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Alabama Power: No Public Oversight, No Plan, No Relief in Sight

What happens when a politically powerful utility is allowed to spend its customers’ money without any public accountability for over thirty years?

In Alabama, billions went to upgrade coal-fired power plants that are approaching – or have reached – the end of their useful lives, while the Alabama Power Company, which provides power to most of the state, faced nothing more than a rubber-stamp from the Alabama Public Service Commission, which routinely approves adding such costs to the rate base, according to a new report.

The result, says the study, is that customers will pay for decades for Alabama Power’s continued reliance on coal without the company ever having to demonstrate it's making good use of their money.

The report is called “LEFT IN THE DARK: How the Alabama Public Service Commission Makes Customers Pay Billions of Dollars for Alabama Power Investments without Any Meaningful Public Review or Involvement.” http://ieefa.org/wp-content/uploads/2015/02/Left-in-the-Dark-Feb-2015.compressed.pdf

Author David Schlissel, of the Institute for Energy Economics and Financial Analysis, has written before on Alabama Power and the Public Service Commission. Schlissel’s report was prepared for the Southern Environmental Law Center (SELC), the Southern Alliance for Clean Energy (SACE) and the Greater Birmingham Alliance to Stop Pollution (GASP).

Dominated by ultra-conservative Republicans who virtually never oppose Alabama Power’s will, the Alabama PSC has not conducted a public rate-setting hearing since 1982 when it traded hearings for something called “Rate Stabilization and Equalization,” under which Alabama Power adjusts its charges each year without the inconvenience of evidentiary hearings or participation by the rate-paying public. Instead, the utility opens up its books to the PSC and its staff, which reviews the numbers privately and renders a decision.

 In an earlier report, Schlissel wrote that this “extreme rate-making process” - held up as a national model by the Edison Electric Institute - was devised specifically “to shield the process from public involvement and scrutiny.” http://arisecitizens.org/index.php/component/docman/doc_view/948-arise-report-public-utility-regulation-without-the-public-3-1-13?Itemid=44

Even within the Southern Company family of politically-influential utilities in Georgia, Mississippi and northwestern Florida, Alabama Power is considered unusually dominant in its home territory, where it provides electricity to about 1.2 million residential, 197,000 commercial and 5,200 industrial customers in the southern two-thirds of Alabama. And while Georgia Power has boasted of beefed-up solar capacity and its costly new nuclear plant, and while Mississippi Power brings delegations of energy ministers to its still-incomplete $6 billion “clean coal” facility, Alabama Power’s plan for the future is evidently to double down on its aging coal fleet.

Big Investments, Big Profits

For which it is being rewarded with industry-leading profits. Nationwide, the average return on equity for utilities between 2008 and 2011 was 9.4 percent. However, Alabama Power was allowed to earn 13.3 percent - nearly 30 percent more - under the PSC’s formula rate process.  Given this atypically generous return, it’s easy to see why Alabama Power is considered the cash cow in the Southern Company empire.  

Fueling this inflated profit margin is the 11.6 percent return the company gets on investments it adds to the rate base, such as the more than $3 billion in environmental upgrades Alabama Power has made at existing power plants in past 10 years, all without having to offer any evidence in a public forum that these expenditures are the most cost-effective and least risky of available alternatives. The same applies to another $722 million in upgrades that will be added to rates by 2019. 

 “Moreover, placing an investment into rate base means that the Company is allowed to earn a return on that investment for decades and can also recover annual operating & maintenance and depreciation expenses,” Schlissel notes.




BP Leaves ALEC, Shades of Global Climate Coalition Defections

In what could be a throwback to the 1990s, the National Journal just broke that British Petroleum (BP) has quit the American Legislative Exchange Council today, saying ALEC membership was not needed to pursue its interests.

"We continually assess our engagements with policy and advocacy organizations and based on our most recent assessment, we have determined that we can effectively pursue policy matters of current interest to BP without renewing our membership in ALEC," the spokesman said.

BP was not specific about what triggered this move.  Shell and others have been under increased pressure since Google left ALEC in a hurry last September as a result of ALEC's climate change stance.

While BP is far from a green company and is not even greenwashing itself like it was in the "Beyond Petroleum" days, this reminds some climate policy observers of the late 1990s corporate defections from the Global Climate Coalition, when companies were no longer denying the urgency of climate change nor the scientific consensus underpinning that urgency.

As Lester Brown writes in his essay "The Rise and Fall of the Global Climate Coalition", BP left the GCC in 1997 after CEO Sir John Browne's famous speech on climate change at Stanford.  Dupont departed even earlier. Then, Shell jumped ship in 1998 and soon companies couldn't leave fast enough, as Ross Gelbspan recaps here:

"Between December, 1999 and early March, 2000, the GCC was deserted by Ford, Daimler-Chrysler, Texaco, the Southern Company and General Motors. While many of the defecting companies said their anti-Kyoto posture had not changed, this was a major blow to a 10-year campaign by oil, coal and automotive interests to prevent public action to address the climate crisis."

We have detailed ALEC's CLIMATE DENIAL history in this Climate Investigations Center blog.

Big Companies Have Left ALEC

How important is it for ALEC to lose membership of large companies? Climate Investigations Center has compiled a table of the companies who have left ALEC since 2012.

Findings:

Twenty three companies in the Fortune 500 top 50 have left ALEC since 2012.  (BP is not in the Fortune 500 of U.S. Companies)

Ranked by Market Cap, the results are even more stunning.  The total Market Cap of the companies that have left ALEC in recent years is over $7.25 Trillion (trillion with a T)  The biggest company that is still an ALEC member is ExxonMobil with a current Market Cap of $355 Billion.

These tables with sources are available for reporters, please contact us at info@climateinvestigations.org

 

  Big Companies that have left ALEC 2012-2015  
 

23 of the top 50 companies in the Fortune 500 have left ALEC since 2012...

just 13 of top 50 Fortune 500 remain ALEC members, down from 36

  Companies in Bold below have left ALEC  
Fortune 500 Rank    
1 Wal-Mart Stores  out
2 Exxon Mobil  in
3 Chevron  in
4 Berkshire Hathaway  out
5 Apple  not
6 Phillips 66 (spun off from ConocoPhillips 2012) out
7 General Motors  out
8 Ford Motor in
9 General Electric  out
10 Valero Energy  was not a member
11 AT&T  in
12 CVS Caremark  out
13 Fannie Mae  out
14 UnitedHealth Group  out
15 McKesson  not
16 Verizon Communications  in
17 Hewlett-Packard  out
18 J.P. Morgan Chase & Co.  not
19 Costco Wholesale  not
20 Express Scripts Holding  out
21 Bank of America  out
22 Cardinal Health  not
23 IBM  out
24 Kroger  not
25 Marathon Petroleum  in
26 Citigroup  not
27 Archer Daniels Midland  in
28 AmerisourceBergen  not
29 Wells Fargo  out
30 Boeing  in
31 Procter & Gamble  out
32 Freddie Mac  not
33 Home Depot  out
34 Microsoft  out
35 Amazon.com  out
36 Target  not
37 Walgreen Co.  out
38 WellPoint  out
39 Johnson & Johnson  out
40 American International Group  not
41 State Farm Insurance Cos.  in
42 MetLife  not
43 PepsiCo  out
44 Comcast  in
45 United Technologies  not
46 Google  out
47 ConocoPhillips  out
48 Dow Chemical  in
49 Caterpillar  in
50 United Parcel Service  in
  BP out
  51Pfizer  in
  52Lowe's Companies  out
  53Intel Corporation  out

  

Corp That Have Left ALEC since 2012 Market Cap Dec 2 2014 (billion $) Fortune 500 rank
Microsoft $398.73 34
Berkshire Hathaway Energy $366.86 4
Google $363.86 46
Johnson & Johnson $302.58 39
Wells Fargo $278.58 29
Wal-Mart $277.36 1
General Electric (GE) $261.15 9
Roche Diagnostics Corporation $250.84  
Procter & Gamble $243.00 31
Nestlé USA Inc.  $241.70  
Facebook $208.43  
Coca-Cola Company $194.52  
Intel $180.83  
Bank of America $177.30 21
Merck $172.56  
IBM $160.37 23
Entergy $151.98  
Amazon.com $150.28 35
PepsiCo $149.99 43
Home Depot, Inc. $130.04 33
Amgen $125.43  
Unilever $123.29  
BP $121.27  
GlaxoSmithKline $113.57  
Union Pacific Corporation $103.48  
CVS Caremark $103.05 12
3M $101.91  
Bristol-Myers Squibb $97.67  
Novo Nordisk Pharmaceuticals $96.96  
UnitedHealth Group  $94.99 14
McDonald's $93.13  
AstraZeneca $92.46  
SAP America $86.68  
ConocoPhillips $84.04 47
Medtronic $72.55  
Hewlett-Packard $72.51 17
Walgreens $63.80 37
Occidental Petroleum $62.83  
Lowe's Companies, Inc. $61.68  
Express Scripts/Medco $61.39 20
General Motors (GM) $52.70  
Yahoo Inc. $47.35  
Emerson Electric Co $43.70  
Reckitt Benckiser Group $37.93  
Kraft $35.33  
PacifiCorp $35.21  
WellPoint $34.67 38
YUM! Brands $33.87  
John Deere & Company $31.97  
Freeport-McMoRan $27.34  
Intuit $26.83  
Dell Computers $24.38  
The Pacific Gas and Electric $24.13  
PG&E $24.03  
International Paper $22.46  
Brown-Forman Company $20.31  
Reed Elsevier $19.65  
Sprint Nextel $19.27  
Symantec $18.10  
Xcel Energy $17.46  
Visa $16.13  
Motorola $15.72  
Dr Pepper Snapple Group,  $14.30  
MillerCoors (Molson Coors) $14.09  
Best Buy $13.03  
Publix Super Markets $11.46  
Endo Pharmaceuticals $10.97  
Ameren $10.52  
Western Union $9.46  
News Corporation $8.83  
Darden Restaurants $7.57  
Alliant Energy $7.06  
MidAmerica $5.46  
Sallie Mae $4.09  
Yelp $4.02  
AOL $3.55  
Alliant Energy $3.52  
Wendy's $3.20  
Overstock.com $0.59  
     
