Poor People vs. Alabama Power Company

Poor People vs. Alabama Power Company

By Wayne Greenhaw

Vol. 1, No. 8, 1979, pp. 16-19

He knew it would be an uphill climb from the beginning. Back in the winter of 1978, Robert John Varley, anewattorney whohad joined the federally-funded Legal Services Corporation of Alabama (LSCA), was glad to have the clout ofGov. George C. Wallace and Atty. Gen. Bill Baxley on his side. It had surprised Varley and Ohio native Stanley Weissman, also with LSCA, that Wallace was actually fighting a monopolistic utility like the Alabama Power Company. “All of my friends back home didn’t believe me when I first told them,” remarked Weissman later.

But Wallace and Baxley were seriously fighting side-byside with the legal services attorneys. They were fighting the little man’s fight; they spoke out for the middle-class consumer, the old person on a fixed income and the sidewalk businessman. They didn’t want to see Alabama Power Company receive the largest rate increase in the state’s history.

The request for the large rate increase came at the tail end of a eight-month battle in which Wallace was trying to show the Alabama Public Service Commission, the state’s utility regulatory body, that the company needed to lower the consumer’s electricity bills. Neither the governor nor his lawyer ever entertained the notion that the power company would use his forum to ask for an increase; but both knew the company could ask at any time. The request came like an afterthought during a late November session.

Immediately, Baxley jumped into the arena in support of Wallace. “The company is trying to get the raise before Wallace goes out of office so it can be put on his shoulders rather than the new man,” Baxley commented in private.

The LSCA, a non-profit organization organized after the Legal Services Corporation Act was passed by Congress in 1974, entered the picture on behalf of the poor people of the state. With six regional offices in Montgomery, Muscle Shoals, Gadsden, Dothan, Mobile and Selma, the LSCA had been fighting the legal war for the poor for nearly two years. With a goal to provide the poor at least minimum access to legal services, LSCA Executive Director Marvin Campbell pushed his staff to battle for better housing, consumer protection, prisoners rights, health care, equal education and other areas in which the poor have been mistreated.

With the power company asking for its gigantic increase only at the end of the year and in the dying days of an old administration, the public service commission did not act.

Later, during a public hearing, Alabama Power Company President Joseph M. Farley testified that Baxley’s earlier prediction had been right. He said his company did not ask for the increase when it first needed it-in mid-l978—-for political reasons. He said the power company did not wish to interject another issue into the statewide political campaign for governor. He knew that Baxley, who ran second to businessman candidate Fob James, would have used the increase request to his benefit since several members of the Alabama Power Company’s Board of Directors made large contributions to James’ campaign fund.

Two new commissioners, James E. “Jim” Folsom Jr., the charismatic young son of “Kissin’ Jim” Folsom, a former two-time governor of the state, and Pete Matthews, a veteran state legislator, joined incumbent commission president Juanita McDaniels in January of 1979. Immediately, Alabama Power Company again asked for a more-than-33 percent permanent increase in rates. The company also asked for the same increase on an emergency basis-meaning it would go into effect immediately.

However, the two new commissioners told the media they wanted to wait. They said they did not know enough about the case. They wanted to hear both sides to the argument.

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Then the new governor, Fob James, a former AllAmerican football player from Auburn University who had promised “a new beginning” after 16 years under George Wallace, met with his buddies on the power company board. Without telling the LSCA attorneys, James, a selfmade multimillionaire with a sporting goods manufacturing company in Opelika, summonsed all three commissioners and the new attorney general, Charles Graddick, to his office. For more than an hour they met in secret behind closed doors. At the end of the meeting, a spokesman said the group had discussed the need for an emergency rate increase for the power company. And a day later the PSC unanimously agreed to hear the request.

Bob Varley was up early that morning. From his rural home in Autauga County, he drove into Montgomery as the sun was coming up over the Alabama River. At LSCA offices in Montgomery’s downtown Bell Building, Varley, who some two months earlier had agreed to take the case because “I was ready to do anything in the courtroom,” started his first major legal battle.

