MONTGOMERY, Alabama — Alabama Power Co. rates will go up nearly 5 percent next year under a requested rate adjustment that will see a typical household electric bill rise by $6.78-a-month.
Alabama Power spokesman Michael Sznajderman said the changes reflect the company's increased costs, including money spent to overhaul coal-fired power plants to reduce air pollution.
"It is basically the increasing cost of doing business. We've held rates flat over a three-year period," Sznajderman said.
The power company filed for the adjustment Monday with the Alabama Public Service Commission. The utility is allowed to seek yearly adjustments to reflect changes in the cost of generating power. The higher rates will begin in January unless PSC staff object to the company's calculations.
The increase translates to a monthly increase of $6.78 for a typical residential customer using 1,000 kilowatt hours each month.
Sznajderman said the last increase was in 2011.
The new increase comes after a heralded 2013 rate formula change that lowered the company's range of profit. Company officials said at the time that it would put downward pressure on rates and two public service commissioners predicted savings for customers.
PSC President Twinkle Andress Cavanaugh said Tuesday that the increases are modest considering the company held rates flat for three years.
"Obviously, the cost of business has gone up," Cavanaugh said.
Sznajderman said bills would have risen more, but modestly so, without the 2013 formula change.
"We're thinking it would have been in the neighborhood of a $1 a month higher had the commission not reduced our allowable return," Sznajderman said.
However, he said it significantly reduced profit for Alabama Power shareholders.
Candace Williams, interim state director for AARP-Alabama, expressed concern over the rate increase.
"With many older Alabamians on fixed incomes, any rate increase can be very painful for them," she said.
The company filed for one base rate adjustment to reflect increases in general operational expenses. A second adjustment reflected money spent on environmental upgrades to comply with federal mandates to reduce toxic emissions from coal-fired energy plants. The base rate adjustment totals $181 million and the environmental compliance adjustment totals $75 million, Sznajderman said.
"In some cases we are adding controls to coal units that we are going to continue to use. In some cases we are converting some coal units to natural gas. There are all under a suite of environmental regulations that are predominantly tied to emissions related to coal," Sznajderman said.
He said the overhauls include installing pollution control devices at coal-fired units at the Gorgas plant in Walker County. A facility in Greene County is being converted to natural gas.
Sznajderman said Alabama Power prices will remain 10 percent below the national average and 2 percent below the regional average.
"Our price has been below the national average for decades," he said.
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