Southern Company - Corporate Responsibility Report: Key Impacts, Risks, Opportunities

We're ON so you can be. Southern Company employees start every day knowing they are responsible for keeping the lights on.

Here in the Southeast, start your microwave and that's us behind the plug. Buy a soft drink, that's us powering the bottling plant. Go fishing on a local lake, that's us operating the dam. Even if you heat your house with another fuel, we probably supply the power to run the circulating fan. People take our product for granted. Because we're everywhere with lines to everyone.

Key Impacts

By nature of what we do—generate electricity for 4.4 million customers in the Southeast—our company has a key impact on the:

Safety of workers by stressing the need to anticipate hazards.
Prosperity of customers by keeping monthly electric bills affordable.
Profits of businesses where efficient electrical use can lower operating expenses.
Improvement of communities with service, volunteerism and support.
Growth of a region that needs affordable energy to compete in a global market.
Energy independence of a nation facing increased strains on domestic resources.
Conservation of the environment and natural resources.

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These impacts are not necessarily distinct from each other. Some coincide and present opportunities; some conflict and produce risks. This report details how we address these key impacts.

To illustrate the point, let's look at some figures from a national poll of utility customers—results consistent with our own customer stakeholder research. The Edison Electric Institute online survey conducted online (by Market Strategies International, an independent research organization) in first quarter 2008 on climate change finds:

70 percent of consumers have concluded that global warming is happening.
One-third say it requires immediate action.
79 percent are concerned about the cost of electricity.
Two in five say they would participate in an energy program to lower the environmental impact of electricity generation if it had a 10 percent price premium. Fewer would participate if the cost were higher.

One-third of consumers support climate change action while 4 of 5 have concerns about costs. If climate change actions impact costs, stakeholders will not agree on actions to take. We seek to balance these priorities.

Opportunities

Balancing priorities among employees, investors, customers, suppliers, regulators, community members, and environmentalists sets up opportunities. We draw these goals from our stakeholders:

Keep electricity affordable and reliable.
Champion conservation and energy efficiency.
Lower the impact of electricity generation on the environment.
Attract, develop, protect, and retain skilled workers to ensure reliable supplies of electricity.
Foster community growth and environmental stewardship.

This report focuses on our plans, progress, and performance against these goals. The first two goals are covered in the electricity section, the third in environment, the fourth in work force, and the last in stewardship. See also the GRI index and Table of Contents »

Risks

Rising fuel costs, increasing demand, an aging work force, environmental obligations and a growing global energy crisis are the leading issues with associated risks for our business. Climate change, emissions, water use and other expansive issues are covered in detail in the report. Additional risks to future earnings potential, outlined in our 2007 annual report (p35), include:

Growth in energy sales subject to variables such as weather, competition, energy sales to neighboring utilities, energy conservation practiced by customers, and pricing.
The rate of economic growth in our four-state service area.
Total generating capacity available in the Southeast and remarketing of capacity as current contracts expire.
Changes in regulations that impact recovery of prudently incurred costs.
Profitability of the competitive wholesale supply business and credit worthiness of wholesale customers.
Pending environmental matters such as New Source Review actions, carbon dioxide litigation, environmental statutes and regulations (the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substances Control Act, the Emergency Planning & Community Right-To-Know Act, and the Endangered Species Act), and global climate Issues.
FERC matters—including Market-Based Rate Authority, Intercompany Interchange Contract, and Generation Interconnection Agreements.
Public Service Commission matters including state retail regulatory matters, fuel cost recovery, and storm damage cost recovery.
Construction projects including the integrated coal gasification combined cycle projects and nuclear expansion and relicensing.
Additional matters, including Mirant securities litigation, leveraged lease transactions, depreciation, Georgia state income tax credits, the Internal Revenue Service domestic production deduction, and others.