Alabama Power asks PSC for 14.6 percent rate hike
MONTGOMERY — Alabama Power Co. has asked the Public Service Commission to raise rates for residential customers by 14.6 percent due to rising costs for coal and natural gas.
The state’s utility regulatory board announced Tuesday that it will hold a public hearing Sept. 23 in Montgomery to consider the power company’s request.
The PSC’s regulations allow Alabama Power to recover its fuel costs. But as of July, the company was $239 million behind because coal costs have gone up 16 percent and natural gas costs 46 percent since 2007, company spokesman Michael Sznajderman said Tuesday.
"Like other utilities, we have experienced pretty dramatic increases in the cost of fuel," Sznajderman said.
Without a change in rates, Alabama Power predicts it would be nearly $1 billion behind in fuel costs by October 2009, he said.
Under the power company’s proposal, a residential customer using 1,000 kilowatt hours per month would go from paying $112.74 to $129.19 — an increase of $16.45 each month.
The power company’s plan calls for an increase of 16 percent for commercial customers and 24.8 percent for industrial customers.
If approved by the commission, the new rates would take effect on Oct. 9. Over the next 12 months, they would allow Alabama Power to erase the shortage on fuel recovery charges, Sznajderman said.
The commission has the option of stretching the company’s recovery over more than 12 months, which would reduce the size of the increase, the company spokesman said.
Alabama Power’s proposed hike is part of a trend. Customers of Georgia Power Co., a sister company of Alabama Power, and Entergy Mississippi have seen recent rate hikes due to fuel costs. The Tennessee Valley Authority, which serves the northern third of Alabama, approved a 20 percent rate hike last week.
Its request for a rate hike is no surprise. At a meeting Aug. 5, PSC members mentioned the company was spending more on fuel than it was getting back from its customers, and they speculated that a rate increase application could be coming up.
Out of the $112.74 that Alabama Power currently charges for 1,000 kilowatt hours, $31 is to compensate the utility for energy costs.
