Southern Energy, Inc. “Natural Gas and Electricity: Looks Like a Good Marriage” Pamela S. Pierce IPAA Luncheon November 8, 2000 Houston, Texas

2 Southern Company Official Sponsor of the PGA Tour

3 Southern Energy, Inc. Southern Company Official Sponsor of the PGA Tour

4 IPO’d September 27, NYSE Symbol SOE $9.2 billion company headquartered in Atlanta (20% currently in public market) A leading integrated non-regulated power provider with regionally based businesses in North America, Europe and the Asia-Pacific Region Vertical integration of non-regulated electricity generation and distribution; marketing and risk management; and access/ management of gas and oil assets Southern Energy, Inc.

5 Price range originally filed with SEC:$15 - $17 / share Price range in last S-1 Amendment:$18 - $20 / share Actual IPO price:$22 / share Order book was 13.5 times oversubscribed Goldman Sachs’ most oversubscribed $1+ billion IPO Largest ever increase from initial filing range to offer price for all IPOs greater than $1 billion (excluding technology and telecom) Expectations for a full spin-off from Southern Company within 12 months

6 Southern Energy, Inc. Ref. Date 11/8/00

7 Southern Energy, Inc. Ref. Date 11/6/00

8 One of the leading non-regulated power producers in the U.S. 14,000 MW of operating capacity in North America targeted to grow to 30,000 MW by 2004 Power assets in key population areas throughout the US Worldwide capacity targeted to grow to 50,000 MW by Currently operating in Germany, England, Philippines, China, Trinidad and the U.S. Southern Energy, Inc. ELECTRICITY GENERATION AND DISTRIBUTION

9 Southern Energy, Inc. Q2’00 Gas Marketing Rankings* (BCF/d) 1.Enron Duke Aquila Coral9.4 5.Sempra8.4 6.Dynegy8.3 7.BP Amoco8.2 8.Reliant7.9 9.TransCanada Southern Energy5.9 *Source: Gas Daily August 4, 2000 Q2’00 Power Marketing Rankings* (MM MWh) 1.Enron American Electric Power Duke PG&E Energy Southern Energy Aquila Reliant Constellation Dynegy Edison Mission24.6 *Source: Power Markets Week August 21, 2000 MARKETING AND RISK MANAGEMENT

10 Southern Energy, Inc. Provide financing options for oil and gas companies to transact acquisitions, development drilling programs, monetization of existing assets and company recapitalization Maximum flexibility to design customized financial structures including debt, equity and working interest Provide marketing and risk management services to add value to physical commodities $400 MM annual capital budget Key drivers: the assets and the partners SOUTHERN PRODUCER SERVICES, L.P. - ENERGY CAPITAL GROUP

11 ELECTRICITY DEMAND 1999 annual U.S. electrical consumption 3,700,000 GW-hrs Coal supplies about 55% Nuclear supplies about 18% Natural Gas supplies about 15% Hydro supplies about 8% Fuel Oil supplies about 4% Electricity consumption grew by 5.4% during 1998, up from 3.2% annually from Electricity growth, upwards of 6% could occur due to greater dependence on electricity-consuming technology Source: Edison Electric Institute and Simmons & Company Southern Energy, Inc.

12 INCREMENTAL NATURAL GAS DEMAND 5% Electricity Growth - 185,000 GW-hrs per year incremental demand 185,000 GW-hrs x 8 mcf x 1,000 KW = 1,480 bcf 1,480 bcf = 4.0 bcf Average daily demand growth 2-4 bcf depending on weather and plant efficiency Source: Simmons & Company (modified) year KW1 GW yearday Southern Energy, Inc.

13 Southern Energy, Inc. Natural gas supply growth for 2001 on 50 bcfd produced in 2000 is estimated at 1.0 bcfd or 2% With 5% electricity growth in 2001, need 2-4 bcf/day Looks like a mismatch between natural gas supply and electricity demand NATURAL GAS AND ELECTRICITY A GOOD MARRIAGE? Source: Simmons & Company