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.
Resource: Fact Sheet
Public Utility Regulation Without the Public
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.
Against the tide: The death penalty in Alabama
In Alabama, the death penalty is a curious exception to concerns about government efficiency. When it comes to executing people, a majority of Alabamians appear to trust the government to get it right every time. Lack of transparency in our capital punishment system prompts little public comment. Similarly, on the fiscal side, calls for reducing Alabama’s spending rarely include eliminating costly executions.
This fact sheet looks at Alabama’s death penalty through the lenses of governmental competence, transparency and fiscal responsibility.
No-frills Alabama Medicaid brings health care, jobs
Alabamians often are surprised to learn that Medicaid is a major engine for the state’s economy. Medicaid creates thousands of jobs, supports rural hospitals and the state’s only children’s hospital, pays for medical equipment that all patients use, boosts tax revenue in local communities and enhances our quality of life. Medicaid touches the lives of average Alabamians who never need the agency’s services themselves.
Alabama Medicaid is in the bull’s-eye for cuts as the Legislature looks to balance the FY 2013 General Fund budget in the face of a revenue shortfall. This fact sheet examines what’s at stake in the Medicaid budget challenge.
Ending the state grocery tax and protecting schools
Alabama’s tax system is upside down, and the state sales tax on groceries is one reason why. Alabama remains one of only two states — the other is Mississippi — with no tax break on groceries. Food costs consume a larger portion of the household budget for low-income families than for those who are better off, so the grocery tax hits low-income people especially hard. The grocery tax is part of why Alabama’s overall tax system requires low- and middle-income people to pay twice as big a share of their incomes in state and local taxes as the riches households pay.
A temporary halt: Alabama’s executions
Alabama has a long and tangled history with the death penalty. A Tuskegee University archive preserves the grim evidence of the “lynch law” that long terrorized African Americans. The state’s historic enthusiasm for legal executions, which remains strong, bears the stain of racism as well. One measure of the problem is the frequency of national court rulings that address Alabama’s capital punishment machinery.
This fact sheet examines the history of capital punishment in Alabama against the backdrop of national legal trends and the growing call for a moratorium.
Alabama bound: Our unjust 1901 constitution
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.
A tax on survival: Grocery tax policies in America
Food takes a much bigger bite out of the household budget for low-income families than for richer ones, and sales taxes on groceries thus hit harder at lower incomes. In recognition of this fact, most states either have exempted groceries from state sales taxes entirely or have devised ways to help offset grocery taxes for low-income people. Alabama and Mississippi stand alone in offering no tax break break on groceries.
This fact sheet considers the effects of grocery taxes on low-income households and examines the ways that Alabama could reduce or eliminate its sales tax on groceries.
Hands on: Alabama’s adult workforce development
As Alabama recovers from a recession that undercut a wave of record economic growth and employment, workforce development policymakers face a two-fold challenge: getting thousands of Alabamians back to work and gearing up the broader workforce for systemic changes in the economy.
This fact sheet offers an overview of skills training programs and related components of Alabama’s complicated workforce development system.
Teamwork for the common good
If you talk to a low-income Alabamian about the state’s tax system, you’re liable to hear two things. One is a boast that the state has some of the nation’s lowest taxes. The other is a complaint that, nevertheless, the person pays too much in taxes. The statements may sound contradictory, but both are grounded in reality.
This fact sheet examines an Alabama tax paradox: that low-income residents pay so much in taxes even as their state collects comparatively little money for the public services that can help make their lives better.