Issue: Other Issues

Bill to increase homestead exemption for debtors clears Alabama Senate committee

By Stephen Stetson

Alabamians could shield more of their home’s value from creditors under a bill that the Senate’s General Fund budget committee approved 7-0 Wednesday. SB 427, sponsored by Sen. Cam Ward, R-Alabaster, awaits consideration by the full Senate.

Ward’s bill would allow individuals to protect up to $30,000 of their home’s value from creditors. The exemption for married couples would be up to $60,000. Current Alabama law sets that homestead exemption at just $5,000 for individuals and $10,000 for couples. Those amounts are among the weakest debtor protections in the nation and are so low as to prove virtually useless in shielding most homes from foreclosure in a debt collection case.

Most states have far higher exemptions. Some, including Florida and Texas, do not limit how much of a home’s value can be protected from creditors. Ward’s bill would update Alabama’s exemptions for the first time in more than 30 years and give debtors a better chance to rebuild after a financial judgment is entered against them.

SB 427 also would allow debtors in bankruptcy cases to choose to exempt homesteads and personal property in accordance with federal bankruptcy law. The bill originally would have increased debtors’ state exemptions for personal property as well, but the committee removed those provisions.

The new version also does not include a cost-of-living adjustment. That means the Legislature would have to raise the limit again in the future to prevent inflation from eroding the homestead protection’s value. “I think it’s something that this body should vote on, instead of some sort of artificial index number,” Ward said.

Time is getting shorter for the bill to win Senate approval. Lawmakers will return Thursday for the 24th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Stephen Stetson, policy analyst. Posted March 12, 2014.

Hidden power: The story behind your electric bill

By Stephen Stetson

For most of us, the monthly electric bill is a fact of life. Though its share of the household budget rises and falls with consumption, electricity ranks with water, food and shelter as an essential expense. Meeting this demand in homes and businesses across Alabama requires production and distribution on an enormous scale. Because of the unusual relationship between a “captive” market and what is often a single producer, states regulate power companies differently from most other commercial operations. In theory, one part of that regulation is allowing consumers to see how their utility rates are set. This fact sheet examines regulation of Alabama’s largest utility company, with a focus on transparency in the rate-setting process.

Public Utility Regulation Without the Public

By Alabama Arise

There has not been a public rate case for the Alabama Power Company (“Alabama Power” or “the Company”) in 30 years. Instead, the Alabama Public Service Commission (“PSC” or “the Commission”) has a regulatory process that allows Alabama Power to adjust its charges each year without any public evidentiary hearings and, indeed, without any participation by ratepaying consumers whatsoever other than off the-record and after-the-fact comments at an informal hearing that completely lacks public transparency.

In fact, the evidence is clear that the PSC specifically adopted this extreme rate-making process in the ’80s in order to protect Alabama Power from having to file for rate increases (as utilities in other states do) and to shield the process from public involvement and scrutiny. Moreover, the Alabama PSC allows Alabama Power to earn a rate of return of between 13.0 percent and 14.5 percent on the common stock investment made by its sole owner, the Southern Company.

This return on equity range is significantly higher than other commissions around the nation allow their utilities to earn. For example, the average return on equity earned by utility operating companies like Alabama Power during the years 2008-2011 was only 9.40 percent or nearly 30 percent below the 13.27 percent return on equity earned by Alabama Power under the formula rate process followed by the Alabama Public Service Commission.

Only two other states with privately owned utilities have similar regulatory processes for electric utilities, Louisiana and Mississippi. However, in these states, unlike Alabama, there are meaningful opportunities for public involvement and ratepayer participation before major rate increases are approved.

Click here to read the full report.

Alabama bound: Our unjust 1901 constitution

By Stephen Stetson

Advocates for a new Alabama constitution have been divided for decades over how best to achieve that goal. Some have wanted to hold a convention at which elected delegates would craft a new constitution all at once, subject to voter approval. Others have favored a gradual, article-by-article rewrite. A recent development may render the debate moot, at least temporarily. Earlier this year, the Legislature established the Constitutional Revision Commission to revise 11 of the constitution’s 18 articles over four years.

This fact sheet examines the main issues at stake in constitutional reform, as well as some of the obstacles that continue to hinder reform efforts.