Alabama PSC Adjusts Spire Energy Rates, Sets Future Customer Charge Increases

The Alabama Public Service Commission (PSC) on Tuesday reduced the rate of return that Spire Alabama, a St. Louis-based energy company, can earn for the next two years. The PSC's vote, based largely on a recommendation from the Alabama Attorney General’s Office, sets Spire Alabama’s return on equity (ROE) at 9.4%.

This new rate is 1.1% lower than the 10.5% ROE company officials had sought and is also lower than what the company currently collects. However, commissioners also authorized Spire Alabama, which serves approximately 500,000 customers across Alabama, to increase its fixed monthly charge by a total of $5 per month in two phases. Customers will see an increase of $2.50 starting October 1, 2026, followed by another $2.50 increase on the same date the following year, October 1, 2027.

The PSC’s ruling means customers’ utility bills will remain steady for now, as the commission lowered the usage rate to balance the higher future monthly recurring cost. Cynthia Almond, president of the Public Service Commission, clarified that the adjustment to the monthly customer charge is revenue neutral, meaning it does not increase the total amount of money the utility collects. Almond explained that this change “shifts a portion of the recovery of fixed customer costs away from the volume metric, or usage-based, portion of the bill into the monthly customer charge.”

The commission also reduced the ROE for Spire Gulf, a sister company that provides heating and cooling services to the Gulf Coast, to 9.6%. This is lower than the 10.75% return on equity the company requested and also lower than the nearly 10% it currently receives.

Representatives from Spire Energy expressed disappointment with the PSC’s ruling. Reynolds Anderson, vice president of external affairs for Spire Energy, told reporters after the meeting that the decision will directly impact the company's ability to invest in growth and economic development within Alabama. Anderson indicated that Spire’s request was based on rates received by other companies and anticipated challenges in attracting and growing businesses in the state moving forward. Despite this, he affirmed the company’s commitment to providing safe and viable natural gas service to its customers.

The PSC’s hearing was part of a rate case announced in June after Spire Alabama and the Alabama Attorney General’s Office failed to agree on an appropriate Rate Stabilization Equalization (RSE) figure. This marks the first rate case the regulatory agency has convened since the 1980s. The process to decide the return rate a company should earn is known as Rate Stabilization Equalization, where companies typically submit a request for a specific return for PSC approval.

The rate case follows a period of mounting complaints over electricity prices in Alabama and legislative changes to the PSC. Lawmakers expanded the size of the commission and altered its structure. The bill, HB 475, sponsored by Rep. Mack Butler, R-Rainbow City, and ultimately signed by Gov. Kay Ivey, expanded the PSC from three to seven members and granted Ivey four immediate appointments. These appointees are slated to be gradually replaced by staggered popular elections.

However, the new law also makes it more difficult for the PSC to convene future rate cases. It established a cabinet-level Secretary of Energy position, which now holds the authority to set the agenda for PSC meetings and to convene a rate case. Under the new structure, a supermajority of five of the seven commissioners would be required to convene a rate case independently or to change the agenda.

The PSC based its vote on evidence presented at an August hearing presided over by Luke Bentley IV, executive director of the PSC, who served as the administrative law judge. Bentley, reading from a prepared statement, indicated that the Attorney General’s ROE recommendation was “the most reasonable and more accurately reflects Spire Alabama’s cost of equity.”

Energy Alabama, a nonprofit advocating for renewable energy in the state, expressed satisfaction with the PSC’s decision. Sheree Martin, deputy director and general counsel of Energy Alabama, released a statement thanking the Commission for opening the rate investigation and for its decision to “bring Spire’s return on equity down to a more reasonable level.” Energy Alabama had sought an even deeper rate reduction, suggesting an ROE of about 8.3% for both Spire Alabama and Spire Gulf companies.

For context on broader energy costs, the Energy Information Commission reported that Alabama residents in June paid approximately 16.4 cents per kilowatt-hour for electricity, which was higher than the regional average of 14.89 cents per kilowatt-hour.