This Accord describes the commitments that The Southern Company and the U.S. Department of Energy (DOE) have made to participate in the Climate Challenge Program in pursuit of the President's goals for reducing greenhouse gas emissions. The Climate Challenge Program is a joint, voluntary effort of DOE and the electric utility industry to reduce, avoid, or sequester greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Program Memorandum of Understanding (MOU) and exhibits thereto dated April 20, 1994 (the Climate Challenge Program MOU.) (See Attachment B to this Participation Accord.)

The Southern Company is the parent firm of one of the nation's largest investor-owned electric utility groups. The company includes five operating utilities - Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric - as well as Southern Nuclear and Southern Electric International.

I. Utility Commitments

A.
Consistent with paragraph II.B.1 of the Climate Challenge Program MOU, The Southern Company will participate in the following industry initiatives:

1) National Earth Comfort Program
2) Electric and Renewable Energy Investment Pool
3) Utility Forest Carbon Management Program, and
4) EV America

The Southern Company will also undertake projects in the following areas:

1) Transportation
2) Forestry
3) End-Use
4) Supply-Side
5) Transmission
6) Distribution
7) Recycling, and
8) Other government/industry initiatives

A description of these programs is provided in Attachment A.

B.

The Southern Company will report annually on activities and achievements under the Climate Challenge Program. Results achieved during each year shall be reported in a clear and understandable manner that is consistent with the guidelines adopted pursuant to subsection 1605(b) Energy Policy Act and the Climate Challenge accounting protocols in Exhibit B of the Climate Challenge Program MOU. The first such report may include a description of the activities and achievements of The Southern Company prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.

C.

The Southern Company will confer with DOE on or before July 1, 1996, to evaluate jointly the progress of the company in achieving its Climate Challenge Programs goals and to discuss possible adjustments to its voluntary commitments.

D.

The Climate Challenge Program representative for The Southern Company will be Charles H. Goodman, Vice President, Southern Company Services, Post Office Box 2625, Birmingham, Alabama 35202. The Southern Company agrees to notify DOE prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

A.
DOE's commitments to The Southern Company are those set out in section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B.

DOE will consider requests by The Southern Company to intervene in regulatory proceedings of federal, state, and local commissions and boards on issues pertinent to the Climate Challenge Program. Before DOE intervenes in regulatory and other proceedings pertaining to The Southern Company and/or its operating subsidiaries for purposes of addressing Climate Challenge Program issues, it will provide notice to The Southern Company.

C.

DOE will provide an annual report to The Southern Company describing the actions that it has taken to fulfill its commitments under section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.
D.
The Climate Challenge Program representative for DOE, who will serve as liaison to The Southern Company, will be Allan Hoffman, Department of Energy, Room 6B-128 (EE-10), 1000 Independence Avenue, S.W., Washington, DC 20585; Telephone: (202)586-1786. DOE agrees to notify The Southern Company prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

III. General Provisions

A.
Use of DOE-developed materials by The Southern Company will be governed by the provisions of section IV of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B.

In addition to the foregoing provisions, DOE and The Southern Company agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set out in subsections V.A-V.D, V.F, and V.G of the Climate Challenge Program MOU, which are hereby incorporated by reference.

C.

Either party may withdraw from this Participation Accord or any of its activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

_______________________________                ______________________________

A.W. Dahlberg                                  Hazel R. O'Leary

President                                      Secretary

The Southern Company                           U.S. Department of Energy

                                

February 3, 1995                               February 3, 1995

Attachment A -- Commitments of The Southern Company under the Climate Challenge Program

Attachment B -- Climate Challenge Program Memorandum of Understanding and Exhibits

1. National Earth Comfort Program

 The Southern Company will participate in this program to increase the market penetration of ground source heat pump technology. Present financial requirements for participation are $50,000 per year from 1995 through the year 2000 for a total investment of $300,000.

2. Electric and Renewable Energy Investment Pool

 This fund will provide venture capital for companies to produce and introduce into the market electric and renewable energy technologies that will reduce emissions of greenhouse gases. The Southern Company will invest up to $5 million into the fund for the years 1995 through 1999. If additional funding pools are created as part of this initiative, The Southern Company will consider additional investments in those funding pools.

3. Utility Forest Carbon Management Program

 This initiative will leverage the resources of numerous utilities to undertake carbon sequestration projects. The Southern Company plans to commit $200,000 for the years 1994 through 2000 upon satisfactory development of the program.

