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AL ABAMA PUBLIC SER VICE COMMISSION 2008 Annual Report for Fiscal Year 2008 Table of Contents TABLE OF CONTENTS Introduction .......................... 3 Commissioners ...................... 4 Commission Staff ................... 7 Administrative ....................... 9 Advisory................................11 Energy ..................................15 Telecommunications ...............24 Transportation .......................26 Legal ....................................28 APSC History ........................29 Past Commissioners................30 1 Introduction to the Alabama Public Service Commission The activities and accomplishments president and two associate commis- of the Alabama Public Service Commis- sioners – administer all functions of the sion during the period October 1, 2007, Commission. Commissioners are elect- to September 30, 2008, are presented in ed to four-year terms, with the presi- this annual report. dent's term staggered by two years The Alabama Public Service Com- from the two associate commissioners. mission is a quasi-judicial regulatory The Commission supervises and body whose jurisdiction, powers and regulates utilities and some aspects of duties are delegated to it by the Ala- public transportation to ensure ade- bama Legislature. The Commission quate service and facilities are made derives its authority from the Code of available at rates that are reasonable. Alabama, 1975, Sections 24-1-28, 10- The law prohibits variation from estab- 2B-15.13, 10-5-3, 10-5-4, 10-5-7, 11- lished rates. The quasi-judicial status 50-268, 11-50-269, 11-50-270, 37-1-32, of the Commission requires conduct- 37-2-3, 37-2-171, 37-3-7, 37-4-60, 37-4- ing public hearings on applications, 82, 37-4-108, 37-9-8, and 37-9-9. petitions and complaints, together The Alabama Public Service Com- with the rendering of decisions on mission has been charged with the those proceedings. responsibility for the regulation of pub- The Commission operates solely lic utilities and some aspects of the from inspection and supervision fees transportation industry doing business received from the companies regulated in Alabama. These include privately and appropriated by the Legislature. owned corporations providing electric, The various divisions conduct gas, water and certain telecommunica- the work of the Commission. A state- tions service to the public, as well as ment of the function, operational railroads, buses, some trucking compa- procedure and accomplishments of nies and taxis operating outside police these divisions during FY-08 appears jurisdictions. in this report, which is published by Three elected Commissioners – a the Advisory Division. 3 Commissioners JIM SULLIVAN has been President of the Alabama Public Service Commission since 1983, making him the country's longest serving active public utility commissioner. When he was re-elected to the PSC in November 2000, Alabama voters gave him the largest margin of victory of any statewide candidate. In November 2004, he made history Commissioner Sullivan's Staff: in Alabama when he was re-elected while facing no opposition. In November 1998, he was elected president of the National Associa- David P. Rountree, tion of Regulatory Utility Commissioners (NARUC), the principal Executive Assistant III voice of the states on national energy and telecommunications pol- icy. He also served as Chairman of NARUC's Committee on Criti- Donna H. Dodd, cal Infrastructure. Technical Assistant Commissioner Sullivan holds a Bachelor's Degree in Business Administration from the University of Mississippi, which he attended Carolyn Denham, on a football scholarship. After graduating from Ole Miss in 1968, he Executive Secretary went to the University of Alabama, earning a Master's Degree in Banking and Finance in 1969 and his Juris Doctor in 1973. He Virginia Hill, remains a member in good standing of the Alabama State Bar. Administrative Support In addition to his national leadership role through NARUC, Assistant I Commissioner Sullivan recently held a seat on the University of Chicago, Board of Governors of the Argonne National Laboratory, Kelly Tuck, and he also served on the advisory council of the Electric Power Laborer Research Institute (EPRI) in Palo Alto, California. Other professional affiliations have included membership on Motor Carrier the advisory boards of the Keystone Energy Board, the Institute of Enforcement Section Nuclear Power Operations (INPO), the Nuclear Electric Insurance (See page 27.) Limited (NEIL), and the National Regulatory Research Institute (NRRI). Since 2004, Commissioner Sullivan has served as a dedicated member of the Board of Directors of Glenwood Mental Health Ser- vices, Inc., a renowned health care facility serving children, adoles- cents, and adults who are affected by autism or severe mental, emo- tional and behavioral disorders. Commissioner Sullivan and his late wife, Susan, were married for over 30 years. He has two daughters and three grandchildren. 4 Commissioners JAN COOK is a native of Dozier, Alabama where she served on the City Council. She is a graduate of Auburn University with a degree in Political Science. She has also done graduate work at both AUM and Troy State University. In 1982 she sought her first statewide office and won the office of State Auditor with more votes than any other candidate seeking office. She was re- Commissioner Cook's Staff: elected as State Auditor in 1986. In 1990 she was elected to the Alabama Public Service Commission. She was re-elected to the Kelly Mulero, Alabama Public Service Commission in 1994, 1998, 2002 and 2006. Executive Secretary Commissioner Cook has always been a consumer-minded Commissioner and has sponsored several initiatives, including Karen Rogers, antislamming and cramming legislation and statewide Y2K infor- Administrative Support mation forums. She has also been involved in issues ranging from Assistant III helping Alabama agriculture compete in a global market to her concerns for railroad safety. In addition, Commissioner Cook Tamika Reed, developed several programs to help Alabama farmers through Executive Assistant the 2000 and 2007 droughts. The Alabama Farmers Federation honored Commissioner Cook with its Service to Agriculture Virginia Hill, award in 2008. Administrative Support Assistant I 5 Commissioners SUSAN D. PARKER, Ph.D. was elected to the Alabama Public Service Commission, Place 2, November 2006. During her term, Parker has quickly become a leader in regional and national profes- sional utility organizations. She is serving the Southeastern Asso- ciation of Regulatory Utility Commissioners (SEARUC) as First Vice-President. Parker also serves on the National Association of Regulato- ry Utility Commissioners (NARUC) Executive Committee, Energy Resources and Environment (ERE) Committee and the Sub-Committee for Education. Commissioner Parker champions energy efficiency and renewable energy. She has established the Consumer Education Initiative to educate Alabamians on measures to conserve energy and lower their utility bills. Parker's political career also includes being elected as State Auditor of Alabama in 1998, and she was the first woman in Alaba- ma ever nominated for the U. S. Senate in 2002. Prior to becoming involved in public service, Parker had a 25-year career in public education. In 1972, at the age of 16, she started working at Calhoun Community College as a file clerk and rose through the ranks to become an Associate Dean. Parker worked her last eight years in higher education at Athens State University where she served as Development Officer and Assistant to the President. Perhaps Parker's greatest achievement is that she completed four college degrees by attending college at night and working full-time during the day. It took Commissioner her 13 years but Parker persevered and completed her associates, bachelors, mas- Parker's Staff: ters and Ph.D. — all with honors. Throughout her career, community service has been important to Parker. She John Nixon Jr., has served as president of numerous non-profit organizations including Boys and Chief of Staff Girls Clubs, Heart Association, Cancer Society, Leukemia Society, Big Brothers/Big Sisters, and United Way. She has also chaired leadership programs Brad Williams, for both Athens and Decatur Chambers of Commerce. Parker has provided Executive Assistant III training programs throughout the country for non-profits on board development, management, communication and fund-raising. Angier Johnson, Susan Parker was the first woman in Alabama to receive the coveted TOYA Director of Media Award (Ten Outstanding Young Americans) by the U. S. Jaycees. She also has Relations been recognized by the Boys and Girls Clubs of Alabama as Outstanding Volun- teer in the State of Alabama. Denise D. Harris, Parker and her husband of 28 years, Paul Parker, enjoy golf and travel. They Executive Secretary are members of the Cumberland Presbyterian Church where Susan teaches Sun- day School. Kelly Reynolds, Highlights: Student Assistant Born in Eva, Alabama in Morgan County Completed 4 college degrees attending night classes and working full-time Ph. D. in Administration of Higher Education, University of Alabama 1985 Masters degree, UAB B.S., Athens State College Associates degrees, Calhoun Community College Successful career in Higher Education, 1972-1996 State Auditor 1998-2002 First Woman in Alabama nominated for the U. S. Senate Elected to Alabama Public Service Commission, Place 2 in November 2006. 6 Commission Staff Administrative Division Walter L. Thomas, Jr., Finance Section Motor Carrier Records Section Commission Secretary Miles Gagner, Valerie Hogan, Sandy Haynes, Senior Accountant Administrative Support Assistant III Clerk Stenographer III Kimberly Holt, Senior Accountant Leveika Martin, Felisa Webster, Ernestine Huffman, Administrative Support Assistant II Administrative Support Assistant III Accountant Anthony Jackson, Tashenma Lawrence, Account Clerk Administrative Support Assistant II Advisory Division Judy McLean, Consumer Services Section Karen Gaston, Director, CPA Aquilla Spivey, Programmer /Analyst Associate Ellen Irvine, Consumer Services Manager Administrative Support Assistant III Sue Hicks, Federal Affairs Jodie Byrd, Consumer Services Specialist Mary Newmeyer, Administrative Support Assistant I Wanda Lowery-Geiger, Public Utility Analyst Manager Consumer Services Specialist Gene Hanes, Analysts Stephanie Sweet, Public Utility Analyst Manager Tom Samford, Consumer Services Specialist PSC Attorney Liz Thompson, Personnel Gene Pitts, Clerk Stenographer IV Dorinda Kepler, PSC CPA Michelle Wright, Personnel Assistant III Rolland Casey, Administrative Support Assistant III Rozetta Parker, PSC Accountant Administrative Support Assistant III David House, Information Systems Services Public Utility Analyst III Kay Oswalt, Public Affairs Clarence Duncan, IT Systems Specialist Senior Clark Bruner, PSC Rate Analyst Debra Jackson, Public Information Specialist IT Systems Technician (Transferred 2/1/2008) Energy Division Janice M. Hamilton, Joe Leverette, Gregory Meadows, Director Public Utility Analyst III Pipeline Safety Investigator, Senior Electricity Section Tonya Williams, Judy Ramsey, John Free, CPA Accountant Pipeline Safety Investigator, Senior Public Utility Analyst Manager Brenda Roberts, Hosie Powell, Robert Taylor, III, Administrative Support Assistant III Pipeline Safety Investigator, Senior Public Utility Analyst III Gas Pipeline Safety Section David Snoddy Sheila Ward, Christopher J. Harvey, Pipeline Safety Investigator, Senior Public Utility Analyst II Gas Pipeline Safety Administrator (Retired 1/1/2008) Gregory Kelly, (Retired 1/1/2008) Daniel Trapp, Public Utility Technical Specialist, Senior Wallace R. Jones Sr., Pipeline Safety Investigator Linda Gardner, Gas Pipeline Safety Administrator Clark Brown, Public Utility Analyst II Jannette Mitchell, Pipeline Safety Investigator Patricia Smith, Clerk Stenographer III Special Projects Section Public Utility Analyst II Harold Dunson, Rick Cleckler, Jacqueline Frazier, Pipeline Safety Investigations Supervisor Public Utility Technical Specialist, Senior Administrative Support Assistant II John Paul Harris, Water Section Natural Gas Section Pipeline Safety Investigations Supervisor Stephen Bartelt, Robert Reed, Thomas Lancaster, Utility Analyst Manager Public Utility Analyst Manager Pipeline Safety Investigations Supervisor Maverick D. Roberts, Donald Powell, Spencer Brady, Administrative Support Assistant II Public Utility Analyst III Pipeline Safety Training Officer 7 Commission Staff Legal Division John A. Garner, Suellen L. Young, Aisha Smith, Chief Administrative Law Judge Attorney III Administrative Support Assistant III G. Scott Morris, Eileen M. Lawrence, Administrative Law Judge Departmental Operations Specialist Telecommunications Division Darrell Baker, Laneeta Roberts, Special Services Compliance Team Director Public Utility Analyst III Barbara Franklin, Bill Cook, Bobby Mobley, Clerk Stenographer III Public Utility Analyst II Public Utility Field Technician, Senior Deboraha Thornton, Janet Conway, Doug Dillard, Administrative Support Assistant III Public Utility Analyst II Public Utility Field Technician Cynthia Allen, Perry Johnson, Administrative Support Assistant I Service Analysis and Compliance Public Utility Field Technician Section Gilbert Carlisle, Economic Analysis and Compliance Section Public Utility Field Technician Glenn Darter, Larry Smith, Public Utility Field Technician, Senior Public Utility Analyst Manager Jack Cates, E.C. McArthur, Public Utility Field Technician Public Utility Analyst III Terry Jackson, Eugene Holsenbeck, Public Utility Field Technician, Senior Public Utility Analyst II Steve Bennett, Linda Jones, Public Utility Field Technician Clerk Stenographer III Tom Jones, Public Utility Analyst III David Peeler, Public Utility Analyst III Transportation Division Britt Roberts, Tara Lawson, Larry Coleman, Director Administrative Support Assistant II Railway Safety Inspector Rita Grantham, Jennifer Morgan, Enforcement Section Clerk Stenographer III Account Clerk Earl Reeves, Rates