The issue before the Alabama Public Service Commission on Jan. 10 was narrow. After three decades with no formal rate reviews on PSC-regulated utilities, including Alabama Power, was it time to do a more thorough study of those rates and determine whether they are fair to consumers?
Commissioner Terry Dunn made the motion. President Twinkle Cavanaugh and recently appointed Commissioner Jeremy Oden refused to second the motion, so the review will not take place.
A formal rate review would not have had any direct impact on either rates or on Alabama Power's profits. Its function would have been to examine how the utility was applying a formula that guarantees its shareholders a return on equity of between 13 and 14.5 percent, and whether its returns are reasonable. Unlike many informal meetings routinely held between PSC officials and Alabama Power, all of the information from a formal review would have been under oath and open to the public.
It might be the review would have prompted further action by the PSC, possibly including a reduction in Alabama Power's return on equity and a corresponding drop in rates. Or not. That decision would have remained in the discretion of the three PSC commissioners.
Both in her comments immediately after the vote and in her critique of The Daily's editorial on the topic, Cavanaugh said almost nothing about how a rate review could be harmful to ratepayers. Instead, Cavanaugh makes leaps of logic designed to tap into issues that tend to inflame Alabama voters.
Without connecting the dots, she suggests anyone who wants the PSC to conduct a formal rate review of Alabama Power, Alabama Gas Corp. and Mobile Gas is conspiring with "environmental extremist groups." Asking the PSC to do that part of its job, she said, amounts to "a full frontal attack on coal-based energy production."
Coal? Who said anything about coal?
She stresses that energy must remain affordable or industries will not locate in the state, but fails to explain how that is an argument against a rate review. Indeed, making sure rates are as low as possible is the purpose of a rate review. Alabama Power has a state-protected monopoly in its service area. Cavanaugh makes $75,000 a year to ensure consumers are receiving "safe, adequate and reliable services at rates that are equitable and economical."
The question that must be asked is why Cavanaugh is trying to distract voters from the narrow issue of whether consumers are paying a fair rate. Why is she talking about coal and jobs and President Barack Obama and "fancy San Francisco environmental lawyers and junk science hucksters"?
The beneficiaries of the PSC's rejection of a formal review, of course, are the utilities the PSC is supposed to regulate. They are content with their guaranteed return on equity. A rate review would result in public scrutiny. It might even result in a drop in profits, if the PSC took action after the rate review.
Alabama Power, a subsidiary of Southern Co., is large and powerful. Alabama Power was a major player in Alabama politics three decades ago, when the rate-making formula was implemented. Since 2003, Alabama Power-affiliated political action committees have contributed more than $2 million to state political campaigns. State law prohibits them from making contributions to PSC candidates, but they contributed thousands to Oden's campaigns before his appointment to the PSC. They also contributed heavily to the campaign of Gov. Robert Bentley, who appointed Oden. They contributed to the Alabama Republican Party, formerly headed by Cavanaugh.
The PSC's rejection of a formal review did not benefit ratepayers. It may benefit Alabama Power.
Why is Cavanaugh talking about coal and "liberal environmentalists" and "hidden special interests?" Maybe to distract voters from asking a more difficult question: Is her primary loyalty to the people, or to the companies she is supposed to regulate?
Eric Fleischauer can be reached at 256-340-2435 or firstname.lastname@example.org.
Not registered? Click here
|High School Sports||@DecaturPreps|