,un s ther t pe n ! r q h f( n e # kU Nh* h UMN'"I(P3I 't4 " 4 41 U 1 An a' + iF te n ;ninn; H e t_i n up ess '" du ins an)und the > va n k t H .m,

• t'n e.  ;, , a Un o eg,, wg u np< n tant 'o [x un' c u d th, d , r i , , , 1 1ca. , wtu,g w, g a n ItN19'id j' ht ( U S l .g n f '![ g ;

, O' $,fhie 1

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<Mf4nd d Wim t1 M U Nt r ,te s ) t g n . q- w' t i ., t , p h 1 g r u q i g ., ,

ave" age > ','KariwenA);m ,9 r im.ti.!av, 'ogv'3..

, U ! dild t h ' ittj d !+ n pi '

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3 FiMANdAL REVIEW contents

. Common Stock Price and Dividends Consolidated Statements of Eamings Retained Per Share 23 in the Business W Report o' Management ,

. 23 Consolidated Statements of Sources of Funds j - Selected Consolidated Financial Data 24 1

for Gross Property Additions  :

Management's Discussion and Analysis of Results Consolidated Statements of Amount Paid in for ul Operations and Financial Condition . 24 Common Stock in Excess of Par Value  :

Consolidated Balance Sheets 26 Notes to Financial Statements  :

Consoirdated Statements of Capitalization 27 Auditors' Report  ;

Consolidated Statements of income 28 Common Stock Price and Dividends Per Share Price of Common Stock Dividends Paid i

(Wall Street Joumal Composite) Per Share The Southem Company 1980 1979 1980 1979 High Low High Low 4 First Ouarter $12% $10% $14% $13% 38%c 38%e Second Ouarter

-] Third Ouarter 14 % 10 % 14 12 38 % 384 13% 11 % 14 % 12 38L 38 4 Fourtt.Ouarter 12% 10% 13 11 40% 38 6 Report of Management The management of The Southem Company has reporting. They regularly evaluate the system of interna prepared and is responsible for the consolidated finan- accounting control and perform such tests and other cial statements and related financial information in- procedures they deem necessary to reach and express cluded in this report. The financial statements were an opinion on the fairness of the financtal statements.

prepared in accordance with generally accepted ac. The board of directors pursues its responsibility for counting principles appropriate in the circumstances reported financial information through its audit commit-and necessanly include amounts that are based on tee, composed of directors who are not employees.

best estimates and judgments with appropriate con-The audit committee meets penodically with manage-sideration to materiality. Financial information included mr.nt, the intemal auditors, and the independent public elsewhere in this unnual report is consistent with the accountants to assure that they are carrying out their financi statements. responsibilities and to discuss auditing, internal con'rol.

J The .ompany maintains a system of internal and financial reportina matters. The intemat auditors accounting controls to provide reasonable assurance and the independent public accountants have free ac-that ass 9ts are safeguarded and that the books and cess to the audit committee at any time records retlect only authorized transactions of the com-We believe that these policies and procedures pro-pany, timitahons exist in any system of internal control vide reasonable assurance that our opemaons are con-based upon the recognition that the cost of the system ducted with a high standard of business conduct and should not exceed the benefits denved. The company that the consolidated financial statements reflect fairly believes its system of intemal accounting controls, the financial position, results of operations, and sourcet augmented by its intemal auditing function, appropriate- of funds for gross property add;tions of The Southern fy balances the cost / benefit relationship. Company and subsidiary companies.

The independent public accountants provide an ob-jective assessment of the degree to which manage-ment meets its responsibility for faimess of financial 23

FINANCIAlf REVIEfV ~~

' Selected Consolidated Financial Data ihe Southern Company and Subsidiary _ Companies 1980 1979 1978 1977 Operating Revenues (in thousands) 1976

'W $3,763,483 $3.128,169 $2.906.672 $2.652.085 $2.199.531 Consolidated Net income (in thousands) $344,395 $219,127 $201.568 $245.067 Earnings Per Share on the Average $194.573 Number of Shares Outstanding $2.23 $1.51 $1.45 $ 1.95 $ 1.62

Cash Dividends Declared Per Share on Common Stock $1.56 $154 lotal Assets (,n thousands) $1.54 $1.48 $ 1.4 i '

Long Term Debt (in thousands) $11,466,555 $10.552.095 $9.866.463 $9.044.269 $8,072.453

$5,226,851 Cumu:ative Preferred Stock of Subsidiaries $4.769.066 $4.522.888 $4.221.694 $3.744.495 Subject to Mandatory Redemphon (in thousands) $152,000 $149.750 $155,000

$155.000 $155.000 Construction Expenditures (in thouseds) $1,229,932 Kilowatthout Sales (in millions)

$1.164.956 $1.082.431 $1.218.404 $994.839 92,460 86.021 87.035 85.354 Customers (end of penod) 2,565,461 80.356 Average Revenues Per Nfowatthour - 2.522.284 2.472.646 2.415.939 2.363.877 Total Sales (cents) 4.04 3 61 3.31 Average Cost of fuel Per Kilowatthour 3 08 2.72 Generated (cents) 1.61 1.52 1.36 1.27 1.13 Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations The Southem Company's financial performance in 1980 showed signihcant improvement over the severely depressed 1977 has resulted pnmanty from increased energy produc-j carnin9s of the past two years Consohdated net income for hon and escalabons in the cost of fuel and other operation

, 1980 tota!ed $344 4 milhon, an increase of 57 percent over expenses. partially offset by reductions in purchased power.

Fuel cost in cents per kilowatthour generated was 1.36 in

' 1979 and 71 percent over 1978. Eamings per share for 1980 of $2 23 increased at a lower rate (48 percent over 199 and 1978,1.52 in 1979, and 161 in 1980. Purchased and inter-i 54 percent over 1978) due to the increase in the average changed power expenses declined in both 1980 and 1979, i number of shares outstand;ng dunng the periods. Con- rettecting increased availabihty of generating capacity, the j sohdated net income includes revenues subject to refund, addition of new capacity to the system. and increased at:er deduchog apphcable taxes, of $3.057,000 in 1980, as economy and emergency energy sales to neighbonng uhhties increases in other operahon and maintenance ex-discussed in Note 2 to the financial statements.

increases in ooerating revenues in each penod are at- penses were largely due to the addition of substantial new 3 Inbutable pnncipally to rate increases, recovery of increased facihties to the system and escalating costs of labor.

matenals, and services.

i fuel and purchased power costs througn fuel and energy ad-i justment provisions contained in rate schedules, and in- Increases in depreciation and amortization each year are creased energy sales in 1980 and 1978 Approximately due poncipa!!y to the conhnued growth in depreciable plant

$152 minion of rate increases placed into ellect in 1980 have in service, and the amothzation of costs related to cancelled generating plants (see Note 3 to the financial statements),

not been reflected in revenues Kilowatthour sales decreased amounting to $7.116.000 in 1978. $8.540.000 in 1979, and one percent in 1979, compared to a 7.5 percent increase in 1980 and a twopercent increase in 1978 The increase in $9.272.000 in 1980. The compo.>ite straight-kne depreciation sales in 1980 was due pomanly to increased demand from rate was approximately 3 6 percent in 1978 and 1979, and

- 3 7 percent in 1980 residennat and cumercial customers resulting trom an ex-Fluctuahons in income taxes resulted from changes in in-

' tended heat wav9 during the summer and increased energy sales to neighboring uhhhes. Du.ing 1980, capacity of 700 come before income taxes. and from the reduchon of the megawal:s was sold to neighbonng utshbes for penods up to federal income tax rate from 48 percent to 46 percent in su years These bulk power sales amounted to some fear 1979 Federal and state income tax provisions are detailed in Note 6 to the knancial statements.

bethon kilowatthours and revenues of $108 milhon The art. The allowance for funds used donng construction hme maximum demand on the Southern ele: toc system oc.

curred on July 14. 1980, and was 19.553.100 kilowatts - 7 6 represents the cost of capital apphcable to ubhty plant under

_ percent above the previous record set on June 28.1978. The construchon which is not included in rate base. Although the dochne in energy sa!es in 1979 resulted primanly from con- equity portion of this credit represents non cash income, a servation efforts by residenhal customers and a dechne in signihcant pothon of current cash flow results from the allowance of a retum on and recovery through depreciahon safes to wholesale customers resulung trom their increasing of previously capitahzed amounts lo addition, the normahza-ownership in generating facihties increased bilhngs rr.Jung tion of the income tax effect of the debt porhon results in a from the recovery of increased fuel and energy Gs and the non cash charge. Therefore, the allowance for funds used results of rate rehef have encreased the avr ,ge revenue per kilowatthour from 3 31 cents in 1978, to 3 61 cents in 19n dunng construction, net of income taxes, as a percent of net and 4 04 cents in 1980. income amounted to 39 9 in 1980. 56 8 in 1979. and 57.1 in 1978 The rise in operahon expenses occurring each year since 24 i

r __- .

