POWERGRAMS

REGULATORY Company tells its story at third PSC meeting ON THE COVER: Hooking a big one is always fun, but when it weighs almost 70 pounds, it becomes a recordbreaking experience. See page 6 for details. PAGE 2 Photo by Bill Snow T he Alabama Public Service Commission on July 17 held the third and final public meeting about the company's Rate Stabilization and Equalization (RSE) mechanism. The meeting in Montgomery lasted all day and into the evening. It included presentations from Alabama Power representatives and by independent experts representing the company. Zeke Smith, executive vice president for External Affairs, said the public meetings were an opportunity for the company to tell its story: how customers are at the center of everything Alabama Power does, and how the company has been able, under RSE, to provide reliable electricity and award-winning customer service at a price below the national average. Alabama Power representatives provided a detailed explanation of the company's capital structure and its allowed return under RSE. The experts, with more than 50 years combined experience studying and analyzing utility financing and regulation, presented their own findings: that the company's total returns are reasonable and that the RSE system under which the company operates has been beneficial for customers. Michael Vilbert, an expert representing Alabama Power and a financial economist with the international consulting organization The Brattle Group, examined the company's capital structure and its range of return allowed under RSE. Using a number of models, he concluded that, based on the company's financial structure and the business and financial risk it bears, Alabama Power's range of return is reasonable. Steven Fetter, former chairman of the Michigan Public Service Commission under both Democratic and Republican administrations, analyzed Alabama Power and its credit rating under the RSE system. He said during the 30 years RSE has been in place, the company has significantly strengthened its financial position, which provides the foundation for the company's operational excellence. "This state has a good thing going," he said. Both Fetter and Vilbert took issue with some of the assertions made by advocacy organizations including the Southern Environmental Law Center, Alabama Arise, the Southern Alliance for Clean Energy, the Greater Birmingham Alliance to Stop Air Pollution, the Alabama Environmental Council, and the AARP, which have questioned the company's ROE and range of return. Dan McCrary, an attorney with Balch & Bingham, also helped make Alabama Power's case at the third PSC meeting, by closely questioning an expert representing Alabama Arise and the report the expert had prepared for the group. McCrary identified numerous instances where the report contained misleading information about Alabama Power's prices compared to those charged by other utilities. During the meeting, the advocacy groups presented their own experts. They suggested the PSC lower the company's return on equity (what the company is allowed to earn on the portion of its business financed through Southern Company stock). No one during the lengthy meeting questioned the company's reliability, its response to major storms and natural disasters, and its level of customer service. The Alabama Public Service Commission held three public meetings about Alabama Power. The meeting included a session during which the public could comment about the company. It is the work performed by Alabama Power employees every day to provide customers superior service that brought customers out in large numbers in support of the company. These customers shared personal experiences of how Alabama Power has impacted their lives. The overwhelming support from customers confirms the notion that they are "at the center of everything we do,"Smith said. Meeting participants included representatives from labor unions concerned about environmental regulations they fear could force coal-fired generating plants and coal mines to close, as well as small business leaders and job recruiters who praised Alabama Power's economic development efforts. PSC President Twinkle Andress Cavanaugh said she expected the commission to issue findings by midSeptember, possibly sooner. By Michael Sznajderman

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