File No. 70-9739
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3
to
FORM U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
ALABAMA POWER COMPANY GULF POWER COMPANY
600 North 18th Street One Energy Place
Birmingham, Alabama 35291 Pensacola, Florida 32520
GEORGIA POWER COMPANY MISSISSIPPI POWER COMPANY
241 Ralph McGill Boulevard, N.E. 2992 West Beach
Atlanta, Georgia 30308 Gulfport, Mississippi 39501
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent of each
applicant or declarant)
William E. Zales, Jr., Vice President Warren E. Tate, Secretary
and Secretary and Treasurer
Alabama Power Company Gulf Power Company
600 North 18th Street One Energy Place
Birmingham, Alabama 35291 Pensacola, Florida 32520
Judy M. Anderson, Vice President Michael W. Southern, Vice President,
and Corporate Secretary Secretary, Treasurer and
Georgia Power Company Chief Financial Officer
241 Ralph McGill Boulevard, N.E. Mississippi Power Company
Atlanta, Georgia 30308 2992 West Beach
Gulfport, Mississippi 39501
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
W. L. Westbrook John D. McLanahan, Esq.
Financial Vice President Troutman Sanders LLP
The Southern Company 600 Peachtree Street, N.E., Suite 5200
270 Peachtree Street, N.W. Atlanta, Georgia 30308
Atlanta, Georgia 30303
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ITEM 3. APPLICABLE STATUTORY PROVISIONS
Item 3 is hereby amended to read in its entirety as follows:
"Section 12(e) of the 1935 Act and Rules 62 and 65 thereunder are
applicable to the Proxy Solicitations. Section 12(e) of the 1935 Act and Rule 65
thereunder are and Section 6(a)(2) may be deemed applicable to Cash Payments.
Section 6(a)(2) of the 1935 Act is applicable to the Proposed Amendments. Rule
54 under the 1935 Act is also applicable to the proposed transactions.
Rule 54 Analysis: The proposed transactions are also subject to
Rule 54, which provides that, in determining whether to approve an application
which does not relate to any exempt wholesale generator ("EWG") or "foreign
utility company" ("FUCO"), the Commission shall not consider the effect of the
capitalization or earnings of any such EWG or FUCO which is a subsidiary of a
registered holding company if the requirements of Rule 53(a), (b) and (c) are
satisfied.
SOUTHERN currently meets all of the conditions of Rule 53(a),
except for clause (1). At September 30, 2000, SOUTHERN's "aggregate investment,"
as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.565 billion,
or about 58.14% of SOUTHERN's "consolidated retained earnings," also as defined
in Rule 53(a)(1), for the four quarters ended September 30, 2000 ($4.412
billion). With respect to Rule 53(a)(1), however, the Commission has determined
that SOUTHERN's financing of investments in EWGs and FUCOs in an amount greater
than the amount that would otherwise be allowed by Rule 53(a)(1) would not have
either of the adverse effects set forth in Rule 53(c). See The Southern Company,
Holding Company Act Release No. 26501, dated April 1, 1996 (the "Rule 53(c)
Order"); and Holding Company Act Release No. 26646, dated January 15, 1997
(order denying request for reconsideration and motion to stay).
In addition, SOUTHERN has complied and will continue to comply
<PAGE>
with the record-keeping requirements of Rule 53(a)(2), the limitation under Rule
53(a)(3) on the use of Operating Company personnel to render services to EWGs
and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of
copies of certain filings under the Act to retail rate regulatory commissions.
Further, none of the circumstances described in Rule 53(b) has occurred.
Moreover, even if the effect of the capitalization and earnings of
EWGs and FUCOs in which SOUTHERN has an ownership interest upon the SOUTHERN
holding company system were considered, there would be no basis for the
Commission to withhold or deny approval for the proposal made in this
Application-Declaration. The action requested in the instant filing would not,
on a pro forma basis, have any effect on the SOUTHERN system's financial
condition. Further, the proposed transactions, considered in conjunction with
the effect of the capitalization and earnings of SOUTHERN's EWGs and FUCOs,
would not have a material adverse effect on the financial integrity of the
SOUTHERN system, or an adverse impact on SOUTHERN's public-utility subsidiaries,
their customers, or the ability of State commissions to protect such
public-utility customers.
