(Adds comments from CEO about climate-change bill starting in 10th paragraph.)


Southern Co.'s (SO) third-quarter profit climbed 1.2% as the utility company was helped by cost cuts and increased service charges amid still-sliding demand and cooler-than-average weather that hurt revenue.

The Southeastern U.S.-focused company has continued to see reduced demand, especially from industrial customers, during the economic downturn. Southern, one of the largest owners of coal-powered plants in the U.S., has cut costs and begun working on alternative-energy projects amid a push for reduced carbon-dioxide emissions.

The company said Wednesday industrial sales have started to pick up, as it saw an 11% sequential increase in that segment.

"While the economy continues to take its toll, we are seeing signs of stabilization and what may be the beginnings of recovery in certain sectors in our region," said Chief Executive Officer David M. Ratcliffe.

Southern reported third-quarter earnings of $790 million from $780.4 million, but fell to 99 cents from $1.01 on a per-share basis as stock outstanding rose 3.2%. Revenue fell 14% to $4.68 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of 98 cents on $5.5 billion in sales.

Kilowatt-hour sales fell 6.1%--2.6% for residential customers, 3.6% for commercial customers and 9.6% for industrial customers.

Southern is regarded as the utility most likely to first begin construction on the next generation of nuclear reactors, using part of $18.5 billion in federal financing. Even as other companies' plans for plants have been rejected, Southern says it expects its plant in Georgia to enter service around 2016.

Southern also is trying to capture and store greenhouse emissions from coal-fired plants and expand its presence in biomass-burning plants.

Southern CEO Ratcliffe said in an interview that he doesn't expect Congress to pass climate-change legislation this year as health-care reform takes precedence in Congress. The Senate version of the climate-change bill should mirror the House version, which allows utilities to use energy-efficiency measures to comply with a requirement to produce or buy 20% of their electricity from renewable sources by 2020, Ratcliffe said.

Southern has opposed a renewable-energy standard, arguing that such a requirement would place an undue burden on electricity customers in the Southeastern U.S., where wind and other renewable resources are less plentiful.

The House bill also lets utilities make "alternative compliance" payments to farmers and other landowners for environmentally friendly projects, which could benefit Southern ratepayers, Ratcliffe said. The Senate Environment and Public Works committee is debating climate-change legislation this week,

Shares closed at $32.65 on Tuesday and weren't active premarket Wednesday. They are down 12% this year.

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com

(Christine Buurma contributed to this article.)