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Name:
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waterph
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Subject:
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APC, Fifth Highes for Resident
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Date:
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10/9/2008 10:43:51 AM
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Below is an article for the Birmingham News discussing residential power rates - very interesting.
Alabama Power had the fifth-highest residential power rate among 14 Southeastern utilities in first half of 2008
Thursday, October 09, 2008
DAVID WHITE
News staff writer
MONTGOMERY - Alabama Power Co. in the first half of this year had the fifth-highest average price of electricity for residential customers among 14 Southeastern utilities, according to a review of reports by the Energy Information Administration. For January through June, the price of electricity for residential customers of Alabama Power averaged 10.15 cents per kilowatt-hour.
Among 13 other major Southeastern utilities, average residential electric prices in that six-month period ranged from 11.61 cents per kilowatt-hour for Progress Energy Florida, which serves parts of central and northwest Florida, to 6.58 cents for Kentucky Utilities Co., which is based in Lexington.
The Alabama Public Service Commission this week approved two rate increases for Alabama Power. Together, they will raise electric rates by $15.07 a month, 13.3 percent, for a residential customer who uses 1,000 kilowatt-hours of power each month. The utility says that's the median monthly usage: Half of residential customers use more and half use less.
The comparison of average residential electric prices in January through June doesn't include those rate increases, or increases other utilities may have gotten since then. But it does offer a measuring stick of how prices paid earlier this year by Alabama Power's 1.2 million residential customers compare with prices paid by customers of other large utilities in the Southeast.
The median average residential price for the 14 utilities in the six-month period was 9.47 cents per kilowatt-hour. Alabama Power's price was 7 percent higher than the median. Nationally, Alabama Power's price was 6 percent lower than the U.S. average residential price of electricity in January through June, which the EIA said was 10.83 cents per kilowatt-hour.
The EIA, which is part of the U.S. Department of Energy, collects information from larger utilities and reports the retail sales of power made by each utility and related revenues each month. The latest survey from the agency's Form EIA-826 database was for June.
Southeast survey:
The survey included 14 electric utilities in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, South Carolina and Virginia that had at least 400,000 residential customers. No electric utility in Mississippi and Tennessee in the EIA survey had that many residential customers.
Alabama Power spokesman Michael Sznajderman reviewed the comparison Wednesday afternoon and said he thought a 12-month comparison would have been more accurate. He also said a more detailed analysis of operations, utility by utility, could help provide a "truly accurate picture."
That said, Sznajderman listed a few reasons Alabama Power showed up fifth-highest in the survey.
Geography. Alabama Power has a large territory with lots of rural areas. "We have to use more poles, more wires, more transformers to reach customers than in some of the more densely populated areas," he said.
Also, Alabama is prone to tornadoes, hurricanes and thunderstorms that can damage power lines and poles, damage that is expensive to repair. Parts of Alabama Power's territory also have steep, rocky terrain where it costs more to maintain power lines.
Government mandates. Alabama Power has spent $2 billion in the past five years to meet government mandates to clean up emissions from the utility's coal-fired power plants Customer service. Sznajderman said Alabama Power has 90 local offices. "That level of customer service is more costly," he said. Other utilities may not be that closely connected to their communities, he said.
13-14.5% return:
Alabama's PSC for many years has allowed Alabama Power to collect a return on average common equity that ranges from 13 percent to 14.5 percent.
Sznajderman said comparing utilities' profit ranges can be tricky. Some utilities in other states may be able to keep some of the earnings that exceed a profit range, he said. "The system as it has been installed has worked very well over a long period of time to keep our rates stable and to keep our rates below the national average," Sznajderman said.
PSC spokesman David Rountree said, "Alabama Power makes a healthy profit. Its balance sheet is very solid. It's certainly in the interest of Alabama's economy that its principal electric utility be a first-class outfit and not some second-tier Mickey Mouse utility."
If that were the case, Alabama wouldn't have been able to attract ThyssenKrupp or Mercedes or other major manufacturers, Rountree said. "At the same time, you don't want a company that's making an excessive profit on the backs of ratepayers. This commission is doing its very best to make sure Alabama Power is healthy and well run and that the price (of power) remains competitive," he said.
Rountree said many factors could account for Alabama Power's residential price of power being higher than that charged by some other Southeastern utilities. "It's not necessarily an indication that Alabama Power is out of line in its rates," he said.
For instance, Rountree said utilities in Kentucky and Virginia can buy coal that is relatively close. Alabama Power buys much of its coal from Wyoming and Colombia, South America. The mix of power, how much of a utility's electricity comes from coal-fired plants, nuclear plants, dams or natural gas-fired plants, also can affect prices, Rountree said. He noted that some coal prices have skyrocketed in the past year.
Rountree also said he thinks Alabama Power has a high level of service, which could cost more to provide. "Alabama Power does a very good job" of providing reliable service, he said.
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