Fitch Rates $50MM 6.00% Mississippi Power Company Senior Notes 'AA-'

Business Wire, Nov 17, 2008

NEW YORK -- Fitch Ratings assigns an 'AA-' rating to Mississippi Power Company's (MPC) $50 million series 2008A 6.00% senior notes due Nov. 15, 2013. The new notes are unsecured and rank equally with existing and future unsecured debt of MPC. The proceeds from these notes will be used to repay a portion of its outstanding short-term indebtedness and for general corporate purposes including MPC's continuous construction program. The Rating Outlook is Stable.

Fitch's rating of MPC reflects the continued strong operating performance, good liquidity, stable financial condition and constructive regulatory environment in Mississippi. Mississippi enacted a law on May 9, 2008 to enhance the Mississippi Public Service Commission's (PSC) authority to facilitate development and construction of base load generation in the State of Mississippi. The bill authorizes, but does not require, the Mississippi PSC to include in retail base rates, prior to and during construction, all or a portion of the prudently incurred preconstruction and construction costs incurred by a utility in constructing a base load electric generating plant. Fitch believes the new law is likely to facilitate timely cost recovery of new baseload generation capacity and minimize rate shock.

From a liquidity perspective, MPC had approximately $43.3 million in cash and cash equivalents and $149.2 million of available credit facilities as of Sept. 30, 2008. The credit lines provide liquidity support to MPC's commercial paper program and have $32.2 million dedicated to funding purchase obligations related to variable rate pollution control revenue bonds. MPC may also meet short-term cash needs through a Southern Company subsidiary organized to issue and sell commercial paper and extendible commercial notes at the request and for the benefit of MPC and other Southern Company subsidiaries. MPC had $54.6 million of commercial paper outstanding as of Sept. 30, 2008.

Fitch's credit concerns include risks associated with relatively higher concentration of industrial customers in a slowing economy, location of service territory in a natural-disaster-prone region, and recovery lags for fuel and other costs. MPC plans capital expenditures of approximately $280 million and $447 million in 2009 and 2010, respectively. The costs associated with the development of MPC's proposed IGCC plant will continue to be deferred as regulatory asset. The capital expenditures are subject to the company filing a request for a certificate of public convenience and approval thereof by the Mississippi PSC.

Fitch's Stable Rating Outlook assumes MPC will supplement internal cash flows with a balanced mix of debt and equity to fund capital spending and other cash needs.

MPC (IDR 'A ', Stable Outlook) is a vertically integrated utility subsidiary of Southern Company (IDR 'A', Stable Outlook) providing electricity to retail customers within the State of Mississippi. MPC serves approximately 187,000 retail customers. For further information, see Fitch Credit Analysis dated Feb. 19, 2008 available on Fitch Research.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.