and Services Section Amy Bowden, Transportation Enforcement Supervisor Account Clerk John M. Brock, Ron Hicks, Transportation Enforcement Officer Transportation Regulatory Manager Natasha Fields, Leo Sauls, Jr., Administrative Support Assistant II Transportation Enforcement Officer Donald Williamson, Terry Shirley, Transportation Rate Specialist Retha Bryant, Transportation Enforcement Officer Insurance and Registration Section Administrative Support Assistant I Gary Shirley, Transportation Enforcement Officer Larry Wingard, Railway Safety Section Samuel B. Peacock, Transportation Regulatory Manager Transportation Enforcement Officer John C. Longcrier, Michael L. Lawson, Robin McBrayer, Railway Safety Inspector Transportation Enforcement Officer Staff Accountant Danny Arledge, Railway Safety Inspector 8 Administrative Division Statement of Operations For the Fiscal Year Ending September 30, 2007 and 2008 PSC Operating Gas Pipeline Total Total Fund Safety Fund Sept. 30, 2008 Sept. 30, 2007 Comptroller's Beg. Cash Balance: $ 1,622,079 $ 961,167 $ 2,583,246 $ 5,188,955 Inspection & Supervision Fees - Utility/Water Companies 9,937,429 — 9,937,429 9,262,465 Telecommunications/Railroads 3,113,638 — 3,113,638 3,215,676 Motor Carrier Ins. & Reg. Fees 2,711,647 — 2,711,647 104,313 Gas Service Line Fees — 522,670 522,670 518,051 Federal Dept. of Transportation — 440,170 440,170 300,228 Alabama Dept. of Transportation 50,000 — 50,000 50,000 Miscellaneous Receipts 503,477 3,340 506,817 218,261 Total Receipts: 16,316,191 966,180 17,282,371 13,668,994 Total Cash Available: 17,938,270 1,927,347 19,865,617 18,857,949 Disbursement of Encumbrances: Personnel Costs — — — — Employee Benefits 1,625 — 1,625 1,670 Travel- In State 8,261 3,690 11,951 12,195 Travel- Out of State 3,605 — 3,605 3,298 Repairs & Maintenance 562 — 562 374 Rentals & Leases 4,584 293 4,877 9,052 Utilities & Communications 23,026 927 23,953 13,305 Professional Services 21,613 182 21,795 76,902 Supplies & Operating Expenses 54,578 7,971 62,549 50,944 Transportation Equipment Operations 6,419 3,299 9,718 21,025 Grants and Benefits — — — — Transportation Equipment Purchases — — — — Other Equipment Purchases — — — 11,459 Transfer to State General Fund 100 955,750 — 955,750 955,750 Total Encumbrances: 1,080,023 16,362 1,096,385 1,155,974 Disbursement of Operating Costs: Personnel Costs 6,027,765 716,224 6,743,989 6,404,503 Employee Benefits 1,923,662 218,360 2,142,022 1,972,168 Travel– In state 76,981 48,694 125,675 118,498 Travel– Out of State 75,469 11,186 86,655 67,764 Repairs & Maintenance 6,511 384 6,895 6,707 Rentals & Leases 899,722 35,026 934,748 918,091 Utilities & Communications 170,899 16,270 187,169 159,717 Professional Services 215,747 11,615 227,362 125,893 Supplies & Operating Expenses 295,829 54,039 349,868 242,375 Transportation Equipment Operations 75,659 32,768 108,427 92,181 Grants and Benefits 5,000 — — — Transportation Equipment Purchases 249,983 39,300 289,283 124,388 Other Equipment Purchases 49,031 4,768 53,799 49,989 Total Operating Costs: 10,072,258 1,188,634 11,255,892 10,282,274 Transfer to General Fund 3,823,000 — 3,823,000 2,867,250 Transfer to General Fund: Prior year cash — — — 1,969,205 Total Disbursements & Transfers: 14,975,281 1,204,996 16,175,277 16,274,703 Comptroller's Cash Balance, Ending: 2,962,989 722,351 3,685,340 2,583,246 Purchase Orders 141,860 8,127 149,987 106,488 Unencumbered Cash Balance, Ending (1) $ 2,821,129 $ 714,224 $ 3,535,353 $ 2,476,758 (1) PSC is authorized by statute to carry over $600,000 each fiscal year plus $80,328 court settlement in fiscal years 2007 and 2008 and the unencumbered cash balance for Fund 325. 9 Administrative Division The Administrative Division consists of three sec- makes any necessary corrections; verifies and processes tions – the Secretary's Office Section, the Finance Sec- invoices and expense reports for payment; coordinates the tion, and the Motor Carrier Section. A description of each payroll and maintains payroll records; bills utilities for section's responsibilities and a detailed report of its inspection and supervision fees; maintains records of fees activities during FY-08 are as follows: collected; notifies the Legal Division of any delinquent companies; and conducts special studies or assignments as SECRETARY OF THE COMMISSION requested by the Commission. The Commission Secretary receives all filings made This section maintains office supplies for the Com- to the Commission and distributes them to the appropri- mission, develops and administers internal accounting pro- ate division. He also assigns docket numbers to cases cedures and administers a centralized purchasing service requiring public hearings and maintains an electronic file of approved materials, supplies and equipment; and is on cases so that information on the status of any case can responsible for maintaining property records and conduct- be obtained quickly. ing an annual physical inventory. The Commission Secretary takes and distributes the minutes of each monthly Commission meeting. He attests MOTOR CARRIER SECTION to and files orders of the Commission and certifies copies The Motor Carrier Records Section is responsible for of orders and other documents of record in the official preserving the records of transportation companies. This files of the Commission. includes maintaining a complex database and record- The Secretary files Commission oaths of office, sure- keeping system on all motor carriers who are required to ty bonds covering each railway policeman appointed by register with the Public Service Commission according to the Governor, furnishing certification of the policeman's applicable state and federals laws and motor carrier rules appointment along with the oath and bonding to the Sec- and regulations of the Commission. Records retained by retary of State. this section include, but are not limited to, motor carrier The Secretary signs orders for the Commission to applications, vehicle identifications, transfers, name authorize transportation companies to place reduced rates changes, transcripts, revocation and reinstatement orders, into effect on less than statutory time, in order to meet an and insurance filings on both active and inactive motor emergency. carriers. The Secretary receives public officials, attorneys, This section assigns docket numbers for all informal transportation and utility executives, and other interested motor carrier cases that come before the Public Service people, providing them with information on the procedur- Commission and prepares revocation and reinstatement al practices of the Commission. orders on motor carriers who failed to maintain proper The Secretary is responsible for the retention of all proof of insurance coverage as required by law. The records of the Commission. He coordinates the transfer of Motor Carrier Records Section provides copies of docu- records to the Department of Archives and History as well ments and answers inquiries as requested by the general as destruction of records. public and other governmental agencies. The Secretary acknowledges receipt of filings advis- ing parties of the requirements of the Rules of Practice ACO Tracking Database and statutes governing proceedings in which they are The Public Service Commission implemented a new involved. He gives general procedural information and automated system to improve the processing of tariffs, answers inquiries requiring research into Commission applications and other filings made with the Commission. records. In this new system, most filings are submitted electronically The Secretary is responsible for the coordination of via the PSC website. The Secretary's Office receives sever- the departmental telecommunications services. This task al types of filings electronically. These include applications primarily entails ensuring that the telephone and data for a Certificate of Public Convenience and Necessity, tar- lines are working properly. iffs, interventions, arbitration requests, certified document A tabulation of the principal activities of the Secre- requests, complaints, Inspection and Supervision Fees, and tary during FY-08 is as follows: various other agreements and contracts from regulated Commission orders issued ....................................1,364 companies. Once the documents are in electronic format, Public hearings held ...................................................43 the filings are routed to the appropriate sections electroni- Report and Recommended Orders issued ..............11 cally for review and processing. The new system has allowed the Commission Sec- FINANCE SECTION retary to maintain the Commission hearing docket book The Finance Section plans, coordinates and directs and hearing calendar electronically, assigning cases for the fiscal functions of the Commission, overseeing such hearing in collaboration with the Administrative Law activities as accounts, budgets, purchases, equipment and Judges and Commissioners. The Secretary prepares the custodial care. Its responsibilities include maintaining the weekly hearing calendar for the Commissioners, staff, and general books, consolidating operating budget require- press representatives through the tracking system. The ments and preparing budget requests and operations Secretary also receives and records transcripts of testi- plans. mony in the tracking database. This section also prepares budgetary performance The new tracking database allows for faster access to reports; monitors the budget for possible problems and all filings received by the Public Service Commission. 10 Advisory Division Natural Gas Advisor The Alabama Public Service Commission has 12 natural gas companies under its jurisdiction. The Natural Gas Advisor works independently of the Commission's other divisions to ana- lyze natural gas industry issues before the Commission. This gives the Commissioners a separate recommendation for their review. The Natural Gas Advisor forms recommendations by researching the industry and utilizing this knowledge to study natural gas issues. Because they are independent from the Com- mission's other divisions, the resulting financial analyses, opera- tional reviews and recommendations can be used by the Com- The Advisory Division touches almost all aspects of the mission to make the most informed judgments for the benefit of Commission, but the primary role the division plays is to provide Alabamians. the Commissioners with relevant information and alternatives Specifically, the Advisor reviews ratemaking methodolo- related to regulatory issues brought before the PSC. Here is a gies, gas supply contracts, accounting matters, operational detailed description of the activities of each section of Advisory: issues, municipal acquisitions and other filings made with the Commission. ANALYSTS Monthly, the Natural Gas Advisor monitors the Rate Sta- bilization and Equalization (RSE) and related programs for Electricity Advisor Alabama Gas Corporation (Alagasco) and Mobile Gas Corpora- The Electricity Advisor reviews on a periodic basis Alaba- tion (Mobile Gas). Each month this section monitors the books ma Power Company's accounting methodology governing the and records of Alagasco and Mobile Gas to determine the return Company's treatment of regulatory assets and liabilities. Regu- on average common equity for the preceding twelve-month peri- latory Assets and Liabilities are authorized by the Alabama Pub- od and reports the financial and operational results of the previ- lic Service Commission when such accounting treatment pro- ous month, including the return on average common equity to motes rate stability. the Commission. The Energy Cost Recovery Rate Factor and Forecast of the Also, included in these reports are graphical summaries of Company's Energy Cost Recovery are analyzed on a monthly Alagasco's and Mobile Gas' recent operating histories. basis. Rate ECR provides for the recovery by Alabama Power The Natural Gas Advisor also acts as one of the PSC's leg- Company of defined energy costs using an ECR Factor derived islative liaisons within the Advisory Division. pursuant to the Rate ECR and applied to all of Alabama Power Company's retail rate schedules. Energy costs consist primarily of Telecommunications/Special Projects Advisor the cost of natural gas, fossil fuel, nuclear fuel, emission The Telecommunications/Special Projects Advisor has two allowances, and purchased power contracts. specific responsibilities within the Advisory Staff. The first is to A public hearing was held on September 23, 2008 related provide verifiable, independent recommendations to the Direc- to the necessary revisions to the Rate ECR factor. The public tor of the Advisory Staff and to the Commissioners on all mat- hearing resulted in a joint settlement being reached between ters relating to telecommunications companies that impact the Alabama Power Company and representatives of the ratepayers citizens of our state. These companies include incumbent and which allows for Alabama Power Company to properly recover competitive local exchange carriers, long distance companies, its fuel cost in an orderly manner such that ratepayers would not Voice Over Internet providers (VoIP), and cellular providers. To experience sudden economic hardship or rate shock. accomplish this, the Advisor reviews all telecommunications fil- ings made to the Commission to ensure these filings comply with The Electricity Advisor reviews on an ongoing basis Alaba- the established policies of the Commission; works closely with ma Power Company's pricing structure in the Company's rates the Advisory Division's Director, Telecommunications Division and rate riders, and the reasonableness of contracts involving the personnel and the Legal Division, participating in the develop- purchase and sale of energy-related resources. ment of the telecommunications policies and procedures to be Throughout the year Alabama Power Company's RSE implemented by the Commission; and maintains a working (Rate Stabilization and Equalization) performance and special knowledge of non-jurisdictional yet highly significant areas of projects such as Alabama Power Company's common, preferred, telecommunications service such as VoIP and cellular service. and preference stock activity are studied. Another major special The second function of this Advisor is to manage Special project review was undertaken to report on the inter-company Projects assignments from the Advisory Director and the Com- relationships and transactions between Mobile Gas Service Cor- missioners. These assignments cover any area or activity in poration, Inc. and EnergySouth, Inc., and the Subsidiaries of which the Director or Commissioners request additional infor- EnergySouth, Inc. mation or analysis. 