MONTGOMERY – “Our actions today represent a victory for Alabama families. This Commission was tough on Mobile Gas. We were even tougher on Alabama Power. By adopting the PSC staff’s recommendation, we have lowered Alabama Power’s potential revenues by up to $65 million per year and ensured that electric rates will remain stable for both 2013 and 2014.
During the course of our numerous public hearings on Alabama Power’s Rate RSE, this Commission heard from many who talked about topics ranging from economic development to community involvement to the environment. While I appreciate the deeply held belief of many that Alabama Power works to recruit jobs to Alabama and support worthy charities, my focus has always been on doing what’s right for Alabama families and businesses. And that is what we have done today, with customers potentially saving an average of $30 – $45 per year going forward. While that may seem modest, there have been over 40 authorized or pending rate increases in the Southeast alone since Alabama Power’s last rate increase in October of 2011.
Another important success resulting from this process is our modernization of the RSE formula in Alabama. My experience in the world of finance taught me that a company’s financial performance cannot be properly evaluated without looking at both its equity and debt structure. Adoption of the weighted cost mechanism promotes transparency by allowing, for the first time, an accurate side-by-side comparison of the profit Alabama Power is allowed with that of utilities in other states, after accounting for differences in their debt and equity structures. As we were in the 1980s with the adoption of Rate RSE, Alabama is once again a leader in how we regulate utilities with this modernization of the formula.
Finally, I am proud to say that we have strengthened our already intense reviews required under RSE by adopting an even more rigorous review process. We have also formalized a 6 year review of the RSE mechanism to be led by the Office of the Attorney General and the PSC staff. With these modifications, I am confident that the RSE formula and this Commission will continue to serve the people of Alabama well for years to come.”