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PSC member: Utilities' returns may be set too high

Published on NewsOK Modified: December 15, 2012 at 2:20 pm •  Published: December 15, 2012

Dunn said a formal review is like a court proceeding with due process rights. It involves public hearings, the sharing of documents filed by all sides, and the opportunity for input from consumers.

Spokesmen for the utilities say the current system is fair and is providing reliable service.

Before any of the three current members joined the PSC, the utility regulatory board enacted rate plans for the three large utilities that provide ranges for their return on equity. If their return drops below the range, the PSC can raise rates to get the return back within in the range. If the return goes above the range, the PSC can reduce rates.

A report issued in October by an independent research group, Regulatory Research Associates, said Alabama Power's range of 13 percent to 14.5 percent hasn't been changed since 1982. The range for Alabama Gas has been 13.15 percent to 13.65 percent since 1983, and the range for Mobile Gas has been 13.35 percent to 13.85 percent since 2002.

The report found the ranges of return for the three Alabama utilities were "well above" the average returns approved for energy utilities nationwide.

A recent analysis of Alabama Gas and Mobile Gas rates by the Press-Register newspaper found utility customers would have saved about $260 million in 2010 if they had been charged rates paid by natural gas customers in Mississippi and Georgia. The utilities said variables between the states made the comparison invalid.

Representatives for the utilities say current regulations are fair for both the utilities and for consumers.

All three PSC members are Republican. Dunn and Cavanaugh have been members since 2010, and Oden since Dec. 1.