11 Advisory Division Important projects addressed in FY08 were the continuing There are several systems in place for consumer and users' implementation of the Telecommunications Reform Act of needs. These include small-scale database applications tracking 2005, the most fundamental change in Public Service Commis- regulated motor carrier registrations, consumer complaints, sion authority over jurisdictional telephone service since the information technology help desk requests, and some telecom- passage of the Telecommunications Act of 1996; the continuing munications data. The section also coordinates and oversees the application of the Alabama Telecommunications Regulation maintenance of the agency's document imaging system with an Plan on customers and jurisdictional companies; participation outside vendor. IT staff establish e-mail and network user accounts and on the Commission team implementing the database tracking provide help desk support for hardware and software issues system, the new computerized information gathering and track- experienced by end users. Custom applications are also ing system to be used at the PSC; work on numerous arbitra- designed, primarily using Microsoft Access. Information Sys- tions/mediations that were the responsibility of the PSC to tems created and updates the PSC's Web site which offers the direct, review of natural gas rates and pricing, and numerous functionality of allowing consumers to file complaints online. information requests and customer complaints of interest to the Commission orders and filings in PSC proceedings can also be Director or Commissioners. accessed through the agency's site. Legal Advisor Federal Affairs The Legal Advisor reviews dockets and issues before the The Federal Affairs section keeps the Commission abreast Commission for legal implications and provides job-related legal of federal activities affecting utility regulation in Alabama. advice and assistance to Advisory Division personnel, as well as When necessary, the staff also intervenes and files comments in other Commission officials and employees. In order to properly federal proceedings. perform his assigned duties, the Legal Advisor monitors pend- To stay on top of the federal scene, at a minimum Federal ing legislation and court opinions, as well as industry publica- Affairs monitors activities of the Federal Communications tions. Duties include, but are not limited to, contract drafting Commission (FCC), the Federal Energy Regulatory Commis- sion (FERC), the Surface Transportation Board (STB), the and negotiation, legislative drafting, administrative proceedings, Nuclear Regulatory Commission (NRC), the Department of and the updating of various manuals and handbooks governing Transportation (DOT), the Department of Energy (DOE), the the conduct of Commission activities. The Legal Advisor also Federal Railway Administration (FRA), and the Securities and participates in state and federal legal proceedings, both in-state Exchange Commission (SEC). and out-of-state, in which the Commission has an interest. Just as important, Federal Affairs reviews federal court appeals and decisions on utility and telecommunications issues Information Systems Services and, if appropriate, makes recommendations on actions to be taken. The section also looks at proposed federal legislation affecting Alabama utilities and telecommunications providers and prepares documentation to express the Commission's views. Keeping the Commission abreast of state legislation is another function of Federal Affairs. The section assists in draft- ing legislation and tracks it progress. In this capacity, Federal Affairs is a member of the Permanent Joint Legislative Commit- tee on Energy, created by the 2007 Legislature to develop a state policy on energy. Federal Affairs has participated as a member of the standing subcommittees of the full Committee as they attempt to craft legislation to accomplish this goal. At times, Federal Affairs staff members are called upon to testify on pro- posed bills at state legislative committee hearings. Federal Affairs also acts as the PSC's legislative liaison with the Gover- nor's office. Federal Affairs has worked with several significant regula- tory issues. The Commission adopted the final report issued by The PSC's Information Systems Services section provides a the Electricity Restructuring Task Force, a team that was spear- variety of information technology services to the agency. The headed by Federal Affairs, as its current position on the issue. section operates a local area network which links the Commis- The topic is extensively monitored on a national basis by the sec- sion's divisions electronically to facilitate sharing data and tion. The state requirements of the Energy Policy Act of 2005, information. The department operates a bank of servers, includ- Sections 1251, 1252 and 1254, have required Federal Affairs, in conjunction with the Energy and Legal Divisions, to investigate ing the primary file server where users store information in and make determinations regarding net metering, fuel diversity, secure folders that are backed up daily. This section is responsi- fossil generation efficiency, time based metering and distributed ble for running virus protection software and following best prac- generation interconnection. In addition, Federal Affairs has tices procedures for information security and disaster prepared- begun work on the same process for the Energy Independence ness. and Security Act of 2007. 12 Advisory Division In 2008, Federal Affairs worked with the Energy Division makes available to the Commission staff resource materials on to prepare comments for the Commission's participation in the federal issues. Department of Energy's Transmission Workshop, and filed for- Furthermore, Federal Affairs represents the Commission mal comments for the triennial 2009 DOE Transmission Conges- on the NARUC Staff Subcommittee on Telecommunications, tion Study. and Staff Subcommittee on Nuclear Issues-Waste Disposal. The requirements of the Telecommunications Act of 1996 Personnel have been a major focal point for Federal Affairs. Numerous FCC orders and court decisions have been reviewed and imple- The Personnel Section mented. In addition, Federal Affairs filed comments in FCC maintains the records of Commis- sion employees. One of its pri- proceedings that had a direct impact on Alabama. mary functions is to identify and A Federal Affairs staff member, while serving on the implement changes in payroll Federal/State Universal Service Joint Board, participated in the expenditures that are incurred by analysis of issues and drafted proposed recommended decisions appointments, resignations, pro- for the Federal and State Commissioners on the Joint Board. motions, terminations, etc., Recommended decisions were released on the Lifeline and through the use of the Govern- Linkup program for low income subscribers; Universal Service ment Human Resource System, Portability; and modification to the high-cost support mecha- an automated payroll/personnel nisms for non-rural carriers in response to the Tenth Circuit system. Court's decision. The Federal Affairs staff member initiated a Personnel oversees the in- review of the utilization of the Federal Lifeline/Link-Up needs- processing and orientation of new employees and the out-pro- based telephone service discount programs in Alabama. cessing of employees who separate from service at the Commis- As a result, meetings and workshops were held with rep- sion. As the source for state and departmental rules, regulations resentatives of Medicaid, the Department of Human Resour- and benefits that apply to employees, Personnel provides infor- ces and the Alabama telecommunication companies to deter- mation through the agency handbook, the State Personnel Pro- mine how to make people aware of the program and increase cedures Manual, and various manuals provided by the State Per- participation. The meetings resulted in the formation of a com- sonnel Training Division. Requests to fill vacancies in the Com- mittee of industry representatives and Commission staff to pur- mission are processed by Personnel with the coordination of divi- sue implementing an aggressive plan to better inform the con- sion directors. sumers who are on a limited income and participate in the qual- The personnel manager acts as the liaison with the ifying federal assistance programs about the availability of the State Personnel Department (SPD), checking to see that per- discounts on telephone service and installation. sonnel transactions are in line with state laws and SPD rules The committee developed a colorful poster with the infor- and regulations. mation about the program and how to apply for participation The personnel manager also represents the Commission at that the telephone companies will display in their offices and at meetings of the State Personnel Board and the Council of Per- social service agencies, and other areas. They also created sonnel Administrators. brochures explaining the program and how to apply for the sub- Personnel develops, or assists in the development, and sidy that will be available at their offices and at the social updates of job descriptions on employees. This ensures appro- agencies if permitted by the agency. priate classifications are selected for a particular job and may The Federal Affairs staff member is reviewing and also be used as an indicator for change in classification and pay. following the progress of a telecommunications industry spon- sored "Missoula" intercarrier compensation reform plan filed Public Affairs with the Federal Communications Commissions. The plan rep- The Public Affairs Section of Advisory handles the public resents the culmination of a 3-year process led by the National information duties of the Commission. This entails distributing Association of Regulatory Utility Commissioners (NARUC). information to the news media, the public and other state, gov- There will be an extensive review of the analysis of the plan and ernmental and regulatory agencies. The coordinator also produces informational materials its effects on the industry and consumers. such as the PSC's Annual Report, brochures, presentation aids, In FY08, Federal Affairs filed numerous comments before other graphic materials, plus, the coordinator provides informa- FERC and Congress on the topic of regional electric transmis- tion to be posted to the PSC's web site. In addition, the coordi- sion organizations. This subject is still being closely followed by nator attends Commission hearings and meetings and monitors Federal Affairs, as FERC implements changes under Order 890 media coverage of the PSC. ("Preventing Undue Discrimination and Preference in Trans- mission Services") that are a direct extension of those policies. The Federal Affairs Section monitors and reports on posi- Consumer Services Section tions taken by other state commissions and NARUC on issues The Consumer Services Section is an extension of the affecting the Commission. This section also maintains and Advisory Division that serves as the complaint resolution center 13 Advisory Division gress, the Federal Communications Commission, Alabama Attorney General's Office and the Alabama State Legislature. The staff has the responsibility of responding to general ques- tions about a utility's practices or a Commission rule which is generally handled as an inquiry. A dispute involving a billing or a service-related matter is held as a complaint and requires infor- mation about the matter from the utility which is reviewed by the staff person who makes a determination about the validity of the utility's action and finally a decision is communicated to the con- sumer supporting the action taken or recommending a course of action to resolve the dispute. Consumer Services additionally serves as a sounding board to record consumers' opinions and observations in response to rate cases. Investigation of complex for the Commission. This Section helps consumers resolve dis- complaints often requires coordination between the utility, Com- putes with utilities and answers general utility questions about mission staff and the consumer. Written records are created to regulated utilities. Staff in this section consult with the various document inquiries and complaints referred to the Consumer utility service providers, the consumer and the Commission's Services Section. divisions' staff to resolve disputes, clarify action taken by the util- The written records created result in a series of reports ity and respond to general and often complex inquiries made each month that are used to track and monitor the utilities' regarding a utility and the Commission's rules. The Consumer activities and compliance. The written complaint and inquiry Services Section provides education to consumers and is an inte- records that are created are summarized into a report that is an gral part of the Public Service Commission. official record of the Commission. This report summarizes the Consumer Services is staffed by six professionals, the complaints taken during the month by the utility's name and the majority of whom have utility-related work experience. There are nature of the complaint. It is reviewed for trends and patterns three Consumer Service Specialists who have the responsibility and recommendations are made to the various utilities and are to gather information from the consumer, document the issue, considered when a utility makes a request to expand its certifi- research, and respond to the consumer. Each Specialist