Retail Operating Companies
The transmission facilities of each of the retail operating companies are connected
to the respective company’s own generating plants and other sources of power
and are interconnected with the transmission facilities of the other retail
operating companies and SEGCO by means of heavy-duty high voltage lines.
Operating contracts covering arrangements in effect with principal neighboring
utility systems provide for capacity exchanges, capacity purchases and sales,
transfers of economy energy and other similar transactions. Additionally, the
retail operating companies have entered into voluntary reliability agreements
with the subsidiaries of Entergy Corporation, Florida Electric Power Coordinating
Group and TVA and with Progress Energy Carolinas, Duke Energy Corporation, South
Carolina Electric & Gas Company and Virginia Electric and Power Company,
each of which provides for the establishment and periodic review of principles
and procedures for planning and operation of generation and transmission facilities,
maintenance schedules, load retention programs, emergency operations and other
matters affecting the reliability of bulk power supply. The retail operating
companies have joined with other utilities in the Southeast to form the SERC
to augment further the reliability and adequacy of bulk power supply. Through
the SERC, the retail operating companies are represented on the National Electric
Reliability Council.
The IIC provides for coordinating operations of the power producing facilities
of the retail operating companies and Southern Power and the capacities available
to such companies from non-affiliated sources and for the pooling of surplus
energy available for interchange. Coordinated operation of the entire interconnected
system is conducted through a central power supply coordination office maintained
by SCS. The available sources of energy are allocated to the retail operating
companies and Southern Power to provide the most economical sources of power
consistent with reliable operation.
SCS has contracted with Southern Company, each retail operating company, Southern
Power, Southern Nuclear, SEGCO and other subsidiaries to furnish, at direct
or allocated cost and upon request, the following services: general and design
engineering, purchasing, accounting and statistical analysis, finance and treasury,
tax, information resources, marketing, auditing, insurance and pension administration,
human resources, systems and procedures and other services with respect to business
and operations and power pool transactions. Southern Power, Southern Company
Gas, SouthernLINC Wireless and Southern Telecom have also secured from the retail
operating companies certain services which are furnished at cost.
Southern Power
Southern Power is an electric wholesale generation subsidiary with market-based
rate authority from the FERC. Southern Power constructs, owns and manages generating
facilities and sells the output under long-term, fixed-price capacity contracts
both to unaffiliated wholesale purchasers as well as to the retail operating
companies (under PPAs approved by the respective state PSCs). Southern Power’s
business activities are not subject to traditional state regulation of utilities
but are subject to regulation by the FERC. Southern Power has attempted to insulate
itself from significant fuel supply, fuel transportation and electric transmission
risks by making such risks the responsibility of the counterparties to the PPAs.
However, Southern Power’s overall profit will depend on the parameters of the
wholesale market and its efficient operation of its wholesale generating assets.
Other Business
Southern Holdings is an intermediate holding subsidiary for Southern Company’s
investments in synthetic fuels and leveraged leases and various other energy-related
businesses.
SouthernLINC Wireless serves Southern Company’s retail operating companies
and marketing its services to non-affiliates within the Southeast. SouthernLINC
Wireless bundles multiple communication options into one phone including InstantLINCSM
Mobile to Mobile, cellular service, text messaging, wireless internet access
and wireless data. Its system covers approximately 128,000 square miles in the
Southeast.
These continuing efforts to invest in and develop new business opportunities
offer potential returns exceeding those of rate-regulated operations. However,
these activities also involve a higher degree of risk.
Territory Served by the Utilities
The territory in which the retail operating companies provide electric service
comprises most of the states of Alabama and Georgia together with the northwestern
portion of Florida and southeastern Mississippi. In this territory there are
non-affiliated electric distribution systems which obtain some or all of their
power requirements either directly or indirectly from the retail operating companies.
The territory has an area of approximately 120,000 square miles and an estimated
population of approximately 11 million.
Alabama Power is engaged, within the State of Alabama, in the generation and
purchase of electricity and the distribution and sale of such electricity at
retail in over 1,000 communities (including Anniston, Birmingham, Gadsden, Mobile,
Montgomery and Tuscaloosa) and at wholesale to 15 municipally-owned electric
distribution systems, 11 of which are served indirectly through sales to AMEA,
and two rural distributing cooperative associations. Alabama Power also supplies
steam service in downtown Birmingham. Alabama Power owns coal reserves near
its Gorgas Steam Electric Generating Plant and uses the output of coal from
the reserves in its generating plants. Alabama Power also sells, and cooperates
with dealers in promoting the sale of, electric appliances.
Georgia Power is engaged in the generation and purchase of electricity and
the transmission, distribution and sale of such electricity within the State
of Georgia at retail in over 600 communities, as well as in rural areas, and
at wholesale currently to OPC, MEAG, Dalton and Hampton.
Gulf Power is engaged, within the northwestern portion of Florida, in the generation
and purchase of electricity and the distribution and sale of such electricity
at retail in 71 communities (including Pensacola, Panama City and Fort Walton
Beach), as well as in rural areas, and at wholesale to a non-affiliated utility
and a municipality.
Mississippi Power is engaged in the generation and purchase of electricity
and the distribution and sale of such energy within the 23 counties of southeastern
Mississippi, at retail in 123 communities (including Biloxi, Gulfport, Hattiesburg,
Laurel, Meridian and Pascagoula), as well as in rural areas, and at wholesale
to one municipality, six rural electric distribution cooperative associations
and one generating and transmitting cooperative.
Savannah Electric is engaged, within a five-county area in eastern Georgia,
in the generation and purchase of electricity and the distribution and sale
of such electricity at retail.