[SOUTHERN COMPANY LOGO]

SOUTHERN COMPANY GENERATION

Post Office Box 2641

Birmingham, Alabama 35291

Tel 205.992.6011

April 10, 2003

Mr. Marc Merritt

President

Horizon Natural Resources Sales Company

2000 Ashland Drive

Ashland, Kentucky 41101-7058

Mr. Christopher C. Womack

Senior Vice President- Fossil& Hydro Power

Georgia Power Company

241 Ralph McGill Boulevard, N. E.

Atlanta, Georgia 30308-3374

Re: Agreement for Purchase and Sale of Coal between Horizon Natural Resources Sales Company and Georgia Power Company

Gentlemen:

Horizon Natural Resources Sales Company, a Kentucky corporation ("Seller"), and Georgia Power Company, a Georgia corporation ("Purchaser"), have entered into a new agreement for the purchase and sale of coal from 2004 through 2010 ("New Agreement"). (Seller and Purchaser are sometimes hereinafter referred to collectively as the "Parties" or separately as a "Party.") The terms and conditions of the New Agreement are as follows:

1. Definitions. In addition to other terms defined elsewhere in this letter agreement, the following terms shall have the following meanings whenever such terms are used in the New Agreement:

(a) "Coal Price" means the price for coal supplied under the New Agreement, which shall be determined from time to time as provided in paragraphs 6, 7, and 8 of this letter agreement.

(b) "Coal Property" means the real property, mineral interests, preparation facilities, loading facilities, and related improvements that are located in Knott, Perry, or Leslie Counties, Kentucky, and are owned or controlled by Seller or its affiliates.

(c) "Contract Year" means each period of twelve calendar months beginning on January 1 and ending on December 31 during the term of the New Agreement. The first Contract Year shall begin on January 1, 2004, and end on December 31, 2004.

(d) "Monthly Quantity" means the quantity of coal scheduled to be supplied by Seller to Purchaser under the New Agreement during a calendar month.

(e) "Semiannual Period" means each period of six calendar months during a Contract Year. The first Semiannual Period of each Contract Year shall begin on January 1 and end on June 30, and the second Semiannual Period of each Contract Year shall begin on July 1 and end on December 31.

(f) "Semiannual Quantity" means the quantity of coal scheduled to be supplied by Seller to Purchaser under the New Agreement during a Semiannual Period.

(g) "Shipment" means one lot of coal, in sufficient quantities to fill a unit train, loaded into railcars for delivery to Purchaser.

(h) "Ton" or "ton" means an avoirdupois weight of 2,000 pounds.

(i) "Typo Facility" means Seller's loading facility located near Hazard, Kentucky.

2. Term. The New Agreement shall become effective as of April 1, 2003, and shall remain in effect through December 31, 2010, unless earlier terminated as hereinafter provided. Shipments under the New Agreement shall begin in January, 2004.

3. General Provisions. During each Contract Year while the New Agreement remains in effect, Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, at least 1,000,000 tons of coal produced from the Coal Property. Seller's obligation to sell and Purchaser's obligation to purchase such coal are subject to the termination provisions set forth in paragraphs 7 (d) and 12 of this letter agreement. The New Agreement consists of the following documents:

(i) this letter agreement;

(ii) the document entitled "Computation of SO2 Allowance Transfers," which is attached hereto as Exhibit A and made a part of the New Agreement;

(iii) the document entitled "Changes in Environmental-Related Requirements," which is attached hereto as Exhibit B and made a part of the New Agreement; and

(iv) the document entitled "Terms and Conditions of Coal Purchase," as revised February 7, 2003 (hereinafter referred to as "Additional Terms"), which is attached hereto as Exhibit C and made a part of the New Agreement. All references to "the Agreement" in the Additional Terms shall be deemed to refer to the New Agreement. In the event of any conflict between the terms of this letter agreement and the Additional Terms, the terms of this letter agreement shall control and take precedence over the Additional Terms.

4. Quantity. Except as otherwise provided in this letter agreement, Seller shall supply to Purchaser 1,000,000 tons of coal during each Contract Year, which shall be supplied at the rate of 500,000 tons during each Semiannual Period and in approximately equal monthly Shipments during each Semiannual Period. Notwithstanding the foregoing provisions of this paragraph 4, Purchaser may elect, in its sole discretion, to adjust the quantity of coal to be supplied under the New Agreement by increasing the Semiannual Quantity as follows:

(a) For each Semiannual Period of each Contract Year, Purchaser may increase the Semiannual Quantity to not more than 750,000 tons; provided, however, that the total quantity of coal supplied under the New Agreement during each Contract Year shall not be more than 1,500,000 tons. As a result, the Monthly Quantity for each calendar month during a Semiannual Period shall not be less than 83,333 tons and not more than 125,000 tons.

If Purchaser elects to increase the Semiannual Quantity for any Semiannual Period, Purchaser shall give Seller written notice thereof, which shall specify (i) the Semiannual Quantity for such Semiannual Period and (ii) the Monthly Quantity for each calendar month during such Semiannual period. Such notice shall be given at least sixty days prior to the beginning of the Semiannual Period to which such .......

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