has cate. Utilities also rely on this information to gauge customer knowledge of the Commission's rules, the utility-specific rules billing and service issues. This report is a snapshot of issues the and industry practices necessary to address complaints and utilities and Consumer Services are dealing with in a given inquiries. There are two support persons in this workgroup who month. Another report that is created each month is a compila- manage the day-to-day operations for the staff who are responsi- tion of information that is requested by the Federal Communica- ble for screening incoming calls, processing mail, maintaining tions Commission. This agency requests data about telephone complaint files, managing the complaint database and respond- service providers that change a consumer's service without per- ing to general requests for information. The group manager pro- mission or authorization; this report documents the company vides advice to staff on complex issues, develops talking points to that made the unauthorized change and the number of charges address current issues, arranges training sessions and initiates made. rule changes as necessary. As the pulse of the Public Service This section also fields Do Not Call queries. The Alaba- Commission, this section handles in excess of 2,000 complaints ma State Legislature authorized the Commission to establish a and over 3,000 inquiries annually. Do Not Call Registry. This registry is now a collaborative This workgroup is generally the first point of contact for effort between the Federal Communications Commission and consumers with the Commission. General inquiries and com- the Commission. Consumers are advised about registering a plaints are reported to the Commission by telephone, electronic phone number. This data is maintained by the Federal Trade filing, letters and fax transmission. This office also handles con- Commission, and complaints are registered through a federal sumer issues referred from the Governor's Office, U. S. Con- collection site. 14 Energy Division The Energy Division oversees the operations of all investor-owned elec- tric, natural gas and water utilities serving consumers within the state of Alaba- ma. This responsibility includes monitoring the rate stabilization and equalization programs used by the Alabama Pub- ALABAMA POWER COMPANY lic Service Commission ("the Commission") to Rate Stabilization and Equalization (RSE) regulate Alabama Power RSE was designed to lessen the impact, frequency and size of retail rate increase requests by permitting the Compa- ny, through the operation of a rate that was filed and approved, to adjust its charges more readily to achieve the rate of return allowed by the rate order of the Commission. By provisions in the rate, the charges are increased if projec- tions for the upcoming year show that the designated rate of return range will not be met and are decreased if such projec- tions show that the designated rate of return range will be exceeded. Other provisions limit the impact of any one adjustment (as well as the impact of any consecutive increas- es), and also test whether actual results exceeded the equity return range. Beginning December 1, 2006, and by December 1 of each year thereafter, the Company's rate of return on project- ed average common equity ("RRCE"), separated to retail electric service, shall be computed annually for the upcoming Company, Alabama Gas Corporation and Mobile Gas Ser- twelve-month period ending December 31 (such twelve- vice Corporation. The safety of all natural gas and hazardous month period being the "rate year"). The RRCE shall be liquid pipeline systems in Alabama is included within the computed on the basis of cost estimates and budgets prepared Energy Division's scope of responsibility under the Gas by the Company in the ordinary course of its business and in Pipeline Safety section's purview. Additionally, the Special a manner consistent with the Uniform System of Accounts. If Projects section addresses and coordinates issues that are the resulting RRCE is less than 13.0% or more than 14.5% non-jurisdictional or concern multiple energy commodities. (13.0% – 14.5% being "the equity return range"), then The subsequent paragraphs discuss each section's sig- monthly bills under the respective rate schedules subject to nificant regulatory policies, responsibilities and major Rate RSE shall be increased or decreased by amounts per activities that occurred during fiscal year 2008. kilowatt-hour (kWh) necessary, in total, to restore the RRCE to 13.75% (the "adjusting point" in the equity return range). The Electricity Section examines the Company's books Electricity Section and records on a monthly basis to determine the RRCE for the current 12 month period. It also actualizes the December The Electricity Section is primarily responsible for the forecast using the most recent accounting data. The section's regulatory oversight of Alabama Power Company ("the Com- staff prepares a summary report of this information and pres- pany" or "APCo"). This includes financial analyses, econom- ents it at each monthly Commission meeting. As of August ic evaluations, auditing, and statistical data assimilation. In 31, 2008, the re-projected Retail Return on Average Common addition, the staff performs management inquiries to remain Equity for the twelve-month period ending December 2008 informed as to the manner and method in which APCo's busi- was 13.55%. ness is conducted. This section also evaluates certain aspects of Southern Energy Cost Recovery (ECR) Electric Generating Company (SEGCo), jointly owned by Rate ECR is the rate approved by the Commission to Alabama Power Company and Georgia Power Company, and recover retail customers' portion of energy cost. Initially the Alabama Municipal Electric Authority (AMEA). established at 17.88 mills per kWh, the rate has been adjust- 15 Energy Division ed for temporary periods of time to reduce the over/under facilities and the recovery of the related capital cost for such collections accumulated in the energy cost recovery account. facilities. During FY-2008, Alabama Power Company did not The Electricity Section prepares a summary report for the file any applications for a Certificate of Public Convenience monthly Commission meetings reflecting the status of the and Necessity related to adding generating facilities. Company's energy costs recovery, the accumulated Rate CNP was modified in April 2000, to include a sec- over/under collections, and the ECR projection for Decem- ond provision, Rate CNP—Part B, that would allow for the ber 31 of the current year. certification of Purchase Power Agreements (PPAs) and the In April 2002, the Commission approved Rate Rider recovery of the total cost (excluding fuel) associated with each RDF (Rate Differential Factors). This rate rider is applicable agreement. Rate CNP—Part B is also referred to as Rate to Rate ECR and adjusts the ECR billing factor to reflect the CNP-PPA. At this time, Alabama Power Company has two seasonal patterns of fuel cost. The billing factor is increased (2) seven-year PPA contracts. The first PPA contract, during the months of June through September and decreased effective in 2003, for 939 MW will expire in 2010 and the sec- for the billing months of October through May. ond PPA contract, effective in 2004, for 312 MW will expire in In December 2005, the ECR billing factor was increased 2011. to 24.00 mills per kWh, effective January 1, 2006. This inter- Rate CNP was further modified in October 2004, to im energy cost recovery factor was intended to remain in include a third provision, Rate CNP—Part C, that would pro- effect until December 31, 2007, at which time the company's vide a mechanism to recover compliance costs associated with fuel cost was expected to be fully recovered. However, as of "environmental mandates." Rate CNP—Part C is also June 2007, the accumulated balance under Rate ECR had not referred to as Rate CNP-ECP. Beginning in December 2004, declined, but instead had grown to a deficit of approximately and each December thereafter, the Company must file its $360 million. As a result, the Company filed a petition with annual Environmental Compliance Plan subject to Rate the Commission seeking to increase the factor from 24.00 CNP—Part C. The first Part C provision went into effect in mills per kWh to 31.00 mills per kWh. After a thorough January 2005. review, the staff recommended approval of the company's petition. The Commission approved the requested interim ECR factor of 31.00 mills, effective for July 2007 billings, and Flexible Contract Rate (FCR) thereafter for a period of 30 months. At the end of this peri- By Order dated April 1, 1996, the Commission od, the interim factor would have been re-evaluated. approved the Company's petition for a new Flexible Contract As of August 31, 2008, the under-recovered energy cost Rate (Rate FCR). Rate FCR was designed to be applicable was $257,544,178 and had been steadily rising since May 2008. only to commercial and industrial customers who have a need In addition, the Company estimated that by October 2008, the for flexibility in rates and/or service and who have an account cumulative under-recovery was projected to exceed for no less than one megawatt of electricity. For contracts $361,000,000 and, by October 2009, the under-recovered with commercial and industrial customers utilizing this rate, energy cost was projected to be approximately an economic evaluation must be made in accordance with $1,000,000,000. The escalating cost was primarily attributable methods accepted by the Commission. The economic evalu- to the increased costs of coal and natural gas. ation must prove that the pricing under each contract will Therefore, in August 2008, prior to the expiration of the promote a positive benefit to all ratepayers over the term of 30-month interim ECR factor of 31.00 mills, Alabama Power the contract. Company filed with the Commission a proposed revision to During FY-2008, the Commission staff evaluated two the Rate ECR Factor (ECRF). The Company proposed an (2) electric service contracts that were filed pursuant to Rate interim factor of 46.62 mills per kWh for a 12-month period FCR. In addition, the staff performed a post-contract review and a post interim factor of 59.10 mills to be effective there- of three (3) electric service agreements. after. A special hearing was held on September 23, 2008, whereby a joint recommendation was made by Alabama Natural Disaster Reserve (NDR) Power and all Interveners. The joint recommendation includ- By Order, dated October 3, 1994, the Commission ed an interim 24-month factor of 39.83 with an effective date granted Alabama Power Company authority to establish a for customer's billings beginning on October 9, 2008. The Natural Disaster Reserve of $32 million against which post- interim ECR factor would remain at 59.10 mills per extraordinary operation and maintenance expense, resulting kWh. At its October meeting, the Commission approved the from natural disasters, would be charged. The reserve was joint recommendation. established to help mitigate the disruptive effects of signifi- cant natural disasters in the company's service territory. However, the Natural Disaster Reserve (NDR) was sub- Certificated New Plant (CNP) stantially depleted in October 1995, due to Hurricane Opal. Rate CNP—Part A was originally approved in 1982 in Under the monthly accruals established in the original order, conjunction with Rate RSE under Dockets 18117 & 18416. it would have taken more than eight years to restore the The original rate provided for the certification of generating reserve to the authorized level of $32 million. 16 Energy Division Therefore, in December 1995, the Commission author- to designate a "Critical Peak" period and it can only be called ized APCo to make additional accruals, without further order during the defined on-peak period and cannot exceed 120 by the Commission, above the normal monthly amount of hours per year. CPP is available only to customers who are $250,000 whenever the balance in the Natural Disaster served under Rate FDT (Family Dwelling Time-Of-Use) and Reserve declines below $22.4 million. Accruals above normal within the Company's Automated Metering Infrastructure monthly amounts could continue until the reserve was (AMI). In May 2008, the Commission approved Rate Rider restored to $32 million and must be reported to the Commis- CPP to become effective for June 2008, billings. sion in writing. In June and July of this year, the Commission approved On September 16, 2004, Hurricane Ivan made landfall the 28th and 29th revisions to Rate PAE (Purchase of Alter- on Alabama's Gulf Coast and continued on through the state, nate Energy). In June 2008, the charges and payments under resulting in significant damage to the Company's transmission this rate were revised to reflect updated costs and avoided and distribution equipment and facilities. The total O&M costs for the Company and are based on 2008 forecasted data. related expenses were $57,565,583. This amount was in In July 2008, modifications to the Special Rules Governing excess of the reserve balance and therefore prompted the Application of Rate PAE were approved by the Commission. Company to request that the Commission allow the reserve to The revisions to the Special Rules (PAE) eliminated (1) the carry a negative balance. The Commission approved this requirement that customers with a capacity of 25 kW or less request on October 19, 2004, effectively deferring cost recov- carry at least $1 million of liability insurance and (2) the ery through the normal accrual method, additional accruals, requirement that a customer-generator be a "qualifying facil- and/or by other accounting treatments. In July and August ity" (or QF) under PURPA to take service under Rate PAE. 2005, the Company's service territory was impacted by Hurri- Other modifications included: (a) A customer may change canes Dennis and Katrina, once again causing significant their election between two pricing schedules (Standard or damage to the transmission and distribution system. Togeth- Time of Day) once a year; (b) when a