Reject Alabama Power’s Unneeded Gas

Alabama Power wants to raise your rates by adding more than $1 billion of new generating capacity.

Most of it is gas we don’t need.

Sound suspicious to you?

Yeah, us too. Fortunately, there’s something WE can do about it.

Take Action Now

Ok, so what is happening?

Alabama Power is asking the Alabama Public Service Commission (PSC) for permission to build and buy new power sources at a cost to customers of at least $1.1 billion. The additions will expand the utility’s total power-producing capabilities by almost 20%.

Just two years ago, Alabama Power said it wouldn’t need new generation sources until 2035. So why the sudden change? Did the Company get a sizeable influx of new customers? Did customers start using a lot more electricity? No and no. Demand for electricity is declining, and Alabama Power has ample capacity to meet its customers’ needs. So what changed?

It’s called a “winter reserve margin.” All electric utilities hold some capacity in reserve to make sure there’s enough available to serve customer demand on extremely hot or cold days. Traditionally, Alabama Power has built up its system according to summer needs, when demand for electricity is often highest. But now the company is saying that winter’s a problem too. Such a problem that it needs to hold 25% of its power production in reserve for extreme cold.

That’s right. Alabama Power wants fully a quarter of its power plants to sit idle for winter emergencies, and to get there, they have to build and buy more than a billion dollars of new generation – which the company will then charge to its customers.

To understand how extreme this proposal is, consider that national standards call for only about a 15% reserve margin. And Alabama Power’s winter reserve margin substantially exceeds that used by other utilities, even ones in colder regions.

 

Wait, winter outages? In Alabama?

According to Alabama Power, the utility’s annual peak demand (the highest amount of electricity it uses at one time) now occurs in the winter. For anyone who has sweated through a hot, humid Alabama summer day without air conditioning, or enjoyed the relative mildness of a winter day, this will come as quite a shock. While winter reliability is a valid concern, Alabama Power is significantly overstating in order to benefit its shareholders.

 

So what’s really going on?

We can’t be entirely sure of the Company’s reasoning, but we do know this. Utilities have an incentive to build, and sometimes overbuild, because they earn a return and profit from these expenditures. Southern Company, Alabama Power’s parent company, has spent an immense amount of money on construction projects to add more generation in Georgia (nuclear) and Mississippi (carbon capture and storage), and, because of these projects, has had to swallow billions in losses [1]. In addition, Southern Company has already had to sell its Florida subsidiary Gulf Power to fund its troubled nuclear project in Georgia [2].

We do not want Alabama to be the next state where a Southern Company subsidiary makes a bad decision and overbuilds for new generation based on shaky evidence. Alabamians should not have to shoulder the blame for corporate blunders into the next several decades, like Southern Company customers in our bordering states. And Alabama Power customers should not prop up Southern Company for the bad decisions made elsewhere.

 

So many questions

Even putting aside Alabama Power’s flimsy justification for this massive commitment of customer dollars, the Company’s filing raises a host of questions:

  • How much will this cost customers? Alabama Power claims customer bills will go up an estimated $ 4 per month. Alabama Power’s long-range planning document was heavily redacted (an Alabama Power favorite tactic). But the Company’s filings are also heavily redacted. As a result, the public doesn’t even know the true costs of this massive investment, which they will be paying for decades.

 

  • Is it the best deal for customers? Alabama Power excluded renewable energy from competing against gas even though its own analysis shows that renewable energy is the cheaper alternative. And energy efficiency (i.e. avoiding energy waste) is even cheaper. Even assuming there’s a need for so much added generation, why should Alabamians pay more for gas generation, which is inherently risky because gas prices are volatile. Renewable energy and energy efficiency have no fuel costs.

 

  • Why so much gas? Southern Company made commitments to its investors to achieve low-to-no carbon by 2050. How is adding two gigawatts new gas generation – resources that will emit millions of tons of carbon dioxide for decades – consistent with that goal?

 

  • Speaking of energy efficiency, Alabama Power said it would include ~200 MW of energy efficiency but gave no details about what it might actually do to save energy. Why is the Company not telling you how it wants to spend your money?

 

One more thing…

Energy Alabama is proud to represent our members’ interests before the Public Service Commission. But we shouldn’t be alone.

The Attorney General of Alabama has intervened in this case, as they should. They need to hear from you to make sure that long-term energy decisions benefit customers and not just utility shareholders. Let the Attorney General know that you’re concerned about your electric bills and that you want more affordable, clean renewable energy.

 

What can I do?

Together with Gasp, Energy Alabama is calling on the Alabama PSC to reject Alabama Power’s filing for new gas as it is unneeded and unjustified by the evidence.

If you agree that the Public Service Commission should reject Alabama Power’s petition for expensive and unneeded gas, please sign our petition below!

 

 

 

References:

[1] https://www.utilitydive.com/news/mississippi-regulators-approve-kemper-settlement-affirming-end-to-ratepaye/516450/

[2] https://www.energyandpolicy.org/southern-companys-big-bets-lead-to-loss-of-gulf-power/