Utility rate litigation bad for Alabama businesses
No one voluntarily puts themselves in the middle of a legal action — with lawyers and judges, appeals and depositions — unless they simply have no other alternatives to gain justice and right a grievous wrong.
But it seems that a minority of the Alabama Public Service Commission and many editorial boards want to plunge Alabama back into the rate-making-by-litigation model that harmed economic development and benefited the bank accounts of an army of lawyers while providing a backdrop for political demagoguery.
One of our Public Service Commissioners has called for “formal hearings” on the rates of return for Alabama’s major utilities, and the press has castigated the two Commissioners who oppose such hearings.
“Why,” the editorial writers ask, “would anyone be opposed to formal hearings?” The answer is really very simple.
First, the current process of ratemaking is working. In spite of the strange economic calculations some reporters are producing and calling them a financial analysis, the rates for energy in Alabama are not only reasonable, they are low when compared nationally.
In particular, electricity from Alabama Power has been priced below the national average for decades.
Moreover, using its current process, the PSC has secured a freeze on rates that will prevent rate increases for two years.
This freeze on rates takes place while other utilities throughout the South are requesting and getting hundreds of millions of dollars in rate increases.
Our rates are frozen while stringent environmental regulations coming from Washington are imposing billions of dollars in added expenses on utilities.
The system is working so there is no need to put it on trial with formal hearings, judges, lawyers and endless appeals.
Second, if there are problems with rate structures, the current system can solve them.
It is factually inaccurate to say that the range of return for Alabama utilities has not been examined in 30 years.
It’s just not true.
There have been formal dockets that examined and changed the range of return, the method of calculation has been examined and modified and on a monthly, ongoing basis, the technical staff of the PSC studies and examines the economics and calculation of utility rates.
This constant examination is why we have the Public Service Commission, and this system is working for the people of Alabama.
And let me make it clear, these proceedings are not “informal”. Actions before the PSC are transparent, and allow for interveners who want to be heard to make their case.
What the current system does not do, that some appear to want, is create the kind of record necessary for third-party lawyers to begin an appeals battle in state court.
Third, moving to an adversarial legal process does nothing good for Alabama.
Anytime we have to go to court we set in motion a chain of actions that is expensive and does not always yield the best results.
We created the system used by our PSC to arbitrate, not litigate the rates for energy in Alabama.
I have been serving in state government or representing the interests of Alabama businesses before state government for about four decades.
I remember vividly when virtually every proceeding before the PSC was “formal” and legal. In those days, the Supreme Court functioned as the rate-maker, not the PSC. We do not need to go back to those days.
Alabama businesses depend on reliable low-cost energy to both keep jobs and attract new jobs to our state.
Returning to a court-based process of ratemaking introduces tremendous uncertainty for businesses.
It will make doing business more difficult for existing businesses and will force those considering bringing jobs to Alabama to consider other states whose ratemaking is not threatened with endless legal action.
From the point of view of Alabama businesses and manufacturers, our PSC’s process is working.
It would be harmful to take this system that is working and drag it into court.
No one in Alabama will be pleased with either the process or the result if this takes place.