Alabama Power, despite being one of the only utility providers in the state, is not publically owned.¹ It is a vertically-integrated monopoly, meaning that it not only has no competitors in the state’s electricity market, but that it also handles all functions of electricity generation, transmission, and distribution.² Though some other states are in a similar position with regards to their power providers, Alabama Power is unique in that it also lacks adequate government oversight.
The three-person Alabama Public Service Commission (or PSC) is the government body meant to check the company’s power.³ However, the PSC has demonstrated a clear disregard for consumers’ interests in favor of Alabama Power’s. It has allowed the company to adjust the rates it charges customers without public hearings. As a result, there have been no public rate cases for Alabama Power in 30 years and it has charged an average of 12 percent more than electric utilities in other southern states.⁴ Consumers, again, have no say in this, as Alabama Power is the sole electricity provider in the market.⁵
Lack of adequate government oversight not only incurs monetary costs for Alabamians but also environmental ones. Enabled by the PSC, Alabama Power has effectively struck down state efforts to expand distributed solar panels, roof-mounted systems for individual homes.⁶ Though solar panels could be a long-term cost-effective benefit, especially in Alabama’s poorer regions, Alabama Power has taken extreme measures to prevent its spread.⁷ It implemented the “most punitive charge on rooftop solar customers by any regulated utility in the country,” according to Katie Ottenweller, a senior attorney at the Southern Environmental Law Center.⁸
This is known as the “Capacity Reservation Charge,” a fixed fee for Alabama Power customers that generate their own electricity using a distributed solar system. The company claimed to implement it merely cover the costs incurred if solar users needed to borrow electricity from the larger power grid. However, this fee (which is $5 per kilowatt produced per month) is unreasonable and discriminatory. It can add up to $300 per year to solar users’ power bills for no reason other than the fact that they have solar panels. “It’s akin to going to the grocery store and getting an extra tax on your bill because you have a tomato garden in your backyard,” Ottenweller said. Alabama Power provided no reasoning for the fee or its fixed cost. There were no evidentiary hearings or any public involvement before the fee’s implementation indicating the PSC’s disregard for consumers once again.⁹
The problems that come with Alabama Power’s monopoly rule cannot be addressed through one singular action, as these issues are structural. However, steps can be taken to increase public oversight of Alabama Power. Advocacy group Arise Alabama released a report in 2013 making a simple suggestion to the PSC, to periodically review Alabama Power’s rates and allow formal, public hearings on the rate-setting process.¹⁰ This is not a dramatic step, but it would bring more consumer voices to the process than it does at present.
¹ 2017 Annual Report, report, Alabama Power Company (Birmingham, AL, 2017), 5.
² Hg.org, www.hg.org/legal-articles/what-are-consumer-rights-31356.
³ APSC Mission & History,” Psc.state.al.us, 2018, , accessed December 05, 2018, http://www.psc.state.al.us/News/ComHist.html.
⁴ David Schlissel and Anna Sommer, Public Utility Regulation Without the Public: The Alabama Public Service Commission and Alabama Power, 13.
⁵ David Schlissel and Anna Sommer, Public Utility Regulation Without the Public: The Alabama Public Service Commission and Alabama Power, 1.
⁶ Greer Ryan, Throwing Shade: 10 Sunny States Blocking Solar Development ( Center for Biological Diversity, 2016), 3.
⁷ Robert Kaufmann and Devina Vaid, “Lower electricity prices and greenhouse gas emissions due to rooftop solar: empirical results for Massachusetts,” Energy Policy V olume 93 (2016).
⁸ Elise Hansen and Katarina Zimmer, “Southern Discomfort,” Grist.org, August 16, 2018, , accessed December 05, 2018, https://grist.org/article/the-fight-for-cheap-solar-is-going-south/.
⁹ Elise Hansen and Katarina Zimmer, “Southern Discomfort,” Grist.org, August 16, 2018, , accessed December 05, 2018, https://grist.org/article/the-fight-for-cheap-solar-is-going-south/.
¹⁰ David Schlissel and Anna Sommer, Public Utility Regulation Without the Public: The Alabama Public Service Commission and Alabama Power, 15.
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