Following is a position statement from AEC in response to the recent recommendation for Alabama Power's RSE proceedings, adopted by the Alabama Public Service Commission.

Montgomery, AL- On August 13, 2013, the Alabama Public Service Commission (PSC) issued a vague and speculative recommendation based on recent hearings. It added a weighted cost of equity (WCE) formula into the Rate Stabilization and Equalization (RSE) mechanism which adds another layer of confusion to rate calculations for Alabama citizens.  Because the process by which the PSC arrived at this new formula was not made available to the public, AEC cannot be sure of exact calculations.  Some have suggested that the WCE should compare Mobile Gas with Alabama Power’s as well as comparing the two companies’ equity ratio. It is Alabama Environmental Council’s (AEC) opinion that these comparisons are inaccurate and most would agree the two companies are vastly different. Alabama Power’s equity ratio is currently in the 45% range, much different from Mobile Gas’ equity ration of 56%. Accordingly, any comparisons between Mobile Gas and Alabama Power and estimates of savings are speculative if not inaccurate.

All three Commissioners disagree on potential customer savings. The lack of information exchanged during these informal proceedings calls into question estimates of what consumers may save because of the aforementioned change in Alabama Power’s rate structure. The lack of transparency and free flow of information in this entire process has made an already confusing subject matter almost incomprehensible for the public who simply want fair rates.

“It is the lack of transparency that concerns AEC,” said Michael Churchman, Executive Director for the organization. “AEC takes the position that in order for the PSC to adequately balance the interests of utility and consumer, full transparency—the exchange of information and ideas—is imperative.”

For the last few months, AEC participated in informal, public proceedings instituted by the PSC regarding the RSE mechanism used by Alabama Power.  AEC’s interest in utility prices and regulatory oversight provided by the PSC relates to our support of policies that encourage the most efficient and sustainable approaches to providing all Alabamians with safe, available, affordable and reliable electricity, and empowering customers to use it wisely.

Through participation in these informal proceedings, it is AEC’s position that these proceedings were lacking in transparency.  Although AEC and other groups were permitted “a seat at the table,” the substance of participation was very limited.  From the beginning, it was clear that the scope of the hearings would be extremely narrow. Alabama Power continually denied requests for information by AEC and other participants. The proceedings also greatly limited the contents of conversation, which resulted in both confusion and limited public debate.  The portrayal of the informal process is also inaccurate as the proceedings became incrementally more formal and lawyers for Alabama Power continued to deny requests made from the public.

Churchman went on to say, “AEC takes the position that these informal proceedings did not achieve the balancing of interests between Alabama Power and Alabama consumers.  AEC contends that full transparency and planning, which includes robust stakeholder participation with Alabama Power is crucial to the PSC’s ability to fulfill its duty of balancing the interests of the utility and the consumer.”

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