customer's credits for er, the O&M expenses related to these two major storms, as energy delivered exceed APCo's charges, the customer may well as other small storms, were estimated to be approximate- choose to have the account credited or receive a check for the ly $80 million. As a result, on September 30, 2005, the NDR amount due; (c) amending the contract term from three years had a negative balance of $69,278,301. to one year; and (d) if an inverter meets the requirements of Because of the significant negative balance, the Commis- UL standard 1741, it is deemed to have met Alabama Power's sion approved Rate Rider NDR in December 2005, and requirements for interconnection. All changes were effective increased the authorized disaster reserve balance from $32 mil- with August 2008, billings. lion to $75 million, effective January 2006. Rate Rider NDR was designed to address the negative balance in the Natural Disaster Federal Issues Reserve and to re-establish a reserve balance sufficient to address The Electricity Section staff monitors various Federal potential costs associated with future natural disasters. In order to issues that may impact the electric industry. This includes accomplish this, Rate Rider NDR added a small monthly charge participating in teleconferences, conducting research, and to each account served under the Company's retail rate sched- attending meetings with the Federal Energy Regulatory Com- ules. As a result of Rate Rider NDR, the negative balance in the mission (FERC), the National Association of Regulatory reserve was fully recovered by June 30, 2007. As of September 30, Utility Commissioners (NARUC), and other electric industry 2008, the Natural Disaster Reserve had a positive balance of organizations. $30,070,183. During FY-2008, the staff monitored several Federal Other Activities: matters that reaffirmed final rules previously issued by FERC. They were: 1) Open Access Transmission Tariff Reform; 2) New and Revised Tariffs Mandatory Reliability Standards for the Bulk-Power System; In 2006, the Commission approved Rate Rider CPP 3) Electric Transmission Siting Rule; and 4) Prohibition of (Critical Peak Pricing) as a demand-side management pilot Energy Market Manipulation. program for residential customers. The program, also known In September 2006, the Commission opened three as a "SmartPower Program", was tested during the summer dockets for consideration of Sections 1251 (Docket 30066), months of 2006 and 2007. Based upon the success of the pro- 1252 (Docket 30067), and 1254 (Docket 30068) of the Ener- gram, Alabama Power petitioned the Commission to remove gy Policy Act of 2005 (EPAct 2005). In Docket 30067, the the pilot program expiration date and, with certain revisions to Rate CPP, continue the program as a permanent rate rider. Commission determined that the standards to be considered The SmartPower program promotes energy efficiency under Section 1252 have been met with prior state action; through a mutually beneficial arrangement between the Com- therefore, no further action was needed. In Docket 30068, pany and the customer. In addition, the customer has the the Commission determined that the standards to be consid- potential to reduce their electricity costs by modifying their ered under Section 1254 should be considered in conjunction electricity consumption behavior in response to the Smart- with Docket 30066. In Docket 30066, the Commission deter- Power price signals. Under Rate Rider CPP, APCo is allowed mined that the standards to be considered in Sections 1251 17 Energy Division and 1254 had not been met. Therefore, the standards under of September 30, 2008, the remaining authority for common both sections were set for further review, with a schedule of stock issuance was 8,150,000 shares. proceedings to be established. In addition to the Commission On November 9, 2007, the Commission issued an Order proceedings in Docket 30066, the Alabama Legislature also in Informal Docket U-4861 granting SEGCo the authority to passed HB234/SB305 entitled the "Alternative and Renew- issue, sell and incur obligations in connection with the able Energy Act of 2008." Under this bill, "no utility shall be issuance of not more than $100,000,000 (long-term borrow- liable to any person, group of persons, or legal entity, direct- ing) in aggregate principal amount of promissory notes, sub- ly or indirectly, for damage to or loss of property, injury, or ordinated debentures and other debt instruments and indus- death that arises in any way from the interconnection or oper- trial development revenue bonds; and borrow from lenders ation of a distributed generation facility." As a result of the on its promissory notes and to issue and sell its commercial new legislation, Alabama Power filed proposed revisions to its paper notes from time to time (short-term borrowing) on or Rate PAE removing the liability insurance requirement previ- prior to December 31, 2009. The maximum aggregate princi- ously included in the rate and thereby removing a huge barri- pal amount of notes at any one time outstanding will not er for customers wanting to interconnect to Alabama Power's exceed $60,000,000. Upon issuance of this order, SEGCO electric distribution system. surrendered its remaining authority under Informal Docket Also, staff reviewed and prepared documents for Com- U-4689. As of September 30, 2008, the remaining long-term mission President Jim Sullivan to be used for a presentation borrowing was $100,000,000 and the remaining short-term at the 2009 Pre-Congestion Study Regional Workshop held in borrowing authority was $35,000,000. Atlanta, GA. Auditing Financing The Electricity section's auditor and analysts conduct monthly analytical reviews and/or audits to test the complete- The Electricity Section staff reviews all financing peti- ness and accuracy of financial statements, economic models tions filed by Alabama Power Company and Southern Elec- and other data submitted by Alabama Power Company. tric Generating Company (SEGCo). SEGCo is a fossil-fueled For this activity, the staff's monthly fuel audit is partic- generating facility located in Wilsonville, Alabama, jointly ularly important because the Company's energy costs are owned by Alabama Power and Georgia Power, in equal approximately 66 percent of total operation and maintenance shares. These petitions are generally filed with the Commis- (O&M) expense. During this monthly audit, the accounting sion to request approval to engage in the issuance of securi- records for fuel purchases and burns are reviewed at the cor- ties or to assume obligations pursuant to other types of debt porate office and at the respective generating facilities. Site instruments. Upon analysis and evaluation, the staff makes audits for each generating facility are performed on a rotating recommendations to the Commission pertaining to those basis. petitions. The staff also audits the annual filing of Rate CNP-ECP On November 09, 2007, the Commission issued an (Environmental Compliance Plan). The Commission Order in Informal Docket U-4860 granting Alabama Power requires the Company to submit, as part of the modified Rate Company the authority to issue additional securities and CNP, a detailed annual summary report of the Environmental incur obligations in connection with the issuance of industrial Compliance Plan. This summary identifies the previous year's development revenue bonds, assume obligations in connec- environmental expenses incurred and projected expenses for tion with the issuance of preferred securities by a special sub- upcoming years. This information is reviewed thoroughly sidiary or subsidiaries, and borrow upon issuance of promis- during the audit procedure. The staff performs two separate sory notes and commercial paper not to exceed audits of this filing – one audit is of the filing itself and the sec- $2,300,000,000 (long-term borrowing) prior to December 31, ond audit is of the environmental compliance plan. During 2009. Additionally, the Company was granted authority to the audits, the staff 1) reviews and verifies the accuracy of borrow from lenders on its promissory notes and to issue and amounts reported in the filing; 2) ensures that the filing is in sell its commercial paper notes from time to time not to accordance with Rate CNP; 3) compares and researches sig- exceed $2,000,000,000 (short-term borrowing) prior to nificant budget variances; 4) determines if reported expenses December 31, 2009. Upon issuance of this order, the Compa- are qualifying environmental expenses; and 5) requests and ny surrendered its remaining authority under Informal Dock- reviews additional information, as needed for a complete and et U-4687 and Informal Docket U-4688. As of September 30, thorough analysis of the filing. 2008, the remaining long-term borrowing authority was In addition, the staff performs an annual compliance $1,361,000,000 and the remaining short-term borrowing audit of the Rate CNP-PPA (Purchase Power Agreement) fil- authority was $1,905,000,000. ing. Other auditing responsibilities include testing of various The Company, in Informal Docket U-4860, was also accounts and activities to trace and verify reported revenues granted authority to issue and sell up to 16,000,000 shares of and expenses, to review APCo's compliance with the FERC its $40.00 par value common stock to its parent, the Southern Uniform System of Accounts, and to investigate significant Company, at a purchase price not less than the par value. As variances identified during monthly monitoring and analytical 18 Energy Division processes. Also, the staff performs random billing audits to Natural Gas Section test the Company's compliance with approved tariffs. The Natural Gas Section is responsible for the regula- Engineering tion of all publicly-owned natural gas distribution, transporta- The section's staff engineer performs monthly site tion, storage, and intrastate natural gas and oil pipelines in visits, investigates service quality issues, responds to tech- Alabama, and the monitoring of the Rate Stabilization and Equalization and related programs for Alabama Gas Corpo- nical inquiries and works on special projects as assigned. ration and Mobile Gas Service Corporation. From time to time, the staff engineer has also assisted with research regarding the application of various environmen- Rate Stabilization and Equalization (RSE) tal technologies such as: flue gas desulfurization (FGD) systems, i.e., scrubbers, baghouses, selective catalytic The Commission regulates the rates for the two largest reduction (SCRs), selective non-catalytic reduction natural gas utilities in the state under a Rate Stabilization and (SNCRs), electrostatic precipitators (ESPs) and low Equalization (RSE) plan. RSE has been in use for more than nitrous oxide (NOx) burners. The staff also stays abreast 20 years as a method of keeping rates as low as possible while of utility automation systems (AMR, AMI, SCADA, etc). assuring quality service. Monthly site visits to utility plant facilities and construc- tion projects were performed to review maintenance, repairs ALABAMA GAS CORPORATION and operating (MRO) practices, infrastructure improve- Each month, this section examines the books and ments, capital projects, electric safety and construction stan- records of Alabama Gas Corporation (Alagasco), determines dards and power quality issues. the return on average common equity for the preceding 12- Power system maintenance, repairs and operating month period and reports the financial and operational activities include performing routine duties which keep the results of the previous month, including the return on average system and/or equipment in good working order. Projects common equity, to the Commission. It also graphically sum- such as vegetation management, turbine inspection supervi- marizes Alagasco's recent operating history. Under the RSE sion, pole replacement administration and system study plan, the only time Alagasco can receive an increase in rates analysis are good examples of proactive and preventative is December 1. If the projected return, based on the budget MRO programs. approved by the utility's board of directors, is less than 13.15 Safety, reliability and power quality standards are percent, rates are increased December 1 to bring the return at reviewed and discussed with utility personnel. Operating the end of the fiscal year to 13.4 percent. If the projected return is more than 13.65 percent, rates are decreased to tests and reports are also reviewed. bring the return to 13.4 percent. If the projected return is Occasionally, the staff engineer participates in training between 13.15 and 13.65 percent, inclusive, no adjustment is and educational activities relevant to the performance of his made. Subsequent points of test, based on the projected duties. return at September 30, can yield only decreases or no During FY-2008, the staff visited 24 different plant sites change, effective April 1, July 1, and October 1. The Natur- and facilities with an emphasis on power quality issues and al Gas Section evaluated four RSE filings by Alagasco during environmental technologies. FY-2008. • Effective Date. . . . . . . . . . Increase (Decrease) ALABAMA MUNICIPAL • December 1, 2007 . . . . . . . . . . . . . . $10,729,148 ELECTRIC AUTHORITY • April 1, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 • July 1, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 Pursuant to the provisions of Section 11-50A-25, Code • October 1, 2008. . . . . . . . . . . . . . . . . . . . . . . . . 