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. Let’s oppose it together!

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Ok, so what is happening?

Alabama Power received approval from the Alabama Public Service Commission (PSC) for permission to build and buy new power sources at a cost to customers of around $1.1 billion. The additions will expand the utility’s total power-producing capabilities by approximately 15%. We at Energy Alabama, along with our friends at GASP and represented by the Southern Environmental Law Center, filed an appeal in state court challenging the Commission’s decision.

Just three years ago, Alabama Power said it wouldn’t need new generation sources until 2035. So why the sudden change? Did the Company get a sizable influx of new customers? Did customers start using a lot more electricity? No and no.

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. 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.

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 the national organization that sets grid reliability requirements calls for a baseline of approximately 15% reserve margin. Alabama Power’s winter reserve margin substantially exceeds, by a significant amount, that national benchmark used by other utilities, including utilities in colder regions.

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 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 considers much its long-range electric planning document confidential and not subject to public review. The company releases a summary of its long-range planning document but the summary does not include important details. Similarly, many of the Company’s filings are also not subject public review, according to the Company. 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? The Commission denied Alabama Power’s proposed solar plus battery storage projects because it found them not well-suited to meet Alabama Power’s reliability needs, despite all of the evidence of their reliability benefits and cost-effectiveness. 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 almost 1,900 megawatts of gas generation – resources that will emit millions of tons of carbon dioxide for decades – consistent with that goal?
  • Speaking of energy efficiency, the PSC approved Alabama Power’s proposal to invest in ~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 has represented our members’ interests before the Public Service Commission, we weren’t alone. Thousands signed on to support us.

The Attorney General of Alabama intervened in this case, as they should, stating that the customers should not be left with the burden should these new gas plants become stranded or uneconomic as a result of new standards or changes in technology. Yet, in its final order, the PSC ignored the Attorney General’s recommendation and failed to set any conditions on its approval, concluding that it would be “inequitable” to burden Alabama Power with the costs of their own mistakes.

What can I do?

Together with GASP and Southern Environmental Law Center, Energy Alabama is taking this to court. Will you support us?

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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/