Fitch Assigns 'A+' Rating to New Senior Notes of Mississippi Power Company.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 9, 2004

Fitch Ratings has assigned an 'A+' rating to the issuance of $40 million of Series F Floating Rate Senior Notes due March 9, 2009 (Notes) of Mississippi Power Company (MPC). The net proceeds from the sale of the Notes, along with cash on hand, will be used to repay $80 million of maturing notes of MPC due on March 12, 2004. The Notes are unsecured and unsubordinated obligations of MPC.

MPC's rating is reflective of its strong credit protection measures, low generation costs, and benefits of affiliation with the Southern Company group. Further support for the rating is provided by the historically constructive regulatory environment in Mississippi. The ability to recover costs associated with environmental spending and short term purchase power contracts increases the stability of cash flow available for debt service. MPC has pending requests to the Mississippi Public Service Commission (MPSC) to include 266MW of Plant Daniel capacity in rate base and to modify certain provisions of its Performance Evaluation Plan (PEP), the performance based rate plan which has been in place since 1986. The proposed changes to PEP include the use of a forward, rather than historical, test year and adjustments to the performance indicator mechanism. A final order is expected in the second quarter of 2004. In May 2000, the MPSC ordered that retail competition may not be in the public interest and that no further hearings would be held on the subject. Fitch does not anticipate that retail electricity deregulation will occur in Mississippi in the foreseeable future.

Credit risks include: exposure to environmental regulations affecting coal fired generation; moderate industrial customer concentration and any adverse changes in the state or federal regulatory environment. One former credit concern, exposure to the credit of Dynegy, was eliminated due to the termination of a capacity sales agreement with a subsidiary of Dynegy Inc. relating to capacity of Plant Daniel in 2003. Dynegy made a $75 million payment to MPC to terminate the agreement, resulting in a gain of $38 million. This Plant Daniel capacity will become dedicated to serving MPC's retail demand if the MPSC grants MPC's pending request to add it to rate base, however, at present this capacity is subject to the currently weak wholesale electricity market conditions in the Southeast.

MPS is a wholly owned subsidiary of the Southern Company, which is the parent company of five regulated public utilities in the Southeast, a wholesale generation company, and various other subsidiaries. MPC operates as a vertically integrated utility providing electricity to retail customers within the state of Mississippi and to wholesale customers in the Southeast.