0 of Alabama, 1975, as amended, the Commission reviews and acts on certain activities of the Alabama Municipal Electric Alagasco also has an incentive program, the Cost Con- Authority (AMEA). On April 8, 2008, the Commission trol Measure, under which it must keep growth in operation issued an order in Informal Docket U-3013 approving an and maintenance expenses below a specified range, or face Amendment No. 2 to the Power Supply Agreement (PSA) penalties. The utility has a temperature adjustment that between AMEA and Alabama Power Company (APCo) and adjusts bills for the effect of abnormally high or low tempera- approving an Agreement for the Supply of Supplemental tures on the recovery of non-gas costs. The section monitors Capacity and Energy between APCo and AMEA. Amend- both of these programs to ensure that they are conducted in accordance with the approved tariff. ment No. 2 improved upon the "pricing mechanisms" in the contract in such a way as to reduce price volatility. Under the provisions of the Supplemental PSA, APCo will supply the MOBILE GAS SERVICE CORPORATION bulk electric power and energy to serve AMEA's load growth Each month this section examines the books and during the period from 2011-2015. records of Mobile Gas Service Corporation (Mobile Gas), 19 Energy Division determines the return on average common equity for the pre- cials of the respective gas companies are held to discuss the ceding 12-month period and reports the financial and opera- results. tional results of the previous month, including the return on average common equity, to the Commission. ALABAMA GAS CORPORATION Under the RSE plan, the only time Mobile Gas can Regarding Alabama Gas Corporation, the section: receive an increase is December 1. If the projected return, based on the budget approved by the utility's board of direc- • Participated in numerous meetings concerning the renewal tors, is less than 13.35 percent, rates are increased on Decem- of Alagasco's RSE; ber 1 to bring the return at the end of the fiscal year to 13.6 • Participated in a Consumer Roundtable in Anniston, percent. If the projected return is more than 13.85 percent, Alabama; rates are decreased to bring the return to 13.6 percent. If the • Met with Alagasco and the Commission's Consumer Ser- projected return is between 13.35 and 13.85 percent, inclu- vices Section concerning a service connection delay experi- sive, no adjustment is made. Subsequent points of test, based enced by a group of customers and reached a resolution so on the projected return at September 30, the end of Mobile that no customer was denied or delayed service beyond Gas' fiscal year, can yield only decreases or no change, what was absolutely necessary; effective April 1, July 1, and October 1. The Natural Gas sec- • Reviewed Alagasco's proposed tariff pages for compliance tion evaluated four RSE filings by Mobile Gas during FY- with the Commission's RSE renewal order and presented 2008. them to the Commission; • Investigated Alagasco's application to revise Rate Sched- • Effective Date. . . . . . . . . . Increase (Decrease) ule P and presented it to the Commission; • December 1, 2007 . . . . . . . . . . . . . . . ($333,043) • Evaluated Alagasco's Precedent Agreement with Transco • April 1, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 arising from FERC action and presented it to the Commis- • July 1, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 sion; • October 1, 2008. . . . . . . . . . . . . . . . . . . . . . . . . 0 • Investigated Alagasco's proposed regulatory treatment of Mobile Gas also has an incentive program, the Cost certain tax benefits and presented it to the Commission; Control Measure, under which it must keep growth in opera- • Worked extensively with the Commission's Consumer Ser- tion and maintenance expenses below a specified range, or vices Section on several issues related to Alagasco's bills; face penalties. The utility has a temperature adjustment that and adjusts bills for the effect of abnormally high or low tempera- • Analyzed Alagasco's filing to modify its Temperature tures on the recovery of non-gas costs. The section monitors Adjustment Rider and presented it to the Commission. both of these programs to ensure that they are conducted in MOBILE GAS SERVICE CORPORATION accordance with the approved tariff. Regarding Mobile Gas Service Corporation, the sec- Local Distribution Companies tion: • Examined Mobile Gas' application for approval of a Another function of the Natural Gas section is to main- Revolving Credit Agreement with EnergySouth and pre- tain statistical data and keep the Commission informed on all sented it to the Commission; facets of the gas utilities' operations. Under that function, • Coordinated a response relating to a complaint against the following reports are prepared regularly: Mobile Gas; • Revenue and Expense Analysis • Reviewed the Cast Iron Main Replacement Factor for • Competitive Fuel Clause Mobile Gas Service Corporation; • Gas Supply/Purchased Gas Adjustment • Had discussions with Mobile Gas to ascertain the true • Return on Average Common Equity effects, if any, on the regulated utility caused by the pend- ing acquisition of EnergySouth by Sempra Energy; During FY-2008, the Natural Gas section was responsi- • Attended the EnergySouth stockholders' meeting, where ble for evaluating and making recommendations to the Com- the a sale of EnergySouth to Sempra was approved by a mission on all matters pertaining to the following local distri- vote of the shareholders; and bution companies: • Evaluated a financing issue related to Sempra Energy's buyout • Alabama Gas Corp. of EnergySouth and presented it to the Commission. • Mobile Gas Service Corp. • Wheeler Basin Natural Gas Co. WHEELER BASIN NATURAL GAS COMPANY The section conducts its own investigations requiring Regarding Wheeler Basin Natural Gas Company, the examination of work papers, financial reports and other section: records. The findings are documented and evaluated in • Met to discuss its financial condition, potential customer written reports, and, when appropriate, meetings with offi- growth, and community relations; and 20 Energy Division • Reviewed and presented Wheeler Basin's line of credit Support of Commission Offices application to the Commission. The section: Intrastate Pipeline and Storage Companies • Prepared letter responses and documents concerning natu- ral gas issues; During FY-2008, the Natural Gas section was responsi- • Participated on the PSC Consumer Education Project; ble for evaluating and making recommendations to the Com- • Assisted in the financial review of Parker Creek Water mission on matters pertaining to the following intrastate Company, LLC; pipeline and storage companies: • Participated in a public hearing concerning Parker Creek • Bay Gas Storage Company, Ltd. Water Company; and • Served on a Commission Task Force regarding wastewater • Crosstex Alabama Gathering System LP, regulation and assisted in the review of applications for • Enbridge Pipelines (Alabama Gathering) LLC Certificates of Financial Viability to operate decentralized • Enbridge Pipelines (Alabama Intrastate) LLC wastewater cluster systems. • Enbridge Pipelines (Bamagas Intrastate) LLC Interagency Activities • Enbridge Pipelines (Tennessee River) LLC A section member: • Enterprise Alabama Intrastate LLC • Served as Vice Chairman of the Alabama Liquefied Petro- • Genesis Pipeline, LLC leum Gas Board as President Sullivan's designee; • Led the National Association of Regulatory Utility Com- • Pine Energies, Inc. missioners and the National Regulatory Research Institute • Southern Gas Transmission Company undertaking to update the Natural Gas Toolkit for utility commissions nationwide to use this heating season; BAY GAS STORAGE COMPANY, LTD. • Served as Vice Chair of the National Association of Regu- The section: latory Utility Commissioners' Staff Subcommittee on Gas; • Participated in the NARUC Winter Committee Meetings • Examined Bay Gas' application for approval of a Revolving in Washington, DC and Summer Committee Meetings in Credit Agreement with EnergySouth and presented it to Portland, Oregon; the Commission; • Participated in the Energy Efficiency and Conservation • Visited Bay Gas' facilities to receive briefings on ongoing Subcommittee recommendation process; construction; and • Provided accounting assistance for the 2009 National Asso- • Investigated Bay Gas' application for a revision of its Cer- ciation of Pipeline Safety Representatives Southern region tificate of Public Convenience and Necessity to build an conference in Alabama; interconnect with Transco and participated in the hearing • Attended the Energy Efficiency and Renewable Energy on the matter. Conference conducted by the Alabama Department of • Had discussions with Bay Gas to ascertain the true Economic and Community Affairs; effects, if any, on the regulated utility caused by the • Served on the Alabama Department of Economic and pending acquisition of EnergySouth by Sempra Energy; Community Affairs' Weatherization Assistance Policy • Attended the EnergySouth stockholders' meeting, where Advisory Council; the a sale of EnergySouth to Sempra was approved by a • Attended the NARUC Annual Convention in Anaheim, vote of the shareholders; and California; • Evaluated a financing issue related to Sempra Energy's • Made a presentation to the National Association of State buyout of EnergySouth and presented it to the Commis- Utility Consumer Advocates; • Participated in the National Association of Regulatory sion. Utility Commissioners' Accounting Subcommittee; and • Served on and participated fully in the Alabama Depart- GENESIS PIPELINE, LLC ment of Public Health Bioterrorism and Public Health Pre- The section: paredness Advisory Council. • Reviewed Genesis' application for a Certificate of Public Training Activities Convenience and Necessity, conducted an investigation, Section representatives: and participated in the hearing; • Inspected the intended route to be used by Genesis for the • Received training concerning the operation of Southern pipeline and gathering system; and Natural Gas' and Transco's Electronic Bulletin Boards; • Analyzed Genesis' application for approval of a crude oil • Participated in a Regulator Webinar presented by Planalytics; gathering and transportation contract with Midroc Operat- • Attended the PSC's annual Gas Pipeline Safety Seminar ing Company and presented it to the Commission. held in Montgomery; and 21 Energy Division • Attended several classes conducted by State Personnel. Water Section Miscellaneous The Water Section is responsible for regulating seven investor-owned and municipal water systems including four The section: located out-of-state that have authority to operate in Alaba- ma. The jurisdictional water utilities are: • Collected and graphed data on regional LDCs; • Worked closely with the LDCs to monitor gas supply • Central Water Works (Florida) activities to ensure the lowest possible cost gas would be • East Lowndes Water Association (Mississippi) available for the winter heating season; • Hiwannee Water Association (Mississippi) • Investigated, analyzed, and reported on approximately 85- • Parker Creek Water Company 90 separate additional matters, including special contracts, • Plantation Water System tariff changes, gas supply adjustment filings, purchased gas • Tishomingo County Water District (Mississippi) adjustment filings, new rates, certificates, and related mat- • Water Works, Inc. ters; and The duties of the Water Section include inspecting the • Investigated requests for gas service, and responded to a facilities, reviewing the financial books and records, working significant number of requests by the general public for with the Alabama Department of Environmental Manage- rate information, financial data, tariff sheets, and other ment's staff, assisting the PSC's Consumer Services section in information. handling customer complaints, preparing reports as a result of inspections and visits, and conducting compliance and Gas Pipeline Safety Section accounting audits. The section reviews and evaluates new water utilities The Gas Pipeline Safety section conducts and carries seeking authority to operate under the jurisdiction of the out the inspection and monitoring activities of all natural gas Commission. The Governmental Utility Service Corporation and hazardous liquid pipeline systems operating in Alabama, – Sherbrooke was transferred to the Northeast Morgan Coun- ty Water and Sewer Authority and its certificate to operate in including offshore in state waters. The responsibility was Alabama was cancelled on February 13, 2008. Central Water given to the Commission by the Alabama Legislature to Company was granted a Certificate of Convenience and assure and obtain compliance with the Minimum Federal Gas Necessity (CPCN) to operate in south Alabama in December Pipeline Safety Standards adopted by the United States 2007. A new, private water system, Lake Mitchell Water Department of Transportation pursuant to the Natural Gas Company, is under construction and should be completed in Pipeline Safety Act of 1968. early 2009. The Commission currently regulates, for safety matters, The section participated in meetings, led by the Alaba- 91 intrastate gas systems, 35 master meters, seven hazardous ma Department of Economic and Community Affairs' Office liquid systems, one liquefied petroleum system, four offshore, of Water Resources, regarding the continuing study of two river basins in a dispute over water needs for the city of and six liquefied natural gas systems. Atlanta, Georgia. The two river basins include the Alabama, The Gas Pipeline Safety section develops and presents Coosa, Tallapoosa and Chattahoochee Rivers. programs to promote safe operations by natural gas transmis- During FY-08, the Commission received 138 inquires sion and distribution systems. When a system is in noncom- and questions concerning water utility service with most of pliance with rules and regulations, immediate action is taken. the calls concerning non-jurisdictional companies. An important function of this section is accident pre- vention. The section conducts safety seminars around the Commission Action on Water Utilities in FY-2008: state, as well as fire schools and plastic pipe qualification Action Order Date classes. A tabulation of the section's activities in FY-08 is Central Water Company listed below: CPCN December 4, 2007 Hiwannee Water Association Inspections Rate Increase June 10, 2008 Gas Pipeline Safety ...........................................996* Parker Creek Water Company Enforcement Actions ...........................................48 Tariff Change September 10, 2008 Non-compliances ..................................................74 Non-compliances Corrected ................................37 Special Projects Section Construction Projects .........................................166 Safety Education Programs .............................243* This section assisted in the oversight of energy utility compliance with Commission rules and regulations, as well as Pipeline Safety Incident Investigations ................5 updating various sections of the rules when needed. The * These figures represent "person-days" that were expended Special Projects section provided direct assistance to utility in the inspection/education processes. customers through telephone and personal communications. 