2011-03-07 15:53:40 -

Fitch Ratings has assigned a rating of 'A+' to the $250 million of 5.50% senior notes issued by Alabama Power Company (Alabama Power). The new notes are unsecured and rank equally with other unsecured debt of Alabama Power. The notes will mature March 15, 2041. Proceeds will be used for general corporate purposes including the continuous construction program. The Rating Outlook of Alabama Power is Stable.

The ratings are supported by the stable financial performance and credit metrics consistent with Fitch rating guidelines over the next three years, driven by a gradual improvement in industrial sales and timely recovery of costs through its regulatory mechanisms, including rate stabilization and equalization (RSE) and environmental cost recovery clauses. The funds from operations (FFO)

interest coverage ratio is forecasted by Fitch to be approximately 5.5 times (x) in 2011 and 2012.

Alabama Power's annual rate adjustment proceedings have been going well and there are no major construction projects. Fitch sees adequate headroom in current and projected credit metrics to absorb a prolonged period of economic slowdown in Alabama Power's service territory; as was demonstrated during the stressed economic conditions of 2009.

Liquidity is strong relative to expected needs. Maturities of long term through 2015 are as follows: $200 million in 2011; $500 million in 2012; $250 million in 2013; $0 in 2014 and $54 million in 2015. There was cash on hand of $154 million and no commercial paper borrowings as of Dec.

31, 2010.

Rating concerns for Alabama Power include a high reliance on the industrial sector, which accounts for approximately 34% of total megawatt-hour (MWh) sales and results in relatively high economic sensitivity. The dominant industries in Alabama Power's service territory are composed of chemicals, pipelines, primary metals, and pulp and paper. In addition, the company has a relatively high reliance on coal-fired generation (67% of energy produced), which could lead to increased spending needs to comply with future emissions regulations.
However, Alabama Power has an environmental clause to facilitate timely recovery of these costs.

Additional information available at ' www.fitchratings.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. '.

Applicable Criteria and Related Research.

--'Corporate Rating Methodology', Aug. 16, 2010;

--'Credit Rating Guidelines for Regulated Utility Companies' July 31, 2007;

--'U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines' Aug. 22, 2007;

--'Utilities Sector Notching and Recovery Ratings', March 16, 2010.

Applicable Criteria and Related Research.

Credit Rating Guidelines for Regulated Utility Companies

www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id= .. : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..

Utilities Sector Notching and Recovery Ratings

www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id= .. : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..

U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines

www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id= .. : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..

Corporate Rating Methodology

www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id= .. : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..

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Fitch RatingsPrimary AnalystSharon Bonelli, +1-212-908-0581Managing
DirectorFitch, Inc.One State Street Plaza,New York, NY

10004orSecondary AnalystShalini Mahajan,

+1-212-908-0351DirectororCommittee ChairpersonGlen
Grabelsky, +1-212-908-0577Managing DirectororMedia
Relations:Cindy Stoller, +1-212-908-0526Email: cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com