Lawmaker pushes bill intended to overhaul how your utility rates are regulated

BIRMINGHAM, Ala. (WBRC) - Changes are likely to come for legislation intended to transform the way the Alabama Public Service Commission (APSC) sets your utility rates.

HB475 as written would require the APSC to hold rate hearings with utilities to discuss rates, profits and answer the public’s questions. These meetings are already held annually with the APSC in December.

Representative Mack Butler, the sponsor of HB475, said the intention of the bill is to force the APSC to regulate utilities through rate cases, which are notably different than rate hearings.

“We want the full-blown rate hearings, a rate case to get the people Alabama the absolute lowest energy cost possible,” Butler explained.

But the bill stops short of including the actual language to trigger a rate case.

“The main goal of this is to make them justify the rates that they’re charging - and we’re wanting the rates lowered,” Butler responded. “We want people in the State of Alabama to have the absolute lowest energy prices possible.”

What’s a rate case?

Many states use rate cases to regulate monopoly utilities. When a utility wants to raise prices, it must go to its utility commission and make a case for why it customers should pay more. It’s a lengthy process that often ends in court.

This hasn’t happened in Alabama in more than 40 years.

How APSC sets rates

The APSC uses multiple formula rates to set your utility rates. One of the rates is called Rate RSE, or Rate Stabilization and Equalization Factor, which covers operational costs and profit.

The formula has a set range. If Alabama Power’s projected profit is higher than the range, rates could go down. If it’s lower than expected, rates could go up. With formula rates, the APSC has access to Alabama Power’s finances.

Read more about how your rates are set here.

Butler says he wants to throw out adjustable rates.

“Absolutely, that proves we are doing something and have been doing something that is not working on behalf of the people,” Butler added. “I believe it’s working on behalf of the utility companies. We’re all supposed to be working for Alabamians, our state. And Alabama Power is reporting record profits.”

Butler expects to file an amendment to clarify the legislation, likely at the time the bill goes to committee. No committee hearing has been set for HB475 at the time of publication.

“I may have to tweak this a bit more and part of the process with any piece of legislation, as you go through is literally the sausage being made,” Butler explained. “When we file a bill it brings people pro and con to the table and it brings a lot of experts to the table.”

Butler said he was prompted to file this legislation after hearing a recorded call published by WBRC, where an Alabama Power lobbyist was discussing a bill that would strip Alabamians of the right to elect the ASPC. Butler says it outraged his constituents.

“You’re well aware there was a leaked audio of Alabama Power lobbyists conspiring with some people about this legislation and apparently they were terrified of who might be elected, that’s where I think the outrage came.” Butler confirmed. “I talk to people all the time that literally are making choices between food, medicine, and energy costs. I’m an ambassador for our state. We’re always trying to recruit businesses and industry here and with industrial recruitment, one of the first things they look at is energy costs and all of our neighbors are cheaper. We’re going to have to force this, not only for our people, but to help our state grow.”

According to the legislation, if the APSC doesn’t hold the rate hearings, the three-member commission could be impeached.

“Trying to get their attention of who they work for,” Butler said as for why the drastic measure was included. “For all these years, the candidates have said that they want to go work for the people, but the perception is that they’re working for the utility companies.”

The bill would also prohibit passing along costs to ratepayers for lobbying, association dues and charitable gifts, which are already prohibited. It would also prohibit passing along advertising costs, which are currently partially banned.

Energy Alabama, a clean energy nonprofit that advocates for lower energy rates, weighed in on the bill Monday, Feb. 23, saying they appreciate Butler’s effort to bring down rates.

“However, as currently written, HB475 does not require a structured, formal rate case on a defined schedule,” stated Daniel Tait, executive director of Energy Alabama. “An annual hearing is not the same as a structured, formal rate case, which would include a full evidentiary review, discovery, and a public record. Without that process, there’s no guarantee utility spending, profit margins, and rates will receive the scrutiny necessary to deliver real savings.”

WBRC launched an investigative series, Price of Power that revealed Alabamians are paying some of the highest power bills in the country. You can read more on our series and the subsequent impact of that reporting here.

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