22 Energy Division The staff provided engineering and technical support other communications with applicants. The staff also assist- with special projects to other sections and divisions within the ed ADPH with general administrative matters related to the Commission, as well as led in the performance of multi-disci- interagency contractual arrangement. pline requests and issues. This section also gave assistance to other division engi- This section is involved in an on-going project to assist neering personnel. This section made a diligent effort to stay the Alabama Department of Public Health (ADPH) with the abreast of the latest technological developments in the elec- evaluation of the financial viability of on-site wastewater sys- tric, gas and water utility industries as well as relevant pro- tems' management entities pursuant to a 2001 Alabama law. ceedings before federal regulatory agencies and PSCs in other The staff cooperates with the ADPH on this project under an states. Results of this research are provided to appropriate interagency contractual arrangement. During FY-2008, the staff members on a timely basis. section reviewed and submitted comments on 21 cluster sys- This section's personnel also reviewed research and tem applications, two certificate renewal applications, and development projects undertaken by utility companies, and one initial certification application, all involving meetings and made on-site visits when appropriate. 23 Telecommunications Division The Telecommunications Division maintains limited security. The staff also began the development of a third jurisdiction for the regulation of telephone service providers party billing database. in the State of Alabama. Utilities that fall under the Commis- 3. Staff implemented rules regarding Truth and Billing issues sion's jurisdiction include; Incumbent Local Exchange Carri- in Docket 15957. The rules require companies to provide ers (ILECs) – the traditional providers of local telephone full disclosure of actual and estimated charges which a service; Competitive Local Exchange Carriers (CLECs); customer can expect to pay on an average monthly bill Interexchange Carriers (IXCs); Long Distance Service when quoting prices for services. Resellers (Toll); Payphone Service Providers (PSPs); and Shared Tenant Telephone Service (STS) providers. 4. Staff proposed new and received telephone rules for the With passage of the Alabama Communications regulation of Inmate Phone Service. Comments were Reform Act of 2005, the Commission's jurisdiction over received and a final Commission Order is pending. prices for telecommunications services other than basic serv- 5. The section reviewed 100 interconnection, resale, and col- ice, Emergency Reporting Services, access service and inter- location agreements between CLECs, wireless providers, company wholesale pricing, was curtailed. Beginning in 2008, and ILECs. basic service rates are allowed to increase in accordance with the Consumer Price Index as reported by the U.S. Depart- 6. The staff received 8 applications for toll resale and com- ment of Labor Bureau of Labor Statistics. The Commission petitive local exchange service in Alabama. no longer has pricing authority over bundled offerings, new 7. Staff participated in the four (4) mediations/arbitrations contract offerings, and other retail services. of interconnection issues between various telephone com- Staff participates in certification hearings for new panies. telecommunications service providers; reviews and analyzes tariffs and intercompany wholesale agreements for which we 8. Audits were performed on the Transition Service Funds retain jurisdiction; reviews service quality performance; is and Area Calling Service Funds in accordance with Dock- involved in numbering resources management; and recom- et 24499, 24472, 24030, and 24865. mends telecommunication policy and rules to the Commis- 9. The section developed programs to comply with recent sion. The Commission does not have jurisdiction over cable legislation pursuant to the Code of Alabama, Section 11- television, Internet Service; Voice Over Internet Protocol 98-5.1 regarding emergency telephone service charges (VOIP) phone service, or cellular telephone service. (E911) and constantly maintains applicable websites. The Division is comprised of two primary sections: the Economic Compliance Section and the Service Compli- 10. Staff ensures compliance with the Code of Alabama, Sec- ance Section. tions 37-2A-4 and 30-6-1 regarding Family Violence pro- cedures and the associated Alabama Public Service Com- mission Docket (29878). Economic Compliance Section 11. Staff participated extensively in Docket 25980, which pro- The Economic Compliance Section of the Telecommu- vides for implementation of Universal Service require- nications Division reviews financial and rate information ments of Section 254 of the Telecommunications Act of filed by telecommunication companies with the Commission 1996 and Federal Communications Commission rules and provides telecommunication policy and rule recommen- and regulations regarding Universal Service. The review dations to the Commission. included analysis of BellSouth, CenturyTel, and Rural The Section is composed of analysts that review federal ILECs' plans for utilization of rural and non-rural federal and state policies/rules, tariff rates, applications for authority Universal Service high cost fund allocations. Additional- to operate in the state of Alabama, intercompany wholesale ly, detailed monitoring plans were developed and Staff agreements, and are extensively involved in resolving con- performed on-site inspections to verify that funds were sumer inquiries and complaints. Analysts also participate in utilized as approved by the Commission. hearings and workshops regarding various telecommunica- tions issues before the Commission. 12. Staff investigated the use of statewide NXX's (telephone prefixes) by carriers to determine whether such NXX's are During FY-08: being utilized in the manner prescribed by the North American Numbering Plan Administration. 1. Staff continues to work on the implementation of the Communications Reform Act of 2005. The Division has 13. Staff continually evaluates issues associated with Voice worked extensively with the Legal Division in the inter- Over the Internet Protocol, e.g. E911, directory listings, pretation of the Act in order to comply with requirements etc. of the Act. 14. Staff continues the implementation of the STAR tracking 2. The section implemented rules regarding the expansion of system, an online tracking system that provides for elec- Lifeline/Linkup services and domestic violence shelter tronic filings and assignments. Certain sections of this sys- 24 Telecommunications Division tem are still in the development stage and continually Service Compliance inspections were performed on the updated by Staff. Currently through this system, filings following utilities: are available for review and comments by interested par- 1. Castleberry Telephone Company ties and the general public. 2. (TDS) Butler Telephone Company 3. AT&T Alabama (Jackson Exchange) 15. Staff continues to develop potential amendments to the 4. Century Tel of Alabama LLC (Luverne Exchange) Alabama Public Service Commission's General Rules and 5. Hayneville Telephone Company, Inc. Regulations and Telecommunications Rules. 6. Camellia Communications 16. Staff routinely assists the Commissioners, consumers, 7. Pine Belt Telephone Company, Inc. and telecommunications companies in matters relating to 8. Interstate Telephone Company rates, tariffs, and filings with the FCC. 9. Valley Telephone Company, LLC 10. Fairpoint Communications 17. Staff assisted in resolving 244 issues and complaints from telecommunications industry personnel, consumers, and Service Quality follow-up inspections were performed other governmental agencies. on the following utilities: 1. Castleberry Telephone Company Service Compliance Section 2. Ragland Telephone Company The Service Compliance Section also monitors the qual- 3. Frontier Communications of Alabama, LLC ity of service of incumbent and competitive local exchange In-depth reviews were performed on AT&T Alabama telephone companies certificated in Alabama and is respon- and CenturyTel USF (universal service funds) high cost allo- sible for numbering resources optimization. Staff conducts cation construction proposals. On-site inspections were per- inspections to compare existing levels of service with formed within the following service districts to ensure that required APSC rules, industry standards and electrical and construction projects complied with those approved by the safety codes. Staff also monitors construction work involving Commission: plant upgrades and additions plus reviews construction work funded by the Universal Service Fund. Company/District The Service Compliance Section also monitors the 1. BellSouth/Gulf quality of service and rates charged by Customer-Owned 2. BellSouth/North Alabama Coin-Operated Telephone Services (COCOTS) providers, 3. CenturyTel/Southern Local Exchange Carrier (LEC) pay telephone service 4. CenturyTel/Northern providers, Shared Tenant Service (STS) providers, and Utility boundary lines were verified for 6 local Hotels/Motels to ensure compliance with Commission rules exchange carriers. The Service Compliance Section assists the and regulations. Economic Compliance Section in USF analysis/audits. During FY-08: The following is a summary of the Special Services Group activities during FY-08: The Service Compliance Section staff has been working closely with the North American Numbering Plan Adminis- 1. Consumer Complaint Investigations - 6 trator (NANPA) and telecommunications representatives in 2. County Jails Visited – 6; Independent Jails Visited – the state to actively promote conservation measures in Alaba- 1; Inmate Instruments Inspected – 127 ma's four area codes. Numbering assets are finite resources and usage has increased at a rapid pace. In Alabama, Area 3. Four special services providers were certified and ten Code 256 is currently in jeopardy status and relief planning were decertified during FY-08. has commenced. Staff has actively monitored number assign- ment and usage in Area Code 256 and taken steps to reclaim unused numbering resources. Because of increased monitor- ing and effective conservation measures, numbering assign- ments in Area Code 256 have shown a significant decrease over the last fiscal year. The latest Numbering Resource Uti- lization Forecast (NRUF) figures show positive results from the ongoing number conservation and pooling measures in Area Code 256. Area Code 205 is rapidly approaching relief status and staff is monitoring numbering assignments and usage while actively promoting numbering resource conservation efforts to forestall premature exhaustion of numbering assets in this area. 25 Transportation Division The Transportation Division consists of three sec- Motor Carrier Vehicle Identification tions: Insurance and Registration, Railway Safety, and Applications processed 573 Rates and Services. As provided by law, the Transporta- Numbers and decals issued 2,337 tion Division is responsible for the supervision and reg- Letters of correspondence 600 ulation of air, motor, and rail carriers. Revocations and Reinstatement Insurance and Registration Section of Authority Revoked for no insurance 546 The Insurance and Registration Section performs Reinstated after compliance 255 three separate but interrelated functions. First, it regis- ters for-hire transportation companies that are not Railway Safety Section exempted by law. It also registers motor carriers from the United States, Canada, and Mexico that have been The Railway Safety Section conducts safety granted authority by the Federal Motor Carrier Safety compliance inspections on all railroad common car- Administration or those exempt from federal regula- riers' track and equipment in Alabama in accordance tion. Secondly, it requires motor or air carriers of pas- sengers or property to file and maintain proof of finan- with state and federal standards. Inspections are also cial responsibility. Such carriers file forms of liability made to monitor compliance with regulations for Rail- insurance, cargo insurance, bonds, self-insurance, and road Workplace Safety. This section investigates rail- bonds for handling of collect-on-delivery shipments. road accidents and derailments to determine causes Thirdly, it issues intrastate motor carrier vehicle identi- and to recommend action to prevent recurrence. Fed- fication decals, numbers, and Unified Carrier Registra- erally certified inspectors are called upon by the tion receipts. It also collects, accounts for, and deposits the monies collected for applications, transfers, and Federal Railway Administration (FRA) and the motor carrier identification into the State Treasury. It is National Transportation Safety Board (NTSB) to assist responsible for maintaining journals, ledgers, receipts, in major accident investigations. This section also han- and various other records and reports of monies dles complaints from railroads, railroad employees, received and deposited. This section receives, process- labor unions, other governmental agencies, and the es, and approves applications for the registration of general public in all matters pertaining to railway safe- such carriers operating in interstate commerce into and through Alabama. This includes the issuance of Com- ty. Inspections are also conducted on railroad rehabil- mission