PSC Hearing Starts Monday on Alabama Power Request to Add $1.1 Billion in Energy Capacity

James M. Barry Plant in Mobile County

Alabama Power Company says it needs to add $1.1 billion in energy sources to meet future demand for electricity. Major industries, environmental groups and clean energy advocates are among those opposing the move.

The company says adding the resources, predominantly from natural gas generation, will allow it to meet customer needs for years to come. It estimates the expansion would cost residential customers an average of $4 per month, to be phased in over four years.  Alabama Power reduced its prices by 3% this year, meaning an estimated $4.50 per month reduction for the typical residential customer.

A multi-day hearing on the matter will be heard by an administrative law judge beginning at 10 a.m. Monday at the Public Service Commission offices in Montgomery, 100 Union St., Room 900.

Under PSC rules, the burden is on Alabama Power to prove that customers need its proposed expansion and that the expansion is the least-cost means of meeting this customer need.

The Alabama Industrial Energy Consumers group, composed of some of the major electricity-using companies, including U.S. Steel, ACIPCO and Occidental Chemical, opposes the action, saying the power company’s analysis is faulty and the average cost may exceed the power company’s prediction, among other objections.

Environmental groups Gasp and Sierra Club and clean energy advocate Energy Alabama are among those also opposing Alabama Power’s petition. The Southern Environmental Law Center, representing Gasp and Energy Alabama, says there is insufficient justification for the proposed 2,400 megawatts of new capacity.

“SELC’s experts will focus on flaws in Alabama Power’s planning and justification process and the impacts the petition will have on customers,” according to Emily Driscoll, program communications manager for the law center.

The PSC will hear at least 15 experts testify for both sides in proceedings that are expected to last most of the week. Administrative law judge John A. Garner, executive director of the PSC, will preside over the hearing. Because Alabama Power has a monopoly on retailing power for the southern two-thirds of the state, the commission represents customers, regulates its activities and is mandated to restrict its profits only to projects determined to meet customer needs.

Alabama Power is scheduled to present its case first, followed by Manufacture Alabama, the Alabama Coal Association, Energy Fairness.org, American Senior Alliance, the Alabama Industrial Energy Consumers, Sierra Club, Energy Alabama/GASP, The Alabama Solar Industry Association Inc., the Office of the Attorney General of Alabama, and PSC staff.

A protest rally against Alabama Power’s petition is scheduled on the steps of the PSC building at 9 a.m. Monday.

In its petition filed in September, the power company stated that demand for electricity in winter months is now higher than in summer months, and new sources of power are needed to ensure it can produce enough power to meet peak demand in the future. It maintains that it needs to have a reserve of 26 percent above peak demand to assure it can provide service at all times.

The company proposes to add 2,400 megawatts of capacity – 2,000 of it by building a new natural gas plant at its Barry Steam Plant in Mobile County, purchasing an additional such plant in Autauga County, and buying electricity generated at another plant in Mobile County.

Another 400 megawatts would be added from solar with battery storage.

Opponents of the move say most other utilities do not keep the capacity margin desired by Alabama Power.

They also point out that the company’s “return on equity” – or profits – is partly based on the value of its infrastructure, which would increase significantly if the $1.1 billion in additional power sources goes forward.

Alabama Power spokesman Michael Sznajderman said Friday that “nearly 90 percent” of the requested increase “would replace generation that we have retired or energy contracts that will likely not be available to us soon.”

He cited retirement of 1,221 megawatts of capacity at Plant Gorgas in Jefferson County and 225 megawatts at Plant Barry. The company also will lose 700 megawatts of capacity from a power-purchase agreement scheduled to expire at the end of 2022.


Cautions Against Natural Gas

Alabama Power’s request for more natural gas sources of power comes on the heels of a report last week that warns utilities run the risk of over-relying on natural gas. Investment in natural gas infrastructure “is increasingly incompatible” with a climate-stable future.

“Utilities clinging to business models that rely on fossil fuels are jeopardizing their ability to meet critical climate goals (including their own) and will miss out on opportunities to benefit from new technology advances,” according to Lila Holzman of As You Sow, a shareholder advocacy group and one of the sponsors of the report, Natural Gas: A Bridge to Climate Breakdown.

The Sierra Club has filed opposition to the power company’s nearly 20 percent expansion in generating capacity partly because it would lock in 40 years of burning gas derived from fracking, a controversial technique, according to Emily Bosch, associate press secretary for the group’s Beyond Coal campaign. She said in an email that Alabama Power’s petition “fails to prove that customers need this expansion or that it is the most economical way to serve them.”

This story has been changed to correct the amount of new capacity being added and the amount being added in solar energy.