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Rate hike should be gradual

Alabama Power is asking for only 57 percent of the record rate increase it initially sought from the Public Service Commission earlier this summer.

The PSC will decide Oct. 7 whether to approve the hike, which would take effect starting Thursday, Oct. 9.

Under the new rates, residential customers would pay an extra $9.30 per 1,000 kilowatt hours. Translation: an increase from $112.90 to $122.20 per 1,000 kilowatt hours. The average Alabama home uses about 1,300 kilowatt hours each month, according to the PSC.

Had the company’s original request found approval, it would have meant an extra $16.45 per 1,000 kilowatt hours for homeowners. The reason for the increase was a $239 million shortfall due to rising fuel costs, primarily for coal, which supplies about 70 percent of the company’s power.

As a result of negotiations with industries, the company agreed to reconfigure its proposal to a two-year cost recovery program (the initial request would have allowed the company to recover from the shortfall within one year).

The agreement means a smaller rate hike: 8.24 percent for residential customers, 9 percent for commercial customers, and 14 percent for industries. If approved by PSC, the new rates would be locked in for two years. They could potentially change again in October 2010.

Alabama Power set a record two years ago with its 12.8-percent rate increase while the company recovered from massive hurricane damage. At least under their current proposal, the change would not be so drastic.

It’s difficult enough for low- and fixed-income residents to adjust to rate increases when virtually every necessity costs more money. What is agreeable to businesses and industries is doubly hard on these citizens.

And with no end in sight to this energy crisis, it seems as vital as ever to look for less expensive alternatives. Simply passing down expenses to an already economically stressed public cannot be the ultimate solution.