Alabama Power: There’s No Upside to Monopolies

September 3, 2013 — Leave a comment
This entry is part 1 of 3 in the series Alabama Power

I have to admit up front, I’m not a fan of government-sanctioned monopolies. Part of the reason we chose to move to an unincorporated area outside of Ashville was to get away from as much government interference as possible. Unfortunately, it’s impossible to escape the nonsense entirely. So far things have gone pretty well. Getting city water has been reasonably straight forward and getting an address was a breeze. For the most part the county, state and federal government have left me alone, and I’ve been just fine. That is until I started the process of getting grid power to the property.

Getting Power

It’s ironic that a company dedicated to the generation and distribution of power can make its own customers feel so incredibly… powerless. For the record, Alabama Power has been a complete thorn in my side from the very beginning, and I can’t wait to be done with this process.

Our home site is located pretty far back on the property. The Ant Farm is on a road maintained by the county with all the normal utilities and services: water, power, phone, internet and even trash pickup. The power lines run down the street, so access is pretty convenient from that perspective. When we were budgeting for the property I dug around on the internet and guesstimated that getting power service to the home site would probably cost around $2,500. I’ve worked in the construction world for a long time, and I generally have a pretty good sense for what things cost. As we got a little further in the process I decided to call Alabama Power to get a more serious estimate for our budget. The first call went very well. I was bounced around to a few different people before I got the engineer for my area, let’s call him Power Dude.

Power Dude explained that with new service there is a deposit of two month’s anticipated billings, but since we have been customers of Alabama Power already, they would graciously waive that fee. Alright, things were going pretty good, and they’re waiving fees already. This was going to be no problem. The engineer agreed to meet with me at the property to take a look and give me some rough estimates for my budget.

First Signs of Trouble

A few days later we met up and walked through the brush where the road was planned. I explained how everything would lay out, and then Power Dude retired with some measurements and my drawings to his office to work up the numbers. When he called a few days later, I could immediately hear discomfort in his voice. I could tell it was going to be a lot of money, and he knew it was not going to go well. He first explained that the power company gives credit toward construction of distribution based on anticipated annual billings. In collusion with the government through the Public Service Commission (PSC) power rates are determined and the allowances given to customers for service are decided. Under the law, the power company provides an “allowance” of five times annual revenue toward the construction of facilities. So I quickly did the numbers in my head:

“$150/month for 60 months. This is great… $9,000 should be PLENTY to install three poles and pull some wire.”

But something in his voice made it clear that my experience would not be so simple. The estimate for overhead service came back at over $5,000, which means that with the $9,000 allowance, Alabama Power was indicating that it would cost $14,000 to get power to my home site… and that was with me doing all of the clearing and prep.

RIDICULOUS!!!!

I politely told Power Dude that it was outrageous. There is no way you can convince me that all of the surrounding farms and shacks laid out this kind of money to get power. He admitted that a few years ago the policies changed and the PSC was now allowing them to shift more (translated ALL) of the financial burden onto the customers as a result. It seems that just four years ago this would have cost us nothing… Zero… Zilch.

When I hung up the phone, I was blinded with rage. There was no one to call. In the world of government sanctioned monopolies and bureaucratic collusion there are no competing bids. You want power, they’ve got it, and you’re going to pay for it – end of story.

It’s Who You Know

For several days I stewed on it. Finally, I thought, “We’ll play their game…” A friend of ours knows one of the higher-ups at the power company, so we made some calls and got him to “look into it.” A week or so later I was headed back to The Ant Farm to take another look at the estimate to see if there was some way to reduce the numbers. It’s not what you know, right?

A few more days passed, and I got a call from the Power Dude with the same tone in his voice. Not only did he inform me that the price would remain the same, but he also changed some of the ancillary requirements that made it an even worse deal than before. By this time I was investigating solar, wind and hydro. If there was any way to avoid sending these people my money, I was going to find it. Unfortunately, there was not.

Never Say Die

But Alabama Power did not know that I’m not the kind of person who gives up… EVER. I tried another approach. I remembered that my business partner used to be an engineer for a power cooperative in another part of the state. I asked him to take a look at things and see if he had any ideas, and he quickly found the rate document for a nearby power cooperative. Based on their published rates we figured that the cost for underground service should only be around $2,000. I went searching a little deeper and found this document buried deep in Alabama Power’s website. I don’t believe it was an accident that it was not easy to find.

After studying the document at length, I called and asked Power Dude why I was being charged $5,000 for overhead service when underground should only cost $2,100 based on their own Rules and Regulations for Electric Service. He fumbled around a little. I’m sure he was surprised that a customer was quoting their own policies back to him. Quite honestly, the explanation didn’t really address the issue. He eventually explained that my specific scenario was “out of ratio”, therefore, the published rates didn’t apply. Pretty convenient, huh?

By this time I was finished being diplomatic. I firmly told him that this whole thing was a bunch of bull crap.

(When I told this story to my next door neighbor, he laughed heartily and told me, “We’re gonna make you a country boy, yet…”)

I demanded a written proposal so I could formally submit a complaint to the Alabama Public Service Commission. I also demanded pricing for underground service, which up to that point he had been very reluctant to provide.

He hem-hawed around a good bit before he finally made an admission that shed some light on the situation. He told me that it was prohibitively expensive because they really weren’t set up for underground service, and they had to contract out all of the maintenance and construction as a result. Finally, I was hearing the truth. I asked if there was any way that I could contract out the installation to save money, and he said that since they owned the service, they wanted to be in control of the process. I countered with the fact that my excavation guy had quoted me a grand total of $500 for all of the trenching and installation of the conduit. When I asked him if Alabama Power could even crank a truck for $500, the tone of the conversation changed. At this point, Power Dude agreed to revisit the site one more time and re-draft the proposal for both overhead and underground service.

A few more days passed before I heard back from him. This time, the tone of his voice was a little more optimistic. He asked if I wanted the good news or the bad news first.

“I’m not prone to believe there is going to be any good news from Alabama Power…”

“Well, the bad news is that the cost for underground service is going to be pretty high… about $5,600. The good news is that I think we can do the overhead service for about $2,500.”

So inexplicably, without any particular reason, the power company cut the cost literally in half. How could this be? In the end I believe that some manager somewhere was absolutely sick of hearing about this guy in Ashville, and he instructed Power Dude to just get rid of me. I believe that they sincerely didn’t want to maintain the underground services, so they were willing to cut the price so dramatically that it would seem like a no-brainer. It’s worth noting that the price Alabama Power ultimately came back with was exactly the figure I had originally expected.

A Flawed System

While I’m glad that Alabama Power finally came around on my project, I can’t help but think about how many other people have been screwed over by this monopoly. How many people don’t know how to negotiate? How many don’t understand how the construction world works? The big argument for government intervention in the utilities is that they protect us from exploitation through regulation. Maybe that’s the intent, I don’t know. What I do know is that any system without a mechanism for competition gets lazy at best, and hopelessly corrupt at worst. The PSC, the government agency that regulates the utilities, is overseen by former power company executives and lobbyists. It seems we’ve selected the wolves to guard the hen-house. The “poor and down-trodden” are not being served by this system. The slime balls with the lucrative government contracts are.

I still haven’t decided if I’m going to file a complaint with the PSC. I guess I’ll see how the rest of the project works out.

At this point in time, the whole power debacle has set my project back about two months. Without knowing the cost and logistics of the power service, I couldn’t begin excavation. Once I finally cleared the excavators to do their job, the rains set in, and they could only work a half day here and there. Things finally seem to be moving, but we’ll see. Hopefully things go smoother with my water. If not, at least I can dig a well…

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Ken

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