CEO Viewpoint: Sustainability Through Innovation

Dear Fellow Stakeholders:

Most companies come and go in a matter of years. They serve a need then fizzle when the need no longer exists. Companies that last, well, they commit to the community, embrace technology and transform themselves to meet customers' needs. Southern Company is a lasting company. Actually, we're a centennial company.

On Jan. 5, 2012, we celebrated our 100th anniversary. I attribute the company's long-term success and positive impact on the community to our culture of sustainable innovation. Efforts that exemplify sustainability through innovation touch every aspect of Southern Company's business. That's how we have stayed relevant for 100 years.

A prime example of sustainability through innovation is our industry leadership when it comes to innovation in energy. In order to provide safe, reliable, affordable and cleaner power to millions of customers, we must continue to build and maintain power plants. These plants are long-life assets and we strive to operate some of these plants for many decades. Technological advances and population growth often spur us to identify innovative ways to generate energy and reduce emissions. A prime example of such an innovation is our construction of two new nuclear units near Waynesboro, Ga. These new nuclear units — which represent cutting-edge engineering and layer-upon-layer of redundant safety systems — will be the first in the United States in more than 30 years. Our innovative culture shines through the nearly $740 million in research and development we've managed in the last decade. Among the successes of this research and development is a new technology for turning coal into gas, which we will use at a new plant in Kemper County, Miss., to provide cleaner electricity. And we're partnering with the DOE to research the capture and storage of carbon dioxide to keep coal — America's most relied upon energy resource — a fuel option for the future.

A century ago, the southeastern U.S. was primarily agrarian and the population was sparse. Southern Company founder James Mitchell understood that electricity could attract manufacturing businesses. A hundred years later, we continue to commit time and resources to economic stewardship and are proud to be part of the team that has wooed companies such as Kia, ThyssenKrupp and Mercedes to the region. We're also proud of our dividend record. Dating back to 1948, Southern Company has continuously paid a quarterly dividend to its shareholders. With a 3.7 percent increase to the dividend on April 11, 2012, Southern Company raised the dividend on its common stock for the 11th straight year.

Another example of our sustainability efforts is the company's committed governance. Due to the regulated nature of our business, governance permeates everything we do. Southern Company has a management council, board of directors, code of ethics and policies and procedures in place to ensure we are doing what is required. Our employees do what is right thanks to a cultural norm that we call SouthernStyle. Some see the tenets of SouthernStyle — unquestionable trust, superior performance, total commitment — simply as our core values. While they are our core values, they are so much more. I like to define actions as WHATs or HOWs. If following the rules is WHAT we do, then SouthernStyle is HOW we do it. And there is an expectation at Southern Company that all HOWs are done through collaborative leadership that keeps the goal in mind while preserving integrity and respect for all involved.

Southern Company's 26,000 employees - with a few exceptions — reside in Alabama, Florida, Georgia and Mississippi. We live, work, play and volunteer with our customers. Because we are part of the community and our long-life assets avail us to being a permanent fixture in the communities we serve, social responsibility has become an important part of who we are. In 2011, our employees volunteered more than 250,000 hours in the communities we serve. Our foundation and corporate giving programs contributed more than $28 million to non-profit organizations. The company and its employees are involved because these communities are our homes. The stronger we make them, the better off we will be individually, as a company and as a community.

Our corporate responsibility program is dynamic; we are continually making adjustments as changes in technology, population and the regulatory environment occur. I believe we need a national energy policy that enables continuous innovation in how electric utilities provide energy for our customers, and that:

• maintains the availability of a diverse fuel mix,
• enables companies like Southern Company to continue to be successful and
• helps save consumers money, generates jobs and reduces environmental impacts.

Thank you for your interest in our work. Your thoughts and comments are welcome. Please visit our contact page.

Tom Fanning
CEO Southern Company