1 Inflation has had a significant effect on the Southern elec- counts payable. Also, fuel stock inventories were increased inc system due to the regulatory environment in which the in anticipation of a coal m:ncrs'stnke, subsdanes operate and the large investment (almost 90 per. The subsid'ary companies' continuing constmction pro-cent of total assets)in utikty plant. See Note 14 to the finan- grams to bui!d an energy supply network with a sufficient 4

cial statements for supplementary information concerning tne margin of reserve capacity to ensure an adequate, approximate effects of inflabon. economical power supply will require expendaures estimatec i The results of operahons discussed above are not to total some $4 7 bilhon for the three years 1981 through t

nocessarily indicative of future earnings it is expected that 1983. These construchon programs are subject to revision higher operating costs and carrying charges on increased in- because cf factors such as granting of timely and adequate vestment in plant. if not offset by proportionate increases in rate increases, new estimates of increased costs. revised operahng revenues (either by periodic rate rehef or increases load eshmates, and the availabihty and cost of Capital These in sales) will adversefy affect future earnings. Increases in factors forced substantial reductions in construction pro-sales in the future will be affected by the extent of energy grams in recent years, resulting in a combination of conservation practiced by custorners. the elasticity of de- postponements and cancellations of generating units and mand, weather, and the rate of economic growth in the other facilities throughout the system system service area in recent years eamings have tended in order to adapt the construction program to the chang-to dec!ine during penods following the full 12 months' reahza- ing conditions in recent years. Georgia Power has sold and e hon of generat rate increases and poor to the receipt of fur- negotiating to sell undivided interests in certain plant ther rate rebel facihties in addition, the system companies have sold 1.400 megawatts of capacity over the penod 1983 through 1992 Financial Condition This will enable the system companies to compfete tne olant The major changes in the company's financiaf condihon in now under construction and to sell the capacity until it is 1980 were additions of $1.2 bilkon to utility plant and is' needed by the system See Note 4 to the financial suance of addihonal secunhes, net of retnements, to finance statements for further details.

38 percent of such construction expenditures The rematn- in addition to the funds required for the construction pro-ing funds needed for construction were provided from inter- gram, approiumately $261 milhon wil1 be required oy the end of 1983 in connection with sinking fund requirements and nal sources (30 percent) and sales of property (32 percent)

' maturities of long term debt and preferred stock subject to See the Consohdated Statements of Sources of Funds for mandatory redemption.

1 Gross Property Addihons for further details, It is anticipated that the funds required will be denved f The company's capitahzation rahos (see Conschdated l

from sources in form and quantity similar to those used in Statements of Capitahzabon) have remained approumately the past However, the type and hming of financings will de-the same in recent years, but the cornposite interest rate on pend on market conditions and maintenance of adequate long term debt has increa3cd from 7 95 percent at earnings. In order to issue addihonal long term debt and December 31.1977, to 8 95 percent at December 31.1980.

pretened stock, the subsdiary companies mmt comply with and the composite dividend rate on preferred stock has in- certain eamings coverage requirements conts.ned in their creased from 8 04 percent to 8.18 percent. Tne common mortgage indentures and corporate charters The ability to equity ratio of 315 percent at December 31,1980. is at the maintain these coverages and to generate adequate amount:

tower end of the company's goal of 31 to 33 percent inade-of internal funds for construction is dependent on receiving

, quate camings in recent years - together with significant amounts of extemal knancing necessary to fund the continu-adequate and timelv rate increases to ottset the continuing effect of inflat.on Should The Southem Company and the inq construchon program - have resulted in the market subsdiary compantes tv unable to obtain funds from exter-value of common stock being below book vaiue At December 31.1980. the book value per share of commcn nal sources in amounts which - together with internaily generated funds - will be adequate to carry out the present stock was $16 80, compared to a market value of $12.25 per construchon program. further delays and possible cancella-

share The improved eamings in 1980 permitted the quarterly hons would be necessary

~~

i divdend to be increased to 40 5 cents per share in the fourth On the b3 sis of the requirements contained in their mort-quarter of 1980 from the 38 5 cents per share which had tren in effect since the fourth quarter of 1977 The cash flow gage indentures and corporate charters and including coverage of common stock dividends was 3 29 hmes in revenues subl ect to refund the respective bond and pre-lened stock coverages of the subscury companies are as 1980, compared to 2 48 in 1978 Emphasis on operating offi- follows Ciency will Continue, as will the aggressive pursuit of rates that will provide suf hdent growth in earnings to maintain a competitive position in the marketplace Mortgage Coverage Charter Coverage

~^C OO Repec ~ (150 R.used)~

At December 31,1980, the system companies had '

$28R456100 of temporary cash investments and 1980 IN9 1580 1979

$981.190.000 of unused credit arrangements with ' nks to Natuma Pcwer 2.59 2 17 1.51 1 19

- Gmrea Pow 2.86 2?4 1.81 1 66 meet their short term cash needs (See Note 5 to the f nan- Gu Power 1.92 2 :6 rut statements ) Only $od501.000 of shott term t,nk loans 1.34 1 50 M.sswm Pov.er 2.83 '51 1.61 1 35 were outstandinq at year end. compared to $352 4781VA) at

, year end 1979 The increase in receivables is due p'. manly to the wiedeaw bsk of Georgta Power's new cor ; orate headquatters Du!Id.og (157 miuion). amounts oue from joint owners of Georosa Power's generahnq faciht es ($51 nn:l on).

and a settlement agreement t etween Mississippi Pov.m and a coal suppbcr t$55 minion) The porhon of this settlernent to l'e reforxled to customers t$53 milhon)is includt31 in ac 2b

FINANCIAL REVIEW-Consolidated Balance Sheets At December 31,1980 and 1979 The Southern Company and Subsidiary Companies I 4 1980 1979 (in thousands) 2-ASSETS Utility Plant (Notes 1,3 and 4):

Plant in service, at original cost .

9 $10,102,347 $ 9.587,816

- Less-Accumulated provision for depreciation

__2,567,991 2.270,150 Nuclear fuel, at amortized cost 7,534,356 7,317,666 186,273 177,158 Construction. work in progresc 2,151,617 1,935.233 Total 9,872,246 9.430.067 -

, Other Property and Investments (Principally nonutility property, net) 7,319 Current Assets: 7.072 Cash (Note 5) 50,344 Temporary cash investments, at cost 33.494 288,456 166,510 Receivables, less accumulated provision for uncollectible accounts of $3,108.000 in 1980 and $2,776.000 in 1979 Fossil fuel stock, at average cost 514,642 307,807 553,336 450,398 Materials and supplies, at average cost Prepayments 69,096 62,349 32,078 19.144 Total 1,507,952 1.039.702 Deferred Charges:

9 Deferred cost of cancelled plants, being amortized (Notes 1 and 3) .

Debt expense, being amortized 20,162 29,973 Miscellaneous 17,215 16.695 41,661 28.586 Total 79,038 75.254

-fs Total Assets

$11,466,555 $10.552.095 t CAPITAllZATION AND LIABILITIES Capitalization (See accompanying statements).

