CERTIFICATE OF NOTIFICATION
filed by
THE SOUTHERN COMPANY and Subsidiaries
Pursuant to the order of the SEC dated December 27, 2000, in the matter of file
No. 70-9701.
The above named companies HEREBY CERTIFY to said Commission, pursuant to Rule
24, that the following transactions have been carried out in accordance with the
terms and conditions of and for the purposes represented by the statements on
Form U-1, as amended, and of said orders with respect thereto. The items listed
below are in response to the reporting criteria as established in the
proceedings referenced above. Such information, as of September 30, 2002, is as
follows:
1. A copy of Southern Power Company's (Southern Power) balance sheet and
income statements as of and for the period ending on the last day of
the quarter for direct subsidiaries of SOUTHERN that hold the
securities of EWG's, including New Co.
See attached: Income Statement September 2002, Year to Date
Balance Sheet September 2002
2. A narrative description of Southern Power's activities during the
quarter just ended organized by business category (project development,
project related services and other) and within each category, a
description of new developments by project type (e.g., EWG's energy
related activities, etc.).
In the third quarter 2002, Southern Power continued operation of its
existing generating units. This includes a portfolio of ten units at
Plant Dahlberg near Commerce, GA, two units at Plant Wansley near
Roopville, GA and one unit at Plant Franklin near Phenix City, AL.
Construction continued on two units at Plant Harris near Autaugaville,
AL, two units at Plant Franklin, one unit at Plant Stanton in Orlando,
FL and two units at Plant McIntosh near Rincon, GA .
Southern Power development activities continue including purchases of
land and land options for potential new generation projects around the
southeast.
3. Amounts and forms of: (i) guarantees of, and similar provisions and
arrangements concerning, performance and undertaking of other
obligations by Southern Power or any subsidiary of Southern Power; and
(ii) indemnifications of and with respect to persons acting as sureties
on bonds or other obligations on behalf of Southern Power or any
subsidiary of Southern Power which Southern Company has agreed to grant
in the event a bid by any of the foregoing is accepted.
Southern Power has no outstanding bids that would obligate additional
Southern Company guarantees or keep wells.
4. Amounts and forms of: (i) guarantees of, and similar arrangements
concerning performance and undertaking of other obligations by Southern
Power or any subsidiary of Southern Power which Southern Company has
granted and are currently effective, and (ii) indemnification's of and
with respect to persons acting as sureties on bonds or other
obligations on behalf of Southern Power or any subsidiary of Southern
Power which Southern Company has granted and are currently effective.
Southern Company has committed to directly fund Southern Power at least
40% equity as part of Southern Power's construction project financing.
In addition, Southern Company has guaranteed the timely completion of
Southern Power projects currently financed via a revolving credit
facility. In this guarantee, Southern Company agrees to pay for cost
overruns to the extent that Southern Power's own cash flow is
insufficient. Southern Company also agrees to prepay any portion of the
credit facility used for Southern Power projects not completed within
two years of the proposed projects' completion date. At September 30,
2002, the outstanding amount of this revolving credit facility related
to projects under construction was $276 million.
Southern Company has granted performance guarantees on behalf of
Southern Power and its subsidiary, Southern Company - Florida LLC (SCF)
for SCF's payment obligations under construction and power purchase
agreements associated with Plant Stanton in Orlando. Southern Company's
maximum exposure is $53 million under the construction and ownership
agreement and $19.5 million under the power purchase agreements.
Contracts for the construction of transmission facilities related to
the new Southern Power plants are covered by a Southern Company
guarantee with an estimated value of $13.4 million. Southern Company
has agreed to reimburse the affected operating subsidiaries ("Operating
Companies") should Southern Power fail to make its required payments
for transmission construction.
Southern Company has also entered into limited keep well arrangements
such that pursuant to certain contingencies, Southern Company would
contribute funds to Southern Power via loans or capital contribution to
fund Southern Power.
Certain of these keep well agreements were created to facilitate the
assignment of specific partially executory vendor contracts to Southern
Power. As of June 30, 2002, Southern Company keep wells were in place
to facilitate the transfer of specific vendor contracts from Alabama
Power to Southern Power related to Plant Harris construction. Southern
Company keep wells are also in place for the transfer of specific
vendor contracts from Georgia Power to Southern Power for the operation
of Plant Dahlberg and construction at sites for Plant Franklin and
Plant Stanton. As of September 30, 2002, remaining payments for these
contracts were $32.6 million related to the Georgia contracts and none
related to Alabama contracts. Southern Company has also entered in a
keep well agreement with Alstom Power related to the transfer of a
specific equipment contract for the Franklin Unit 3 facility. As of
September 30, 2002, the amount outstanding under this contract was $5
million.
Certain other keep well arrangements were entered into in order to
enhance the efficiency and flexibility of the energy marketing and
related natural gas procurement function. Acting as agent for all of
Southern Company's Operating Companies, Southern Company Services, Inc.
may enter into various types of wholesale energy and natural gas
contracts. Under such Agreements, each of the Operating Companies may
be jointly and severally liable for the obligations of each of the
other Operating Companies. In that regard, the creditworthiness of
Southern Power is currently inferior to the creditworthiness of the
other Operating Companies. To insure that such other Operating
Companies will not subsidize or be responsible for any costs, losses,
liabilities or damages arising out of or resulting from Southern
Power's inclusion as a contracting party under the Agreements, Southern
Company has entered into a keep well agreement with each of the other
operating companies. The market value of Southern Power's share of
natural gas and wholesale energy purchase commitments, was $15.2
million as of September 30, 2002.
No events have occurred or amounts have accrued that would require
Southern Company to incur any obligations under these keep well
arrangements, and Southern Company does not anticipate that any will.