4. EV America

 This program is designed to enhance the development and demonstration of electric vehicles by having utilities introduce them into their fleets. Alabama Power Company and Georgia Power Company are founding members of this program. The Southern Company will introduce 100 electric vehicles into its fleet operations by the year 2000 under the EV America program.

1. Transportation

Between the years 1995 and 2000, The Southern Company will expend $63 million in programs to place electric vehicles into the transportation marketplace. This will include the introduction of some 1,400 electric vehicles into the fleets of The Southern Company's operating subsidiaries. (This commitment does not include the EV America commitment of 100 vehicles.)

2. Forestry

The Southern Company will expend the following on programs to address sequestration of carbon from the atmosphere over the years 1994 through 2000:

        $300,000        Smithsonian Tropical Research Institute 

        $700,000        Improvements on existing Company lands

        $3,800,000      Development and implementation of programs not on Company lands

3. End Use Programs

Demand Side Management (DSM)

1991 - 1994

The DSM programs in place include the promotion of new energy efficient homes, low-income housing energy efficiency kits, technical assistance to businesses, time-of-use and pricing incentives, and additional programs.

The operating subsidiaries of The Southern Company will continue to implement and improve programs to help electric customers use energy in the most efficient manner. These programs will continue to be refined, based on market conditions and Integrated Resource Plan requirements. The Southern Company is committed to undertake a portfolio of DSM programs during this time period. A description of the plans is provided in the current Integrated Resource Plan of The Southern Company. The activities are projected to reduce energy consumption by more than 2 million MWh annually in 2000. Southern Company anticipates aggregate expenditures of approximately $25 million on DSM over the next 5 years.

In addition, as part of The Southern Company's overall commitment to DSM programs we plan to: 1. Seek appropriate regulatory solutions to overcome economic barriers;

 2. Continue to investigate additional economic programs; 3. Continue to sponsor, participate in, and seek out appropriate government-sponsored programs; and 4. Support the passage and enforcement of cost effective and energy efficient building codes and appliance and equipment standards.

Electrotechnology Development

 Over the next 5 years, The Southern Company will operate the Technical Application Center for the promotion and development of electrotechnologies and will support the research of viable electrotechnologies. Electrotechnologies allow the substitution of electric equipment for manufacturing and other applications where other fuels or less efficient electric equipment are presently used. Their use may result in a net reduction of greenhouse gas emissions. The Company anticipates that operating expenditures for the Center will total $5 million over the next 5 years. In addition, The Southern Company will invest over $1 million over the next 5 years for additional research into electrotechnologies.

4. Supply Side Programs

The Southern Company will implement programs to continue and enhance past gains in efficiency at its electric generating plants. This focus on efficiency lowers the amount of fuel needed to provide each unit of energy from the plants.

1991 - 1994

Fossil Efficiency Improvements

 From 1990 to 1993, fossil fuel fired plants in The Southern Company improved their average net heat rate from 9,810 Btu/kWH to 9,721 Btu/kWH.

Heat Rejection Improvements

 Since 1990, cooling tower system upgrades have included 1800 MW and 3300 MW of fossil and nuclear-fueled generation, respectively. Upgrades have been achieved through media replacement, helper cooling towers, redesign, and chemical additives. These upgrades improve the condenser heat exchange of a generating unit and thus its operating efficiency.

Nuclear

 The Southern Company owns 100 percent of Plant Farley, 50.1 percent of Plant Hatch, and 45.7 percent of Plant Vogtle. Nuclear generating plants do not emit greenhouse gases, and they reduce overall emissions by displacing generation from coal-fired baseload plants.

Between 1991 and 1994, the total annual generation of these three nuclear plants (including the co-owned portions) rose from 38,167,229 MWh to 42,134,134 MWh, an increase of more than 10 percent. Several factors have contributed to this increase: the total rated capacity of Plant Vogtle was increased by about 100 MW, routine refueling outages were completed in less time, and plant reliability and availability between refuelings were improved.

1995 - 2000

Heat Rejection Improvements

 The Southern Company will improve the steam cycle heat rejection equipment at several system generating plants prior to 2000. These improvements will result in more efficient production of electricity. The Company anticipates aggregate expenditures of approximately $10 million over the next 5 years as outlined in current capital budgets.