Common stock equity

- Preterred stock 3 2,834,736 $ 2,499.422 786,820 786.820 Preferred stock subject to mandatory redemption (Note 7)

long term debt 152,000 149,750 Total 5,226,851 4.769.066

_ 9,000,407 8.205.058 Current Liabilities:

Notes payable to banks (Note 5)

96,501 352,478 Preierred stock sinking fund requiremenUNote 7)

Long term debt due within one year (Note 9) 4,075 5.020 l Accounts payable 119,277 86,326 368,564 322,310 Revenues to be refunded (Note 2) 15,847

~ CusiJmer deposits 5.067 7 axes accrued- 56,941 53.510 Federal and state income Olher 98,204 32.203 Interest accrued 60,696 52.645 Miscellaneous 126,845 116,403 Total 29,163 34.401 Deterred Credits, Etc.: 976,113 1.060.363 Accumulated delerted income taxi s 1,089,081 990,181 Accumulated delerred investment I w credits 346,910

. Miscellaneous 254.518 Total 54,044 41.975 1,490,035 1.286.674 Commitments and Contingent Matters (Notes 2,3,4 and IC)

,, Total Capitalization and Liabilities

$11,466,555 $10.552.095 The accompanying notes are an integral part of these statements.

26-

{ -

Consolidated Statements of Capitalization At December 31,1980 and 1979 The Southem Company and Subsidiary Companies 1980 1979 1980 1979 (in thousands) Percent of Total d' Common Stock Equity:

Common stock, par value $5 per share-

.j Authonzed-225,000,000 shares; Outstanding-1980: 168,697,130 shares:

1979. 148,744,837 shares (a) . $ 843,486 $ 743,725 Amount paid in for common stock in excess of par value . 1,253,742 1,125,823 Premium on preferred stock (Note 7) . 2,775 1,756 Earnings retained in the business (Note 11) 734,733 628,118 Total common stock equity _2,834,736 1 499,422 31.5 % 30.5%

Cumubtive Preferred Stock of Subsidiaries:

$100 par or stated value-4 20% to 5 96% 199,356 199,356 6 48% to 7 88% 147,000 147,000 8 04% to 9 52% ...

340,464 340,464

$25 stated value. Class A-

$2.52 and $2.56 100,000 100.000 Total (annual dividend requirement-$60,115,000) 786,820 786.820 8.7 9.6 Cumulative Preferred Stock of Subsidiaries Subject

~

to Mandatory Redemption (Note 7).

$100 par value-

," 1020% to 11.00% 76,000 80,000 11.36 % .

10,000 -

$25 stated value. Class A-l $2.75 70,075 74,770 Total (annual dividend requirement-$17,005,000) 156,075 154.770 Less amount due within one year 5.020 4M5 Total excluding amount due within one year 152,000 149.750 1.7 1.8 1.ong Term Debt:

d First mortgage bonds of subsidiaries-Maturity Interest Rates I

1980 2%% to 2%% -

18,000

~

1981 3%% 15,000 15,000 1981 3%% .. 23,778 23.778 1982 3%% to 94% 52,536 52,536 1983 3%% to 4%% 23,008 23,008

} 1984 34% to 3%% 37,915 37,915 1985 3%% to 3K% 26,988 26,988 l 1986 thruugh 1990 3%% to 8%% 246,574 246,574 1991 through 1995 4%% to 5%% 295,160 297 083 J- 199G through 2000 (Note 9) 5%% to 11%% 662,528 667,528 2001 through 2005 7%% to 11%% 1,631,171 1.631,171 2006 through 2010 8%% to 15%% 1,474,500 1.074.500

, Total first mortgage bonds 4,489,158 4.114,081 Other long term debt (Note 8; 890,360 770,192 Unamorlized debt premium (discount), net J33,390) (28.881)

Total long term debt (annual interest requirement-$481,359,000) 5,346,u8 4.855.392 Less amount due within one year (Note 9) 119,277 86.326

~ t.ong term debt excitxhng amount due within one year _5,226,851 4.769.066 58.1 58 1 Totat capitahzahon 59,000,407 $8.205.058 100.0 % 100 0 %

(a) At Decemte 31,1980 a total of 5 638.673 shares was reserved for issuance pursuant to the Dividend Reinvestment and Stock Purchaw Plan cod the Employee Savings Plan. The Southem Company also has authority from the Secunties and Ex-change Cornmission to issue, through October 15,1981, up to $22.858.000 of comtr'n stock through its Employee Stock Ownership Plan The accompanying notes are an integral part of these statements.

27

. FINANCIAL, REVIEW Consolidated Statements of Income )

For the Years Ended December 31,1980,1979, and 1978 The Southern Company and Subsidiary Companies 1980 d 1979 1978 i Operating Revenues (in thousands)

• > $3,763,483 $3. i28.169 $2.906.672 Operating Expenses:

Operation-Fuel .

1,520,875 1.287.516 1,127.127 Purchased and interchanged power, net (9,525)

Other 8.393 112.356 442,498 367.460 340.940 Maintenance 289,796 Depreciation and amortization 245.079 236.085 331,222 304.188 269.012 Taxes ether thanincome1 axes 179,543 171.174 157,127

' Federal and state income Iaxes (Note 6) 326,176 208.263 191.156 Totaloperating expenses _3,080,585 2.592.073 2.433.803 Operating income 682,898 Other income: 536.096 472.869 Allowance for equity funds used during construction 72,640 Other,nel 73.082 79.011 52,553 49.591 31.007 income before interest charges 808,091 658.769 582.887 i interest Charges and Preferred Dividends:

1 Interest on long term debt 431,416 403.250 364.357

] Interest on notes payable Amortization of debt discount, premium and expense, nel 59,738 34.070 5.624 1,841 2.062 2.269

, Other interest expense 18,010 23.016 10.616 Allowance for debt funds used during construction (124,598)

Preferred dividends of subsidiary companies (98.577) (72.430) 77,289 75.821 70.883

Net interest charges and preferred dividends 463,696

' 439,642 381.319 Consolidated Net income $ 344,395 $ 219.127 $ 201,568 f Weighted Average Number of Shares of Common Stock Outstanding (in thousands) 154,392 j Earnings Per Share on the Average Number of 145.038 139.005 J Shares Outstanding .

$2.23 $1.51 $1.45 Cash Dividends Paid Per Share of Common Stock $1.56 $1.54

$1.54 Consolidated Statements of Earnings Retained in the Business For the Years Ended December 31,1980,1979, and 1978

The Southern Company and Subsidlary Companies 1980 1979 1978 Balance at beginning of period (in thousands)

S628,118 $633.917 Conschdated net income $646.345

• 344,395 219.127 201.568 972,513 853.044 847.913 Cash dividends on common stock

($1.56 per share in 1980 and $1.54 per share in 1979 and 1978) 236,900 Capital stock issuance expense 222.504 213.380 880 2.422 616 Babince at end of period (Note 11)

- $734,733 $628.118 $633.917 The accompanying notes are an integral part of these statements.

28

P Consolidated Statements of Sources of Funds for Gross Property Additions For the Years Ended December 31,1980,1979, and 1978 The Southern Company anff Subsidiary Companies 1980 y 1979 1978  !

i (in thousands)

Sources of Funds for Gross Property Additions: l Consolidated net income

$ 344,395 $ 219,127 $ 201,568

, Add (deduct) pnncipal noncash items-Depreciation and amortizahon 403,829 346,899 321,933 Deferred income taxes, nel 196,417 176.515 160,442 Deferred investment Iax credits 58,424 20,556 s 26.100 Allowance for equity funds used during construction (72,6_40) (73.082) (79.011) 930,425 695.559 625.488 Less dividends on common stock 236,900 222.504 213.380 693,525 473.055 412,108 Decrease (increase)in net current assets, excluding notes payable, and long-term debt and preferred stock due within one year-Cash and temporary cash investments . (138,796) 230,635 (28,503)

{ Receivables (206,835) j (66.924) (16,429)

Fossil fuel stock (102,938) 3 Matenats and supplies (56.470) (36.917)

(6,747) (9.128) (7,F8)

! Accounts payable 46,254 j Revenues to be refunded 10,780 88.899 (6.860) 38,193 (23.283)

Taxes accrued 74,052 i Interest a crued 8.081 (19,647)

• • 10,442 6.853 15,260 Other. nel (14,741) 6.296 (5.466)

_ (328,529) 201.382 (84.190)

Other, net (including allowance for equity funds used dunng construction) 9,662 47,298 38.540 Total funds from internal sources 374,658 712.977 375,216 External sources-First mortgage bonds 400,000 J 255.000 435.000 Bonds retired. reacquired or refunded at maturity __(24,923) .(170,725) (30.609) 375,077 84.275 404.391 4

Preferred stock -

60.000 -

" Prelerred stock subject to mandatory redemption 10,000 - -

. Preferred stock reacquired (8,695)

