The complacency of the Alabama Public Service Commission

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Brian Lyman | ALABAMA REFLECTOR

Imagine there’s a leak in your bathroom. You can’t figure out the cause, so you call a plumber and give a detailed description of the flooding before you.

“Yeah, I know what’s causing the problem,” the voice on the other end replies. “It’s clearly the woke agenda.”

You’d likely call a different plumber.

Alabama faces something similar with our Public Service Commission.

On paper, the PSC is the state’s chief electricity regulator, meant to ensure that Alabamians not served by the Tennessee Valley Authority (a federal agency) pay fair and reasonable power bills.

How are we doing on that front?

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According to the U.S. Energy Information Administration, residential electricity rates in Alabama averaged 15.03 cents per kilowatt-hour last June. That was up over 2023 and only trailed Georgia (15.53 cents) in the Deep South.

It’s worse for Alabama’s commercial businesses, who paid 13.64 cents per kilowatt-hour, higher than the national average that month (13.10). Industrial users do slightly better, trailing both Florida and Georgia in costs, but higher than other Southern states.

Now, this doesn’t mean that something underhanded is going on. There could be reasonable explanations for why electricity costs more in Alabama than in most other parts of the South.

But because of how the PSC operates, no one can say that for certain.

Since 1982, the Public Service Commission has worked with utilities under a process known as rate stabilization and equalization. It emerged after a fight over a proposed rate increase in 1981 that went to the Alabama Supreme Court. The court ordered the Public Service Commission to develop a rate schedule that allowed Alabama Power a 15% return on its investments.

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Because of that, the utility is guaranteed a profit. If it exceeds the profit margin, it’s supposed to cut rates. If it falls below it, it’s supposed to be allowed to raise them.

This differs from a formal rate hearing, where a utility must publicly justify any proposed increases and other parties can testify. Critics have accused the PSC of creating an opaque process that does not provide proper scrutiny for data used to justify rate requests. The attorney general could challenge the rates, but in my time in Montgomery anyone who’s held that office has stayed on the sidelines.

Apart from a controversial change in 2013 (which critics said did nothing to affect rates), rate stabilization and equalization remains in place.

The PSC also appears complacent about Alabama Power’s attitude toward private solar power. The utility imposes fees on rooftop solar, claiming that it needs to recover the costs of providing backup energy to solar power users.

That’s hindered the growth of the sector in Alabama. In Georgia, where Alabama Power’s sister company Georgia Power operates, solar makes up about half of all renewable energy. In Alabama, solar power is just 6% of all renewable energy generated, a blip in power generation.

But there’s no dawn on the horizon for the sector. As Ralph Chapoco reported last week, Alabama Power extended the charge earlier this year to any private solar farms that may want to generate power and sell it back to the utility. It also reduced the amount of money they would pay for that power.

The PSC signed off on it.

In a state that roasts from May 15 to September 15, a public agency charged with guaranteeing affordable, reliable energy should want to encourage the development of as many energy sources as possible. Experts credit solar and wind power with preventing blackouts in Texas on the hottest days of the year.

But our regulators seem to be OK with these obstacles to energy creation.

And if you look at our public service commissioners’ recent political campaigns, you might wonder if they even understand their responsibilities.

PSC President Twinkle Andress Cavanaugh ran for re-election this year on fighting “liberal ‘woke’ ideas.”

Commissioner Chip Beeker cut an ad at a gas pump in 2022 that never mentioned Alabama or electricity bills but did show off fuel prices (which the PSC has no authority over) and accused Joe Biden of failing America (the PSC is not a co-equal branch of the federal government).

That same year, Commissioner Jeremy Oden cut an ad where he fired guns and pledged to “keep the left from jacking up our energy prices.”

They show little interest in discovering the source of Alabama’s regionally high energy prices, much less rolling them back.

So what, exactly, is the point of the Public Service Commission? What good is a regulatory body whose members seem distracted by culture wars and don’t push back against the entities they regulate?

I’m not saying the PSC should be abolished. But it would be great to have some regulators who prioritize the price of electricity and work to find answers and solutions to the high electricity costs that Alabamians face.

And it would be a lot more useful to have commissioners who understand you can’t lower a power bill by yelling “woke agenda” at it.

Brian Lyman is the editor of Alabama Reflector. He has covered Alabama politics since 2006, and worked at the Montgomery Advertiser, the Press-Register and The Anniston Star. His work has won awards from the Associated Press Managing Editors, the Alabama Press Association and Robert F. Kennedy Center for Human Rights. He lives in Auburn with his wife, Julie, and their three children.

Alabama Reflector is part of States Newsroom, an independent nonprofit website covering politics and policy in state capitals around the nation.

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