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August 2013 Group Watch: PSC Lowers Power Rates

The Public Service Commission voted 2-1 to radically change how Alabama Power’s rates are measured and created more oversight, which will mean cheaper power bills for consumers. The PSC President said the changes allow the commission to measure Alabama Power’s profits by taking into account a wider array of its financial picture and will save customers an estimated $30 to $110 a year based power utilization.

Most regulated utilities are allowed a profit range based on a rate of return on common equity. Alabama Power’s range has stayed at 13 to 14.5 percent for the past few decades, while the ranges for similar utilities in other states have fallen. But the company argued at a series of public meetings that the figure paints an incomplete picture of its finances. The new formula takes into account the company’s debt structure and allows for a range of 5.75 to 6.21 percent.

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