Hundreds of millions in savings at stake as PSC set to rubberstamp rates and profits for Alabama Power
WHAT: Alabama Power customers will question the process for determining electric utility bills on Tuesday, as the Alabama Public Service Commission goes through the annual exercise of rubber-stamping the rates it allows Alabama Power to charge. These rates would allow the company to pass on more than $3 billion in capital expenditures without justifying the prudence of those costs. With only token opportunity for input, this hearing will leave residential and commercial customers paying some of the highest electricity bills in the country. The process used by the PSC to determine rates prioritizes Alabama Power returns, which are about 40 percent higher than the industry average, giving the company some of the most generous profit margins in the country.
WHY: Unlike most other utility regulators in the country, the Alabama PSC employs arcane formulas to determine electricity rates rather than open, fair and transparent public hearings. This allows Alabama Power, the state’s largest utility, to make decisions about spending ratepayer money without publicly justifying those costs. For example, it does not have to evaluate alternatives to spending billions on pollution controls for outdated coal plants or invest in energy efficiency programs that help lower bills. Despite promises from two of the PSC’s three commissioners that recent changes would lower bills, Alabama Power has already clearly stated that won’t be the case. In fact, Fitch, a major credit rating agency, has given the company a highly favorable A+ rating based on forecasts that credit will remain strong, “driven by … rate increases” tied to recent PSC decisions.
There hasn’t been a formal rate hearing on Alabama Power’s rates in 30-plus years. Unlike past years, however, the public is now calling for a return to transparency and fairness that will restore balance between the bills that customers pay and the profits the company earns. There is now a body of evidence showing the unfairness of the current arrangement and how fixing it could save customers hundreds of millions of dollars and still leave the company competitive with other utilities around the country.
WHEN: Tuesday, Dec. 10, 2013, 9:30 a.m. CST and 2 p.m. CST. Alabama Power customers will be available to give their impressions of the hearing at the conclusion of the morning session.
WHERE: The hearings, covering different parts of the formula the PSC uses to calculate rates and returns, will take place at the RSA Union Building, 100 North Union St., Room 900, in Montgomery.