Groups appeal AL Public Service Commission’s approval of $1+ billion gas expansion

Alabama Power hopes to increase its natural gas capacity by over 1800 megawatts, including building a new gas plant it doesn’t need at the Barry Electric Generating Plant in Mobile, County. (© Nancy Pierce/Flight by Southwings)

SELC—along with Energy Alabama and GASP—are appealing the Public Service Commission’s approval of Alabama Power’s petition for its single largest capacity increase ever, with a price tag for customers of over $1.1 billion.

The groups have filed an appeal in state court challenging the Commission’s decision allowing Alabama Power to increase its natural gas capacity by over 1800 megawatts, including building a new gas plant at the Barry Electric Generating Plant in Mobile County, while failing to approve a proposal to add 400 megawatts of solar plus battery energy storage projects.

Alabamians already pay some of the highest energy bills in the country and the pandemic has only worsened the financial hardships many are facing. Now the Commission is allowing Alabama Power to go forward with an unjustified, massive amount of new capacity that will further increase electricity rates, putting added strain on customers.”

—Keith Johnston, Birmingham Office Director

In September, the groups petitioned the Commission to reconsider its determination that this capacity increase is needed, especially in light of the economic slowdown caused by the pandemic; its decision to saddle customers instead of utility shareholders with the risk that the assets will become stranded; and its denial of the solar plus storage projects, which the utility’s own analysis showed had the most value for customers. The Commission denied the petition.

Starting January 1, Alabama Power’s electric rates are increasing for all 1.48 million residential, commercial, and industrial customers, raising the average residential monthly bill by about $4. As a result of the new natural gas capacity, bills are expected to increase further starting in 2023.

“Alabamians already pay some of the highest energy bills in the country and the pandemic has only worsened the financial hardships many are facing,” says Keith Johnston, Director of SELC’s Birmingham office. “Now the Commission is allowing Alabama Power to go forward with an unjustified, massive amount of new capacity that will further increase electricity rates, putting added strain on customers.”

The Alabama Attorney General’s office raised concerns in the Commission proceedings that the proposed gas plants could become stranded or uneconomic as a result of new emission standards or changes in technology, and recommended that the Commission impose a condition requiring that Alabama Power and its shareholders bear any stranded costs associated with its proposal instead of customers.

In its final order, the Commission ignored the Attorney General’s recommendation and failed to set any conditions on its approval, concluding it would be “inequitable” to burden Alabama Power shareholders with stranded asset risk, even though shareholders reap substantial profits from self-build assets like Barry Unit 8.

“The Commission failed to act in the public interest by approving unnecessary, expensive projects while leaving more affordable options on the table,” says Daniel Tait, Chief Operating Officer of Energy Alabama. “To make matters worse, the Commission has rubberstamped an enormous transfer of risk from utility shareholders to customers.”

Alabama remains the only state in the Southern Company territory, which includes Alabama, Georgia, and Mississippi, that prevents the public from any meaningful participation in the energy planning process.

“Alabamians deserve to have an open and transparent regulatory process, more information around how their energy decisions are being made, and the opportunity to provide input to ensure decisions are made in our state’s best interest,” says Michael Hansen, Executive Director of GASP. “When that transparency is missing from the energy decision-making process, we end up with unjust results where utility profits are given priority over people.”

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