Conynon stock (230) -

227,680 82,824 81,325 Proceeds itom pollution contr01 obligations, net 49,376 Sales of property, net book vaiue 22.057 56,562 387,021 27,935 32.673 increase (decrease)in other long term debt 70,792 41.893 (26,799:

Increase (decrease)in notes payable _(255_,97_7) 133.225 159.063 i Total funds itom external sources 855,274 451.979 707.215 Gross Property Additions (includes al'owance for funds used donog construchon in the amount of $139,366.000 in 1980,

$126,360.000 in 19i9 and $116,738.000 in 1978) $1,229,932 $1,164 956 c $1.082,431 Consolidated Statements of Amount Paid in for Common Stock in Excess of Par Value For the Years Ended December 31,1980,1979, and 1978

~

_The Southern Company and Subsidiary Companies 1980 1979 1978 Balance at beginning of pent (in thousands)

$1,125,823 $1.076.213 $1,021,539 Prownt trnm sales of conimon stock over the par value thereof-19.952.293 shares in 1980, 6.612,714 shares in 1979. and 5.330.135 shares in 1978 127,919 49.610 54.674 Balance at end of penod $1,253,742 $1,076.213

$ 1.125.823 The accompinying notes are an integral part of these statements-29 t

t HNANCIAL REVIEW The Southern Company and Subsidiary Companies Notes to Financial Statements December 31,1980,1979, and 1978

1. Summary of Significant Accounting Policies:

j General. The Southern Company is the parent com-Utility Plant. Utility plant is stated at onginal cost.

Such cost includes applicable administrative and f pany of tour operating companies and a system ser.

'1 general costs; payroll-related costs such as pensions, vice company. The operating companies are engaged taxes, and other fringe benefits; and the estimated cot 9 in the business of providing electtic sitility service in of funds used during construction.

four southeastem states. Operating contracts among the companies - covering interconnection ar- Allowance for Funds Used During Construction.

The allowance for funds used during construction rangements, interchange of electric power, and joint represents the estimated debt and equity costs of ownership of generating facilities - are subject to capital funds which are applicable to utility plant while regulation by the Federal Energy Regulatory Commis-sion (FERC) or the Securities and Exchange Commis- under construction. The composite rates used by the sion (SEC). The system service company provides, at companies during the years 1978 through 1980 rangec from 7.5 percent to 9 0 percent.

cost, technical and other specialized services to The Depreciation and Amortization. Depreciation of Southern Company and to each of the subsidiary operating companies. the original cost of cepreciable utility plant in service if The Southem Company is registered as a holding provided using composite straight-kre rates which ap-proximated 3.7 percent in 1980 and 3.6 percent in bot!

company under the Public Utihty Holding Company Act of 1935, and it and its subsidiaries are subject to the 1979 and 1978. Depreciation includes a factor to pro-regulatory provisions of the Act. The subsidiary vide for expected costs of decommissioning nuclear facilities. The cost of decommissioning, based on operating companies also are subject to, regulation by the FERC and their respective state regulatory commis- decommissioning promptly af ter the unit is taken out of sions an<1 follow generally accepted accounting prin- service, is estimated at approximately $25,000,000 per ciples and the accounting policies and practices unit for Georgia Power's ownership interest in Plant prescribed by the respective commissions Hatch and $30,000,000 per unit at Alabama Power's All material intercompany items have been Plant Farley. These estimates will be adjusted periodically to reflect changing price levels and eliminated in consolidation. Consolidated retained eam- technology. When property subject to depreciation is ings at December 31,1980, include $450,528,000 of undistributed retained eamings of subsidiaries. retired or otherwise dispsed of in the normal course j Revenues. Revenues, including those subject to re-of business, its cost - together with the cost of fund (see Note 2), are included in income as billed removal, less salvage - is charged to the ac-monthly to customers on a cycle basis, except for Gulf cumulated provision for depreciation. The deferred Power, which accrues estimated unbilled revenues at costs of cancelled plants are being amortized over five-year periods.

the end of each fiscal period to conform with the ratemaking treatment of revenues by the F;orida Public Niaintenance. The cost of maintenance, repairs, Service Commission (FPSC). and replacement of minor items of property is charged Fuel Costs. Fuel costs are expensed as the fuel is to maintenance expense accounts. The cost of consumed. The subsidiary companies' electric rates in- replacements of property (exclusive of minor items of crude provisions under which fuel and purchased property)is charged to the utihty plant accounts.

power costs above, or below, base levels are billed, or Pension Costs. The companiu have trusteed and credited, to customers. non-contributory pension plans which cover substantial-The cost of nuclear fuel, including the estimated ly all regular employees The poticy of the companies is cost of anticip3ted permanent storage of spent fuel, is to fund each year's accrued pension cost for the plans amortized to fuel expense based on the quantity of which amounted to $41.018,000 in 1980, $36.241,000 heat produced for the generation of electric energy. in 1970, and $31.485.000 in 1978 Of these amounts.

Such amortization was $48,261,000 in 1980, $26.078.000 in 1980. $23.630.000 in 1979, and

$19,653,000 in 1979, and $31,303,000 in 1978. Final $19,534.000 in 1978 were charged to operating ex-

' disposition of spent nuclear fuel may require ad- penses, and the balance was charged to construction justments to fuel expense. Pending ultimate disposition, and other accounts. The actuarial precent value of ac-sulficient storage capacity for spent fuel is available in- cumulated plan benefits at January 1,1980 totaled

$323,122,000 for vested benefits and $21,128,000 for

' to 1985 at Plant Hatch and into 1991 and 1994 at Plant Farley Unit Nos. I and 2, respectively. Georgia Power nonvested benefits. These amounts were determined is currently expanding the storage facilities at Plant on the basis of accrued benefits as of January 1,1980, Hatch to facilitate storage capacity into 1999. whereas the plan is funded based on the premise that the plan will continue in existence, which requires that future events be considered The net assets available for benefits at January 1,1980. amounted to 30

x. m - ., _ _ - _ . _ _

4 r - -

4

'j-s

$395.355,000. The weighted average rate of'retum $1.7 billion in 1983. These estimates include capitalize

== assumed in determining the actuarial present value of allowance for funds used during construction and ex-

- .j . accumulated plan benefits was five' percent. The un- clude amounts applicable to interests in facilities sold 7 funded prior service cost under the plans and sup- Also, the 1982 and 1983 additions reflect the proposet

~

piemental contracts amounted iu upproximateiy . sale of a portion of Plant Vogtle. (See Note 4.) The coi

' $43,183,000 and $45,957,000 at December 31,1980 struction programs are subject to peiiodic review and and 1979, respectively, and is being amortized over a revision, and actual construction costs incurred may

'perind of approximately 15 years. vary from the above estimates because of factors suc

. Income Taxes. The companies provide deferred in- as granting of timely and adequate rate increases, nes come taxes for allincome hx timing differences to the estimates of increased costs, revised load estimates, r

extent permitted by the appropriate regulatory agen- and the availability and cost of capital. These factors

- cies. See Note 6 for further information regarding in- forced substantial reductions in construction programe come taxes. in recent years, resulting in a combination of

2. Rate Matters:

~

postponements and cancellations of generating units Retail revenues subject to refund included in income and other fac.'ities throughout the system.

in 1980 of $2,054.000 were related to Mississippi Construction of two system generating plants has Power's rate case. These revenues, after deducting ap. been cancelled. Obligations related to equipment plicable taxes, increased consolidated net income by design and engineering and termination of contracts

$1,043,000. applicable to these plants approximated $45,000,000.

