Gary Palmer: AARP’s enviro-agenda assaults Alabama’s economy

  Recently the American Association for Retired People (AARP) sent a petition to the Alabama Public Service Commission (PSC) urging the PSC to reconsider their Report and Order issued regarding the Alabama Power Company rate structure.

  On the surface, the issue of the PSC doing a thorough review of the rates charged to customers by Alabama Power seems reasonable and within the scope and expertise of the PSC. But that is not what this is about. It is about pushing an environmental agenda that kills jobs and increases the cost of electricity for all Alabama Power customers.

  The AARP has aligned itself nationally with environmental activist organizations in an effort to use an adversarial rate-setting process to shut down fossil fuel-based electricity generation, akin to imposing cap-and-trade type regulations on individual states. The real agenda is the "war against coal" being waged by environmental activists and the Obama Administration in an effort to force utility companies such as Alabama Power Company to shut down their coal-fired generation facilities.

  In terms of costs, coal-fired generation of electricity is the least expensive and provides 30 percent of Alabama’s power. In fact since 1990, the cost of electricity (adjusted for inflation) in Alabama has declined by 2 percent while natural gas prices have risen by 43 percent. Overall, Alabamians pay 11.4 cents per kilowatt hour for electricity which is below the national average of 11.9 cents per kilowatt hour.

  Following the defeat of cap-and-trade legislation in Congress, the Obama Administration continued their efforts to shut down the coal industry. Environmental activist groups pushed states such as California to pass state versions of cap-and-trade legislation. When the vast majority of state legislatures refused to do so, the opponents of fossil fuel power generation sought to eliminate coal-fired generation plants through extreme new regulations from the EPA while also going to state public utility commissions under the guise of seeking rate reviews to lower the cost of electricity for consumers.

  In June, Daniel Schrag, an Obama Administration advisor on climate change, said that "a war on coal is exactly what’s needed." That same month President Obama called for the Environmental Protection Agency (EPA) to begin imposing extreme new regulations on new and existing power plants that will significantly reduce the use of coal and that will drive up electricity costs for American families.

  If these regulations are implemented at the federal level and/or the AARP and the environmental activists groups they are aligned with are successful in forcing Alabama Power to shut down its coal-fired generation facilities, all Alabama Power consumers will have to pay higher electric power bills.

  Low-income and senior households in Alabama would be particularly hard hit because they already spend proportionally more of their disposable income on energy than do higher income families. Based on 2011 data, energy costs will consume 25 percent of disposable income for the 501,000 Alabama households with incomes between $10,000 and $30,000 and 64 percent of after-tax income for another 190,000 households with annual incomes of less than $10,000.

  These higher costs will hit senior citizens particularly hard because unlike younger households, most are dependent on a fixed-income. In 2011, there were 614,000 Alabama households with Social Security recipients drawing an average Social Security income of $16,081.

  The Birmingham Business Journal, citing an article in the June 10th edition of Interest.com, reported that median retirement income in Alabama is $31,324. Mike Sante, the managing editor of Interest.com, said, "We found that many senior citizens are significantly underfunded and risk running out of money, especially since people are living longer than they used to and may need to support a two- or three-decade retirement."

  AARP contends that the PSC’s Report and Order "… is unjust and unreasonable, arbitrary and unfair to residential electric consumers," but their agenda has little to do with reducing electric rates. It is really an economy-crippling environmental agenda to shut down fossil fuel-fired generation plants and coal-fired plants are their number one target.

  About the author: Gary Palmer is president and co-founder of the Alabama Policy Institute, an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

  For information or comments, contact Gary Palmer at Alabama Policy Institute, 402 Office Park Drive, Suite 300, Birmingham, Alabama 35223; (205) 870-9900; or e-mail garyp[at]alabamapolicy.org.

  This article was published by the Alabama Policy Institute.