The Alabama Public Service Commission’s December meeting offered another close look at how the state is responding to rising electricity demand, accelerating data center development, and the continued challenge of high power bills. While much of the agenda was routine, the Commission approved two major items that will shape Alabama’s energy landscape in the years ahead: a two-year rate freeze on several Alabama Power cost mechanisms and approval of new solar projects serving Meta’s expanding data center footprint.

These discussions build directly on the themes raised at the November PSC meeting, where commissioners highlighted the rapid growth of data centers across the state and emphasized the need for careful planning to protect existing customers.

PSC Adopts a Two-Year Rate Freeze Covering Multiple Cost Mechanisms, Affordability Questions Remain

The Commission approved Alabama Power’s request to freeze several rate components through 2027, including fuel recovery, purchased power adjustments, and government-mandate cost recovery factors. Commissioners presented the freeze as a way to provide bill stability for customers, especially as household electric bills remain among the highest in the region.

To implement this freeze, the PSC approved two related measures:

• Redirecting customer refunds to the Natural Disaster Reserve

Rather than issuing small refunds to customers, the Commission allowed Alabama Power to replenish its Natural Disaster Reserve, which had fallen into a negative balance. This approach is intended to prevent a future rate increase that would otherwise be needed to rebuild the fund.

• Using nuclear production tax credits to support rate stability

Alabama Power may apply nuclear production tax credits to reduce retail costs, helping limit upward pressure on bills.

Commissioners also voted to extend the moratorium to cover any upward Rate RSE adjustment in 2027. Rate RSE, or Rate Stabilization and Equalization, is Alabama Power’s formula that adjusts customer rates automatically based on the utility’s earnings. Including RSE in the moratorium effectively pauses these automatic increases for two years.

While the freeze limits future increases, it does not reduce current rates. Alabama continues to have some of the highest average monthly electric bills in the region. Advocates have noted that the freeze essentially locks in already high costs rather than addressing the underlying rate drivers.

Commissioners acknowledged these concerns during the meeting and discussed why customer refunds were not applied to next-year bills. Historically, customer refunds amount to only a few dollars per residential account once spread across the system, and commissioners argued that replenishing the disaster reserve offered more meaningful protection for ratepayers.

Commission Approves New Solar Projects for Meta Data Center Load

The PSC approved long-term energy purchase agreements for two new solar facilities, Stockton I (80 MW) and Stockton II (180 MW). These projects will supply renewable energy for Meta’s upcoming Montgomery data center through a subscription by Meta’s subsidiary, Dotier LLC. Once operating, both facilities will be incorporated into Alabama Power’s system mix.

This approval is notable not only for its size, but also because it represents one of the first major clean energy additions tied directly to Alabama’s growing data center market. Across the Southeast, data center development continues to spur new utility-scale solar and storage investment as large companies seek to match their operations with clean energy.

Economic Development Officials Highlight the Growing Importance of Energy Availability

As previewed at the November PSC meeting, Alabama’s Secretary of Commerce, Ellen McNair, returned this month to brief the Commission on statewide economic development trends. Her presentation underscored how important energy planning has become for industrial recruitment.

McNair noted:

• Energy availability is now the second most important factor in corporate site selection.
• Many industries, not only data centers, are requesting significantly more power than in previous years.
• Coordinated planning between utilities, regulators, and economic development agencies will be essential to ensure that new large loads pay their way and do not shift costs to existing customers.

Her remarks reinforce a trend SREA is watching across the Southeast. Rapid load growth, especially from energy-intensive data centers, requires transparent modeling, competitive procurement of new resources, and thoughtful transmission planning.

What This Means for the Southeast

The Alabama PSC’s December meeting illustrates several themes shaping the region:

• Utility-scale solar development is rising, but largely driven by corporate procurement rather than statewide planning.
• Affordability pressures persist, even with rate freezes, highlighting the need for transparent regulatory oversight.
• Data center growth is influencing major planning decisions, including generation investments, rate structures, and infrastructure timelines.
• Coordinated planning between regulators, utilities, and state agencies is becoming increasingly important as large-load growth accelerates.

SREA will continue monitoring Alabama’s regulatory landscape and sharing insights with members as the state navigates these changes. Decisions made today will influence grid reliability, renewable energy development, and economic competitiveness across the region.