5. A description of services and goods obtained from associate companies,
including services to Southern Power, specifying the type of service,
the number of personnel from each associate company providing services
during the quarter and the total dollar value of these services.
Southern Power received disbursement accounting services from Alabama
Power Company. These services included the use of 1 employee charged at
$6,000 per quarter (at cost).
Southern Power received various services from Georgia Power Company.
These services included operation and supervision at the Franklin,
Dahlberg and Wansley facilities as well as disbursement, inventory,
fuel and property accounting. All services were charged at cost.
Operation services included the use of 65 positions and charges were
$3.5 million for the third quarter.
Southern Power received general management, procurement, business
development, treasury, reporting and tax services from Southern Company
Services. Southern Company Services Engineering is responsible for
managing all current Southern Power construction projects.
Project related costs are capitalized as construction work in progress.
All services were charged at cost. Accounting services included the use
of 7 positions; Receivable and contract administration services
included the use of 6 positions and Treasury services included the use
of 3 positions. Business development activities included the use of 14
employees. The value of these services was $20.1 million for the third
quarter, of which $10.5 million was capitalized or deferred.
6. A description of services and goods provided to associate companies and
Southern Power which identifies the recipient company, the charge to
the associate and whether the charge was computed at cost, market or by
using another method, the method to be specified,
Southern Power provided no goods and/or services to associated
companies for the reporting period.
7. A chart showing, as of the end of each quarterly period, all associate
companies of Southern Company that are EWG's, Intermediate
Subsidiaries, Special Purpose Subsidiaries, and Energy-Related
Companies; Southern Company's direct or indirect investment in each
entity; the aggregate direct and indirect investment by Southern
Company in all the entities; and Southern Company's percentage equity
ownership in each entity, together with a statement indicating by
category the type of entity or person (i.e., domestic corporation,
foreign corporation, foreign government, or natural persons) owning the
equity interests in each entity that are not held directly or
indirectly by Southern Company.
See Exhibit A
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of 1935,
the undersigned company has duly caused this certificate to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated November 25, 2002
THE SOUTHERN COMPANY
By: /s/ Tommy Chisholm
---------------------------
Tommy Chisholm
Secretary
SOUTHERN POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
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(in thousands) (in thousands)
Operating Revenues:
Sales for resale --
Non-affiliates $ 43,458 $ 12,999 $ 86,300 $ 12,999
Affiliates 92,445 1,603 126,592 1,603
Other revenues 292 2 379 2
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Total Operating Revenues 136,195 14,604 213,271 14,604
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Operating Expenses:
Operation --
Fuel 50,740 2,336 71,905 2,336
Purchased power --
Non-affiliates 20,489 813 31,214 813
Affiliates 4,407 2,249 9,198 2,249
Other 6,597 782 14,999 2,474
Maintenance 934 45 1,805 45
Depreciation and amortization 6,294 1,307 11,779 1,307
Taxes other than income taxes 1,437 - 2,940 -
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Total operating expenses 90,898 7,532 143,840 9,224
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Operating Income 45,297 7,072 69,431 5,380
Other Income:
Interest income 31 29 260 44
Other, net (3,406) 36 (4,855) 36
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Earnings Before Interest and Income Taxes 41,922 7,137 64,836 5,460
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Interest and Other:
Interest expense, net 3,167 260 4,362 261
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Earnings Before Income Taxes 38,755 6,877 60,474 5,199
Income taxes 11,426 911 19,832 256
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Net Income $ 27,329 $ 5,966 $ 40,642 $ 4,943
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SOUTHERN POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
At September 30, At December 31,
Assets 2002 2001
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(in thousands)
Current Assets:
Cash and cash equivalents $ 48 $ 3,711
Receivables --
Customer accounts receivable 10,134 3,416
Accumulated provision for uncollectible accounts (350) -
Affiliated companies 49,863 1,965
Fossil fuel stock, at average cost 6,854 3,425
Materials and supplies, at average cost 6,166 5,731
Other 13,047 9,391
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Total current assets 85,762 27,639
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Property, Plant, and Equipment:
In service 894,783 265,153
Less accumulated provision for depreciation 15,064 3,291
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879,719 261,862
Construction work in progress 931,680 500,358
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Total property, plant, and equipment 1,811,399 762,220
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Other Property and Investments:
Other 157 9,059
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Total other property and investments 157 9,059
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Deferred Charges and Other Assets:
Accumulated deferred income taxes 39,884 11,915
Other 15,732 12,024
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Total deferred charges and other assets 55,616 23,939
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Total Assets $ 1,952,934 $ 822,857
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SOUTHERN POWER COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
At September 30, At December 31,
Liabilities and Stockholder's Equity 2002 2001
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(in thousands)
Current Liabilities:
Notes payable--
Affiliated $ 212,212 $ 950
Other 1,638 -
Accounts payable --
Affiliated 2,033 26,135
Other 7,686 4,278
Taxes accrued --
Income taxes 14,147 394
Other 2,936 -
Interest accrued 11,582 -
Other 2,898 886
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Total current liabilities 255,132 32,643
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Long-term debt 850,420 293,205
Deferred Credits and Other Liabilities:
Due to affiliated companies 23,693 23,415
Obligations under risk management activities 57,565 365
Deferred revenues under purchased power agreements 30,096 1,731
Other 3,559 4,505
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Total deferred credits and other liabilities 114,913 30,016
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Common Stockholder's Equity:
Authorized - 1,000,000 shares
Outstanding - 1,000 shares
Paid-in capital 728,051 452,097
Retained earnings 48,849 8,207
Accumulated other comprehensive income (44,431) 6,689
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Total common stockholder's equity 732,469 466,993
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Total Liabilities and Stockholder's Equity $ 1,952,934 $ 822,857
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