8-KOther Events

SOUTHERN CO 8-K Report, Corporate Update (Jul 13, 2011)

Filed July 13, 2011For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

This 8-K filing from Southern Company (SO) details a significant regulatory decision by the Alabama Public Service Commission (APSC) concerning Alabama Power Company's rate structure. Effective October 1, 2011, the APSC has ordered the elimination of a specific tax-related adjustment. This change is expected to provide Alabama Power with approximately $30 million in additional revenues for the remainder of 2011 and an annualized increase of about $150 million starting in 2012.

Key Highlights

  • 1Alabama Public Service Commission (APSC) ordered the elimination of a tax-related adjustment in Alabama Power's rate structure, effective October 1, 2011.
  • 2The elimination of this adjustment is anticipated to generate approximately $30 million in additional revenues for Alabama Power in the remaining months of 2011.
  • 3An annualized revenue increase of approximately $150 million is expected for Alabama Power beginning in 2012.
  • 4Additional accruals will be made to the Natural Disaster Reserve (NDR) in Q4 2011, equal to the additional 2011 revenues, to replenish funds depleted by April 2011 storm-related expenses.
  • 5Alabama Power expects these additional revenues will avert the need for a rate adjustment under the Rate Stabilization and Equalization (Rate RSE) mechanism.
  • 6As a result, Alabama Power has agreed to a moratorium on any Rate RSE increases in 2012.

Frequently Asked Questions

The main event is an order from the Alabama Public Service Commission (APSC) to eliminate a tax-related adjustment in Alabama Power's rate structure, which is expected to increase revenues and impact the Natural Disaster Reserve.

Alabama Power anticipates approximately $30 million in additional revenues for the remainder of 2011 and an annualized increase of about $150 million beginning in 2012.

The company will make additional accruals to the NDR in the fourth quarter of 2011, equivalent to the additional revenues earned in 2011. This is to replenish the reserve which was reduced due to expenses from the April 2011 storms.

No, Alabama Power expects these additional revenues will prevent the need for a rate adjustment under the Rate Stabilization and Equalization (Rate RSE) mechanism, and they have agreed to a moratorium on any Rate RSE increases in 2012.