Southern Company Fixed Income Handout. March 11, 2016

Transcription

1 Southern Company Fixed Income Handout March 11, 2016

2 Cautionary Note Regarding Forward-Looking Statements Certain information contained in this presentation is forward looking information based on current expectations and plans that involve risks and uncertainties. Forward looking information includes, among other things, statements concerning projected costs and schedules for the completion and start-up of ongoing construction projects, expected rate impacts, expected credit metrics, expected regulatory approval timing for the acquisition of AGL Resources Inc., and projected financing plans. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward looking information that has been provided. The reader is cautioned not to put undue reliance on this forward looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company s Annual Report on Form 10 K for the year ended December 31, 2015, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward looking information: the impact of recent and future federal and state regulatory changes, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, environmental laws regulating emissions, discharges and disposal to air, water and land, and also changes in tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries, including, without limitation, Internal Revenue Service and state tax audits; the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company's subsidiaries operate; variations in demand for electricity, including those relating to weather, the general economy and recovery from the last recession, population and business growth (and declines), the effects of energy conservation and efficiency measures, including from the development and deployment of alternative energy sources such as self-generation and distributed generation technologies, and any potential economic impacts resulting from federal fiscal decisions; available sources and costs of fuels; effects of inflation; the ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of generating facilities with designs that have not been finalized or previously constructed, including changes in labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction, operating, or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities (including major equipment failure and system integration), and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by any Public Service Commission ( PSC )); the ability to construct facilities in accordance with the requirements of permits and licenses, to satisfy any environmental performance standards and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; investment performance of Southern Company's employee and retiree benefit plans and the Southern Company system's nuclear decommissioning trust funds; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; legal proceedings and regulatory approvals and actions related to Plant Vogtle Units 3 and 4, including Georgia PSC approvals and Nuclear Regulatory Commission actions and related legal proceedings involving the commercial parties; actions related to cost recovery for the integrated coal gasification combined cycle facility under construction in Kemper County, Mississippi ( Kemper IGCC ), including the ultimate impact of the 2015 decision of the Mississippi Supreme Court, the Mississippi PSC's December 2015 rate order, and related legal or regulatory proceedings, Mississippi PSC review of the prudence of Kemper IGCC costs and approval of further permanent rate recovery plans, actions relating to proposed securitization, satisfaction of requirements to utilize grants, and the ultimate impact of the termination of the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association; the ability to successfully operate the electric utilities' generating, transmission, and distribution facilities and the successful performance of necessary corporate functions; the inherent risks involved in operating and constructing nuclear generating facilities, including environmental, health, regulatory, natural disaster, terrorism, and financial risks; the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; the expected timing, likelihood, and benefits of completion of the proposed acquisition of AGL Resources, including the failure to receive, on a timely basis or otherwise, the required approvals by government or regulatory agencies (including the terms of such approvals), the possibility that long-term financing for the acquisition may not be put in place prior to the closing, the risk that a condition to closing of the acquisition or funding of the bridge financing may not be satisfied, the possibility that the anticipated benefits from the acquisition cannot be fully realized or may take longer to realize than expected, the possibility that costs related to the integration of Southern Company and AGL Resources will be greater than expected, the credit ratings of the combined company or its subsidiaries may be different from what the parties expect, the ability to retain and hire key personnel and maintain relationships with customers, suppliers, or other business partners, the diversion of management time on acquisition-related issues, and the impact of legislative, regulatory, and competitive changes; the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required; the ability to obtain new short- and long-term contracts with wholesale customers; the direct or indirect effect on the Southern Company system's business resulting from cyber intrusion or terrorist incidents and the threat of terrorist incidents; interest rate fluctuations and financial market conditions and the results of financing efforts; changes in Southern Company's and any of its subsidiaries' credit ratings, including impacts on interest rates, access to capital markets, and collateral requirements; the impacts of any sovereign financial issues, including impacts on interest rates, access to capital markets, impacts on currency exchange rates, counterparty performance, and the economy in general, as well as potential impacts on the benefits of the U.S. Department of Energy loan guarantees; the ability of Southern Company's subsidiaries to obtain additional generating capacity (or sell excess generating capacity) at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes and other storms, droughts, pandemic health events such as influenzas, or other similar occurrences; the direct or indirect effects on the Southern Company system's business resulting from incidents affecting the U.S. electric grid or operation of generating resources; and the effect of accounting pronouncements issued periodically by standard-setting bodies. Southern Company expressly disclaims any obligation to update any forward looking information. 2

