8-KOther Events

SOUTHERN CO 8-K Report (Aug 2, 2004)

Filed August 2, 2004For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

This 8-K filing by Southern Company and its subsidiary Alabama Power Company primarily concerns a regulatory filing made by Alabama Power with the Alabama Public Service Commission (APSC) on August 2, 2004. The filing seeks to establish a specific rate mechanism for recovering retail costs related to environmental laws and regulations. If approved, this mechanism is expected to go into effect in January 2005, with annual adjustments to a recovery factor. For investors, the key takeaway is the potential for retail rate increases to cover these environmental compliance costs. The company anticipates a retail rate increase of approximately 1% ($33 million) in 2005 and an additional 1% ($30 million) in 2006, attributed to the recovery of operation and maintenance expenses, depreciation, and a return on invested capital. The ultimate outcome of the APSC's decision is currently undetermined.

Key Highlights

  • 1Alabama Power Company filed with the Alabama Public Service Commission (APSC) on August 2, 2004.
  • 2The filing proposes a specific rate mechanism to recover retail costs associated with environmental laws and regulations.
  • 3If approved, the environmental cost recovery mechanism is slated to begin in January 2005.
  • 4The mechanism will involve an annually calculated factor to recover these costs.
  • 5Anticipated retail rate increases are approximately 1% ($33 million) in 2005 and an additional 1% ($30 million) in 2006.
  • 6Costs to be recovered include operation and maintenance expense, depreciation, and a return on invested capital.

Frequently Asked Questions

The main purpose is to request approval from the Alabama Public Service Commission for a new rate mechanism that will allow Alabama Power to recover retail costs incurred due to environmental laws, regulations, and other mandates.

If approved by the Alabama Public Service Commission, the mechanism is anticipated to begin operation in January 2005.

The company estimates that for the first two years under the proposed mechanism, retail rates would increase by approximately 1% ($33 million) in 2005 and an additional 1% ($30 million) in 2006 to cover these environmental costs.

The recovery mechanism is designed to cover operation and maintenance expenses, depreciation, and a return on invested capital related to environmental compliance.