A non-profit pushing for lower electricity costs in Alabama says a plan by Alabama Power to freeze rates for two years is an election year ploy to “avoid headlines about rate increases, not a plan to improve affordability.”
John Dodd, policy director for Energy Alabama, said the power company could simply lower rates now for customers.
“At the core of it, what Alabama Power is proposing is not a rate reduction but a deferral,” Dodd said.
Attempts to reach Alabama Power for a response to those comments were not immediately successful.
In a notification last week to the Alabama Public Service Commission, Alabama Power proposing leaving electricity rates untouched for two years, through the end of 2027.
The company said the decision came after conversations with the commission and the Alabama Attorney General’s Office.
In a statement, Alabama Power said the filing was made “as part of our ongoing discussions about ways to help customers manage their power bills.“
“We know budgets are tight, and power bills are a real concern for many families and businesses,” the statement reads.
The Public Service Commission’s next public meeting is scheduled for Dec. 2 at 10 a.m. in Montgomery.
To forego rate increases, the utility will rely on “internal cost containment measures,” Feagin said in a two-page letter.
The move, CFO Moses Feagin wrote, would give customers “a measure of rate stability.”
To do this, Alabama Power would commit to keeping in place certain rates related to fuel charges, and delaying until 2028 any adjustment to rates dealing with its acquisition of the 895-megawatt gas-fired Lindsay Hill Generating Station near Billingsley, which the PSC approved back in August.
The company is asking the commission for authorization to apply any customer refund amounts coming from Rate RSE, or Rate Stabilization and Equalization, to its Natural Disaster Reserve to prepare for “future storm events.” According to the company, that reserve currently has a negative balance.
Rate RSE is a formula whereby if projected profit is higher than the range, rates go down, but if lower than expected, rates increase.
It is also seeking use of the company’s 2024 nuclear production tax credits to offset retail costs of service.
Dodd’s group, Energy Alabama, is a non-profit advocacy group for lower power bills and reliable clean energy.
He said both the rate deferral and the tax credits could be used to reduce bills now.
“The only thing pushed back is when the public sees the cost increases, and the company may also earn interest on those deferred balances,” he said.
Dodd pointed out that Alabama Power’s sister company, Georgia Power, proposed a similar freeze through at least the end of 2028, which the Georgia Public Service Commission approved in July. The freeze came after three consecutive years of staggered increases.
Advocacy groups in Georgia argued over the summer that the freeze only locks in the company’s profit margin instead of passing along savings to customers.
Instead, Dodd says the proposed freeze allows commission members to “take a victory lap before election season comes.”
“This is something very solvable for the PSC,” he said. “Our commission has the authority to bring down Alabama Power Co.’s extremely high profit margin.”