A bill introduced Wednesday would fundamentally transform how monopoly utilities are regulated in Alabama, force regulators to hold traditional utility rate cases and limit profits for monopoly utility providers.
) - Proposed legislation would fundamentally transform how monopoly utilities are regulated in Alabama, force regulators to hold traditional utility rate cases and limit profits for monopoly utility providers.
This comes amid increased public scrutiny over energy prices.Representative Mack Butler , introduced a substitute bill for HB475 in a House committee hearing Wednesday that proposes sweeping changes to Alabama’s regulatory landscape. Alabama's Public Service Commission votes to freeze some rates to provide more stable power bills for the next two years.Legislation would require Alabama Public Service Commission to hold traditional rate cases for regulated utilities at least every three years. This hasn’t happened in Alabama in more than 40 years. We discuss why below. Rate cases would be opened as evidentiary hearings under oath, granting Alabama Public Service Commission subpoena power to gather evidence. Proposes capping profits by prohibiting Alabama Power from earning a return on equity higher than the national average for investor-owned utilities. Prohibits Alabama Power from passing on costs to ratepayers for lobbying, advertising, political spending, charitable giving and association dues.Alabama House of Representatives punts voting on bill that would strip Alabama voters of the right to elect the Public Service Commission.Butler told the committee this is the first step toward making energy more affordable in the state, noting people in his district are having to choose between buying food and medication or paying their power bill. “There’s something clearly wrong when we’re the highest in the region, third highest in the nation and about 40% higher than TVA,” Butler explained, noting the price of investor-owned electricity in Alabama. Several committee members offered feedback requesting amendments and clarity on some sections of the legislation. Committee Chairman Steve Clouse , ultimately carried the bill over without a vote to secure time to make adjustments. It could come back up for a vote next week barring how quickly the changes are made. “The overriding point a lot of people are making: one thing that needs to be done is have rate hearings,” Clouse told the committee. “That have not been held since 1982. A lot of this other stuff has gotten in the way of our ultimate goal. Let’s carry the over and keep committee in tune of what steps are next.”to a body appointed by the governor and grilled the leader of a clean energy nonprofit on unrelated issues weeks ago. Last week, Butler said he filed this bill in response to public outrage after WBRC first reported and released a recording ofon Alabama’s regulatory landscape, how it works in most states and what this could mean for your utility bills.When an electric utility proposes a rate increase in most states, it triggers a rate case. That rate case requires the utility to provide detailed financial information about why consumers should pay more. It’s a public hearing; anyone can participate and it often ends up in court.In the 1980s, the APSC switched to formula rates, which adjust without a rate case. One of the rates is called Rate RSE, or Rate Stabilization and Equalization Factor, which covers operational costs and profit.The industry standard for measuring equity for investor-owned electric utilities is ROE, or return on equity. In simple terms, this is the rate of profit regulators allow utility companies to earn. The national average for investor-owned utilities was 9.74% in 2024, according to S&P Global. This is lower than Alabama Power’s ROE, which was determined to be around 11% in 2024 by S&P Global. Determining Alabama Power’s exact ROE is difficult because the APSC doesn’t track it. In 2013, the APSC transitioned from measuring ROE to a Weighted Return on Average Retail Common Equity , which must stay between 5.75% and 6.15%. If it’s lower than 5.75%, the rate automatically increases, if it’s higher than 6.15% it would adjust down and could trigger customer refunds. At the time this new formula went into effect, critics said it was a way to further veil Alabama Power’s profit margin. While this legislation stops short of forcing the APSC to transition away from using WRRCE, Alabama Power would be prohibited from earning a return on equity higher than the national average of investor-owned utilities. In February, federal filings showed Southern Company, Alabama Power’s parent company,The legislation would also force Alabama Power to swear under oath that it isn’t passing along prohibited costs to ratepayers or charging an ROE higher than the national average when filing a new rate or change to an existing rate with the APSC. “If the electric utility fails to make the affirmation under oath, the rate or service regulation shall be void” the bill states. The legislation would also require the APSC to launch an investigation if it discovers a utility charged ratepayers with prohibited costs or a higher than allocated ROE. Time is an issue for this legislation, only a few more weeks are left in the 2025 regular legislative session. Still, Butler is hopeful they can make the requested changes get this bill through both chambers. “I’m actually very open to amendments on the floor because this is something that’s going to touch every member of this body,” Butler acknowledged. “I would like all of their input, the more input we get, the more likely we are to get it right the first time.” Alabama Power has been nonresponsive to WBRC’s numerous requests for information regarding ongoing legislation that would impact the company. In 2025, it defended its rates, stating, “Our rates reflect the investments we make to ensure delivery of safe, reliable and resilient energy,” Alabama Power said in a statement. “Investments such as infrastructure improvements help us provide the dependable service our customers expect—day in and day out.”for two years, which was promptly passed by the APSC. You can read more on our series Price of Power and the subsequent impact of thatTakeaways from the first elections of the 2026 midterm campaigns
Apc Alabama Public Service Commission Apsc Utility Rates Public Outcry Power Bill High Electricity Bills Southern Company Energy Dividends Rate Cases Return On Equity Roe Wbrc Birmingham Alabama Alabama Legislature Lawmaker Mack Butler Committee Hearing Price Of Power Jefferson County Jeffco Investigation Profit Cap Profit Utility Profit Rate Case Traditional Rate Case Jenn Horton Jennifer Horton Wbrc News Myfoxal 6 On Your Side 6 On Your Side Investigates
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