Rate hikes for what?

In the fall of 2019, Alabama Power filed a petition with the Public Service Commission (PSC), seeking permission to charge its customers well over a billion dollars over a 40-year period for an unprecedented expansion. The company says it needs to be able to generate a lot more electricity, even though the state’s electricity demand is generally stable. The proposed expansion would increase Alabama Power’s capacity by nearly 20%.

In March, Sierra Club and other intervenors challenged Alabama Power’s expansion at a hearing before the Public Service Commission. The company’s proposal, which is mostly made up of fossil fuels, is a bad financial deal for customers.
In the coming months, the PSC will review the record and decide whether to grant, partly grant, or deny the company’s plan.

This blog series will explain Alabama Power’s proposed expansion and clarify the stakes of one of the biggest energy cases ever to be decided in Alabama history.

By Sari Amiel, Legal Fellow with the Sierra Club's Environmental Law Program

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Rate Hikes For What?

It’s easy to spend other people’s money. So it’s no wonder Alabama Power went on a shopping spree for dirty energy and asked state regulators at the Public Service Commission to pass all the costs onto customers. The company’s rate hikes are never popular, but this time the hikes are wildly out of touch with what customers want: money-saving clean energy. Instead, the hikes would compensate the company for not one, not two, but three large, gas-burning power plants: (1) an aging plant called “Hog Bayou” by Africatown, near Mobile, (2) an aging plant called “Central Alabama” in Autauga County, and (3) a new plant called “Barry Unit 8” also near Mobile.

Although it has been widely reported that Alabama Power seeks $1.1 billion from customers, the actual price tag will be much higher. The $1.1 billion is roughly what it costs to build and buy two of the gas plants, Barry Unit 8 and Central Alabama. It does not include the billions more that it will cost to buy power from Hog Bayou or to buy the gas that all three plants would have to burn—for decades—to produce power. If approved, these plants would lock customers into buying and burning gas—most likely fracked gas—for the next 40 years. 

Alabama Power unilaterally decided to pursue these gas plants before the plants received any public review whatsoever. And even though the company finally submitted the plants for review—at a trial-like hearing held in Montgomery in March—Alabama Power has, for the most part, insisted on secrecy. It has not held public informational meetings. It has not posted information online. Key information about costs in the company’s submissions to the PSC (in the hard-to-find docket no. 32953) has been redacted, stifling public review or debate.

But this much is clear: the company’s rush to buy dirty energy is controversial and contested: it is not in line with industry trends and is broadly opposed by customers, including large industry leaders

At a time of great uncertainty, we shouldn’t be locking ourselves into long-term commitments to gas-fired power plants. Whether you are interested in clean energy or just economics, Alabama Power’s proposal needs to go back to the drawing board.