Energy News: Alabama Power outlines planned plant overhauls

By Kim Chandler,Associated Press

Alabama Power officials outline environmental upgrades and other reasons behind a planned 5 percent rate increase

MONTGOMERY, Ala. (AP) — Alabama Power Co. officials on Tuesday described environmental upgrades and other reasons behind a planned 5 percent rate increase, while consumer and environmental advocates criticized state regulators over the amount of information available to the public.

The Public Service Commission held a public hearing on the power giant's planned rate increase that company officials said is needed to reflect the increased cost of doing business. The rate adjustment will begin Jan. 1 unless PSC staff members object to the company's calculations.

Company officials detailed their efforts to comply with a federal requirement to lower toxic air emissions by April 2015. The $1 billion plan includes converting some coal-fired generating units to natural gas and the installation of emissions control devices on units that will continue to burn coal.

"We have continued to make investments in equipment for our environmental compliance program. As we continue to make those investments and defer those costs, we have not had a rate adjustment to reflect that," Alabama Power Assistant Comptroller Wendy Hoomes said.

Alabama Power earlier this month filed a notice of a 4.93 percent rate adjustment. The increase translates to a monthly increase of $6.78 for a typical residential customer using 1,000 kilowatt hours each month.

Most of the increase, or 3.5 percent, is because of increases in general operating expenses, such as the increased cost of materials, Alabama Power spokesman Michael Sznajderman said. The company's cost of environmental compliance accounts for an increase of about 1.5 percent, he said. He said the company has not had a rate increase in three years.

Michael J. Churchman, executive director of the Alabama Environmental Council, questioned why the company wasn't utilizing renewable energy sources as a partial method of compliance with the federal mandate to reduce emissions.

"They are choosing to do these really expensive retrofits on these really old units, whereas a lot of other utilities around the country are choosing to invest a lot more heavily in renewables and efficiencies," Churchman said. Churchman said he wanted to see the company required to provide a cost analysis of using more renewable energy sources.

Company officials said they evaluated renewable energy sources, but they didn't provide a reliable cost-effective solution for compliance.

Audience members were frequently told that their broader questions about consumer advocacy, Alabama Power's lack of competition or the rate-setting process were outside the scope of Tuesday's hearings.

"Once a year the public gets to ask questions, and yet is derided for asking those questions, given very little time," Churchman said after the meeting.

John Garner, the chief administrative law judge for the PSC, said the point of the meeting was to give the public the opportunity to ask questions.

"That is the purpose of today's proceedings is to allow you to ask questions. A lot of the questions, unfortunately, get way beyond the purposes for which this meeting was established," Garner said.

PSC President Twinkle Andress Cavanaugh said the annual meeting on environmental compliance and rates is held to provide the public with information. She likened it to a coach taking questions.

"We don't even get to watch the game," Churchman said.

Churchman said other states do a better job in providing information to consumers about the regulatory process.

Barbara Caddell with the League of Women Voters said the process is not very clear to the public and the PSC should provide better information.

"You make it seem very, very plain, but I'm here to tell you it's not," Caddell said.

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