New Electric Rate Hikes "Couldn't Have Come at a Worse Time"

AMEA Directors

COUNCIL TO DECIDE HOW MUCH TO PASS ON TO CITIZENS

The Board of Directors of the city's electric power supplier (the AMEA-click) has voted to increase the price it charges the city for electricity 8.8%--beginning Feb. 1, 2011; and another 2.5% next November. Mayor Kant is the city's representative on the AMEA'S Board (right).

A new city ordinance enacted last Spring, gave rate setting authority to the City Council (aka the Utility Board), doing away with the controversial "fuel adjustment charge" on customers' bills.


In an interview last March (click), Kant said:

 "The AMEA channels electricity to its 11 member cities . . . about 80% comes from Alabama Power . . . essentially, now all changes to customers' monthly bills must first be approved by the council." (Previously, the Mayor was authorized to do it himself.)

Fred Clark

NEW EPA POLLUTION STANDARDS BLAMED

According to AMEA President/CEO Fred Clark, the increase is needed to offset "mandatory clean air requirements on AMEA  power resources specifically Alabama Power Company's environmental enhancements . . . and increases in costs for transmission facilities on the Southern Company's transmission system."

"As a result, in order to meet these unavoidable costs, the AMEA Board of Directors is required to pass on  . . . costs to our members . . . through a rate adjustment, effective Feb. 1, 2011."

OTHER CITIES SEEK TO CUT COSTS FIRST

According to reports, at least 2 other member cites (Piedmont, Tuskegee) are debating whether to pass on the full increase to their own residents.

Mayor Brian Young of the City of Piedmont (another AMEA member city) wants to cut other costs there first: "Hopefully, if we've got some of our other costs cut we might not even have to adjust it at all. I know its a pretty good increase, and another one coming in the Fall too." (click for full article)

A Tuskegee Al. newspaper (click), however,  disputes Clark's rationale for the rate increases, citing decreasing (or flat) costs expected next year by other power providers:

"Both Alabama Power and Gulf Power have announced their rates will remain either flat or be reduced in 2011, citing lowered costs for coal and natural gas as the source. Also, in the third quarter (summer) of 2010, Southern Company reported increases in revenue by 13.5%--$5.3 billion--and profit by 3.5%--$817 million."


COUNCILMAN STANKOSKI: "IT COULDN'T HAPPEN AT A WORSE TIME"

Stankoski: "The AMEA rate increase due Feb. 1, 2011 could not have come at a worse time, right after the holidays, during a recession, and a freeze on Social Security. The city purchases power from AMEA which is subject to the new EPA and other cost increasing regulations. The city has to pass the additional cost to the consumer because the city is not in a position to absorb some or all of a rate increase unless we were to reduce services in other areas."

QUINN SAYS HAVE DISCUSSIONS FIRST

Debbie Quinn said she thought there ought to be discussions first--at financial committee levels--about the proposed rate increases: "Do we just eat it? Pass it along?"