POWERGRAMS

7 Federal environmental mandates are forcing Alabama Power to close two coal-fired generating units at Plant Gorgas and reduce or eliminate the ability to use coal at Plant Barry and Plant Greene County by 2016. Because of the rules tied to federal environmental regulations, Alabama Power will close two smaller coal units at Plant Gorgas in Walker County. Two more units at Plant Barry, in Mobile County, will cease using coal but will remain available on a limited basis using natural gas. A third coal unit at Barry will begin using gas, but its capability will not be affected as significantly as the other two units. Another significant change will take place at Plant Greene County, where the company will cease using coal and switch to natural gas. Because of this transition, the plant is expected to reduce its workforce by about half. The reduction in workforce is expected to be completed through attrition and transfers, avoiding layoffs. "Federal environmental mandates are forcing us to change how we generate electricity for our customers," said Environmental Affairs Vice President Matt Bowden. "They are putting new restrictions on our ability to provide our customers with the energy they need in a cost-effective manner." The plant changes announced Aug. 1 are expected to be completed by 2016. Although the company is being forced to reduce its use of coal and make other changes, Alabama Power is committed to keeping all of its generating facilities open – to the extent doing so is cost- effective for customers. "These facilities are vital to the communities they serve, providing quality jobs and supporting local economies," said Senior Production Officer Jim Heilbron. "Many of our plants are located in rural communities, which make the jobs they provide even more important. "Fuel diversity helps protect customers from price volatility and potential shortages of any one fuel source. Unfortunately, new restrictions on coal expose our customers to these risks, while further hindering our ability to serve our customers in a reliable and cost-effective manner," Heilbron said. During the past decade, Alabama Power has spent more than $3 billion to meet federal environmental mandates. The company is spending another $1 billion to comply with new federal environmental regulations tied to air emissions. Further spending could be required to meet future federal environmental regulations tied to water, land and coal combustion byproducts. On top of these regulations, the U.S. Environmental Protection Agency has proposed the first-ever rules related to greenhouse gases for existing power plants. If these rules are put in place, they could force the company to make additional costly changes. Since 1996, Alabama Power has reduced emissions of sulfur dioxide and nitrogen oxides by more than 80 percent. Ongoing projects to add environmental technology on coal units at Plant Gorgas and at Plant Gaston in Shelby County will further reduce emissions. By Brandon Glover Federal mandates force closing coal units, reducing Greene workforce REGULATION Two units at Plant Barry will cease using coal, but be available for natural gas on a limited basis.

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