The young man who had grown up in southwest Florida, attended Auburn University on a Navy ROTC scholarship, served for four years in the Marine Corps, finished the University of Alabama Law School in 1977 and clerked for U.S. District Judge Sam C. Pointer, Jr., was eager to dive into the legal world. What he lacked in experience, he made up in work and intelligence.

At Varley’s side was Stan Weissman, who had been hired out of Ohio as LSCA’s utility specialist. Although he was a member of the Ohio Bar, he was not allowed to practice in Alabama until he passed the local examinations. While he worked on the utilities case, he also studied for the Bar and took the battery of tests.

The heaping workload and pressure of test-taking, however, was nothing new to Weissman. The 48-year-old former chairman of the Ohio Environmental Board of Review was also a holder of a Ph.D. from Illinois Institute of Technology with a major in chemistry. After earning a law degree from Capitol University in Columbus, Ohio, he passed his Bar exam there before moving south.

APC President Joe Farley was the first to take the stand on behalf of his company. He spent two days answering questions by his attorneys explaining in detail why the Alabama Power Company needed some $290 million a year more than they were presently being paid by Alabama consumers. With deadpan emotion, he told-using charts with graphs and columns of statistics-how the power company would be broke within several years if it did not receive the largest increase ever asked.

By the end of the second day, when an assistant attorney general was finally allowed to question Farley, he was asked why APC’s parent company, The Southern Company, continued to pay highnearly ten percentdividends, if it was actually going broke.

Farley leaned forward, loosened his shoulders beneath his dark pinstriped suit in a characteristic gesture, and stated at long length that one could not equate Alabama

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Power Company with The Southern Company. He said that APC had its own problems, while The Southern Company was making progress in other states.

When asked why consumers in Georgia, Mississippi, Florida and Tennessee paid less than the average homeowner or apartment dweller in Alabama, Farley again went into a complex answer which skirted the question.

After Farley’s third day on the stand, an opposition lawyer said, “There is no way you can get a straight answer from the man. He has more corporate tricks up his sleeve than all the Rockefellers and Fords combined.”

During his testimony, Farley pointed out that all construction would stop on the Joseph M. Fancy Nuclear Reactor Plant near Dothan if the increase was not awarded.

Shortly after he stepped down from the stand, thousands of construction workers were laid off at the plant. Work at other facilities was also slowed.

It was a dramatic demonstration of raw power-not necessarily kilowatts.

The LSCA put on several witnesses. Each told how his or her family operated on very little money. A woman described her home in the western section of Montgomery where indoor plumbing was installed within the past five years. “But the wood is so poor in my house that at one place you can sit on the toilet and look down and see the ground,” she said. She said that she and her husband had been trying to save a little money from his pension, their only income, to close such holes, insulate the house, and keep heat from escaping. But she said they were able to save very little with their electricity bill rising every month.

Another witness said his light bill was twice the rent on his five-room house and “if it goes any higher we’re going to have to do without groceries.”

In Selma, an out-of-work truck driver expressed appreciation for LSCA’s intervention in the suit. Back in 1978, when the APC first asked for the increase, they charged some customers the high rate and collected nearly $300,000, which the company was forced by the courts to pay back. The driver was charged the accelerated rate. The electricity bill for his four-room house with an unpainted outdoor lean-to toilet totalled about $22 in October. His bill jumped to $29 in November. “I didn’t have no idea they were going to raise me like that. Here we were with Christmas coming on and no money for anything. That $7 raise might not mean much to somebody making $100,000, but it meant toys for my children and some extra oranges and apples in their stockings,” he added. He had received his $7 refund after LSCA fought for it in court.

During this same period of time, according to its own annual report, APC President Fancy was making $148,049.98 for 1978 . He had received a $12,500 raise from the year before when he made $135,555.48. In 1977, the power company’s two executive vice presidents were paid a total of more than $160,000. A third executive vice president was added in 1978, and three were paid more than $250,000. The company’s 21 other vice presidents received well over $1,000,000 in salary payments for the year.