orders of registration when, after review, it is itative projects administered by the Alabama Depart- found that all the requirements of law are met. It also ment of Transportation. Agreements between the rail- revokes or reinstates such carrier's authority, when roads and DOT typically specify adherence to FRA applicable, according to provisions set out in statutes, Class II standards and encompass a 10-year time rules, and regulations. It works with other state and federal agencies that also regulate motor carriers. This frame. Members of the Railway Safety Section partici- section makes sure that all intrastate motor carriers pate in Operation Lifesaver as fully certified program have insurance on file before credentials to operate are presenters. Operation Lifesaver is a national public issued. It also issues orders of revocation for failure to education and awareness program that seeks to reduce maintain proof of financial responsibility and orders of the number of crashes at highway-rail grade crossings. reinstatement after proof has been received as pre- Target groups include school bus drivers, driver's edu- scribed by law. Subsequent to the above-mentioned regulations of motor carriers, this section is called upon cation students, professional drivers, emergency to provide information to the general public, permit- response personnel (police, ambulance, and fire), as ting services, lawyers, insurance companies, transporta- well as the general public. The following is a break- tion companies, and other state and federal agencies down of the activities of the Railway Safety Section concerning regulatory matters. A tabulation of the sec- during the period covering October 2007 through Sep- tion's activities follows: tember 2008: Insurance Filings Self-insurance, Total Miles of Railway Track Inspected 1,126 bonds for liability and cargo, Total Railway Accidents 7 certificates for liability and cargo, Total Units of Rolling Stock bonds for brokers 13,876 Inspected (Railway cars) 10,426 Letters of correspondence 113 Total Locomotives Inspected 136 Registration of Authority Total Railroad Records Inspected 965 Intrastate registered 405 Total Complaints Investigated 16 26 Transportation Division Rates and Services Section enables the Commission to track the overall financial condition of the industry under the jurisdiction of the The Rates and Services Section advises the Com- Commission. The section also handles requests for ver- mission on matters pertaining to the rates, fares, ification of rates, fares, and charges of passengers and charges, services, and facilities of all regulated modes of household goods. It also verifies rates and services intrastate transportation. The section maintains a file provided by motor carriers through field audits of carri- of all tariffs setting forth rates, fares, charges, classifica- ers' facilities and records. tion, rules and regulations for intrastate transportation companies. Staff members check each re-issue and sup- Motor Carrier Enforcement Section plement filed to ensure compliance with Commission (assigned to Commissioner Sullivan's office) rules and regulations. They also analyze tariff changes to determine the effect. The revised tariffs and supple- The APSC's Motor Carrier Enforcement Sec- ments are either permitted to become effective on the tion conducts and carries out investigative, monitoring, proposed effective date or they are suspended and and enforcement activities of the Commission to assure investigated. When the Commission institutes a formal and obtain compliance with the provision of the Alaba- investigation, public hearings are held. When the ma Motor Carrier Act and associated rules and regula- record is complete, the examiner and other members of tions. When motor carriers are found to be operating the staff study and analyze the evidence of record and without proper authority or are conducting their oper- make recommendations to the Commission. After the ation in violation of established rules and regulations, Commission makes its decision, an order is written for steps are taken to require compliance. If conditions the Commissioners' signatures. This section compiles warrant, violators are arrested and prosecuted in the data from motor carriers and tariff publishing bureaus courts with proper jurisdiction. Enforcement officers to use in Commission proceedings and to supply infor- conduct investigations involving illegal operations and mation for staff members and other state or federal violations of rules and regulations, issuing citations and agencies. The Rates and Services Section receives and warning tickets when appropriate. These officers also maintains motor and rail carrier annual reports that are conduct safety inspections of vehicles and have the required to be filed by April 30 of each year covering authority to place vehicles and/or drivers out of service the previous calendar year of operation. This data for safety/regulatory violations. 27 Legal Division The Legal Division panies now that competition is active. The Legal Divi- consists of the Chief Admin- sion has been involved in several proceedings concern- istrative Law Judge, Admin- ing disputes between telecommunications companies istrative Law Judges, and and the relationship between telecommunications com- legal secretaries. The Judges panies. serve as hearing officers in During the past fiscal year, the Legal Division con- all cases before the Com- ducted hearings involving approximately 60 matters mission. These hearings and processed hundreds of applications not requiring a involve motor carrier cases, formal hearing. The length of hearings varies from 20 utility cases, and other mat- or 30 minutes to several days. ters. A tabulation of the number and types of inquiries The Legal Division pro- handled by the Division is not feasible. Such inquiries vides legal advice to the Commissioners and staff mem- are numerous and cover subjects as broad as the Com- bers, as well as the public. It prepares written reports mission's jurisdiction and beyond. These inquiries and recommended orders, and drafts many of the final come from the public in general, the Commissioners, orders of the Commission. staff members, attorneys, the Legislature of Alabama, The Legal Division also prepares opinions and federal agencies and state agencies of Alabama and memoranda on legal questions involving the Commis- other states, and all types of business regulated by the sion's jurisdiction. The Legal Division also spends a Commission. considerable amount of time involving rulemaking and The Legal Division also assists Commission staff revision of rules, and works with other divisions in attorneys and outside attorneys in Commission matters drafting and reviewing legislation for the Commission. before the courts of Alabama, federal courts, and Many issues arise with telecommunications com- federal agencies. 28 APSC History The Alabama Public Service Commission was road tracks and equipment in 1976 under the designated as such in 1915 by the Alabama Leg- State Participation Program of the Federal islature. It evolved from the Railroad Commis- Railroad Safety Act of 1970. The Legislature sion of Alabama which was created in 1881 to empowered the Attorney General's office in regulate railroads. Between 1881 and 1915, the 1977 to represent consumers and the state in Legislature extended the Railroad Commis- Commission proceedings. In recent years, sion's jurisdiction to include express compa- sweeping federal and state statutory changes nies, sleeping car companies, railroad depot or significantly altered the Commission's jurisdic- terminal stations, telephone and telegraph tion and authority over transportation and companies, plus transportation companies telecommunications utilities. Title IV in the operating as common carriers over water, toll Federal Aviation Administration Act of 1994 bridges, toll ferries, and toll roads. The Com- provides for federal preemption of the states in mission was charged with the regulation of util- matters of motor carrier pricing, routes, and ities providing electricity, gas, water, and services for all but household goods carriers. As steam, companies operating streets or inter- a result, Commission certification and tariff urban railways, as well as rail and communica- approval is no longer required for those motor tion companies being regulated by the former carriers for whom regulatory jurisdiction has Railroad Commission. The new Commission's been federally preempted. The Commission regulation of utilities included approving the continues regulating carriers of passengers and sale or lease of utility property or franchises. household goods, ensures all motor carriers The Commission was composed of three elect- maintain appropriate cargo insurance, and ed members: a president and two associate ensures that all comply with applicable safety commissioners. The Commission's authority standards. With passage of the Telecommunica- was broadened in 1920 when the Legislature tions Act of 1996, Congress opened up the local made it responsible for utility rates. As Alaba- exchange telephone market to competition. ma's highway system developed in the late Large incumbent local exchange companies 1920s, the operation of trucks and buses as (ILECs) such as BellSouth and CenturyTel, who common carriers increased. In 1927, the Legis- previously operated as the only local carrier lature placed all motor transportation compa- within their Commission certified service areas, nies operating as common carriers of freight or must now make their services available for passengers over regular routes on Alabama resale and lease components of their embedded highways under the Commission's regulatory network to new entrants. New entrants into the authority. The Legislature broadened the Com- local telephone market may also petition the mission's authority over transportation compa- Commission to open independent telephone nies in 1931 and 1932 by including motor carri- company local service areas to competition. The ers not operating over regular routes. Air carri- introduction of local competition forced the ers were included in 1945. Natural gas trans- Commission to set utility prices for retail mission and distribution systems were placed telecommunication services using market based under the Commission's jurisdiction for safety rather than cost based methodology. There- purposes in 1968, adopting the Minimum Safe- after, the Alabama Legislature passed the Com- ty Standards outlined in the Natural Gas munications Reform Act of 2005. The Act, cit- Pipeline Safety Act. In 1971, the Commission's ing the competition that exists in the local authority over motor carriers was broadened. telephone market, eliminated much of the Com- Transportation enforcement officers were mission's authority over retail telecommunica- empowered to enforce the rules and regula- tion services. Additionally, Commission juris- tions of the Commission. The Commission's diction was eliminated for all broadband servic- safety jurisdiction was extended to include rail- es used for Internet delivery. 29 Past Commissioners President Willis G. Clark: Wiley C. Tunstall: Walter L. Bragg: August 1893 – February 1895 February 1885 – February 1895 February 1881 – February 1885 Harvey E. Jones: Ross C. Smith: Henry R. Shorter: February 1895 – February 1899 February 1895 – February 1899 February 1885 – February 1897 A.E. Caffee: Osceola Kyle: James Crook: February 1899 – February 1903 February 1899 – December 1900 February 1897 – February 1901 William T. Sanders: Wiley C. Tunstall: John V. Smith*: April 1903 – January 1907 December 1900 – January 1907 March 1901 – March 1905 Charles Henderson: John G. Harris: B.B. Comer: January 1907 – February 1907 January 1907 – July 1908 March 1905 – January 1907 W.D. Nesbitt: John A. Lusk: Charles Henderson: March 1907 – January 1911 August 1908 – January 1911 January 1907 – January 1915 Leon McCord: Samuel P. Kennedy: Frank N. Julian: January 1911 – January 1915 January 1911 – January 1915 June 1915 – January 1923 B.H. Cooper: A.G. Patterson*: S.P. Gaillard: January 1915 – January 1923 January 1915 – January 1923 January 1923 – January 1927 Fitzhugh Lee: Hugh White: Frank P. Morgan*: January 1923 – January 1943 January 1927 – January 1945 January 1923 – May 1936 Gordon Persons: Gordon Persons: W.C. Harrison: January 1943 – January 1945 January 1945 – January 1951 June 1936 – January 1947 James Perdue: C.C. (Jack) Owen: C.C. (Jack) Owen: May 1945 – January 1947 January 1951 – January 1965 January 1947 – January 1951 James Hitchcock: Eugene (Bull) Conner: T.O. Walker: January 1947 – June 1959 January 1965 – January 1973 January 1951 – January 1955 Ralph Smith, Jr.: Kenneth A. Hammond: Sibyl Pool: January 1973 – December 1975 August 1959 – August 1960 Joe Foster: January 1955 – January 1971 C.C. Whatley: Juanita W. McDaniel: December 1975 – January 1977 August 1960 – January 1963 Ed Pepper: January 1971 – January 1977 Juanita W. McDaniel: C.C. Whatley: January 1977 – February 1980 January 1963 – January 1967 C.C. (Jack) Owen: January 1977 – January 1979 William J. Samford, Jr.: January 1967 – January 1975 Jim Folsom, Jr.: February 1980 – January 1981 Jim Zeigler: January 1979 – November 1986 Billy Joe Camp: January 1975 – January 1979 Charles B. Martin: January 1981 – January 1983 Jim Sullivan:* Pete Mathews: November 1986 – November 1998 February 1983 – Present January 1979 – March 1981 George C. Wallace, Jr.: Lynn Greer: November 1998 – November 2006 Commissioner, Place 1 June 1981 – November 1990 Susan D. Parker, Ph.D.: James Crook: Jan Cook: November 2006 – Present February 1881 – January 1885 November 1990 – Present Levi W. Lawler: *Also served as president of the February 1885 – September 1892 Commissioner, Place 2 National Association of Gen. James T. Holtzclaw: Col. Charles P. Ball: Regulatory Utility February 1893 – July 1893 February 1881 – February 1885 Commissioners. 30 Alabama Public Ser vice Commission P.O. Bo x 304260 Montgomer y, AL 36130 www.psc.alabama.gov APSC Consumer Ser vices Toll-Free Complaints Hotline: 1-800-392-8050
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