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Lower rates approved for Alagasco customers

Published 11:50am Monday, November 18, 2013

The Alabama Public Service Commission recently voted to approve a rate reduction affecting Chilton County Alabama Gas Company (Alagasco) and its customers.

In an effort to reduce energy cost to consumers, the commission voted to lower the rate of return or investment Alabama Gas Company is allowed to earn by 280 basis points, the same reduction achieved in the Mobile Gas Company hearing earlier this year.

This historic reduction in return represents the largest one-time decrease in an allowed return by a regulated utility in recent history.

The three-member regulatory panel started a public rate review process for Alagasco in September.

After meeting in Montgomery in early September, in Auburn on Sept. 25 and Montgomery on Oct. 9, the commission reviewed the collected information from the meetings and determined which rate adjustments were justified.

The return for Alabama Gas Company, which has been in place since 1988, was reduced from a range of 13.15 percent-13.65 percent with a point of adjustment at 13.4 percent, to the lower range of 10.50 percent-10.95 percent, with the point of adjustment at 10.80 percent.

The reduction of the allowed return will effectively show annual Alabama Gas revenue reductions of more than $13 million, savings that will directly reduce the roughly 3,800 Chilton County Alagasco customer’s bills.

Alabama Public Service Commissioner Jeremy H. Oden said in a release that over the life of the revised four-year term, Alabama Gas Company customers should see cumulative savings reaching upwards of $50 million.

These savings take into account Alabama Gas Company operating at an allowed equity of 56.5 percent.

“During the Mobile Gas, Alabama Power and Alabama Gas proceedings, I have continued my commitment to hear directly from actual rate payers by calling for public proceedings in off-site locations,” Oden said in a release. “The public hearing in Auburn for Alabama Gas Company on Sept. 25 provided customers the opportunity to speak directly to the company and to me and my fellow commissioners.”

Oden said the agreement will require Alabama Gas to file additional financial documentation to the commission staff, a provision that will further enhance the level of regulatory oversight we have at the public service commission.

“This public hearing process allowed us the flexibility to work directly with our staff, the Attorney General’s Office and the company to institute significant, tangible savings to ratepayers while ensuring a stable regulatory environment for Alabama Gas Company,” Oden said in a release.

Alabama Public Service Commission President Twinkle Andress Cavanaugh said she was pleased that Alagasco customers will receive some relief during tough economic times.

“This is a real victory for the consumers,” Cavanaugh said in a release. “I promised to review all utility rates regulated by the public service commission in order to keep utility rates down and, in return, continue to recruit and grow jobs in Alabama.”

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