Study: Lack of Transparency at Alabama Public Service Commission Leaves Ratepayers in the Dark

Billions of Dollars in Alabama Power Investment Decisions Occur in Private; Customers Have Little Access to Decision-Making Process; Policies Are Outdated Compared to Other States’

CLEVELAND, Feb, 26, 2015 (IEEFA) – A study published today by the Institute for Energy Economics and Financial Analysis shows the Alabama Public Service Commission conducting much of its most important oversight of Alabama Power in private.

The report, by David Schlissel, IEEFA’s director of resource planning analysis, concludes that the commission’s practices are especially egregious in its oversight of Alabama Power’s Integrated Resource Planning (IRP), which are used by utilities to build a road map of how ratepayer dollars will be spent on generating and distributing electricity. Such plans include decisions on investments in energy efficiency and renewable resources, determining what power-purchase deals to make with other providers, deciding whether to retire older power plants and when and how to shift to cleaner or more affordable sources of energy.

“In many states, including a majority of those in the South, these IRP analyses are typically reviewed in regulatory processes that offer affected ratepayers access to critical information, as well as an opportunity to participate in evidentiary hearings or to submit detailed comments before the utilities’ resource plans are approved,” notes Schlissel. “Alabama is the jarring exception.”

The report is titled “Left in the Dark: How the Alabama Public Service Commission Makes Customers Pay Billions of Dollars for Alabama Power Investments without Any Meaningful Public Review or Involvement.” It was prepared by IEEFA on behalf for the Southern Environmental Law Center, the Southern Alliance for Clean Energy, and GASP, all of which have been denied access to documents detailing the utility’s resource planning.

The report highlights:

• How the Alabama PSC’s cursory and opaque regulation of Alabama Power’s investments differs from the public reviews made by state regulatory commissions in other southern states and by the Tennessee Valley Authority’s extensive public IRP process.
• How more than $3 billion of expenditures in power plant upgrades made by Alabama Power since 2005 have been approved by the PSC without any public evidence that these expenses represent the most cost-effective and least economically risky alternatives.
• How the Alabama PSC has refused to provide any evidence to support its claims that it closely monitors and oversees Alabama Power’s power plant investments.

The report makes four recommendations for modernizing the Alabama Public Service Commission’s outdated back-room procedures by creating a formal IRP process that includes:

• Involvement by public stakeholders;
• On-the-record public evidentiary hearings;
• Pre-filed testimony, with witnesses testifying under oath; and
• Allowing interested parties to access IRP documents, input assumptions, and raw data and economic analyses underlying Alabama Power’s resource decisions.

A full copy of the report is available here.

Media contact: Karl Cates, [email protected], 917.439.8225

______________________

About IEEFA

The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce.