In general and in our work on energy policy in Alabama, AEC works in a very collaborative spirit. Since my arrival at AEC 6 years ago, our organization has been very interested in a sustainable approach. Take for example our work on Recycling. Rather than spend all our time fighting landfills and telling people what is wrong with the system, we work to promote recycling and the diversion of valuable commodities out of the landfill, which feeds a thriving manufacturing sector and more than 10,000 jobs across Alabama. Recycling is also a choice that people make, and available to people that want to take advantage and help support the system. In the process, they preserve our valuable resources, save tremendous amounts of energy, and grow businesses that provide jobs to people like you and me.
Our approach to energy policy in Alabama is similar. We have not attacked any form of current energy production, but want to promote an all of the above approach. Current energy production does have negative aspects that are not fully reflected in the cost of power, though we certainly pay those costs. Specific to these hearings, it is AEC’s position that planning has not been discussed as much as it should have and would have a direct impacts on the rates that we pay and the returns that the company receives.
We recognize that the RSE mechanism has played an important role in leveling the price spikes that may have occurred if it had not been utilized. It also may have been a good fit and the high levels of ROE may have fit when it was installed 30 years ago. And, it was very effective at keeping rates level with significant capital costs like were present 30 years ago and when the bond rates were in double digits. But, the fact remains that even though rates are below the national average, Alabamians pay the second highest rates among southeastern states. And, the national average has trended downward in the last 20 years and Alabama’s PSC has not followed that trend. Lastly, Alabama citizens do not have the opportunity to comment or be a part of the decision-making processes that lead to those rates.
It is the recommendation of the AEC that the PSC should require Alabama Power to engage in a public process to develop an Integrated Resource Plan. Much of the information that has come forth in recent informal meetings would be included in such a plan, as well as planning for the future that would help to know what rates would need to be into the future. It would also indicate how other generation opportunities may exist and be implemented that could benefit Alabama customers. AEC has been saying for some time that Energy Efficiency should be utilized more heavily as a resource and invested in as a potential way to meet demand. The cheapest power to produce is that which is already there and is simply captured through energy savings. We should do everything we can to quite wasting this valuable resource.
Another recommendation that AEC would present is that we formalize the process for informal types of meetings. If we are not going to have a formal hearing process, we should at least formalize the structure and timetable for when informal types of hearings happen. It is great that all three commissioners have agreed that the ROE needed to be looked at, but what happens if the next Commissioners don’t want to do that in the future? Would we go for another 30 years without review?
The Public Service Commission should be in service to the public and the Attorney General’s office needs to be a strong consumer advocate.
Given by Michael Churchman, Executive Director, on July 18, 2013, to the Alabama Public Service Commission at it's 3rd meeting on Alabama Power Rate RSE.