Blue Cross Blue Shield private  
Cargill private  
EMD Serono private  
Kaplan private  
Mars private  
     
TOTAL MARKET CAP $7,253.91  




Willie Soon Scandal: Corporate Funding Year By Year

People keep asking how much Soon got from each of his corporate funders year by year, and why some places it says $1.2 million total and others $1.5M...

The total funding since 2001 that we know about from Greenpeace FOIAs to Smithsonian and corporate foundation 990s is $1,573,270, tabulated below.

That total excluding the 'anonymous' donation from Donors Trust, leaved known fossil funding at $1,248,471

Funder Grant Description from source Grant Year(s) Grant Amount Source
American Petroleum Institute   1994-1997 ?? Soon published papers
American Petroleum Institute Sun's impact on climate over the last 1000 years 2001, 2002 $58,380 Smithsonian FOIA
American Petroleum Institute 1000 years of solar variability 2003 $60,053 Smithsonian FOIA
American Petroleum Institute The 11-22 year climate responses 2004, 2005 $50,178 Smithsonian FOIA
American Petroleum Institute Understanding Arctic Climate Change 2005, 2006 $50,000 Smithsonian FOIA
American Petroleum Institute The solar influence of arctic climate change 2006, 2007 $55,000 Smithsonian FOIA
API Total     $273,611  
         
Charles G. Koch Foundation Koch/Mobile Charitable foundation 2005, 2006 $110,000 Smithsonian FOIA
Charles G. Koch Foundation Understanding Solar Variability and Climate Change 2010 $65,000 Smithsonian FOIA
Charles G. Koch Foundation Understanding Solar Radiation and Climate Change 2010-2012 $55,000 Smithsonian FOIA
Charles Koch Foundation Total     $230,000  
         
Donors Trust Understanding Solar Radiation and Climate Change 2011 $50,000 Smithsonian FOIA
Donors Trust A Circum-global Teleconnection View of Regional Sun-Climate Connections 2011-2012 $64,935 Smithsonian FOIA
Donors Trust Wavelet Analysis And Solar Dynamo Theory of Solar Activity Variations 2013 $70,000 Donors Trust 990
Donors Trust Wavelet Analysis And Solar Dynamo Theory of Solar Activity Variations 2013 $49,864 Donors Trust 990
Donors Trust Wavelet Analysis And Solar Dynamo Theory of Solar Activity Variations 2013-2015 $209,864 Smithsonian FOIA
Donors Trust   2014-2015 $90,000 Two 2013 grants subtracted from 2013-15
Donors Trust Total     $324,799  
         
Mobil Foundation   1995-1997 ?? Acknowledged in Soon's published papers
ExxonMobil Foundation listed by Exxon as a grant to SAO 2005 $105,000 ExxonMobil Worldwide Giving Report 2005
ExxonMobil Foundation Listed by Exxon as "project support" to SAO. 2006 $105,000 ExxonMobil Worldwide Giving Report 2006
ExxonMobil Foundation Exxon-Arctic Climate Change 2007, 2008 $55,000 Smithsonian FOIA/Exxon Giving Report
ExxonMobil Foundation "Exxon - Soon - Solar Variability" "Understanding Solar Variability and Climate Change: Signals from Temperature Records of the United States" 2008-2010 $70,106 Smithsonian FOIA/Exxon Giving Report
ExxonMobil Foundation Total     $335,106  
         
         
Southern Company Understanding Arctic Climate Change 2006, 2007 $110,000 Smithsonian FOIA
Southern Company Solar variability and Climate Change signals from temperature 2008, 2009 $120,000 Smithsonian FOIA
Southern Company Understanding Solar Radiation and Climate Change 2011 $60,003 Smithsonian FOIA
Southern Company Understanding Solar Radiation and Climate Change 2011-2012 $59,942 Smithsonian FOIA
Southern Company A Study of Solar Activity Variation on Multiple Timescales 2013-2015 $59,809 Smithsonian FOIA
Southern Company Total     $409,754  
         
         
Electric Power Research Institute   1994-1999 ?? Acknowledged in Soon's published papers
Texaco Foundation   1996 ?? Acknowledged in Soon's published papers
Free to Choose The sun's influence on climate change 2008 $19,383 Smithsonian FOIA
         
Total known grants 2001-2015     $1,573,270  
Total known Fossil grants     $1,248,471  
         
         

 

 

 




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