MONTGOMERY, Ala. (AP) — Some groups will call for rate changes for Alabama Power Co. when the state's utility regulatory board wraps up hearings on the state's largest electric utility.
In position papers filed ahead of the meeting, AARP and Alabama Arise maintain the current rate structure is too favorable to the company. Alabama Power says the rate structure is fair and reasonable.
The Alabama Public Service Commission has been holding hearings on whether to change its rate stabilization plan for Alabama Power. Wednesday is supposed to be the final hearing, but commissioners said the proceedings, which are open for public comment, could extend into Thursday if necessary. After that, the commission will study the material submitted during the hearings — including testimony from company officials and utility experts on Wednesday — and make a decision in a few weeks.
Alabama Power's rate stabilization plan provides the company with a rate of return on common equity of 13.0 percent to 14.5 percent. Small rate adjustments can be made when the return falls outside the range.
AARP, which represents older citizens, hired rate expert Stephen Hill. He is recommending a 10 percent return, which is slightly higher than then company's cost of equity. He estimated that would save customers about $172 million in one year.
Alabama Arise, which represents Alabama's poor, hired utility expert David Schlissel. The organization's position paper says he will tell the PSC that the regulatory system for Alabama Power "unjustifiably rewards the company and is costly to the citizens of the state."
Attorney General Luther Strange, whose office represents consumers before the PSC, has notified the commission that it is not making any financial recommendations now, but could later.
Alabama Power's position paper says having financial integrity and an "A'' credit rating benefit its customers, and that financial standing allows the company to supply a reliable product despite higher-than-normal demand. "Alabama's residential electricity price is below the national average; however, its average electricity usage per residential customer is above the national average," the position paper says.
Commissioners Twinkle Andress Cavanaugh, Terry Dunn and Jeremy Oden predict the commission will make changes in Alabama Power's rate plan, but say it's too early to say what. Cavanaugh said the commission could make a decision Sept. 10, and any rate change would take effect in December.
The commission held hearings on Mobile Gas before beginning the hearings on Alabama Power. The commission decided July 2 to lower the rate of return on common equity for the natural gas utility, which serves the southwest corner of the state. The change is supposed to save customers $2.7 million annually.
After Alabama Power, the commission will turn its attention to the rate structure for Alabama Gas, the state's largest natural gas utility.