Increased fuel rates may increase power costs

Published 11:16 pm Tuesday, August 5, 2008

Alabama Power’s spending on fuel could lead to an increase in rates for the company’s customers.

The Public Service Commission instructed its staff Tuesday to look into the amount Alabama Power is getting to cover its fuel costs. The state’s utility regulatory commission acted after Alabama Power spent nearly $25 million more on fuel in June than it recovered from its customers.

That move has no immediate effects locally, and it is unknown if and when a change in rates will occur.

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Selma office manager Billy Atchison said he was unaware of any changes in rates the company is planning. Alabama Power, like all utility companies, is constantly in discussions about how to offset the rising cost of coal and natural gas.

“It’s not like we’re just having an increase in our rates. Like everybody else, we’re just trying to pay our bills,” Atchison said.

Alabama Power spokeswoman Jan Ellis says the utility has discussed its rising costs for coal and natural gas with the PSC. But she says it’s premature to say what might happen in the coming months.

PSC President Jim Sullivan says he would prefer a small increase soon rather than a big increase later.

Alabama Power serves the lower two-thirds of Alabama. Currently, its residential customers pay $112.74 for 1,000 kilowatt hours. Of that, about $31 is to compensate the state’s largest power company for its energy costs.

The PSC last raised the energy recovery amount from $24 per 1,000 kilowatt hours in July 2007.

The average Alabama home uses about 1,300 kilowatt hours per month, according to the PSC.

The Tennessee Valley Authority, which serves most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia, boosted rates about 2 percent last month to offset higher costs of coal and the lingering effects of the drought.

Customers of Entergy Mississippi and Georgia Power Co., a sister company of Alabama Power, have seen recent rate hikes due to fuel costs. On Tuesday, South Carolina Electric & Gas Co. filed with its state utility commission for an increase in electric rates due to fuel costs.