Power rate hike approved
Published 9:13 pm Tuesday, October 7, 2008
MONTGOMERY – Alabama Power’s electric rates will increase twice in the next three months, resulting in bills for the average home or apartment customer to increase more than 13 percent, except for some of the state’s poorest households.
Alabama’s utility regulatory board unanimously approved the increases Tuesday to help the state’s largest electric utility cope with rising prices for everything from coal to wire. The first is effective Thursday, the second in January.
The Public Service Commission also approved Alabama Power’s first late fee for overdue bills.
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“While we don’t like this, it’s a necessary evil,” Commissioner Susan Parker said.
In return for the increases, the PSC said it intends to go through 2009 without a general rate increase for Alabama Power.
“There will be no increase until 2010,” Commission President Jim Sullivan said.
During a meeting Tuesday, the commission agreed to raise rates 8.24 for residential customers, 9 percent for commercial businesses and 14 percent for industries, beginning this week.
The increase is to help Alabama Power recover increased costs for natural gas and coal. Through August, Alabama Power had spent $257.6 million more for fuel than it had recovered through its rates. The commission also agreed to increase the monthly connection fee for homes and apartments from $8.91 to $14.50, starting Jan. 1. It also approved Alabama Power’s first late fee, starting Jan. 1. It will be 1.5 percent of the bill, with a minimum of $2.
With the rate increases, the amount a residential customers pays for 1,000 kilowatt hours will increase from $112.90 to $127.97. That’s an increase of $15.07, or 13.35 percent, company spokesman Michael Sznajderman said.
The combined increases are the highest for Alabama Power since the PSC established the current rate-setting process in 1982. The previous record was 12.8 percent set in 2006, when Alabama Power had to recover from extensive hurricane damage.
The PSC structured the new increases so that all low-income Alabamians who receive Supplemental Security Income and some who receive Medicaid will not have to pay more. But they must apply to Alabama Power for the exemption.
Sznajderman said the increases should boost the company’s revenue by $168 million annually.
Alabama Power serves the southern two-thirds of the state. The Tennessee Valley Authority, which serves the northern third, recently increased rates 20 percent.
Judy McLean, director of the PSC’s advisory division, said that even with the increases, Alabama Power’s rates will be at least 11 percent below the national average.
Joan Carter, state president for AARP, said the PSC only discussed one rate increase for rising fuel costs when it held a public hearing Sept. 23 for consumers to comment. There was no mention that Alabama Power also wanted to raise its basic monthly charge, and there was never a public hearing held on that issue.
“We are very disappointed in the manner this was done,” she said.