The Alabama Public Service Commission voted Tuesday, by a 2 to 1 vote to implement a reduction in the allowed rate of return for Alabama Power Company. Commissioner Terry Dunn voted no.
PSC President Twinkle Andress Cavanaugh says customers should see annual savings between $30 and $110, depending on their usage. Commissioner Jeremy Oden says residential customers and small businesses should save between $30 and $45 a year. But Commissioner Terry Dunn says those projections are based on hypothetical figures, and he doesn't expect rate payers to see any change.
The changes voted on Tuesday could go into effect in January if Alabama Power doesn't contest the recommendation.
"While Alabama Power Company felt their current rate structure was justifiable, our job as commissioners is to do what's fair for all, and our hearings showed that consumers deserve some relief in the bills they pay," Cavanaugh said.
The lone Public Service Commissioner to vote against the change, Terry Dunn, argued that the move supported by Oden and Cavanaugh does more for the company than for customers.
"This hurried decision actually allows the company's profits to go higher" Dunn said. Dunn argues that the slight decrease for return on equity in the short term will lead to higher profits in the long term for Alabama Power.
The rates that Alabama Power charges its customers had not been reviewed in more than 20 years. Dunn wanted formal rate hearings to examine the fairness of the rates that Alabama Power charges. Commissioners Oden and Cavanaugh preferred a more informal setting that wasn't a formal legal proceeding. During Alabama Power's rate hearings, lawyers tended to dominate the proceedings, questioning experts and others giving testimony. Oden originally said he wasn't in favor of lawyers controlling the proceedings, but he insisted Tuesday that the entire process was open and transparent.
Alabama AARP, the state office of the national organization, was disappointed in the recommendation by the PSC.
"Our expert, Steve Hill, reviewed the decision. Based on the company's current common equity ratio, (44% of total capital) this weighted cost of equity will allow them to earn a profit ranging from 13% to 14%--almost exactly the same as they were allowed previously," said Jesse Salinas, Alabama AARP's state director.
PSC President Cavanaugh defended the process in a press release, saying a formal process would have required participants to hire legal counsel, which would have silenced voices of members of the public who wanted to participate in the proceedings.
The PSC also approved a new six year review of the RSE mechanism that will be run by the Alabama Attorney General's Office and the staff of the Public Service Commission.
Alabama Power is the state's largest utility. It provides energy to more than 1.4 million customers.
Copyright 2013 WSFA 12 News. All rights reserved. AP contributed to this story.
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