Legislator Alvin Holmes of Montgomery called for the company to “fire the vice presidents who don’t do anything but sit behind desks and let that be their increase.”

After all sides were heard in the PSC chambers, it was a general concensus among observers that the threemember panel would vote for the increase.

Little more than a week later, an order on the emergency increase came down signed only by Folsom and Matthews. McDaniel abstained from voting.

When it was announced that there would be an increase LSCA faces fell. Then it was explained that the increase would be less than one-third that asked by the power. company. The commissioners had decided on a plan introduced by Folsom giving the power company a 9.5 percent or about $82 million increase. “I did not vote for it because I do not think it is enough to provide the state with adequate electrical power in the future,” said McDaniel.

Within days, LSCA attorney Bob Varley was back in the courtroom asking that the order be set aside because the PSC did not have the authority to grant an increase or even listen to the emergency hearings. LSCA maintained the PSC had broken Alabama’s sunshine law by meeting in secret with Gov. James, Atty. Gen. Graddick and officials of the power company. “Because of those meetings-three that we know of (including a meeting with the governor’s executive assistant and the PSC behind closed doors)-the Public Service Commission heard the case and ruled,” Varley stated.

However, Varley was quick to say that LSCA was not opposed to the lowering of the increase from 34 to 9.5 percent, adding, “They simply didn’t have the authority to make any decision.”

LSCA Executive Director Marvin Campbell looked at the entire on-going fight. “If in fact there is a need for a substantial increase, as the power company contends, the interplay of facts exists: the lack of planning by the PSC in the past with the failure on its part to anticipate future

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costs and the impact of construction of new generating capacity on the residential consumerthese factors created problems.

“The Alabama Power Company’s rate schedule puts the responsibility on the residential consumer when it is the industrial consumer that receives the benefits of expanded capacity.

“Now the PSC needs to take swift action to protect the residential consumer-particularly people with low and fixed incomes-when the impact hits the hardest,” Campbell continued.

“Last year, the power company went before the PSC for a certificate of convenience and necessity and presented a very low cost for the Farley Nuclear Plant. The company estimated the cost at about $300 million and as of now it has already cost about $800 million. That was very poor planning,” Campbell said.

Shortly before presenting its case to the PSC for a permanent increase, the power com pany bought 30 minutes of prime time television for about $10,000. Vice President Samuel Booker outlined current necessities. He said the company’s coal supplies were at an all-time low. He said that, because of low rates, new customers would be delayed in having their facilities connected. And he said customers should make plans to conserve energy during summer months.

LSCA’s Weissman said the APC spokesman had presented “a one-sided account” which did not “take into consideration the Fuel Adjustment Clause” (given to APC by the PSC four years ago) to allow the company the capability to buy coal immediately and pass the cost on to the consumer.

Weissman said LSCA, however, did agree that everybody should conserve energy and that the power company should rewrite its rate schedule in order to provide incentives for residential consumers to conserve electricity.

The Times, a Black Montgomery newspaper, quoted a local man, “I have four children. It was about the coldest day of the year when they (power company workmen) came out and cut off my electricity.

“I had not received a light bill. I went down to the office and wanted to pay half of my bill, and they refused me.

“I told them that I had not received my bill, and they said it was my mistake-not theirs.

“I didn’t have anywhere to take my family that night, and one of my daughters caught the flu. She almost died,” he said.

After that night, he said, his family began using kerosene lamps for light.

It will probably be another three to four months before a decision is finally made on a permanent increase. In the meantime, Robert John Varley still wakes up before dawn and drives across the Alabama River to work where he and Weissman are still climbing the hillside, fighting tremendous odds.

Wayne Greenhaw, a free-lance writer, has had four books published, including WATCH OUT FOR GEORGE WALLACE. He also handles media contacts for Legal Services Corporation of Alabama.