BIRMINGHAM, Ala. — Residential and commercial customers may have gotten a small, fleeting peek behind the curtain yesterday at the final Public Service Commission proceeding on the rates and profits for the state’s largest utility, but ultimately, the obscure regulatory process has left ratepayers no better informed about why they are paying some of the highest bills in the country.
Rather than ushering in a new era of transparency, these public meetings stand out for issues that the PSC failed to address. Our organization and others were granted a seat at the table, but repeated requests to Alabama Power for information about how the company produces energy, and how its portfolio of energy sources impacts rates – topics that are regularly reviewed by public service commissions across the country – were denied. As a result, many of the automatic rate adjustments made by Alabama Power and allowed by the PSC remain obscure. Apparently, the public will have to push even harder for an effective and systematic review of how the company operates.
Hopefully, these hearings will result in lower rates for Alabamians. In the coming months, the PSC may lower Alabama Power’s allowed return on equity (ROE), which is significantly higher than the industry average, resulting in much-needed savings for Alabamians. It will be important to see if any adjustment in the ROE is accompanied by other, more obscure changes to rates that effectively counteract meaningful reductions.
Lowering the ROE, however, does not address a much larger problem: Alabama lacks a formal and open process to ensure that critical decisions — e.g., energy resource planning, environmental compliance expenditures, and Alabama Power’s rates — are made with meaningful participation by the people who pay the bills.
While there are longstanding concerns about the lack of transparent and effective regulation of Alabama’s utilities, the issue took center stage this spring when PSC Commissioner Terry Dunn called for the first formal hearings in more than three decades. News that Alabama has some of the highest electricity bills in the country built momentum for Alabama to join other states with more transparent processes.
The other two commissioners, however, rejected the call for formal hearings and instead committed to a series of “informal meetings” that they promised would address these issues. We accepted this process in good faith, and over the past few months, our organizations participated in these hearings. Unfortunately, the hearings themselves provided little or no opportunity to understand the data used in Alabama Power’s automatic rate adjustments, and no opportunity beforehand to review the information Alabama Power relied on to make its case during these hearings.
These proceedings have played an important role in highlighting a dire need for much more transparency, but they are only a small first step. The citizens of Alabama who pay the electric bills and the taxes that finance the PSC deserve much better from both.