3 Fixed Income Investor Relations Contact Info Dan Tucker Senior Vice President & Treasurer Todd Perkins Assistant Treasurer Steven Nichols Capital Markets Manager Main website: IR website: CSR website:

4 Environmental Reports Carbon Disclosure Report This update for 2015 details actions the Southern Company system is taking on greenhouse gas emissions and incorporates information the company previously submitted to the Carbon Disclosure Project. Water Action Report A report on how the Southern Company system manages water resources in the production of electricity. Updated for Coal Combustion Byproducts A report on the system's production and safe management of coal combustion byproducts. New Update. Renewables and Distributed Generation Southern Company believes that to best meet customers needs, the full portfolio of America s energy resources is required. 4

5 Southern Company Corporate Structure Southern Company is the holding company for four retail regulated utilities and one wholesale power generator serving approximately 4.5 million customers through its subsidiaries Southern Company Baa1/BBB+/A (N/N/N*) 2015 Revenues: $17.5B Total Assets: $78.3B Customers: 4.5 million Alabama Power A1/A-/A+ (S/N/S) Georgia Power A3/A-/A+ (S/N/S) Gulf Power A2/A-/A (S/N/S) Mississippi Power Baa3/BBB+/A- (N/N/N) Southern Power Baa1/BBB+/BBB+ (S/N/S) 2015 Revenues: $5.8B Total Assets: $21.7B Customers: 1.5 million 2015 Revenues: $8.3B Total Assets: $32.9B Customers: 2.5 million 2015 Revenues: $1.5B Total Assets: $4.9B Customers: 450K 2015 Revenues: $1.1B Total Assets: $7.8B Customers: 190K 2015 Revenues: $1.4B Total Assets: $8.9B Customers: ~40 Note: Ratings are Senior Unsecured (Moody s/s&p/fitch). A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. The graphic above represents a simplified diagram highlighting major SO issuing entities. S Stable outlook, N Negative Outlook, N* - Negative Watch Assets and customer information as of December 31,

6 Southern Company A Solid Foundation ~90% of earnings from our regulated subsidiaries Forward-looking, constructive regulatory frameworks Diverse, growing Southeast economy and customer base Constructive Regulation Customers High Reliability Low Prices High Customer Satisfaction Healthy Capital Investments 4 Simple Rules Keep the lights on Make it affordable Give great service Be a positive force Southern Power Assets Note: Acquisition of Grant Wind Facility subject to completion. 6

7 Southern Company in an International Context Southern Company is one of the largest electric utilities in the world E.ON Electricite de France Exelon Enel Dominion Resources Southern Company National Grid NextEra Duke Energy Ticker EOANGR EDF EXC ENELIM D SO NGGLN NEE DUK Headquarters Unsecured Credit Ratings 1 Düsseldorf, Germany Baa1/BBB+ (N*/N*) Paris, France A1/A+ (N*/N*) Chicago, IL Baa2/BBB- (S/S) Rome, Italy Baa2/BBB (S/S) Richmond, VA Baa2/BBB (S/S) Atlanta, GA Baa1/BBB+ (N/N) Warwick, UK Baa1/BBB+ (S/S) Juno Beach, FL Baa1/BBB+ (S/S) Charlotte, NC Baa1/BBB+ (N/N) Customers Served (mm) Market Cap (bn) 3 $18.8 $21.4 $31.3 $37.9 $42.5 $44.3 $50.4 $52.7 $53.0 LT Debt (bn) 3,4 $16.4 $59.6 $24.3 $53.5 $23.6 $24.7 $32.7 $26.7 $ Ratings are Senior Unsecured (Moody s/s&p). A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. S Stable outlook, N Negative Outlook, N* - Negative Watch. 2 Source: Company websites, Investor Presentation, Company Reports accessed on 3/7/ Assumes 1.10 EUR/USD and 1.43 GBP/USD. Market Cap as of 3/7/ Source: Most recent annual filing: Company 10-K, Company websites, or Company Reports as of 3/9/2016; Does not include current portion of LTD or Securities due within one year. 7

