How Alabama Power Kept Bills Up and Opposition Out to Become One of the Most Powerful Utilities in the Country

“I don’t think there’s a single utility in the country that would be upset with an 11 percent earned ROE,” said Kent Chandler, former chairman of the Kentucky Public Service Commission, now a senior fellow in energy and environmental policy for the R Street Institute. “I mean, that’s like double what I know some utilities are actually earning…”

The R Street Institute, the think tank where Chandler now works, gave Alabama an “F” in its ranking of electricity competition—how much choice consumers have about where their power comes from. No other state received such a bad grade. 

The group only considered investor-owned utility companies in its rankings, and Alabama Power is the only such company in Alabama…

Chandler, the former chairman of the Kentucky Public Service Commission, said that while rate cases can be tedious, they are valuable to the public. 

“One of the benefits of having rate cases is that you get a holistic look at a utility’s revenues and a utility’s costs,” Chandler said. “In my experience in Kentucky, consumers benefit from having periodic reviews by an objective regulator.”

And since regulated utilities earn profits on all their approved spending, the more they spend, the more they earn, he said. 

“They have an incentive to over-invest,” Chandler said. “And if you never check things after the fact, then you’re just writing them a blank check.”