Environmentalists in Alabama are blasting the state’s Public Service Commission, arguing that it hasn’t allowed public input in its dealings with Alabama Power, denying a recent request for public participation.

At issue is the amount that the power company is allowed to charge customers for the fuel it uses to run its power plants. It’s called “Rate Energy Cost Recovery,” or Rate ECR, and is regulated by the commission. It’s a significant factor in everyone’s monthly bill.

“In a time of rising electric bills, the Public Service Commission’s lack of transparency only raises more questions when the people deserve answers, said Daniel Tait, executive director of Energy Alabama, a group that advocates for renewable energy in the state.

The Public Service Commission and Alabama Power argue that outside groups haven’t been allowed to provide input on Rate ECR because there’s no proceeding in which they could.

In November, the state commission declined to reconsider Energy Alabama’s “petition to intervene,” or provide input, in Rate ECR proceedings. The environmentalist group, which is represented by the Southern Environmental Law Center, had first petitioned in May but the commission denied that request.

The commission held there was no proceeding that required space for public input. “The commission is not prepared to find that the routine status reports and intermittent consent orders issued in [the Rate ECR docket] since the last proceeding in that cause in 2008 are equivalent to the commencement, reactivation or continuation of a proceeding per the commission’s rules,” the commission’s November 21 order reads.

Since 2000, the Public Service Commission has adjusted Alabama Power’s Rate ECR 16 times, according to an AL.com review of available records.

But there have only been two public hearings on Rate ECR, one in 2005 and one in 2008. None of the current commissioners were on the commission at the time of the last public hearing.

The Public Service Commission declined to comment for this story, saying it “does not comment on matters that are, or could be subject to litigation.”

Energy Alabama argues that the commission is breaking its own rules by not allowing outside input.

“According to the rules governing Rate ECR, the public is entitled to hear evidence and participate in any proceedings adjusting fuel costs to ensure these changes are ‘just and reasonable,’” the group said in a news release. “The rules are clear: to make any changes to fuel cost — upward or downward — Alabama Power must submit estimates to the commission and the commission must hold a public hearing and allow intervention.”

Alyson Tucker, media relations manager for Alabama Power, did not respond to a list of questions from AL.com and instead referred to a 2020 op-ed published on AL.com. The op-ed criticizes the Energy and Policy Institute, a national renewable energy advocacy group. It’s written by Daniel Stevens, executive director of Campaign for Accountability, a public accountability group based in Washington, D.C.

Tait is an employee of the Energy and Policy Institute, as well as Energy Alabama. In an email to AL.com, Tait said that the Rate ECR work is “in no way whatsoever related” to his work with Energy and Policy Institute.

What is Rate ECR?

Rate ECR is the amount that Alabama Power can charge customers for its energy costs, whether that’s coal, natural gas, nuclear, or power purchased from another utility. Because fuel costs fluctuate frequently, the rate is meant to shift up or down to keep up with the changes.

“The cost of fuel used to run power plants is passed down to customers and costs the average Alabama Power customer over $35 per month,” Tait said.

Rate ECR is one of several “rate riders” that are applied to customers’ bills every month. Alabama Power multiplies the number of kilowatt hours used by the Rate ECR and adds that amount to the monthly energy charge.

Since 2008, there have been 12 adjustments to the rate – both up and down.

Currently, the Rate ECR is 3.015 cents per kilowatt hour. That’s about double what it was at the beginning of 2000, when the Rate ECR was 1.55 cents per kilowatt hour.

For example, on the “family dwelling” residential power plan, a customer using 1,000 kilowatt hours of power in the month of November would be charged $30.15 for Rate ECR, in addition to the $123.21 they would pay for energy use. A base charge of $14.50 is also applied to all family dwelling residential bills.

Informal meetings

The 2008 public hearing, where the commission agreed to increase the Rate ECR from 3.1 cents per kilowatt hour to 3.983 cents per kWh, proved to be pivotal.

Persistent drought conditions and surging fuel costs led to a more than $270 million deficit in recovered fuel costs for Alabama Power that year. The commission, eager to address the shortfall, looked to streamline the rate adjustment process.

In the 2008 order agreeing to modify the Rate ECR, the state commission instructed its staff to “conduct informal meetings” with Alabama Power and the intervenors in the case to develop “mutually agreeable modifications to the procedures governing the filing, review and hearing of future modifications to Rate ECR.”

Since then, the PSC has not held a formal hearing on adjusting the Rate ECR, instead opting to adjust the rate primarily through consent orders. This method was largely how the rate was adjusted prior to the 2005 hearing.

But in those hearings in 2005 and 2008, outside groups, primarily industrial power users, were allowed to intervene. In both hearings, the state Attorney General’s office intervened on behalf of consumers.

Businesses spoke up, too. In 2008, several industrial groups, including the National Cement Company of Alabama, CMC Steel Alabama, Nucor Steel in Birmingham and Tuscaloosa, the Alabama Farmers Federation, and Alabama Industrial Electric Consumers (AIEC). Alabama Power and the AIEC jointly presented a new Rate ECR in that hearing.

After the formal 2008 hearing, an “informal, off-the-record” public forum was held, according to the 2008 order. Around 12 members of the public spoke in that forum.

Now, it doesn’t work that way.

“Alabama Power shouldn’t be the only one at the table,” Tait said in a news release.