MONTGOMERY, Ala. (AP) — Customers of Alabama's largest natural gas distributor are going to see a reduction in their rates starting in the fall.
The Alabama Public Service Commission voted unanimously Tuesday for Alabama Gas to refund $16.5 million to its customers through lower rates between Oct. 1 and March 31. PSC members timed the lower rates to coincide with winter heating bills.
Commissioners Twinkle Andress Cavanaugh and Terry Dunn said the commission could allow the reduction to take effect in July, but that is when bills are low. They said the greatest impact for consumers would be during the heating season when bills are highest.
Commissioner Jeremy Oden called it "a good Christmas gift."
The reduction is due to Alabama Gas having a return on common equity that exceeds the amount allowed by the PSC's rate plan for the Birmingham-based company. When that happens, the gas company has to lower rates to get its return on equity back into the allowed range.
Alabama Gas serves 423,000 customers in the state. Neither the PSC nor Alabama Gas has computed how much the reduction will mean for the typical residential customer.
The reduction was anticipated after the PSC voted unanimously in November to lower the range of return on equity the company was allowed. The change took effect Jan. 1.
Darrell Baker, director of the PSC's utility services division, said the projected return on equity for Alabama Gas through Sept. 30 is 13.89 percent, but the rate reduction should lower it to 11.43 percent. That will be below the upper limit of 11.63 percent in the PSC's rate plan.