8-KOther Events

SOUTHERN CO 8-K Report, Corporate Update (Oct 8, 2008)

Filed October 8, 2008For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Company, through its subsidiary Alabama Power, announced significant decisions from the Alabama Public Service Commission (APSC) on October 7, 2008. The APSC approved an increase in Alabama Power's Rate Energy Cost Recovery (ECR) factor, which will be adjusted over two periods. While this change is not expected to materially impact revenues or net income, it is projected to enhance annual cash flow. Furthermore, a corrective rate package is set to be implemented in January 2009, aiming to generate an additional $168 million in annual revenues. This is anticipated to eliminate the need for a rate adjustment under the Rate Stabilization and Equalization Plan (Rate RSE) in 2009, with Alabama Power agreeing to a moratorium on RSE increases for that year. Additionally, the company will defer collection of certain environmental cost recovery rate increases during 2009.

Key Highlights

  • 1Alabama Public Service Commission (APSC) approved an increase in Alabama Power's Rate Energy Cost Recovery (ECR) factor to 3.983 cents per KWH for billings starting October 9, 2008, for a 24-month period.
  • 2A subsequent increase in the Rate ECR factor to 5.910 cents per KWH is scheduled thereafter, subject to APSC orders.
  • 3The ECR factor increase is not expected to significantly impact revenues or net income but will boost annual cash flow.
  • 4APSC approved a corrective rate package for January 2009 expected to generate $168 million in additional annual revenues.
  • 5These additional revenues are anticipated to prevent the need for a Rate Stabilization and Equalization (RSE) plan adjustment in 2009.
  • 6Alabama Power has agreed to a moratorium on any RSE rate increases in 2009.
  • 7Collection of rate increases related to environmental laws and regulations under the Rate Certificated New Plant will be deferred during 2009.

Frequently Asked Questions

The approved increase in Alabama Power's Rate Energy Cost Recovery (ECR) factor is not expected to have a significant effect on revenues or net income. However, it is projected to increase annual cash flow, which can be beneficial for the company's liquidity and operational flexibility.

The corrective rate package approved by the APSC, effective in January 2009, is expected to generate approximately $168 million in additional annual revenues for Alabama Power.

The moratorium on RSE rate increases for 2009 means that Alabama Power will not seek to increase customer rates under this plan for the upcoming year. This is a direct result of the anticipated additional revenues from the January 2009 corrective rate package, which is expected to offset the need for such an adjustment.

Yes, Alabama Power will be able to recover costs associated with environmental laws and regulations under the Rate Certificated New Plant. However, the collection of any rate increases for these costs will be deferred during 2009, with the company having agreed to this deferral.