ATLANTA – Southern Company said today it has taken a series of actions to minimize the impact of potential changes in the value of its federal tax credits associated with the production of synthetic fuel. Southern Company has investments in two entities, Carbontronics Synfuels Investors LP and Alabama Fuel Products LLC, which produce synthetic fuel. As of March 31, Southern Company’s investment in these entities equaled about $16.9 million. Under current law, synthetic fuel tax credits are slated to expire Dec. 31, 2007.

“Consistent with the strategy we outlined earlier this year, we have effectively reduced the financial exposure associated with our synthetic fuel investments,” said Tom Fanning, Southern Company chief financial officer. In May, Carbontronics idled its production of synthetic fuel. Southern Company also has entered into an agreement to terminate its ownership interest in Alabama Fuel Products, effective July 1, though it will continue to provide some fee-based services to the Alabama Fuel Products facilities. In addition, Southern Company recently executed a series of financial hedges to mitigate the risk of changes in the value of tax credits related to its synthetic fuel investments.

The combined effect of these actions is to reduce Southern Company’s earnings exposure related to synthetic fuel. Including the impact of potentially writing off its investment, Southern Company expects to report slightly positive earnings from synthetic fuels in 2006. Additionally, Southern Company has preserved a portion of the potential benefits in 2006 resulting from proposed federal legislation. Under current law, tax credits are calculated based on the average price of oil for the current year; the credits are reduced as the price of oil rises. However, under the proposed legislation, the tax credits for 2006 would be calculated based on the average price of oil for 2005, and the tax credits would expire a year early—Dec. 31, 2006.

If the proposed legislation is enacted—and depending on a number of other factors— Southern Company could still receive a substantial portion of its originally estimated 2006 earnings of 12 cents per share from synthetic fuel.

With 4.3 million customers and more than 40,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast, one of America’s fastest-growing regions. A leading U.S. producer of electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications. Southern Company brands are known for excellent customer service, high reliability and retail electric prices that are significantly below the national average. Southern Company has earned the highest ranking among the nation's electric utilities in the American Customer Satisfaction Index for seven years in a row. Visit our Web site at www.southerncompany.com.

The following factors, in addition to those discussed in Southern Company's Annual Report on Form 10-K for the year ended Dec. 31, 2005 and Quarterly Report on Form 10-Q for the three months ended March 31, 2006, and subsequent securities filings, could cause Southern Company’s results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry and implementation of the Energy Policy Act of 2005, and also changes in environmental, tax and other laws and regulations to which Southern Company and its subsidiaries are subject, including proposed legislation relating to tax credits associated with synthetic fuel investments (and the timing of adoption of any such legislation), as well as changes in application of existing laws and regulations; fluctuations in the level of oil prices; the level of production, if any, by the synthetic fuel operations at Carbontronics Synfuels Investors LP and Alabama Fuel Products LLC for the remainder of fiscal year 2006; current and future litigation, regulatory investigations, proceedings or inquiries, including the pending EPA civil actions against certain Southern Company subsidiaries, FERC matters, IRS audits and Mirant-related matters; 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 and gas, including those relating to weather, the general economy and population and business growth (and declines); available sources and costs of fuels; ability to control costs; investment performance of Southern Company's employee benefit plans; advances in technology; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate cases relating to fuel cost recovery; 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 ability of counterparties of Southern Company and its subsidiaries to make payments as and when due; the ability to obtain new short- and long-term contracts with neighboring utilities; the direct or indirect effect on Southern Company's business resulting from terrorist incidents and the threat of terrorist incidents; interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company's and its subsidiaries' credit ratings; the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, floods, hurricanes or other similar occurrences; the direct or indirect effects on Southern Company's business resulting from incidents similar to the August 2003 power outage in the Northeast; and the effect of accounting pronouncements issued periodically by standard-setting bodies. Southern Company expressly disclaims any obligation to update any forward-looking information.