Alabama Power not planning rate cut
Published 10:17 pm Tuesday, November 18, 2008
MONTGOMERY – Alabama Power Co., which is raising rates about 13 percent, is not planning to cut electric rates like the Tennessee Valley Authority, which last week announced plans to trim back a 20 percent rate boost.
TVA, which serves the northern third of the state, announced Thursday that it would cut rates by about 6 percent due to lower fuel costs, beginning Jan. 1.
Alabama Power, which serves much of the southern two-thirds of the state, is not planning a reduction because the utility is still trying to catch up on $300 million it has spent for fuel but has not recovered from customers through utility rates, spokesman Michael Sznajderman said.
TVA, which serves seven Southern states, enacted a record 20 percent rate hike Oct. 1 due to skyrocketing prices for coal and higher costs for natural gas.
TVA spokesman Gil Francis said Monday the federal utility is planning to roll back rates because coal prices have stabilized and natural gas prices have come down.
In Alabama, the state’s utility regulatory board, the Public Service Commission, sets rates so that Alabama Power can recover its actual expenses for fuel to run its power plants.
But with fuel prices rising, Alabama Power has failed to recover its costs most months and has run up a $300 million shortfall. Because of that, the PSC approved an 8.24 percent increase Oct. 9 for residential customers.
The PSC also agreed to raise the monthly connection fee for homes and apartments on Jan. 1 from $8.91 to $14.50.
With the two increases, the amount a residential customer pays for 1,000 kilowatt hours will increase from $112.90 to $127.97, equal to 13.35 percent.
In areas served by TVA, the average cost for 1,000 kilowatt hours is currently $102, Francis said. He said the reduction should provide a savings of $4 to $8 per month for homes and apartments.
Sznajderman said it is hard to compare a private utility that pays taxes with a federal utility like TVA that makes payments to governments in lieu of taxes. But he said when the PSC approved the rate hikes for Alabama Power, the company agreed to go through 2009 without a general rate increase. TVA’s rates are not locked in by a state utility regulatory board.