8 Southern Company Regulation Overview Regulatory Oversight Federal Energy Regulatory Commission (FERC) Interstate electricity sales Wholesale electric rates Natural gas pricing Interstate pipeline rates Federal Regulation Environmental Protection Agency (EPA) Emission standards for all electric utilities regarding Air Solid Waste Water State Regulation State Public Service Commissions (PSCs) Retail generation capacity mix Customer rates Recovery of operating costs Return of and return on invested capital, including ROE SO Operating Company and State Regulatory Ratings Moody s Ratings 1 RRA 2 Legislative & Judicial Underpinnings of Regulatory Framework Southern Company Alabama Power Georgia Power Gulf Power Mississippi Power A A A A A Consistency & Predictability of Regulation Aa Aa Aa Aa Ba Timeliness of Recovery of Operating & Capital Costs A Aa Aa Aa Baa Sufficiency of Rates and Returns Baa A Baa Baa Ba Ranking of Supportiveness of State PSC (out of 7 Tiers) - Tier 1 Tier 2 Tier 2 Tier 2 1 Per Moody s. A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. 2 Per Regulatory Research Associates. Rankings are of the state jurisdiction, not operating company relationship. Only 3 states are ranked Tier 1 and 5 states are ranked Tier 2. 8

9 Generation Overview

10 Committed to All of the Above SO has committed $20 billion to developing a full portfolio of low- and zero-carbon emission generating resources Plant McDonough-Atkinson 2,520 MW Natural Gas CC Among the most efficient in the nation Utility Scale Solar at Southern Power and solar initiatives at our traditional operating companies Wind Generation Facilities at Southern Power and Multiple Wind Energy PPAs Vogtle Units 3 & 4 ~1,020MW Ownership AP1000 technology Kemper County Integrated Gasification Combined Cycle (IGCC) ~582 MW Ownership Proprietary TRIG technology 10

11 A Diverse Generation Fleet Benefits our Customers Resources (GWs of Capacity) 33 GW 50 GW 52 GW What We ve Used (GWHs of Energy) 11% 9% 8% 8% 13% 18% 13% Nuclear 9% Hydro/Renew 6% Converted Gas 16% 16% 18% 2% 3% 4% Nuclear 6% Hydro/Renew 2% 56% 30% 16% CTs 27% CCs Total Gas 2015: 48% 2020: 49% 78% 47% 55% Gas 10% 29% 1% IGCC 20% Non-PRB Coal 7% 7% PRB Coal Total Coal 2015: 36% 2020: 27% 33% 2% IGCC 19% Coal E E 2020E energy usage is illustrative based on assumed natural gas prices of $2.00/mmBtu. This assumption does not necessarily represent actual forecasts of future system fuel mix or natural gas prices. 11

12 Renewables Southern Power owns over 1,900 MW 1 of solar generating capacity at 23 facilities in 6 states Our 4 retail operating companies combined own over 300 MW of solar projects in collaboration with the U.S. military By the end of 2016, Georgia Power expects more than 1,000 MW of owned or contracted solar capacity on its network Georgia Power named Solar Electric Power Association's 2014 Investor-owned utility of the year Alabama Power, Georgia Power and Gulf Power combined have over 800 MW of PPAs from wind farms in Oklahoma and Kansas Southern Power owns 450 MW 1 of wind facilities in Oklahoma Southern Company subsidiaries have issued an aggregate $1.325 billion of Green Bonds to fund a portion of their renewables expansion 1 Includes facilities under construction and acquisitions subject to closing. 12

13 Vogtle 3&4 - New Nuclear Construction Approved by Georgia Public Service Commission in 2009; Received Combined Construction and Operating License (COL) from Nuclear Regulatory Commission (NRC) in February 2012 Westinghouse AP1000 Technology, each unit is approximately 1,100 MW Georgia Power is a 45.7% owner (Oglethorpe, 30%; MEAG, 22.7%; and Dalton Utilities, 1.6%) Department of Energy (DOE) Loan Guarantee finalized February 2014, drawn $2.2 billion of $3.5 billion total available Financing costs (debt and equity) recovered during construction through Nuclear Cost Construction Recovery (NCCR) tariff (a.k.a. CWIP in Rates); NCCR is forward looking and automatically adjusts annually Projected customer rate impact of only 6-8%, mostly included in current rates (~5%) Projected in-service dates of Q (Unit 3) and Q (Unit 4) 13

