Public Service Commission approves review process for Alabama Power, data centers

The Alabama Public Service Commission Tuesday unanimously agreed on a new process to review electricity contracts between Alabama Power and data centers.

The process will require power companies to make summaries of proposed agreements publicly available, as well as information about the project and its expected power consumption. Non-public versions that redact proprietary and confidential information would be filed with the PSC and the Alabama Attorney General’s Office.

The PSC would then vote to approve or reject the agreements in a public meeting.

“To me, it was important because of the size of the data centers, the amount of energy they are using and all the public concern about data centers, that we take a public vote on data center contracts,” Cynthia Almond, president of the PSC, said to reporters after the meeting.

Prior to Tuesday’s vote, PSC staff reviewed contracts between Alabama Power and facilities using large amounts of electricity, like data centers, and usually recommended approval. Unless commissioners acted to intervene within 10 days of the staff’s recommendation, the agreements were approved.

The changes came amid mounting concerns about data centers, their power consumption and impacts on local communities and the environment. The issue has become prominent in state elections. Democratic gubernatorial nominee Doug Jones has called for a one-year moratorium on new data center construction. Republican gubernatorial nominee Tommy Tuberville has called for requirements for data centers to pay for their impact. Both have called for greater power for local communities over the facilities.

The vote on Tuesday ended a three-month process to align PSC policy with laws approved by the Legislature in the spring to further regulate data centers amid mounting public concern heard by lawmakers.

SB 270, sponsored by Sen. Lance Bell, R-Pell City, authorizes the PSC to consider the economic impact of data centers on communities when deciding whether to approve contracts between Alabama Power and data centers. It allows the state regulators to consider the cost to operate the facilities and determine whether they provide a benefit to the community. Rep. Neil Rafferty, D-Birmingham also filed similar legislation.

A new process

The new process only applies to agreements between Alabama Power and data centers. The public summary of the contract will list the location of the facility and information about the company, as well as the maximum amount of electricity consumed by the data center. It will also lay out a process for the utility to ensure the data center complies with public interest requirements.

A non-public filing with the PSC and the Alabama Attorney General’s Office will include the terms of the contract and exhibits, along with any analysis conducted by Alabama Power, from capacity to estimated cost and power generation. The PSC may then vote on whether to approve the contract.

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An amendment introduced by Almond and approved by the commission will require the PSC to vote within 90 days from the submission of the Alabama Power filing. If commissioners do not vote, the agreement will be automatically approved.

The amendment came after Commissioner Chris V. Beeker III expressed concerns that the new rules do not require a vote within a specific time.

“There is a lot of public interest in data centers, a lot of concern about whether we are appropriately requiring them to pay their fair share at cost, and so it is important to me that we approve or disapprove these contracts out in the public and have discussion out in the public much like we did today,” Almond said.

The AG’s Office proposed that the PSC publicly vote on every data center contract, arguing the law required it. The motion drew opposition from Luke Bentley IV, the executive director of the PSC.

“The Attorney General’s Office had some comments that said the law required the Commission to vote, I want to make it clear that my recommendation is not based on that comment,” Bentley said during the meeting. “I do not agree with that assessment.”

Reaction

Renewable energy and environmental groups Tuesday said they were pleased that more information will be released about agreements between power companies and data centers but felt more needed to be done.

Jaclyn Brass, an attorney with the Southern Environmental Law Center, a legal advocacy organization that has opposed some of Alabama Power’s requests, said in a statement that she hoped the PSC would “continue this long-overdue move toward letting daylight in on how they regulate Alabama Power.”

“It’s disappointing the commission would not commit to taking public votes on all contracts. However, requiring Alabama Power to disclose basic information about these contracts, including the name of the data center and the maximum contracted electric capacity, are all important steps toward greater transparency,” the statement said.

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Energy Alabama, an organization that advocates for more renewable energy in the state, said it was disappointed that the PSC will not vote on all contracts.

“For three decades, rules built for manufacturers let contracts take effect without a vote of the commission. Data centers on this scale are a different animal,” said Daniel Tait, executive director of Energy Alabama. “Ninety days is better than 10, but silence still counts as yes. A contract this big should never take effect because nobody voted. Alabamians deserve to see their regulators decide in public.”

Alabama Power said in a statement that it will comply with all laws in the state.

“Alabama Power will continue to require large load data center customers to pay the full cost to serve their energy needs, so costs are not shifted to existing customers. Alabama state law affirms that same standard and the Alabama Public Service Commission approves contracts that meet that standard while promoting positive benefits for other customers,” the company said.

The PSC solicited comments from the public to determine the process for approving contracts but did not adopt all of them. Energy Alabama, for example, requested that a public utility provide a fixed pricing plan rulebook to data centers that are publicly available.

Key points box written by Editor Brian Lyman.