~

Upon appeal by the Florida Office of Public Regulatory approval has been received to amortize an

Counsel, the FPSC ordered Gulf Power to refund recover these costs as operating expenses ratably ov(

revenues billed under the rate increase granted in five year periods. This amortization is included in November,1980, due to a change in the effective dau. " Depreciation and amortization" in the Consolidated of the increase. Accordingty, $2,300,000 of revenues Statements of Income and amounted to $9.272,000, has been excluded from income. Gulf Power intends to $8.540,000, and $7,116.000 in 1980,1979, and 1978, e

appeal this decision to the Florida Supreme Court. respectively. Of the above amounts, $2.201.000 in 198 On March 12,1981, under remand orders by the and $1,395,000 in 1979 represented Gulf Power's Supreme Court of Alabama, the Alabama Public Ser- amortization with respect to the cancellation of the

-.a vice Commission (APSC), entered a final order im-Caryville Plant in June,1979. The FPSC had approved piementing a settlement agreement among the APSC, the amortization of these costs but reserved the right Alabama Power, and certain other parties to the 1978 to review the accounting treatment in the context of a

- and 1979 rate case proceedings. As a result, the rate request. I.i its 1980 retait rate order, the FPSC pe revenues from the $208.3 milhon increase granted ir mitted Gulf Power to bih additional revenues for the ef-July,1979, are no longer subject to refund. Additionally, fects of the cancellation of the Caryville Plant, subject an increase of approximately $92.5 million annually to refund, in the event the proposed purchase from was made ellective from July 30,1980, through Georgia Power of an interest in Plant Scherer is not February 28,1981. Refunds of approximately $17 mil. realized or the cancellation of the Caryville Plant is

_. hon will be made from revenues billed subject to refund - not justified to the satisfaction of the FPSC. The agree during such period under the August,1980, order of ment for the purchase of an interest in Plant Scherer the Supreme Court of Alabama. Approximately $12 mil. was signed in February,1981. Consummation of such lion of such refunds is applicable to 1980 and has been purchase is subject to requisite governmental approva excluded from income. The $92.5-million increase was On February 10,1975, a break occurred at lowered to $6] million annually effective March 1,1981. Alabama Power's Bouldin Dam causing extensive Georgia Power has negotiated a settlement agree- damage and resulting in the removal from service of ment with lis wholesale customers. Such agreement is the hydroelectric generating facilities (225,000 subject to fiial approval from the FERC. Georgia Power

_. has included $3,967,000 of revenues, $2,014,000 after kilowatts) at the dam. The costs of reconstruction and repair were estimated to be approximately $42,565,00(

deducting applicable taxes, in income and has exclud-and $22,180,000, respectively. In the ensuing prosecu-

- ed from income $1,569,000 of revenues which are ex-pected to be refunded m 1981. tion of claims and htigation. Alabama Power has settlei with machinery breakdown insurance carriers and all-

3. Construction Program, Financing, and Fuel risk insurers for a total of $33,850,000, and its litigatici Commitments: against the contractors responsible for construction of The subsidiary companies are engaged in a con- the dam is still pending. The facilities at the dam were tinuous construction program presently estimated to retumed to service in late 1980.

total some $1.5 billion in 1981, $1.5 billion in 1982, and a

_ 31

If MSdMML MIEW N ~~

d*

q .

. L Tithe extent possible, the subsidiary companzs' Lconstruction programs are expected to be finareed- completion of agreements satisfactory to the respectr paities, and completion of satisinctory financial ar-from the sale of additional first mortgage bonds and .

rangements by the proposed purchasers. / ' Decem-

- preferred stock to the public; from the sale of pollution '.

ber 31,1980, Georgia Power's percentage ownership S, ' control bonds by public authorities; from the receipt of and investment in these jointly owned facilities were a additional paid-in capital from The Southem Company; _ follows:

from the lease of nuclear materials by Alabama Power; and from_ asset sales in the case of Georgia Power. Gwgia Power m  ;(See Note.4.)

.The amounts of first mortgage bonds, preferred Total Percent Plant in Work in

_ Capacity _ ownership service .Proaress stock, and commnn stock which can be issued in the : (megawarrs) (,n thousands) future will, among other things, be contingent upon Plant Hatch 1.630 50 1 % $479.494 $ 5.13t

' market conditions and maintaining adequate earnings (nuclear) levels. The earnings of Gulf Power are presently insuffi- Plant Vogtle 2,320 50.7 -

453.87 cient to permit the sale of additional first mortgage (nuclear) bonds or preferred stock. Should The Southern Com- Plant Scherer (coa 0 pany and the subsidiary companies be unable to obtain Unit Nos 1 & 2 1.63G 84 739 49.82;:

.l_ funds from extemal sources in amounts which, Common Factitties -

23 5

together with internally generated funds, will be ade-43.59 Plant wansley

]~; . quate to carry out the present construction program, 1.730 53.5 277.510 21 (coal) further delays and possible cancellations would be

, necessary.

Each participant provides for its own construction To supply a portion of _the fuel requirements of their d generating plants, the subsidiary companies have financing. Georgia Power includes its proportionate entered into various long term commitments for the share of plant cperating expenses in the correspondin[

operating expenses in the Statements of income.

procurement of fossil and nuclear fuel. In some cases, Georgia Power is contractually obligated to complete

~

such contracts contain provisions for price escalations,

!' minimum production levels,'and other financial com- those plants still under construction and acts as agent with respect to operating and maintaining the plants.

mitments. Additional commitments for coal and for

in connection with these sales, Georgia Power has nuclear fuel will be required in the future to supply the subsidiary companies' fuel needs. entered into agreements whereby that company is_ re-quired to purchase declining tractions of OPC's and

4. Facility Sales and Joint Ownership Agreements:

J Through December 31,1980 Georgia Power had MEAG's capacity and energy of the respective sold undivided interests in Plants Hatch, Wansley, generating units during a period of up to 10 years i Vogtle, and Scherer in varying amounts, together with following commercial operation - such purchases to y transtnission facilities, to Oglethorpe Power Corporation, be made whether or not any capacity or energy is an electric membership generation and transmission available. The cost of such capacity and energy is a function of each entity's carrying and operating costs corporation (OPC). the Municipal Electric Authority of Georgia, a public corporation and an instrumentality of and is included in purchased and interchanged power 3

the State of Georgia (MEAG); and to the City of Dalton, in the Consolidated Statements of lacome.

i Georgia (Dalton) These sales resulted in gains, after in- Certain Florida utilities have purchased 1,400 f megawatts of capacity extending over the period 1983

" come taxes, of $7,425,000 in 1980, $1,503,000 in 1979, and $375.000 in 1978. In addition to these sales, through 1992. This power will be sold from Georgia Georgia Power has signed a contract to sell a Power's and Gulf Power's ownership of Plant Scherer 25 percent interest ir Plant Scherer Unit Nos. 3 and 4 and Gulf Power's ownership of Plant Daniel or from an-3 other resources which the system may have available.

- to Gull Power and is negotiating to sell approximately

5. Short Term Borrowings:

a 16.5-percent interest in Plant Vogtle to certain Florida utilities. The consummation of any future sees is sub- Interim financing in the form of notes payable to banks and commercial paper is utilized to finance con-ject to ak requisite govemmental approvals and, except struction expenditures.

with respect to such proposed sale to Gulf Power, the Except for daily working funds and like items, substantially all cash of the companies represents com pensating balances - which are ; J legally restricted

- maintained in respect of short term bank borrow-ings, unused revolving credit agreements, and lines of credit.

Unused credit arrangements with banks at the beginning of 1981 totaled $981,190.000. This was subsequently reduced to $831,190.000. of which

.32

$167,000,000 expires ~on September 30,1981, equity funds used during construction. This exclusion.

-$264,190,000 at vanous times during 1981, and was 4.6 percent in 1980,6.8 percent in 1979, and 8.3

$400,000,000 on December 31,- 1983. percent in 1978.

The unused amounts expiring on September 30

'd Deferred investment tax credits are amortized over 1981, and December 31,1983, are portions of revolving the life of the property which gave rise to the credits.

j . credit agreements of Alabama Power and Georgia Such amortization is applied as a credit to reduce

'i: Power, respectively. These agreements require commit- depreciation in the Consolidated Statements of income q ment fees, and the Alabama Power agreement limits and amounted to $8,529,000 in 1980, $7,450,000 in the amount of certain types of additionalindebtedness 1979, and $7,678,000 in 1978. At December 31,1980, which that company may incur. The Alabama Power investment tax credits totaling approximately agreement also requires that a substantial portion cf $237,000,000 - expiring at various times from 1985 t(

the proceeds from sales of properties or securities, 1987 - have not been utilized and are available to q

with certain exceptions, be applied to repayment of reduce federal income taxes payable in future years.

the notes. 7. Cumulative Prefwced Stock Subject to

6. Income Taxes: Mandatory Redemption:

A detail of the federal and state income tax provi- Redemption requirements are live percent of the

sions is set forth below

shares annually, commencing in the fif th year. The 1980 1979 1978 combined aggregate amount of redemption re-l quirements for these series through 1985 amounts to

.; (in thousands)

Total prowsion for income taxes Federal- $7,750,000 per year for the period 1981 through 1984 g and $8.250,000 for 1985. During 1980 and 1979, Q cfer Deferred in pror years 2 thb 1Q $5,020,000 and $230,000, respectively, of the preferrec stocks were reacquired to satisfy the 1980 sinking func (credt) - (36,156) (21.270) (27,718)

Deferred wwestment requirements, and $3,675,000 was reacquired to par-tax crects _58,424 26.100 20.556 tially satisfy the 1981 requirement. The gains on these 312,650 199,069 182,020 reacquisitions of $1,019,000 and $15,000 for the years 1980 and 1979, respectively, are included with Currently payable 21,631 6.966 9.249 premium on preferred stock as shown in the Con-Deferred 19,295 17.235 14.895 solidated Statements of Capitalization.