14 Vogtle 3&4 Update Key Risk Mitigations Priorities are safety and quality 100% fixed/firm Engineering, Procurement and Construction (EPC) contract 1 Significant front-end engineering during NRC design certification Pressurized Water Reactor (PWR) is fundamentally not new technology (safety features of AP1000 are new) Significant oversight (Southern Nuclear Company, NRC, Georgia PSC, co-owners) Statutory recovery of prudently incurred costs Cooling Towers Unit 3 Unit 4 Heavy Lift Derrick Nuclear Island Unit 3 Modular Assembly Building Unit 4 Turbine Island Nuclear Island Annex Building Turbine Island 1 Subject to certain adjustments including change orders. 14

15 Vogtle 3&4 - Capital Cost ($ in millions) Certified Cost Current Cost Forecast Variance EPC Base $3,116 $3,121 $4 EPC Escalation (99) Quality Assurance, Compliance and Operations, and EPC Scope Change remaining 477 1,489 1,012 Other Total Capital Costs $4,418 $5,440 $1,022 Cost increases since certification driven by change in project schedule, owner s quality and compliance costs, and settlement of litigation with Westinghouse In Jan 2016, Georgia Power filed the settlement with the Georgia PSC requesting approval The commission has opted to review prudence of all costs incurred to date, as well as the current schedule and total cost forecast rather than only the settlement 15

16 Kemper County IGCC First of a kind technology developed by SO and Kellogg Brown & Root (KBR) Designed to produce a carbon footprint equivalent to a combined cycle natural gas unit 65% CO 2 capture for enhanced oil recovery (EOR) Affordable, abundant, low-rank coal resource Mine mouth lignite coal 16

17 TRIG TM Design Attributes / Advantages Presalter Cyclone syngas Standpipe Cyclone Simple design Air-blown High Reliability Design Riser Cost-effective using high moisture, high-ash, low rank coals (PRB and lignite) Mixing Zone Startup Burner coal ash Seal Leg air/o2 steam J-leg syngas Standpipe Excellent Environmental Performance Lower water use compared to pulverized coal (PC) Excellent emissions performance Easier to permit compared to PC Lower cost carbon capture compared to PC 17

18 Pending Acquisition of AGL Resources

19 Transaction Overview Southern Company to acquire AGL Resources for $66 per share in cash AGL Resources to become the 3 rd largest subsidiary of Southern Company Expect to issue debt and equity to fund the approximately $8 billion cash consideration Anticipated closing second half of 2016, subject to regulatory approvals 19

20 ~70% of earnings from regulated operations, growing to ~80% AGL Resources Overview Largest U.S. gas-only local distribution company (LDC), serving approximately 4.5 million customers in 7 states Established and growing midstream operations Retail marketer of natural gas and related services for over 1 million customers 20

21 AGL Resources Value Drivers 95% of projected capital investments are for regulated utilities and pipelines Minimal regulatory lag for LDC investments Long-term contracts for pipeline investments Constructive regulatory jurisdictions Solid balance sheet and cash flow (Baa1/BBB+) 1 1 Ratings are Senior Unsecured (Moody s/s&p). A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. 21

22 Strategic Rationale Advances customer-focused business model Strengthens and broadens our mostly-regulated earnings profile A broader platform for long-term success as end-use energy consumption evolves Combined natural gas consumption supports expanded infrastructure opportunities Geographic and end-use customer regulatory diversification Doing Energy Better Make Energy Better Move Energy Better So That Customers Can Use Energy Better 22

23 Combined Profile Over 1,500 bcf per year of combined natural gas consumption and throughput volume Over $50B of projected regulated rate base (largest in industry) Approximately 9 million regulated utility customers in 9 states (2 nd largest in industry) 87% of 2014 operating income from regulated businesses $50B $45B $44B $32B SO DUK+ SO NEE + +GAS PNY HE 9.9 EXC + POM Retail Regulated Operating Company Rate Base (2014 company filings) 9.0 SO + GAS $28B $27B EXC + POM $22B 4.5 $17B $7B $7B $5B $5B AEP D ETR NI SRE GAS ATO Utility Customers (2014 in millions) DUK+ SRE AEP NEE + PNY HE Electric Gas SO GAS NI D ATO ETR 23

24 Status of Major State Filings for AGL Resources Merger Georgia Illinois Maryland New Jersey Virginia Filed merger approval application on December 18, 2015 Evidentiary hearings scheduled for March 15, April 14 and May 3, 2016 Filed merger approval application on October 8, 2015 Evidentiary hearings scheduled for April 20 April 21, 2016 Filed merger approval application on November 3, 2015 Evidentiary hearings completed Filed for stipulated agreement on February 24, 2016 Filed merger approval application on October 16, 2015 Evidentiary hearings scheduled for May 17 May 20, 2016 Filed merger approval application on October 26, 2015 Stipulation approved February 23, nd Quarter 3 rd Quarter 2 nd Quarter 3 rd Quarter California Filed merger approval application on November 9, st Quarter The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on December 4,