The Rule 53(c) Order was predicated, in part, upon an assessment
of SOUTHERN's overall financial condition which took into account, among other
factors, SOUTHERN's consolidated capitalization ratio and the recent growth
trend in SOUTHERN's retained earnings. As of December 31, 1995, the most recent
fiscal year preceding the Rule 53(c) Order, SOUTHERN's consolidated
capitalization consisted of 49.3% equity (including mandatorily redeemable
preferred securities) and 50.7% debt (including $1.68 billion of long-term,
non-recourse debt and short-term debt related to EWGs and FUCOs). SOUTHERN's
consolidated capitalization as of September 30, 2000 was 40.4% equity, 59.6%
debt including all non-recourse debt, and 55.7% equity and 44.3% debt excluding
all non-recourse debt.
<PAGE>
Since the date of the Rule 53(c) Order, there has been a reduction
in SOUTHERN's consolidated equity capitalization ratio; however, it remains
within acceptable ranges and limits of rating agencies for strong investment
grade corporate credit ratings. In addition, the affiliated operating companies,
which have a significant influence on the SOUTHERN corporate rating, continue to
show strong financial statistics as measured by the rating agencies. The
following table presents the senior secured ratings history for each as rated by
S&P, Moody's and Fitch:
----------- ------- --------- ---------- --------- --------- ---------
Company Agency 1995 1996 1997 1998 19991
----------- ------- --------- ---------- --------- --------- ---------
----------- ------- --------- ---------- --------- --------- ---------
Alabama S&P A+ A+ A+ A+ A+
Moody's A1 A1 A1 A1 A1
Fitch A+ AA- AA- AA- AA-
----------- ------- --------- ---------- --------- --------- ---------
----------- ------- --------- ---------- --------- --------- ---------
Georgia S&P A+ A+ A+ A+ A+
Moody's A1 A1 A1 A1 A1
Fitch AA- AA- AA- AA- AA-
----------- ------- --------- ---------- --------- --------- ---------
----------- ------- --------- ---------- --------- --------- ---------
Gulf S&P A+ A+ AA- AA- AA-
Moody's A1 A1 A1 A1 A1
Fitch A+ AA- AA- AA- AA-
----------- ------- --------- ---------- --------- --------- ---------
----------- ------- --------- ---------- --------- --------- ---------
Mississippi S&P A+ A+ AA- AA- AA-
Moody's Aa3 Aa3 Aa3 Aa3 Aa3
Fitch AA- AA- AA- AA- AA-
----------- ------- --------- ---------- --------- --------- ---------
----------- ------- --------- ---------- --------- --------- ---------
Savannah S&P A+ A+ AA- AA- AA-
Moody's A1 A1 A1 A1 A1
Fitch Not rated Not rated Not rated Not rated Not rated
----------- ------- --------- ---------- --------- --------- ---------
SOUTHERN's consolidated retained earnings grew on average
approximately 5.9% per year over the last five years. Excluding the $111 million
one-time windfall profits tax imposed on South Western Electricity plc ("SWEB")
in 1997, the $221 million write down of assets in 1998, the $69 million write
down of the Mobile Energy investment in 1999 and the $78 million gain on the
sale of the SWEB supply business in 1999, the average growth would be 7.4%. In
1999, consolidated retained earnings increased $354 million, or 9.1%. SOUTHERN's
interests in EWGs and FUCOs have made a positive contribution to earnings over
the four calendar years ending after the Rule 53(c) Order.
--------
1 In April 2000, Moody's and Duff & Phelps (now known as Fitch) reaffirmed their
ratings; however, S&P placed the ratings of Southern and its affiliates on
credit watch with negative implications.
<PAGE>
Accordingly, since the date of the Rule 53(c) Order, the
capitalization and earnings attributable to SOUTHERN's investments in EWGs and
FUCOs has not had an adverse impact on SOUTHERN's financial integrity."
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this statement to be signed
on their behalf by the undersigned thereunto duly authorized.
Date: December 14, 2000 ALABAMA POWER COMPANY
By_/s/Wayne Boston
Wayne Boston
Assistant Secretary
GEORGIA POWER COMPANY
By_/s/Wayne Boston
Wayne Boston
Assistant Secretary
GULF POWER COMPANY
By_/s/Wayne Boston
Wayne Boston
Assistant Secretary
MISSISSIPPI POWER COMPANY
By_/s/Wayne Boston
Wayne Boston
Assistant Secretary
