1. CAIR & MATS 2012 Southern Sectional AWMA Annual Meeting & Technical Conference September 12, 2012 Chris Goodman, P.E. Environmental Strategy

2. Southern Company Generating Facilities

3. Through 2011, invested about $8.3 B in environmental controls  17 FGDs on 25 units  17 SCRs  4 baghouses with ACI Projected base capital environmental expenditures of about $1.5 B over the next 3 years; Projected to spend an estimated $1.8 B for MATS and $0.5 B for ash and water compliance over the next 3 years Since 1990, emissions of sulfur dioxide and nitrogen oxides are down over 70 percent, while electricity generation has increased by more than 30 percent to serve growing demand Environmental Program at a Glance

4. Environmental Leadership New Projects and Research Programs National Carbon Capture Center Wilsonville, Alabama Integrated Gasification Combined Cycle Mississippi Power Plant Ratcliffe Second Largest U.S. Solar Cimarron Solar Facility Largest U.S. Biomass Nacogdoches Generating Facility Mercury Research Center Gulf Power Plant Crist Start-to-finish 25-MW CCS Alabama Power Plant Barry Water Research Center Georgia Power Plant Bowen Power Delivery and End-Use Technology Lab U.S. first New Nuclear Georgia Power Plant Vogtle Smart Grid: Integrated Distribution Management System Air Quality Science Center SEARCH network; ARIES; mercury

5. CSAPR vacated and remanded to EPA August 21 (CAIR remains in place) –Court held that EPA exceeded its CAA authority CAIR Phase II begins in 2015 –Tighter SO2 and NOx allowance requirements Transport Rules (CAIR/CSAPR)

6. Mercury and Air Toxics Standards (MATS) Final rule issued by EPA on February 16, 2012 – Largely unchanged from proposed rule – Some additional compliance flexibilities based on comments Imposes stringent emission limits for mercury, particulate matter, and acid gases Could force many retirements and large capital expenditures across the industry Unreasonable compliance time of three years(April 2015), with case-by-case 1-year extensions

7. EPA New Regulatory Actions Timeline

8. CCR Rule Effluent Guidelines Air Heater Bottom Ash Flyash Gypsum NO X Combustion Controls Baghouse (Hg) (Activated Carbon Injection) Coal-Fired Boiler NO x & Hg Control SCR SO 2 & Hg (acid gases) Control Scrubber Dust&Hg Control ESP SNCR CAIR/CSAPR PM-2.5 NAAQS 8-Hour Ozone NAAQS Mercury (Cobenefit) Regional Haze (BART) NO2 NAAQS Utility MACT CAIR/CSAPR Regional Haze (BART) Mercury (Cobenefit) PM-2.5 NAAQS SO2 NAAQS New Stack CO 2 Reduction Groundwater Monitoring/ Dry Handling / Landfilling / Pond Closure 316(a) Thermal 316(b) Intake Structures Effluent Guidelines Scrubber WasteWater Physical/Chemical/ Biological Treatment Scrubber WasteWater Ultra Fine Filtration GHG Regulation/Legislation Process Water Cooling Tower/ Intake Screens Emission Control Technologies for Coal-Fired Boilers

9. Scrubbers CCR Water SCRs CC/CT Nuclear IGCC Renewables DSO NOx SOx Hg PM Ash H20H20 CO 2 CCS Natural Gas IGCC Nuclear Solar Wind Biomass Regulatory Drivers New Resources Balance Baghouses Constructive Regulation Healthy Capital Spending High Reliability Low Prices High Customer Satisfaction Customers Hydro Demand Side Options

10. Preliminary Assessment of Impacts of EPA Rules – More to Come Possible Outcome Install new controls on 13 GWs - 65% of coal fleet. Retire 3 – 4 GWs of coal-fired generation. Fuel switching of 3 -4 GWs, primarily to natural gas Potential Impacts Estimated $13B - $ 18B capital cost through 2020 Possible 10% - 20% electricity price increases over the next 10 years

11. Summary Cumulative impacts of MATS, CSAPR/CAIR, 316(b), new effluent guidelines, CCBs, NAAQS, GHGs and other requirements must be considered when making decisions Research, testing and planning are the keys to finding the least cost, least regret, site specific solution Continuous process and is complicated by uncertain future environmental rules and national energy policies