2008 Southern Section A&WMA Annual Meeting & Technical Conference

Biloxi, MississippiAugust 7, 2008

Danny Herrin, ManagerClimate and Environmental Strategies

Southern Company

Climate Change/Greenhouse Gas Session

Bills analyzed by CRA for Southern Company

Projected CO2 PriceRecently analyzed proposals

0

50

100

150

200

250

300

350

2010 2015 2020 2025 2030 2035 2040 2045 2050

2007

$ pe

r ton

CO

2

Lieberman-WarnerSanders-BoxerLieberman-McCainBingaman-Specter

Data source: CRA analysis for Southern Company, April 2008.

Add 7¢/kwh to coal generation cost, 70 cents/gal gasoline

Add 4¢/kwh to coal generation cost, 40 cents/gal gasoline

Add 1.5¢/kwh to coal generation cost, 15 cents/gal gasoline

L-W Household Cost of Energy Electricity, Natural Gas and Motor Fuel at the Pump

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2020 2025 2030 2035 2040 2045 2050

Pe

rce

nt

Ch

an

ge

Retail Electricity Price Delivered Natural Gas Price Motor Fuel Price

Data source: CRA analyses for National Mining Association and Edison Electric Institute, April 2008.

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2015 2020 2025 2030 2035 2040 2045 2050

TW

h

Energy Efficiency/ Demand Destruction

Electricity Generation Must Transform by 2050 to Meet the L-W Caps

L-W ScenarioBusiness as Usual Scenario

Data source: CRA analysis for Southern Company, April 2008.

Nuclear

Renewables

Coal w/o CCSCoal w/ CCS

Gas/Oil

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2010 2050

TW

h

Coal w/o CCS

Gas/Oil

Nuclear

Renewables

2015 2020 2025 2030 2035 2040 2045

U.S. Coal-Fueled Electricity Generation Lieberman-Warner Would Have Dramatic Impacts

Data Source: Analysis of S. 2191 by CRA International for Southern Company, March 2008.

0

1

2

3

4

5

Trilli

on k

Wh

.

2010 2015 2020 2025 2030 2035 2040 2045 2050

BAUS. 2191

EPA Issues ANPR on Climate Change(F.R. Notice on July 30 - Comments due November 28)

"The ANPR reflects the complexity and the magnitude of the question of whether and how greenhouse gases could be effectively controlled under the Clean Air Act. I believe the ANPR demonstrates the Clean Air Act, an outdated law originally enacted to control regional pollutants that cause direct health effects, is ill-suited for the task of regulating global greenhouse gases. Based on the analysis to date, pursuing this course of action would inevitably result in a very complicated, time-consuming and, likely, convoluted set of regulations. These rules would largely pre-empt or overlay existing programs that help control greenhouse gas emissions and would be relatively ineffective at reducing greenhouse gas concentrations given the potentially damaging effect on jobs and the U.S. economy.” EPA Administrator Stephen L. Johnson.

“The Real Cost of Tackling Climate Change”

• U.S. population is expected to be around 420 million by 2050.• To meet the 80% below 1990 levels caps by 2050 we would

have to reduce U.S. emissions to ~1 billion metric tons or go from ~20 tons per capita to ~2.5 tons per capita.

• France and Switzerland -- countries that generate almost all their electricity from non-fossil fuels are at about 6.5 tons per capita.

• Replacing every existing coal plant with a natural gas plant would still put us at twice the 2050 target.

• If everyone drove a Toyota Prius in 2050 the equivalent transportation target would be overshot by 40%.

Source: “The Real Cost of Tackling Climate Change,” Steven F. Hayward Wall Street Journal - April 28, 2008

Technology Development and Implementation Timeline

2005 2010 2015 2020 2025

Renewables

PC and IGCC Capture & Storage Demo Projects

New Nuclear

Retail and Generation Energy Conservation and Efficiency Improvements

Capture & Storage Commercial

NewCoal

OtherOptions

NGCC

Summary

• Legislation likely in next 1-2 years • EPA regulation a possibility as well • Legislation/regulation could result in significant shift in

generating technologies with attendant cost increases • Technology development and deployment is the key

to mitigating these impacts

backup

U.S. Electricity Generation by RegionHistory and projection, 1990-2030

0%

20%

40%

60%

80%

100%

120%

1990 1995 2000 2005 2010 2015 2020 2025 2030

Ch

ang

e fr

om

199

0

Southeast (SERC, FRCC: AL, AR, FL, GA, LA, W MO, MS, NC, SC, VA)

US

West (WECC: AZ, CA, CO, ID, MT, NV, NM, OR, UT, WA, WY)

Northeast (CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT)

Midwest (ECAR: IN, KY, MI, OH, WV)

Data Source: Energy Information Administration, US Department of Energy

ProjectionHistory

Projected growth

2008-2030

34%

25%34%

22%

11%

Plans to Meet Demand Growth Must Include Multiple Technology Options

• Coal – both pulverized coal and integrated gasification combined cycle (IGCC)

• Nuclear power• Renewable energy• Natural gas combined cycle• Efficiency and conservation

World Energy ReservesOil, Gas, and Coal Reserves in JoulesOil, Gas, and Coal Reserves in Joules

Source: Energy Information Administration/ International Reserves Data

67% of WorldFossil Energy

Reservesare in Coal

Phase 1 – CO2 source and geologic sinks data collection

• SECARB: 4 pilots

– Saline reservoir (Plant Daniel)– Coal Seam (AL & VA)– Stacked EOR/saline (MS)

Phase 2 – Small CO2 storage pilots

Mississippi Test SiteMississippi Power’s Plant Daniel

Coal Seam Projectnear Tuscaloosa, Alabama

Coal Seam Projectsite selection pending

Stacked Storage ProjectDenbury’s Cranfield Oil Field

DOE Southeast Regional Carbon Sequestration Partnership - (SECARB)

Phase 3 – Large capacity CO2 storage demo

Nuclear Power

• Southern Company has signed contracts for and is pursuing an Early Site Permit for two additional units at Plant Vogtle in Georgia

Renewables

• Solar power• Biomass cofiring and conversion• Wind power