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PSC could decide Alabama Gas rates Nov. 5

Published on NewsOK Modified: October 9, 2013 at 7:15 pm •  Published: October 9, 2013

MONTGOMERY, Ala. (AP) — The state's utility regulatory board could decide next month whether to make any changes to the rate plan for Alabama Gas and the timetable for when they will take effect for consumers.

On Wednesday, the Public Service Commission held the last of three public hearings on the state's largest natural gas distributor. PSC President Twinkle Cavanaugh said she expects changes, and the commission will likely consider them at its next meeting Nov. 5 or possibly sooner.

The PSC has had Alabama Gas on a rate stabilization plan with a specified return on equity for 30 years. Rates are adjusted when the return falls outside the range. The current plan provides Alabama Gas with a return on equity of 13.15 percent to 13.65 percent.

The commission used to provide a similar range for Mobile Gas, but the commission voted in July to lower the range to 10.45 percent to 10.95 percent.

Commissioner Terry Dunn said he would like to see the PSC lower Alabama Gas to a similar range "to be fair to Mobile Gas."

A consultant working for Alabama Gas, University of Illinois Springfield business professor Karl McDermott, said the company's current return on equity is reasonable. He said Alabama's largest natural gas distributor has higher risks than Mobile Gas because it serves a more geographically dispersed area, parts of its service area are losing population and have high unemployment, and it faces more competition from other natural gas suppliers.

AARP, the advocacy group for seniors, has been the main adversary of Alabama Gas in the public hearings. AARP's utility consultant, Stephen Hill, said a fair return on equity would be 10 percent, and that would be more in line with other regulated gas utilities around the country. He estimated that would reduce the revenue of Alabama Gas by $20 million annually.

That works out to $47 annually per customer. The amount would be much larger for industrial customers and smaller for residential customers.

The attorney general's office is responsible by law for representing consumers before the commission, but a staff member repeatedly passed when she had the opportunity to question Alabama Gas officials and AARP's consultant Wednesday.

If the PSC decides to change the rate structure for Alabama Gas, it will have to work out when the changes will begin. Its current rate plan got approved by the PSC in 2007, before any of the current commissioners took office, and it runs through the end of 2014. Cavanaugh said she hopes the commission can work out an agreement with the company to begin any changes at the start of 2014.

Alabama Gas, a Birmingham-based company also known as Alagasco, serves 425,000 customers in 30 counties, mostly from Montgomery County northward.