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Twinkle and Oden Rejects Dunn’s Call for a Formal Review of Electricity and Natural Gas Rates

By Brandon Moseley
Alabama Political Reporter

On Thursday, the Alabama Public Service Commission (PSC) President Twinkle Andress Cavanaugh (R) and new PSC appointee Jeremy Oden (R) voted to block PSC Commissioner Terry Dunn’s call for a formal review of the rates which the PSC was allowing utilities in Alabama to charge customers.

According to original reporting by the Associated Press’s Phillip Rawls PSC Commissioner Terry Dunn had requested a formal review to determine if consumers are paying too much for services by Alabama Power, Alabama Gas and Mobile Gas.

Dunn was not alone in calling for the review.  The state director of the AARP, Jesse Salinas wrote in the Annistan Star, “AARP believes that an investigation or evidentiary proceeding is the best forum to ensure that the commission reviews all relevant and necessary information, and the process is open and transparent.  AARP respectfully requests the PSC to review the ROEs allowed in Alabama. We urge the commission to conduct an evidence-based investigation and adjust returns to reflect current market conditions. Utility rates should be fair to both the utility and the ratepayers, but at the current level of allowed returns it is unlikely that rates in Alabama meet this standard.”

Meanwhile Alabama Power’s political allies opposed the move.  The Executive Director of the Jobkeeper Alliance opposed the hearings because he feared that anti-coal environmental activists would highjack the hearing process.  JobKeeper dismissed the call for hearings as, “Nothing more than a ploy to give radical environmental groups a stage to fight against the use and mining of coal.”

The Board Chairman of JobKeeper, Stewart Burkhalter;  Executive Director Cagle, and International Vice President of the United Mine Workers of America District 20 Daryl Dewberry met with members of the media Thursday to discuss why they believed that PSC Commissioner Dunn’s formal hearings on ratemaking could produce a potential loss of thousands of Alabama jobs.

Dunn said that a formal review would be like a court proceeding with due process rights. It would have involved a series of public hearings, the sharing of documents, and an opportunity for consumers to offer their opinions.

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Under the current approved rates Alabama Power is allowed to clear 13% to 14.5% return on their investment.  If their costs go up to where they make less than a 13% profit, the PSC can raise rates to return the state regulated monopoly back to their accustomed profit margin.  If costs go down to  where Alabama Power is making more than 14.5% the PSC can reduce power rates.  Critics of the system point out that recent Alagasco bills have been twice what Mississippi gas customers pay.  A series of bad hedging bets meant that the Alabama Gas Company was paying twice what gas was selling for on the cash market.  However since 1983 the PSC guarantees Alagasco no less than a 13.15% profit so consumers in Alabama paid for Alagasco’s bad hedging bets with higher heating bills.  The current rates of return were set by the PSC decades ago.

A report by Regulatory Research Associates found that Alabama Power, Alagasco, and Mobile Gas guaranteed rate of returns was well above average for the industry.

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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