25 Financing Plan Summary Debt issuance of ~$8B expected to be completed prior to closing Began issuing equity in 4Q 2015, and expect to issue a total of $1.4B by year end 2016 Financing plan supports AGL acquisition, Southern Power growth plan and other investments in subsidiaries Remain committed to a high degree of financial integrity Diversification benefits of AGL transaction Extension of bonus depreciation serves to help mitigate future retail rate increases and provides $4-5B of accelerated cash flow Targeting credit metrics consistent with current ratings 25

26 SO Credit Summary Highly regulated business (~90% of earnings) Customer focused business model leads to constructive regulatory environments Operate in 4 of the top 8 most constructive state regulatory environments in the U.S. per RRA Diverse, growing Southeast economy and customer base Anticipated acquisition of AGL Resources expands lower risk business model and strengthens position as a premier U.S. energy company Strengthens and broadens mostly regulated earnings profile Platform for long-term success as end use energy consumption evolves Geographic, regulatory and end-use customer diversification benefits Constructive Regulation Customers High Reliability Low Prices High Customer Satisfaction Healthy Capital Investments 26

27 APPENDIX SO Financials and Credit 27

28 Southern Company - $17.9B Estimated CapEx Through 2018 $7.3B $7.3B '16 - '18 $6.4B $6.4B $6.2B Total Excluding AGL $17.9 $5.2B $5.5B Southern Power Target Capital $3.1 Total Excluding SPC Target Capital $14.9 Southern Power Base $1.9 Environmental $1.8 New Generation $2.3 Transmission $2.0 Distribution $2.5 Generation Maintenance $2.5 Nuclear Fuel $ Other $1.1 Note: Totals may not foot due to rounding. 28

29 Projected Financing Plan $ in millions as of most recent SO Earnings Release Issued Remaining Total Projected Projected Total Projected Debt Issuances Georgia Power DOE Loan ,075 Mississippi Power Bank Debt 1-1,200 1, ,200 Mississippi Power Securitization ,000-1,000 Capital Markets Alabama Power ,300 Georgia Power ,000 2,300 Gulf Power Mississippi Power , ,250 Southern Power 2-1,200 1, ,200 Parent 3-8,000 8, ,750 Total Capital Markets 400 9,950 10,400 2,900 2,800 16,050 Total Debt Issuances ,600 12,000 4,250 3,075 19,325 Common Equity Needs - 1,200 1, ,200 1 Includes the refinancing of $900 million of existing bank debt in Includes $600 million, $250 million, and $500 million in financing associated with placeholder projects in 2016, 2017, and 2018, respectively 3 Includes $400 million in financing associated with Southern Power placeholder projects in

30 Southern Company Liquidity and Credit $ in millions - as of 12/31/15 Extended the maturity of syndicated credit facilities from 2018 to 2020 with total available credit of $4.4B under these facilities Concurrent with the syndication of the AGL Resources bridge facility, added an additional $1B credit facility at the parent level which matures in Consolidated Credit Facilities Expirations (1) $ 410 $ 30 $ 1,665 $ - $ 4,400 Alabama Power Georgia Power Gulf Power Mississippi Power Parent (1) Southern Power Other (2) SO Consolidated Unused Credit Lines 1,340 1, , ,428 Cash $ 194 $ 67 $ 74 $ 98 $ 42 $ 830 $ 99 $ 1,404 Total 1,534 1, ,292 1, ,832 Less: Outstanding CP Less: PCBs Floaters (3) ,805 Net Available Liquidity $ 724 $ 769 $ 125 $ 253 $ 1,904 $ 1,396 $ 117 $ 5,288 1 Does not include $8.1B AGL Resources acquisition bridge facility 2 Other includes balance amounts from non-sec reporting subsidiaries including SEGCO, Southern Nuclear, SouthernLINC and others 3 PCB Floaters include all variable rate pollution control revenue bonds outstanding 30