Other Efficiency Improvements

 The Southern Company will implement other efficiency measures at system generating plants between 1995 and 2000. Plans for these improvements are described in the current capital budget of The Southern Company. The Company anticipates aggregate expenditures on these efficiency measures on the order of $170 million over the next 5 years.

Biomass

 The Southern Company burns more than a thousand tons of wood waste each month to displace coal. This represents an increase above the pre-1990 levels. The Company will also investigate committing to further uses of biomass based on economics and tax treatment.

Nuclear

 The total rated capacity of Plant Hatch will be increased by approximately 80 MW during this time period, at a cost of about $15 million (including co-owner shares). It is also expected that the reductions in refueling outage times that have been achieved will be sustained during this period, and improved levels of plant reliability and availability between refuelings will continue. Together, these factors will allow current high levels of nuclear production to be maintained or increased during the 1995 to 2000 period, decreasing the need for fossil-fueled generation.

Cogeneration

 The Southern Company subsidiary Mississippi Power Company upgraded the cogeneration facility at the Chevron refinery in Pascagoula, Mississippi to include a new 80 MW unit in 1994. This natural gas-fired facility produces electricity and process steam for a significant industrial customer and provides The Southern Company system with less CO₂ emissions as compared to coal-fired baseload capacity.

Solar

 The Southern Company will continue to implement programs to enhance the development and performance of solar generated energy including:

Georgia Institute of Technology Aquatic Center

Georgia Power Company, The U.S. Department of Energy, and the Georgia Institute of Technology are finalizing plans to fund and construct a photovoltaic array on the roof of the Aquatic Center at the university for the 1996 Olympics. Georgia Power's investment in the 300-kW facility will be $1.8 million.

Research

 The Southern Company will invest $8.2 million prior to 1998 in the Power Systems Development Facility (PSDF) located in Wilsonville, Alabama. In addition to The Southern Company, project partners include the U.S. Department of Energy, the Electric Power Research Institute, and others. The $158 million project will develop and test advanced gasifier systems, advanced pressurized bed combustion, hot gas cleanup systems and fuel cells. This research will lead to technologies that increase the efficiency and environmental performance of electric generation.

5. Transmission

The Southern Company is committed to undertake a portfolio of projects to maintain, improve and enhance the efficiency of existing transmission systems. The Company's plans are described in the current Integrated Resource Plan of The Southern Company. For instance, the Company will operate some of the transmission systems at a higher voltage profile, add new capacitors on the transmission grid, and substitute more efficient transformers. These projects are expected to reduce transmission losses by over 420,000 MWh per year by the year 2000. Over the next 5 years, the Company anticipates aggregate expenditures of approximately $505 million on transmission system improvements that will maintain, improve, and enhance efficiency.

6. Distribution

The Southern Company is committed to a portfolio of projects to maintain, improve and enhance the efficiency of the existing electric distribution system. The Company's plans are described in the current capital budget of The Southern Company. For example, The Southern Company will install lower loss transformers, improve distribution system automation, enhance system voltage optimization and improve phase current balancing and dispersed energy storage. These projects are expected to reduce distribution losses by about 15,000 MWh per year by the year 2000. Over the next 5 years, the Company anticipates aggregate expenditures of approximately $374 million on distribution system improvements that will maintain, improve, and enhance efficiency.

7. Recycling

1991- 1994
Over the period from 1991 through 1994, The Southern Company reused almost 15 percent of total ash, totaling over 2.5 million tons of ash. During this same period, approximately 2,400 tons of paper were recycled. This represents an increase above the pre-1990 levels.

The Southern Company will continue and enhance existing programs to increase the recycling of waste material from its facilities and the specification of recycled material in product and supply purchases. For the period 1995 through 2000 these include:

        $ 2,100,000     Development and testing of coal ash use in concrete

        $ 2,000,000     Purchase products made with recycled materials

        $46,000,000     Installation of dry coal ash collection systems which will enhance

                        recycling

Recycled ash reduces the amount of raw materials needed in the manufacturing of concrete and in roadbed construction, reducing the energy consumption necessary for their manufacture.

8. Other Government/Industry Initiatives

The Southern Company will continue to be a partner in other government/industry programs which will lead to reductions in greenhouse gas emissions. These include:

Green Lights (EPA) - Joined in May, 1993
Waste Wise (EPA) - Charter Member, July, 1994
Cool Communities (EPA, DOE, American Forests) - Georgia Power is a member of this program.

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Lawrence.Mansueti@hq.doe.gov