Detened in pror years g (credt) _(3,851) (1.875) (2,782)

_; J075 22.326 21,362 Total 349,725 221.995 203.382 Less income taies charged to (Aher income 23,549 13.732 12.226 Federal and state income lacs chargul to operakons $326,176 $208.263 $191,156 I

The provision for deferred income taxes results pnmarily from the companies' tax deductions for ac-

_ celerated methods of depreciation and other write-offs i of property costs - as provided for by the income tax laws - being significantly greater than the book depreciation of such costs, income taxes deferred in poor years are crec, led to income wnen the book depreciation of those property costs exceeds the related tax deductions.

The total provision for federal income tax as a per-cent of income before lederalincome tax was 42.6

_ percent in 1980,40.4 percent in 1979, and 40.1 per-cent in 1978, The difference between these rates and the federal statutory rates of 46 percent in 1980 and

_ 1979 and 48 percent in 1978 was due primanly to the exclusion frorn taxable incorne of the allowance for 33

F-MNANCIAIMMIEC

8. Other Long Term Debt:

Details of other long term debt are as follows: Capitalized leases at December 31,1980, were co prised of nuclear fuel ($130,340,000), coal railcars

($20,990,000), buildings ($87,182,000), and transporta 1980 1979 tion and other (515,280,000). Monthly principal OtAgatons incurred in connecton On rnousards) payments are required plus inte.est based on averag.

o p:n tno sale tu putsc authonties . interest rates at December 31,1980, of approximateb

g'*gPjton cmtrol 20.40,9.54,8.19, and 17.35 percents, respectively. Tr principal payments on nuclear fuel leases are based i Conaterahzed-5.95% due 2003 . . .

cost of fuel consumed.

S 41,000 $ 41.000 6% to 8% due 2004 46,030 46,030 Sinking fund requirements and/or serial maturities through 1985 applicable to other long term debt are a

$'[/. t due 2006 ' $,600

!!600 follows- $80,490,000 in 1981, $102,174,000 in 1982, 58% to 6 4% due 2007 . 43,100 43.100 6 375% to 7.1 % due 2008 .

$44,965,000 in 1983, $33,043,000 in 1984, and 96,600 96.600 $15,058,000 in 1985.

Noncollaterabzed-

9. Long Term Debt Due Within One Year:

5 9' Q M 4 " " 8'""Y 3

1s.950 17.050 A summary of sinking fund requirements and 7.4 % to 9125% due eenally 19802004 .

23,700 24,700 scheduled maturities of long-term debt due within one year are as follows:

' 65% of pome rate due 1982 (1398% at 12131/80) 1,500 1,500 8 5% due 1994 17,400 17,400 1980 1979 i

4d 200S 3 3 Bmd sinug W remnements S 55, 7.25% due 2006 10,600 Less- $ A

-- 10.600 72% due 2007 40,000 40 000 on to M sabshed by Wng 7.375% due 2008 48,000 pr peny anons 48.000 47,723 3&&

92% due 2010 4,250 - Racmired bonds Less funds on deposit with trustees 8,194 _ ISD 49,521 95.747 Cash sinking fund remirement 9 i 495,809 43'; Forst mortgage bond matunties 38,778 Capaalized lease obhgatons 18.o.

Notes payable- -

253,792 446'053 142, Other long term debt (Note 8) 80,490 68 2 -

Total $119,277 115% duc 19801982 84,000 125.000 $36.3 8 75% due 19811989 22,000 22.000

' The annual first mortgage bond sinking fund require

$I5, 9 986 '0!

. Floating interest rate ment is one percent of the aggregate amount of the due 19831987 b0nds authenticated prior to January 1 of each year (1025% at 12/31/80) . 20,000 20.000 and may be satisfied by use o, bonds specifically Total $890360 authenticated for such purpose against unfunded prop

' 1 $770.192 erly addllions equal to 166 2/3 percent of such. re-The subsidiary companies have authenticated and quirement il mortgage coverage requirements are met delivered to trustees a hke principal amount of first except for Georgia Power's 11%% series due mortgage bonds as security for obligations under col- August 1,2000, which is subject to a mar'datory cash lateralized installment agreements. The principal and in. sinking fund of $5.000,000 annually, commencing August 1,1981.

" tetest on the first mortgage bonds will be payable only 10. Nuclear insurance:

in the event of default under the installment purchase agreements. Under the Price-Anderson Act, Alabama Power and Geotgia Powet maintain agreements of indemnity with o-the Nuclear Regulatory Commission (NRC) which, to-gether with private insurance, cover third-party liability arising from any nuclear incident occurring at their nuclear power plants. The Act hmits public habikty claims that could arise from a single nuclear incident to $560 million. Each reactor at their nuclear plants is insured against this liabiht tion by private insurance (y to a maximum of $160 the maximum amount presently available), and the remainder is provided by indemnity agreements with the NRC. In the event of a nuclear incident, Alabama Power and Georgia Power t

34

m

m -

1 and each other licensee of a nuclear power plant could 13. Quarterly Financial Data (Unauditedk

-be assessed up to $5,000,000 per incident for each li- Summarized quarterly financial data for 1980 and r censed reactor operated by it, but not more than 1979 are as follows:

$10,000,000 to be paid in a calendar year. On the

,,,n,, , p,,

1' basis of Alabama Power's ownership of one reactor in service and one reactor licensed for service, and opersing comum consoiioeed g,g or snares

. Georgia Power's current ownership interest in two uada ErW Reeses n Outstanding -

. reactors no'w in service, the companies could b7

,l, Q w incone _

assessed a maximum of $10,000,000 and $5,010,000, "1*"3d'M9

, s ggg 'sgg6; s g;;g sgg respectively, for any such incident, but not more 'han

$20,000,000 and $10,020,000, respectively, to be paid g,%30Q - Edd %Q sjy 8%

in any one yeari ,,,,,3,,,;,, ,g,,,, , ,, ,,3 ,3 ,, , ,,,

June 30.1% 819 694 135 858 53 723 0 36 Alabama Power and Georgia Power are members of 98 Ml,",,*,"3 ; ,'38o '@g aggg igg gg Nuclear Mutual Limited, a mutual insurer estabFshed to provide property damage insurance to members' The amounts for the first three quarters of 1980 nuclear generating facilities. In the event of have been restated from those previously reported to

' catastrophic loss payments by the insurer, the reflect a reclassification of bulk power sales made

( members are subject to assessments in proportion to under long term contracts initiated in 1980 and the set-their participation in the mutual insurer. The present tiement of an Alabama Power retail rate matter as ex-maximum assessment for Alabama Power and Georgia plained in Note 2. The effect of the reclassification of

& Power would be approximately $33,000,000 and bulk power sales was to increase operating revenues

$17,000,000, respectively.

.J, .

. Alabama Power and Georgia Power also are for the first three quarters by $11,896,000,

$17,482,000, and $41,672,000, respectively, with a cor-members of Nuclear Electric insurance Limited, a responding increase in purchaseo and interchanged mutual insurer which provides insurance to cover power. The effect of the rate settlement on the third members' extra costs of replacement power resulting quarter was to reduce operating revenues by from a prolonged accidental outage of nuclear units. $4,453.000, operating income and consolidated net in-Members are insured against such increased costs in

] '

the amount of m 't $2,000,000 per week (starting 26 come by $2.237,000, and eamings pei share by 50.02.