31 Long-term Debt Maturity Schedule $ in millions - as of 12/31/ Alabama Power Georgia Power Gulf Power Mississippi Power (1) Southern Power Parent SO Consolidated (2) 2,639 2,431 1,600 1,175 1,369 SO Consolidated Long-Term Debt Maturities $9, (1) Excludes $475 million of short term bank loans maturing in 2016 (2) $576 million of Mississippi Power intercompany loans, maturing in 2017, are eliminated at the consolidated level 31

32 Southern Company Weather Normal Retail Sales Growth as of most recent SO Earnings Release 2015 vs % 1.2% Expected 2016 Sales Growth 1.0% 1.0% 1.1% 0.4% 0.3% Residential Commercial Industrial -0.3% Total Retail Sales Residential Commercial Industrial Total Retail Sales Strong residential customer growth continued in 2015 (+37K customers year-over-year) Every quarter of 2015 reflected year-over-year commercial growth (first time post-recession) Housing-related industries and automotive production are the bright spots for industrial Economic development pipeline remains robust, with recent announcements and prospects spanning automotive, aerospace, chemicals, and fabricated and primary metals sectors Note: Weather Adjusted Retail Sales Growth also reflects adjustment of 2014 KWH sales consistent with Mississippi Power s updated methodology to estimate the unbilled revenue allocation among customer classes implemented in the first quarter

33 APPENDIX Vogtle 3&4 33

34 DOE Loan Guarantee Georgia Power Finalized February 20, 2014 Credit Facility = $3.46B (70% of eligible project costs) Draws mature February 20, 2044, with amortization of principal beginning in Interest Rate = Treasury % Draws to Date Draw Date Amount Rate 2/20/2014 $500M 3.860% Fixed to Maturity 2/20/2014 $500M 3.488% Fixed to 2/20/29 12/11/2014 $200M 3.002% Fixed to Maturity 6/12/2015 $600M 3.283% Fixed to Maturity 12/9/2015 $400M 3.072% Fixed to Maturity 34

35 Vogtle 3&4 Construction Update Unit 3 Recent Progress Setting Course 01 Shield Building panels and placing concrete to EL 103 Placed Turbine Building Table Top concrete Unit 4 Set Containment Vessel Ring 1 Cooling Tower installation to 50% vertical (300 ft) Major Modules Ongoing assembly of CA-03 (Unit 3), CA-05 (Unit 4), and CA-01 (Unit 4) Near Term Unit 3 Continue setting Shield Building panels ( Course 2 ) Set Containment Vessel Ring 2 Unit 4 Complete Cooling Tower Set up main step-up transformers On the Horizon Erect turbine generator (Unit 3) CA-20 assembly (Unit 4) Unit 3 Unit 4 Ring 1 Set on Containment Vessel 35

36 Vogtle 3&4 EPC Settlement Key Provisions of Settlement Prior claims dismissed, including lawsuits and potential extension of such claims EPC agreement amended to restrict future claims for regulatory changes EPC amended to reflect June 2019 and June 2020 as guaranteed completion dates Georgia Power s portion of settlement cost = ~$350M Expected Benefits of Settlement Projected rate impacts remain well within 6% to 8% projection Reaffirms the current schedule and incentivizes the contractor Streamlines resource deployment on the construction site Removes overhangs from lingering dispute and concerns regarding contractor cash flow Further reduces risk of potential future claims/disputes Note: See Form 10-K filed with the SEC on 2/26/16 for additional details 36

37 Vogtle 3&4 EPC Settlement Settlement cost significantly less than potential regulatory change claims Potential Future Claims Under Original EPC Regulatory Change Provision Potential Extension of Prior Litigation (up to an additional 18 months of delay cost claims) Prior Litigation (~21 months of delay costs) $714M (Georgia Power s share) Payment Structure (Georgia Power s share) 1. $120 million previously paid under EPC contract as part of dispute resolution process 2. $114M paid upon closing of final agreement (paid in January 2016) 3. $114M paid over time, with a portion tied to initial fuel load for each unit $349M settlement (Georgia Power s share) Notes: All amounts represent Georgia Power s 45.7% share of Vogtle 3&4 See Form 10-K filed with the SEC on 2/26/16 for additional details 37

38 Major Vogtle 3 Components Containment Vessel Rings CA-05 Module inside Module Assembly Building (MAB) Turbine Building Shield Building Wall Panels 38

39 Nuclear Island with Big 6 Modules CA-03 CA-01 CA-20 Auxiliary Building Walls to Elevation 100 Middle Ring Lower Ring Shield Building Panel Installation CA-02 (Inside Vessel) CA-05 (Inside Vessel) 39

