PSC $120 million Electricity Rate Cut Helps Mitigate Costly EPA Regulations Affecting Manufacturers

MONTGOMERY, Ala. – The Alabama Public Service Commission last week reacted to expensive federal energy mandates and helped Alabama manufacturers by approving a 2 percent rate decrease for Alabama Power Co. customers next year.

The three-member commission voted to reduce Alabama Power rates by $120 million beginning Jan. 1, an action that was well received by the business community that continues to advocate for sound energy policies.

The savings in power rates can be used to expand business and manufacturing or solidify current operations that will increase the bottom line and make Alabama businesses more competitive in relation to our sister states,” said Business Council of Alabama President and CEO William J. Canary.

In the video, Canary, National Association of Manufacturers president and CEO Jay Timmons, and BCA First Vice President Tommy Lee, president and CEO of Vulcan Inc. in Foley, advocate for a sound energy policy that helps, not punishes, Alabama business.

“The government needs to prioritize rather than penalize the state’s incredible advantage in reliable and affordable energy,” Timmons said.

The BCA’s state and federal agendas include supporting state agencies that proactively react to federal actions that are not backed up by sound science and delay the U.S. Environmental Protection Agency’s greenhouse gas regulations under the Clean Air Act.

Alabama Power said customers that use large amounts of energy, such as industrial plants, are likely to see a greater reduction in their bills next year than other customers. Alabama Power said it expects to return an estimated $120 million to customers through the end of 2016.

Lower coal and natural gas prices through 2015 will help offset rising costs and positively affect industrial and residential electricity customers by helping decrease the significant burdens placed on Alabama manufacturers, businesses, and households from EPA regulations that Alabama Power said is a major reason why three of its operating coal-fired plants are being closed.

“There’s no question – costs related to federal environmental mandates and other governmental regulations continue to be a concern for us,” said Nick Sellers, Alabama Power’s vice president for Regulatory and Corporate Affairs.

“Regulatory costs related to coal-fired generation, in particular, are going to continue to rise as more environmental rules come in to play,” Sellers said. “For now, we’re pleased that our fuel flexibility is helping blunt the negative impact of these federal mandates.”

Alabama Power is grappling with $250 million in expenses that are the result of federal regulations including environmental compliance, Alabama Power said. Federal regulations connected to the company’s transmission and distribution operations and nuclear operations also are playing a role.

“But the good news is that rates are going down next year, not up,” Sellers said.

Alabama Power said it does not earn profit from the reduction in fuel-related expenses. Savings gained through prudent fuel choices go directly toward reducing customer costs, Alabama Power said.

Alabama Power said it’s spending about $1 billion in environmental controls and other projects that are required to further reduce emissions from coal-fired units and to enable other units to shift from coal to lower-emission, natural gas.

Alabama Power said that more federal environmental mandates and related expenses are coming, mandates that will present additional challenges and require more costly changes to power generation.

The Business Council of Alabama is Alabama’s foremost voice for business. The BCA is a non-partisan statewide business association representing the interests and concerns of nearly 1 million working Alabamians through its member companies and its partnership with the Chamber of Commerce Association of Alabama.  BCA is Alabama’s exclusive affiliate to the U.S. Chamber of Commerce and the National Association of Manufacturers.

-Dana Beyerle