~

weeks after the outage) for one year and $1,000,000 d per week for the second year, Members are subject to retroactive assessments of up to five times their respective' premiums if losses exceed the accumulated funds available to the insurer. The present maximum assessment for Alabama Power and Georgia Power would be approximately $8,000,000 and $13,000,000, respectively.

L

' 11. Common Stock Dividend Restrictions:

The incoma of The Southem Company is derived mainly from equity in earnings of its operating affiliates.

. At December 31,1980, $179,596.000 of consolidated retained camings was restricted against the payment by the operating affiliates of cash dividends on com-mon stock under terms of bond indentures or charters.

! 12. Assets Subject to Lien:

1 The enmpanies' mortgages, as amended and sup-plemented, securing the first mortgage bonds issued by the companies, constitute a direct first lien on substan-tially all of the companies' fixed property and franchises.

l a l

35

14N4MXITIMikW

,l '

14. Supplementary information Concoming the first adjusted to average 1980. constant dollar amoun Effects of Changing Prices (Unaudited): by year of addition.

' The following supplementary information conceming the effects of changing prices is presented in accor- increases in the cost of electric generating fuel ar dance with the general concepts set forth in Financial recoverable in revenues through operaticn of fuel ce i Accounting Standards Board Slatement No 33, as recovery mechanisms. Such increases effectively an receivables from customers. Therefore, such increas modified to reflect the economic effects imposed on m the Southem electric system by regulatory authorities. are not included in income but instead are treated a:

It should be viewed as an estimate of the approximate monetary assets. Incorae tax expense was not adjus effects of inflation, rather than a precise measure. because only historical costs are deductible for incoi tax purposes.

Constant dollar amounts represent historical cost stated in temis of dollars of equal purchasing power, Holding assets such as receivables, prepayments.

as measured by the Consumer Price Index for All and inventory results in a loss of purchasing power e ing penods of inflation because the amount of casri Urban Consumers. Current cost amounts retlect the received in the future for these items will purchase changes in specific prices of plant from the date the p int was acquired to the present. They dilfer from less Conversely, holding monetary 9 abilities, primarils constant dollar amounts to the extent that specific lono term debt, results in a gain because the paymer prices have increased more or less rapidly than the in the future will be made with nominal dollars having less purchasing power. The Southem electric system general rate of inflation. The current cost of plant was

- determined by indexing each major class of plant using has a net gain due to the significant amounts of long term debt outstanding.

the Handy Whitman Index of Public Utility Construction Costs. Current cost does not necessarily represent the Under the ratemaking prescribed by the regulatory

• renlacement cost of existing pronctive capacity commissions to which the subsidiaries of The Southe b2cause the utility plant is not expected to be replaced Company are subjec*, only the historical cost of plant

' recoverable in revenues as depreciation and plant in precisely in kind.

The accumulated provision for depreciation for cur- rate base L' limited to original cost. Therefore, the co-rent cosi was developed by applying, for each major of plant stated in terms of constant dollars or current class of plant, the same percentage relationship that cost that varies from the historical cost of plant is no:

existed between gross plant and accumulated provision presently recoverable in rates as depreciation. The i

for depreciation on a historical basis to the adjusted amount of this variance that accrued as a result of in plant data. Depreciation expense for both methods was fiation in the current year is reflected as an adjustme s

determined by applying the current depreciation rates to net recoverable cost. While the use of debt financt

, to the respective indexed plant amounts reduced by reduced the effect of this loss on common stock-holders, camings were not adequate to offset the ero the amort 2ation of investment tax credits which were sion in the purchasing power of their investment.

Statement of income Adjusted for Changing Prices For the Year Ended December 31,1980 pn thousands of average 1980 do//ars)

Constant Current I Dollar Cost Income Applicable to Common Stockholders, as Reported d Erosion of Common Stockholders' Equity Because of Changing Prices:

$ 344.395 $ 344.395 Cost in excess of the original cost of productive facilities not recoverable in rates as depreciation-

_ Reportable as an additional provision for depreciation Reportable as a reduct on to net recoverable cost 310.021 383,542 693.571 303.557 1.003.592 687,099 Excess of the generat level of prices ($2,009,519) in the current year over increase in specihc price changes ($1.693.026)*

Otisethng elfect of debt hoancing 316.493 (715.249) (715.242)

~ Net erosion of common stockholders' equity .  ;

_ 288.350 288,350 )

Income (Loss) Applicable to Common Stockholders, as Adjusted" '

(including the ellect of debt hnancing) -

O $ 56.045 $ 56,045

• At Decemtwr 31,1980. current cost of property, plant and equipment, net of accumulated depreciation, was

$N tehon, and historical cost or net cost recoverable through depreciahon was $10 bilhon.

" Adjusted income (loss) apphcable to common stockheiders would be 434 mi! hon on a constant dollar basis and

($39 from the milhon)on a current reported amount cost of such basis if only the amount reportable as an additional provision for deprec income.

36

,' l 1

Five Year Comparison of Selected Supplementary Financial Data Adjusted For Effects of Changing Prices *

(Jollar amounts in thousands)

'w 1980 1979 1978

)' i Operating Revenues:

Histoncal cost 1977 1976

' $3,763,483 $3,128.169 $2,906,672 $2 652,085 $2.'. 99,531 As adjusted 3,763,483 3.566.113 3,662,407 3,606.836 3,189.320 income (Loss) Applicable to Common Stockholders:

. Histoncal cost $344,395 $219,127 As adjusteG for the net crosion of common stockholders' equity ,

56,045 (85,953)

Income (Loss) Per Common Ohne:

Histoncal cost $2.23 $1.51 As adjusted for the nel Grosion of common stockholders

• equity 0.36 (0.59) l Common Stockholders' investment t (Net Assets), at year end:

Histoncal cost $2,834,736 $2.499,422 $2,422,182 $2 360,711 $2,067,412 As adjusted 2,721,347 2.674,382 2.955,062 ,139,746 2,935,725 Excess of the General Level of Prices Over increase in Specific Price Changes $316,49?. $709,439 Etlect of Debt Financing . $715,242 $839,444 7 Return on Average Common Equity-

,, Histoncal 12.91 % 8.90 %

As adjusted for the net erosion of common g stockholders' equity 2.10 % (3.49)%

Cath Dividends Declared Per Common Share:

Historical cost $1.56 $1.54 $1.54 As adjusted $1.48 $1.415 1.56 1.76 1.94 2.01 2.05 Market Price Per Common Share:

" Historical $12.25 $11.50 $13 38 As Adjusted $17.75 $16 38 11.76 12.31 16.32 23 61 23 25 Average Consumer Price Index 246.8 217 4 195.4 3 181.5 170 5

• Adjusted amounts represent average 1980 dollars.

I i

i M

e k

37

n -

~ ~ ~ ~

1

/.iJ1MTORS' REPOKr~

q To the Board of Directors and to the Stockholders of The Southern Company:

We have examined the consolidated bclance sheets ,

and consolidated statements of capitalization of The J Southem Company (a Delaware corporation) and sub-N; sidiary companies as or December 31,1980 and 1979, and the related statements of income, earnings re-

, tained in the business, amount paid in for common stock in excess of par value and sources of funds for gross property additions for each of the three years in the period ended December 31,1980. Our examina-tions were rnade in accordance with generally ac-cepted auditing standards and, accordingly, included such tests of the accountir.g records and such other auditing procedures as we con sidered necessary in the circumstances.

' In our report dated February 15,1980, our opinion on the 1979 financial statements was qualified as being subject to the effect, if any, of the final outcome of pro-ceedings under which one subsidiary had billed revenues subject to refund and another subsidiary had requested approval of appropriate regulatory authoritics a to recover the planning and design costs associated with a generating plant which was cancelled As ex-plainx' in Notes 2 and 3 to the financial statements,

, the revenues are no longer subject to refund and ap-proval to recover the costs associated with the can-

} celled plant was obtained. Accordingly, our present

! opinion on the 1979 financial statements, as presented t

herein, is difforent from tha; expressed in our previous report.

. In our opinion, the financial statements referred to

' above present fairly the financial position of The Southern Company and subsidiary compar5ies as of

" December 31,1980 and 1979, and the results of their operations and the sources of funds for gross property additions for the periods stated, in conformity with

, generally accepted accounting principles applied on a

consistent basis.

