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Power to the corporations
The Alabama Public Service Commission has agreed to extend a special rate offered to new or existing companies that expand or open new locations. It's supposed to encourage economic expansion.
But since the rate-of-return for the power company is guaranteed, won't giving a cheaper rate to the companies reduced their return, making it possible that the rest of the rate-payers have to make up for it?
How about a special rate for people on unemployment?
From David Rountree, chief of staff to PSC Commissioner Terry Dunn. Hi Tim, wanted you to know that the incentive rates actually have the opposite effect: They tend to LOWER rates for all customers. Also, wanted to point out the following:
ReplyDelete• Alabama Power is allowed an opportunity to earn a fair return. There is not a guaranteed return.
• Rate Rider CRI provides for a reduction in base rate charges for 12 months when a customer establishes a new account in an existing building that has been unoccupied for at least 6 months. The account must represent new load (merely switching locations does not qualify). Since Alabama Power has already made investments to serve the existing facility, and these investments are being recovered in rates, any additional revenue specifically targeted for these investments (unoccupied spaces) will place downward pressure on rates for all customers.
• Rate Rider EDI provides a reduction in base rate charges (for 24 months) to customers who provide new or additional load of at least 1,000 kVA while adding new jobs. The additional load and revenue will better utilize existing resources -- remember, the cost of those resources is ALREADY being recovered in rates -- and thus place downward pressure on rates for all customers. In addition, the overall economy will benefit from the additional jobs and tax revenue.
Hi David...thanks for the comment.
ReplyDeleteI don't pretend to be an expert in economics (or the more exotic profession of utility regulation) but how often has APC been turned down for a rate hike when they've argued for one by saying increased costs were hurting their profits?
True, they are not guaranteed a profit, but they have been given a virtual monopoly...must lower prices if their profits rise above a target rate of return...and are permitted to increase rates if it slips below it.
As for the riders, other than a huge empty factory, how much cost is there in the lines leading from the street to an empty building? Haven't those costs already been recovered, other than when a new building is never occupied or empties shortyl after being occupied?
Again, thanks for the information!