The reason for the explosion of interest in
Alabama’s utility rates has less to do with rate setting than it does a
discussion over Alabama’s environmental policies. Frankly, an open discussion
over those policies is appropriate in Alabama regardless of the events at the
PSC.
The creeks where I play with my boys are likely much
cleaner and safer now than they were several decades ago. Common-sense
environmental practices are not only a good idea; they improve our ability to
leave a safe, clean world to our children. Recycling, conservation, and even
choosing products and services that have a lower impact on the environment are
reasonable and effective ways to improve our air, water and soil.
At the same time, environmental concerns are
balanced against economic costs. Some of these costs we may be willing to
incur; others we may not.
The participant and expert list for the recent PSC
hearings is replete with environmental groups: the Southern Alliance for Clean
Energy, the increasingly-activist AARP, Southern Environmental Law Center,
Greater Birmingham Alliance for Stopping Pollution, and the Alabama
Environmental Council.
The aforementioned groups push an agenda that is
anything but mindful of cost. These are the same entities that advocate for
more strident and costly EPA regulations. Many also support the type of “cap
and trade” scheme that President Obama said would cause energy prices to
“necessarily skyrocket.” Shutting down cheaper sources of energy like coal
results in higher energy generation prices that are passed to consumers…period.
So what changed to make these environmental advocacy
groups seem like advocates for low-cost energy?
Many recognize that their idea of environmentalism
at any cost fails to gain traction in a state like Alabama. So instead, they
have decided to tap into Alabama’s populist streak. Nobody likes paying the
power bill, especially in the hot Alabama summer. If environmentalists can
convince Alabamians that the power company is making too much as a result of
existing PSC rate-setting mechanism, they see an opportunity to change the rate
review structure in a manner that would serve their agenda.
A move to an adversarial formal review structure
gives environmentalists the ability to shut down coal and other fossil-fuel
generation through litigation and financial modeling that anticipates
significant federal regulatory burdens without ever having to convince the
people of Alabama of the merits of those ideas.
Similar environmental groups were successful at
targeting coal and oil generation through Georgia’s adversarial rate review,
and Georgia Power has plans to retire 15 such plants. The economic models used
to justify the retirement of coal facilities assume an ever-increasing cost of
federal regulation.
In other words, environmentalists use the
economically burdensome regulations they support as one of the most significant
economic reasons why coal and oil fired electricity generation must be shut
down.
Keep in mind that an informal mechanism to review
power rates already exists, and Alabamians from across the political spectrum
have provided their input. More importantly, there is a particularly formal
means for Alabamians to ensure an appropriate balance between the customer’s
interest and the utility’s profit: The election of PSC Commissioners.
When the PSC makes their rate determination, the
average Alabama utility customer has the chance to respond. If he or she feels that rates are unbalanced,
finds service to be insufficient, or even desires a PSC that more aggressively
champions the ideas of environmental activists, the customer can vote to change
the Commission’s makeup at the polls.
Transparency is important, especially when it comes
to regulated industries. The PSC would be wise to receive input and questions
from anyone willing to put them forth, and they must weigh that information
against that provided by the power company.
The same transparency must also be a priority for
groups promoting policies that impact the entire state. Environmentalist groups
have every right to advocate for the end of coal generation. They can pursue
more strident environmental standards than those already put forth by the
EPA. In either case, they should make
their case directly to the PSC, elected officials, and the people of Alabama
rather than engaging in a populist sleight of hand.
About the author: Cameron Smith is policy director
and general counsel for the Alabama Policy Institute, an independent,
non-profit research and education organization dedicated to the preservation of
free markets, limited government and strong families. If you would like to
speak with the author, he may be reached 205.870.9900, at
camerons[at]alabamapolicy.org or on Twitter @DCameronSmith.
This article was published by the Alabama Policy
Institute.
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