  We discuss a model of the central source in Seyfert 1 galaxy NGC 5548. The
model assumes a three phase disk structure consisting of a cold outer disk, a
hot central disk constituting a Comptonizing X/gamma source, and an
intermediate unstable and complex phase emitting a soft excess component. The
model qualitatively explains broad-band spectrum and variability behavior
assuming that the soft excess contributes significantly to the continuum
emission and drives variability by geometrical changes of the intermediate disk
zone.
