Helping Small Business Owners

1. Helping Small Business Owners Alabama Public Service Commission Presented By: Commissioner Jeremy H. Oden, Alabama Public Service Commission

2. What is considered a Small Business? • The Small Business Administration (SBA) Office of Advocacy defines a small business as: • an independent business having fewer than 500 employees, • is independently owned and operated, and • is organized for profit, and is not dominant in its field.

3. What is considered a Small Business? • Depending on the industry, the size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a 3-year period.  Examples of SBA general size standards include the following:

4. What is considered a Small Business? • Manufacturing:  Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured. • Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided. • Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided.

5. What is considered a Small Business? • Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided. • General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction. • Special Trade Construction: Annual receipts may not exceed $7 million. • Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.

6. Alabama Small BusinessesLess than 500 employees (Total Employees in this range are: 768,300)

7. What role do Small Businesses play in the U.S. economy? • Small businesses are responsible for nearly two-thirds of job growth in the United States and generated 60-80% of net new jobs annually over the last decade. • Small businesses represent 99.7% of all employer firms. • Small businesses create more than half of nonfarm private gross domestic product (GDP). Alabama Public Service Commission

8. Small Businesses Depend on Affordable and Reliable Energy • According to NFIB’s Energy Consumption poll, energy costs are one of the top three business expenses for 35% of small businesses. • The primary energy costs are: • Operating vehicles • Heating and/or cooling • Operating equipment • It is critical for America’s small businesses to have access to reliable and affordable supplies of energy to remain competitive in today’s marketplace.

9. How were Small Businesses affected by the Great Recession? • Small businesses are usually the first sector to be affected during recessions as consumers cut back on discretionary income expenses. • More than 170,000 small businesses in the U.S. closed between 2008 and 2010, according to the Business Journals of U.S. Census Bureau data.

10. Why do Small Businesses continue to struggle? Governmental regulations: • The ability of small businesses to help stabilize and strengthen the economy is hindered by the more than 3,000 Federal regulations. • Regulations from the Environmental Protection Agency and the Department of Labor are a perennial cause of concern for small business owners. • According to the SBA, compliance with environmental regulations costs small businesses over 300% more than large firms.

11. Why do Small Businesses continue to struggle? Public Policies: • Extended unemployment benefits • U.S. Tax Code • Uncertainty of increasing healthcare costs • Affordable Care Act of 2010 • Increase in the Minimum Wage • Legislation to increase minimum wage above the federal requirement of $7.25 continues to be a topic in Alabama.

12. How has the Alabama Public Service Commission (APSC) assisted Small Businesses? • By ensuring reliable service and affordable rates • Encouraging utilities to provide rate options: • Time-of-Use Rates • Real Time Pricing • Segment Rates • Farming and Agriculture Rates • Rate modifications • Expanded the population of customers that would qualify for the small business rate (LPS – light and power small)

13. How has the Alabama PSC Assisted Small Businesses? • Incentives • In April 2011, the APSC approved two different electric service incentives: • Commercial Redevelopment Incentive • Economic Development Incentive • These incentives targeted new or additional loads for small, medium and large customers. • In September 2012, the APSC extended these incentives.

14. How has the Alabama PSC Assisted Small Businesses? • Commercial Redevelopment Incentive (Rate Rider CRI) • The rate rider targets small to medium customers. • A new commercial or industrial account, in an existing building with HVAC, that has been unoccupied or dormant for the previous six months is applicable. • Service to commence prior to January 1, 2014.

15. How has the Alabama PSC Assisted Small Businesses? • The incentive reduces the monthly base rate charges by 15% for one year. • The CRI program resulted in downward pressure in rates for all customers because: • The electric service facilities serving the vacant buildings were already in rate base with no supporting revenue. • Any additional revenue above the variable costs will ease the rate pressures from these under-performing assets.

16. How has the Alabama PSC Assisted Small Businesses? • Economic Development Incentive (Rate Rider EDI) • The rate rider targets large customers. • Customers must have new or additional load exceeding 1,000 kVA (kilovolt-amperes). • Customers must take service to commence prior to January 1, 2016. • The incentive reduces base rate charges related to the incremental load by 10% in year 1 and 5% in year 2.

17. Commissioner Jeremy H. Oden ALABAMA PUBLIC SERVICE COMMISSIONwww.psc.alabama.gov(334) 242-5203