Alabamians will pay more to keep the lights on this summer after the state Public Service Commission approved a rate adjustment tied to rising fuel costs.
The PSC granted Alabama Power a 5 percent increase during its July meeting, and the higher charges will show up on customer bills in August. The utility pegged the change at about $6 more per month for the typical residential customer.
Commissioners blamed the increase on the sharply higher cost of natural gas and other fuels used to generate electricity. PSC President Twinkle Andress Cavanaugh said fuel is a pass-through expense that rises and falls with the market and that Alabama Power is not permitted to profit from it.
Alabama Power External Affairs Manager Beth Thomas said the company worked to keep costs low but was forced to adjust the rate because of fuel prices. Beginning in August, the typical residential customer bill will increase by about $6 a month to cover this higher cost of fuel, she wrote.
How the increase works
Each month the PSC calculates Alabama Power’s Energy Cost Recovery figure — essentially what the company pays for the fuels it uses to make electricity. Because the PSC guarantees the utility a set rate of return, Alabama Power can request a rate increase to pass higher fuel costs along to customers when they spike.
With more than 1.5 million customers, a $6-per-month increase across residential accounts works out to roughly $9 million in additional revenue each month, or about $108 million a year. Neither the PSC nor Alabama Power released the underlying figures on which the latest increase was based, and the company did not say whether the adjustment would be rolled back if fuel prices fall.