40 AP

41 APPENDIX Kemper IGCC 41

42 Permanent rates in place for in-service assets Combined cycle operating reliably and efficiently using natural gas Expected in-service date for remainder of project in third quarter 2016 Repairs and improvements to refractory lining Working towards next set of milestones Commissioning of Lignite Feed and Dryer Systems Gasifier refractory cure Fluidization of Train B First syngas Kemper IGCC Update For additional Kemper photos: 42

43 Kemper IGCC Construction Site Gasifier Lignite Delivery Combined Cycle Gas Clean- Up Cooling Towers 43

44 Kemper IGCC Major Components Acid Gas Removal Area Gasifier Structure CO 2 Flash Drums Gasifier 44

45 APPENDIX Southern Power Company 45

46 Southern Power Overview Southern Power Company is a leading U.S. wholesale energy provider meeting the electricity needs of municipalities, electric cooperatives and investor-owned utilities Southern Power has a portfolio of 35 generating facilities 1 Combined generating capacity ownership exceeds 10,500 MW The Southern Power portfolio was initially founded on natural gas-fired generating plants and has grown to include biomass, solar, and wind facilities Southern Power does not own or operate any coal or nuclear facilities Facilities located in Alabama, California, Florida, Georgia, Nevada, New Mexico, North Carolina, Oklahoma, and Texas 1 As of March 7, 2016 SPC and its subsidiaries had 26 operational facilities and nine facilities under construction, including one facility that will be acquired upon successful completion later this year. 46

47 SPC Credit Highlights Southern Power ( SPC ) is committed to maintaining high credit quality and seeks to maintain its current ratings of Baa1/BBB+/BBB+ from Moody s/s&p/fitch 1 Low-risk business model compared to other competitive wholesale generators Long-term bilateral sales contracts with highly creditworthy counterparties Fuel and transportation pass-through contract provisions help mitigate commodity price volatility Generating portfolio consists of low-cost natural gas plants and renewable assets with strong contract coverage 75% of demonstrated capacity covered by contracts over next 5 years ( ) 2 70% of demonstrated capacity covered by contracts over next 10 years ( ) 2 Average contract length remaining: natural gas 8 years; renewables 21 years Proven re-contracting record In the 18 months ended December 31, successfully re-contracted 873 MW In the three-year period ended December 31, successfully re-contracted 1,517 MW History of superior performance in constructing and operating assets 1 A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. 2 Coverage ratios are MW-weighted and reflected as of the February 26, 2016 filing of the Annual Report on Form 10-K for the year ending December 31, See the Form 10-K for assumptions used in calculation coverage ratios. 47

48 Business Model Execution Continuing to execute contracts-based business strategy Re-contracted 1,517 1 MW of natural gas in the past three years Average contract length of 7 years Capacity payments yield stable cash flow with pass-through fuel provisions Added 1,647 1 MW of solar and wind assets in the past three years Proven technology Average contract length of 22 years Overall stable energy production / cash flow profile The average contract coverage is 75% over the next 5 years ( ) 2 with High Credit Quality Counterparties BBB+ to BBB- 13% Public Power Entities with Ratemaking Authorities 18% AAA to A- 69% Percentage of Contracted MW 1,3 69% of contracted MW 1,3 are with counterparties rated A- or better All counterparties have an investment grade rating or ratemaking authority 1 MW numbers represent Southern Power and its subsidiaries ownership interest in the nameplate capacity. 2 Coverage ratios are MW-weighted and reflected as of the February 26, 2016 filing of the Annual Report on Form 10-K for the year ending December 31, See the Form 10-K for assumptions used in calculation coverage ratios Percentage based on 5 year contract coverage as of March 7,

49 APPENDIX Regulatory Overview 49

50 Constructive, Proven Regulatory Frameworks Alabama Georgia Gulf Mississippi Base Rates Alernative Ratemaking Rate RSE Three-Year Accounting Order PEP-5A Traditional Regulation ROE Band ROE Band Other Regulatory Mechanisms Fuel Purchased Power Energy Purchased Power Capacity Environmental Energy Conservation Plant Additions Storm Reserve Part of fuel mechanism Integrated resource plan and certification process CWIP in Rates New Nuclear New Nuclear Federal Mandates Considerations Forward Looking Test Year New Plant Certification (plus reliability reserve) Integrated resource plan and certification process Need determination process Certification process 50