## A Conversation With Allen Franklin 

## Probably the biggest business story of the past year was corporate ethics. How does Southern Company measure up? 

When someone looks at a company to determine its credibility, they generally use the same standards as when they look at a person. One gains confidence based on the company’s or the person’s actions. When you look at Southern Company, I think you should look at our track record. Have we been candid? Have we done what we said we’d do? Have we put customers and shareholders first? I believe the answer is yes, and I think customers and investors feel the same way. 

## What is the biggest challenge to continuing Southern Company’s success? 

There are lots of issues facing our company and our industry. There’s nothing new about that. I believe we can handle these challenges, as we have in the past. A broader challenge is to not become satisfied with our performance. It is important that we get better and better at the things that have made us successful. And that’s being focused on customer service and creating value for shareholders. It also includes making sure the system is reliable and efficient, that we keep outages to a minimum and restore power quickly when it does go out. It means being disciplined in our decision-making and being true to the type of investment our shareholders expect from us. I think we do an excellent job in all these areas, and our customers rate us extremely well. But we still think we can – and will – do better. 

## Is the oversupply of generation in the Southeast a concern for the competitive generation business? 

It has been apparent for some time that there is more generation being constructed in the Southeast than is required to serve customers in the region. That is the reason we haven’t participated in the speculative com- petitive generation business. We are in the competitive generation business primarily through long-term con- tracts, so I do not expect the current oversupply of capacity to substantially affect the profitability of this business. And I think we can continue to grow this business at an attractive rate, even in an oversupplied market, because wholesale purchasers now put a real premium on the reliability and staying power of the 

supplier. That seems to be as important as the short- term price being offered. Even with this positive out- look, clearly an oversupplied market will make growth in this business more difficult than would be the case in a balanced market. 

## What progress has been made on the environment? 

We continue to be responsible and aggressive in com- plying with air quality and emission standards, while also meeting our responsibility to serve our customers’ energy needs. A recent example is in Florida. Gulf Power, which already meets all state and federal health-based environmental standards, has voluntarily initiated a $200 million project to reduce emissions of ozone- forming nitrogen oxides from the company’s plant near Pensacola by an additional 61 percent by 2007. We’re also testing renewable and alternative sources of power such as biomass and advanced, cleaner-burning coal. There’s a lot of interest in renewables. What will really advance the use of renewables is making them eco- nomical. That’s where our emphasis is. 

## Has the company made progress on diversity? 

We have made significant progress. More than 25,000 employees, including senior management, have now completed diversity-awareness training. And we have increased the diversity of our leadership throughout the company. For example, about 40 percent of leadership- position promotions in 2002 went to women and minorities. And 57 percent of new hires last year were women and minorities. We are working to assure a fully inclusive work place, where every single employee feels valued and is valued. It is an ongoing and long-term commitment requiring daily attention. 

## What’s the overall outlook for the company? 

It’s very bright. Sticking to what we do best, focusing on our customers, paying attention to the nuts and bolts, and running the business to continually get better is the right strategy. Also extremely important is having the discipline to stick to markets and businesses we under- stand and making the creation of real shareholder value a key driver for all business decisions. People in the company believe in the strategy, investors support it, and state regulators feel good about what we’re doing. 

