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Power rate cut approved
Published Tuesday, June 2, 2009
The state Public Service Commission approved a plan Thursday that would see bills for Alabama Power customers decrease starting next week.
The state Public Service Commission decided Tuesday to decrease the cost of 1,000 kilowatt-hours for homes and apartments by $2.72, starting June 9. The reduction from $130.29 to $127.57 represents a drop of 2.1 percent.
Alabama Power spokesman Pat Wylie said the decrease comes from the fact the company has been able to recoup some of the nearly $328 million in losses from previous years due to droughts and increased fuel costs.
In October, the PSC approved a 13.35 percent increase to power rates to help the company reduce the loss, but because of recent rains and lower fuel costs, the company is well ahead of its plan to cover the costs.
“When we first put forth the plan to work down those losses, our goal was to recover that amount in 24 months,” Wylie said. “Just six months into this plan, we have already recovered half of the amount.”
Over the past few years, Alabama Power had been forced to generate power by using more coal and natural gas to meet demands rather than relying heavily on the company’s hydroelectric production dams.
The droughts had lowered lake levels to the point the company was forced to cut back power generation to slow the drawdown on the lakes. The use of coal and natural gas was more expensive.
According to the Associated Press report, Alabama Power serves the southern two-thirds of the state. The Tennessee Valley Authority, which serves the northern third, raised rates 20 percent last year due to higher fuel costs. But TVA has now rolled back most of that increase due to declining fuel prices.
When the PSC raised Alabama Power's rates in October, the prices for coal and natural gas had been climbing. Coal and natural gas generate 80 percent of Alabama Power's electricity, and fuel expenses account for half of the cost of electricity, Wylie said.
At the time, the power company had spent $307 million more on fuel for its power plants than it had recovered through its utility rates.
The rate reduction approved Tuesday is good through October 2010, when the PSC will again review prices.
- The Associated Press contributed to this report.
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Comments
Posted by AZSneed (anonymous) on June 2, 2009 at 9:35 p.m. (Suggest removal)
In the long run, we will be paying a lot more for electricity down the road. When this clean up the air that Obama wants, and Alabama not able to go to wind or solar power, and with no Nuclear power to back up to, then up goes the rates.
Coal is dirty electricity, so the cost for it will, as always, pass to us. This shows a lack of planning, and WE will pay for it!
Posted by getbizi (anonymous) on June 3, 2009 at 7:33 a.m. (Suggest removal)
WOW!!! Now I can send my daughter to Harvard with that extra $2.72 per month. What a joke.
Posted by REK1138 (anonymous) on June 3, 2009 at 7:46 a.m. (Suggest removal)
So - fuel prices go up, Alabama Power is forced to raise rates by 13%. They not only go back down, but are below where they were when they had to raise rates, and they give back 2%. Was about to say it sounded like the government but the government wouldn't have given back 2%.
Posted by kwsrgraves (anonymous) on June 3, 2009 at 10:11 a.m. (Suggest removal)
AZ, I will respectfully disagree with you. The clean air projects cannot be blamed on Obama or any person in particular. I have worked on two SCRs and one Scrubber project for Southern Co long before Obama even planned to run for POTUS. Furthermore there ARE two Nukes in Alabama in operation now. The third, at Belfont, has been RE-PERMITTED and is on schedule to be rebuilt. The clean air act started in the 1970s. If you remember the summer days in Birmingham back in the 70s and 80s, you remember not seeing the sun for days. Miller and Gorgas steam plants were definitely contributors.
What I thought was funny in this article was the statement that APCO relied heavily on hydro electric production. However, hydro-power makes up 20% or less of the power produced, as hydro units are basically peakers.
I wonder how the rates were affected in western states that SOCO sells it's electricity to.
Posted by livinginthorsby (anonymous) on June 3, 2009 at 12:20 p.m. (Suggest removal)
Alabama Power owns or operates 81 electric generating units with total nameplate capacity of more than 13 million kilowatts. These generating units are located at 24 facilities in the state of Alabama.
I have family members and dear friends that work for APCO and you would not believe the amount of money the company puts into making sure these people are safe and not killed while on the job restoring power after major storms and the regular maintenance work they do four days a week, 10 hours a day. So the fact that they are able to reduce rates should be praised.
Posted by getbizi (anonymous) on June 3, 2009 at 1:19 p.m. (Suggest removal)
Livinginthorsby, I appreciate APCO's proclivity toward safety, but I doubt that employees were any less safe before they raised rates.
Posted by livinginthorsby (anonymous) on June 3, 2009 at 1:22 p.m. (Suggest removal)
Sorry get - you missed my point as much as I missed yours. One has nothing to do with the other.
Posted by psychologistdmp (anonymous) on June 3, 2009 at 1:41 p.m. (Suggest removal)
livinginthorsby, I have multiple family member who work for Southern Company as well and want them to be very safe and successful. However, I've got to agree with REK1138 on this one. If our power bills are directly related to the price of fuel, as Southern Company claimed when they asked for the 13% increase, then we should be seeing a significant decrease, not 2%. If other factors are coming into play (safety training or overtime), then that is something different, but, from what I remember, that is not what Southern Company said; they blamed the increase on fuel prices.
Posted by livinginthorsby (anonymous) on June 3, 2009 at 2:14 p.m. (Suggest removal)
psycholog: the answer to your questions as well as REK can most likely be found here:
http://www.alabamapower.com/financial/pd...
As far as the safety factor goes, it was simply a comment made that as a company they care very much about their employees and customers.
Posted by ErnestNorsworthy (anonymous) on June 3, 2009 at 7:03 p.m. (Suggest removal)
Clanton Advertiser 6/3/09
To the good folk in Clanton, greetings from a native of Montgomery now living in California. Southern California Edison is our electricity provider and they do provide relatively low-cost electricity with good service.
Regardless of how you feel about the Alabama PSC, it is a watchdog for Alabama citizens except for the upper third of the state.
The history of the TVA and Southern Company go all the way back to 1933 when TVA began its takeover of 80,000 square-miles of sovereign territory of seven Southern states. TVA is an agency of the federal government and it exercises the power of eminent domain, that is, it can take your property.
I have written extensively about the TVA and its scourge on the South. You are lucky to have your electricity supplied by the Alabama Power Company and not from the TVA.
TVA has been an abomination from the very start; today it is so deeply in debt it should be liquidated.
For more of my comments, see http://norsworthyopinion.com or my latest post, http://norsworthyopinion.com/tvafacesano...
Ernest Norsworthy
Visalia, California
emnorsworthy@earthlink.net
P.S.
I have no interest financially or otherwise in any utility of any kind.
EN
Posted by gkeys (anonymous) on June 3, 2009 at 7:46 p.m. (Suggest removal)
Just wait until this is all passed!
http://www.heritage.org/Research/Economy...
Posted by psychologistdmp (anonymous) on June 4, 2009 at 5:05 p.m. (Suggest removal)
livinginthorsby, what I gathered from Southern Company's annual report is that, even though they, reportedly, suffered $329 millon in losses over the past several years and asked for a 13% increase last year, their numbers, over the past three years have continued to climb. What does that tell me? Instead of risking the possibility of taking a really big hit like most other companies have, they decided to pass the cost on down to the customers. Good business sense because who else are we going to go to for power, but bad for our wallets. It would be nice to see a bigger reduction in 2010, but I imagine that by that time fuel prices will be up even higher than before and we will see an even larger increase.
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