I Atlanta, Georgia, March 12,1981.

M 38

~

~

l SOUTilERN CCNinNY' SERVICE 3'INC.

Officers Directors l Alvin W. Vogtle, Jr. Robert C. Ford Curence B. Grund, Jr. Edward L Addison Chairman of the Board Vice President Assistant Vice President j Age E2,40 years of service Age 44; 15 years of service Age 55; 28 years of service Pensacola Age 50; elected 1977 d William B. Reed S. R. Hart, Jr. W. Dean Hudson V. J. Daniel, Jr.

} President Vice President Assstant Vice President Gulfport Age 52.11 years of service Age 53. 31 years of service Age 33. 8 years of service Age 64; elected 1973 Bill M. Guthrie James C. Ludwig E. Ray Perry Joseph M. Farley Erecutive Vice President Vice President Assistant Comptroller and Birmingham Age 47,29 years of service Age 44; 22 years of service Assistant Secretary Age 53; elected 1970 i

Age 55. 30 years of service 4 Douglas L McCrary William A. Maner, lll William B Reed

! Execuhve Vice President Vice President Malcolm D. Sanders Birmingham l

i Age 51,27 years of service Age 41; 15 years of service Assistant Comptroller Age 52, elected 1972 I ,

Age 46,21 years of service i 8

George B. Campbell William O. Reece Robert W. Scherer l Financial Vice President Vice President and Nell H. Justice Atlanta t Age 58. 41 years of service Comptroiler Assistant Secretary Age 55; elected 1978 '

Age 51; 16 years of service Age 53,27 years of service i Robert F. Ellis, Jr. Alvin W. Vogtle, Jr. ,

1 Senior Vice President Ruble A. Thomas Houston L Welch, Jr. Allanta j Age 58; 35 years of service Vice President Age 59. 32 years of service Assistant Secretary Age 45. 20 years of service Age 62; elected 1966 l

' William B. Harrison Senior Vice President Robert O. Usry Lee C. Williams Age 58.11 years of service Vice Prestdent Assistant Secretary Age 52,34 years of service Age 64; 24 years of service Thomas A. Nunnelly Senior Vice President E. L Wi!F.'mson Orreond W. Frazier Age 48 22 years of service Vice President Assistant Treasurer

! Age 56; 31 years of service Age 50,18 years of service 4 Richard E. Conway

--* V:ce President Tommy Chisholm Age 42. 24 years of service Secretary

! s Age 39; 16 years of service William A. Dunlap

' Vice President Therrell Murphy, Jr.

4

~

Age 47,21 years of service Treasurer and Assistant l

-l Comptroller '

Age 38.11 years of service 4

SYSTEM CIIIEF EXECUTIVES I

~

4 4 5$N  : E _.O k g.g

• w -

r t

Alvin W. Vogtle, Jr. Edward L Addison V. J. Daniel, Jr.

e. r - n..,

Joseph M. Farley William 8. Reed Robert W. scherer c .w,.u,n u v cm,o r #i m .&.i e., m

!% .,d MM0k 4/'%iM$ N Nh40I4f bb kh 'O 4.N y . h.IIM .MN @ (n.f ly y i h 4 'y I' ) J. WW% M b N#45 .%f 4 Uh 9

_ _ . 39

P] '111E SalillERN CUMIfNY o ore Alvin W. Vogtle, Jr. Joseph M. Farley Robert H. Radcliff, Jr.*

Presdent W. C. Vereen, Jr.

Prasident Chairman of the Board

, Age 62; 40 years of service Alabama Power Company Chairman of the Board s Radchff Marine Services, Inc. Rrverside Manufacturing Birmingham, Alabama Fairhope, Alabama George B. Campbell Company Age 53. elected 1970 Age 63, elected 1966 l Financial Vice President (Business uniforms)

Age 58,41 years of service Moultrie, Georgia

. John W. Langdale Crawford Rainwater ^9' '

• William B. Reed Presider t Chairman of the Board The Langdale Company Alvin W. Vogtle, Jr.

Vice President (Engineering)

(Forest products Hygeia CcAla Botthn9 President Age 52; 11 years of service Company manufacturing) Pensacola, Florida The Southem Company Tommy Chisholm V Id sta, Gmrgia Age 64; elected 1975 Atlanta, Georgia Secretary and Assistant Age 63, elected 1977 Age 62; elected 1962 T

William B. Reed Age [16 years of sene William W. McTyeire, Jr. President President Advisory Director McTyeire Enterprises, Inc. Southern Company Services, Inc.

Therrell Murphy, Jr. Birmingham, Alabama Treasurer (Holding company for real Age 52; elected 1977 Edwin I. Hatch Age 38,11 years of service estate and other interests) Former Chairman of the Birmingham, Alabama Board Nas ri. Justice Age 67; eleted 1972 a - "h "' Georgia Power Company d

Assistant Secretary ,d nt Atlania, Georgia Age 53,27 years of service William S. Morris 111 Protective Life insurance Age 67, elected 1965 Chairman of the Board, Company Named Advisory Director Publisher Birmingham, Alabama Directors Morris Communications Age 51; elected 1971 Corporation , Member of 1981 Auct i (Newspaper publishers, commniee Edward L Addison Frank P. Samford, Jr.

I President ponting, computer services) Chairman of the Board i Gulf Power Company Augusta, Georgia Liberty Naticaal Lite Age E el&ted 1971 Auditors Pensacola. Florida Insurance Company Age 50, elected 1978 Bamingh m. Alabama Wi" lam A. Parker, Jr. Age 60, elected 1972 Arthur Andersen & Co.

25 Park Place, NE s V. J. Daniel, Jr Chairman of the Board Cherokee Investment Atlanta, Georgia 30303 Chairman of the' Board Robert W. Scherer i Company, Inc.

Mississippi Power Company President Transfer Agent, Dividen Gunport, Mississop (Pnvate investments) Georgia Power Company Age 64; elected 1973 Atlanta, Georgia Paying Agent, Dividend Atlanta, Georgia Reinvestment Agent, ar.

Age 53, elected 1973 Age 55; elected 1977 Registrar 3 A. F. Dantzler H. G. Pattillo*

i President Herbert Stockham* The First National Bank Chauman of the Board Chanman, President Dantzler Boat & Barge Pattillo Construction Atlanta Company Stockham Valves & Corporate Trust Departme:

j Company, Inc. Fittings, Inc.

Pascagoula, Mississippi Decatur, Georgia P.O. Box 3260 Age 65, elected ?972 Bumingham. Alabama Atlanta, Georgia 30302 Age 54, e:ected 1972 Age 52, elected 1978 (404) 588 6676 m

-M 4

40 e.*e.m*Ne

j Tile SOUlllERN EI ECI' Rid SYSTEif-The Southern electric system System Companies:

cperates 229 generating units with a total capacity of Alabama Power Company Southem Company Services, Inc.

a 23.223.000 kilowatts. An addi- 600 N.18th Street P.O. Box 720071 M tional seven million kilowatts of Birmingham, Alabama 35291 Atlanta, Georgia 30346 4 capacity are under construction. (205) 250-1000 (404) 393-0650 a These facilities are intercon-nected by some 27,000 miles of Georgia Power Company P.O. Box 2625 transmission lines across a ser- 333 Piedmont Avenue, N.E. Birmingham, Alabama 35202 vice area which spans part of Atlanta, Georgia 30308 (205) 870-6011 four states: Alabama, Georgia, (404) 526-6526 the panhandle of Florida, and One Wall Street southeastern Mississippi. In addi- Gulf Power Company New York, New York 10005 tion to a varied agricultural 75 N. Pace Boulevard (212) 269-8842 economy, this region has a grow- Pensacola, Florida 32505 ing industrial base which includes (904) 434 8111 the manufacturing of textile prod-ucts, primary metals, chemicals, Mississippi Power Company and paper. Approximately 9% mil- 2992 West Beach lion people live in the Southern Gulfport, Mississippi 39501 j electric system's service area. (S01)864-1211 L.o.aa f

. - .<,, c _ a,,,, nam g '

• Emma- '

, - < - , , ~ ~ . , ~

m Nuclear-F eled Steae ooc,re cenerat,ry nan , 4 4 .'OM\ $ y the Power Co 7

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