Alabama PSC Approves New Public Review for Data Center Power Contracts

The Alabama Public Service Commission on Tuesday unanimously approved a new process for reviewing electricity contracts between Alabama Power and data centers. The decision mandates increased transparency and public oversight for these agreements, which have drawn significant public and political attention due to concerns about energy consumption and community impact.

Under the new rules, power companies will be required to make public summaries of proposed agreements. These summaries must include information about the project, its expected power consumption, the facility’s location, and details about the company. They will also outline how the utility ensures the data center complies with public interest requirements. Non-public versions, which redact proprietary and confidential information, will be filed with the PSC and the Alabama Attorney General’s Office. The PSC will then hold a public meeting to vote on whether to approve or reject the agreements. This new process specifically applies to contracts between Alabama Power and data centers.

PSC President Cynthia Almond stated after the meeting that a public vote on data center contracts was crucial due to their size, the significant amount of energy they consume, and widespread public concern. She added that it was important to approve or disapprove these contracts in public and foster public discussion.

Prior to Tuesday’s vote, PSC staff typically reviewed and recommended approval for contracts between Alabama Power and large electricity users like data centers. These agreements were automatically approved if commissioners did not intervene within 10 days of the staff's recommendation.

The changes enacted by the PSC are a direct response to mounting public concerns regarding data centers, their substantial power consumption, and potential impacts on local communities and the environment. This issue has grown in prominence, becoming a key point in state elections. Democratic gubernatorial nominee Doug Jones has advocated for a one-year moratorium on new data center construction, while Republican gubernatorial nominee Tommy Tuberville has called for requirements that data centers pay for their impact. Both nominees have also sought greater power for local communities over these facilities.

The Tuesday vote concluded a three-month effort to align PSC policy with new laws approved by the Legislature in the spring. Senate Bill 270, sponsored by Senator Lance Bell, a Republican from Pell City, authorizes the PSC to consider the economic impact of data centers on communities when evaluating contracts. This includes assessing the cost to operate the facilities and determining their benefit to the community. Representative Neil Rafferty, a Democrat from Birmingham, also filed similar legislation.

An amendment introduced by President Almond and approved by the commission establishes a 90-day timeframe for the PSC to vote from the submission of an Alabama Power filing. If commissioners do not vote within this period, the agreement will be automatically approved. This amendment followed concerns raised by Commissioner Chris V. Beeker III about the initial lack of a specific voting deadline in the new rules.

The Attorney General’s Office had proposed that the PSC publicly vote on every data center contract, arguing that state law required it. However, Luke Bentley IV, the executive director of the PSC, expressed his disagreement with that assessment, stating his recommendation was not based on the Attorney General’s interpretation.

Renewable energy and environmental groups acknowledged the increased transparency but called for further action. Jaclyn Brass, an attorney with the Southern Environmental Law Center, expressed hope that the PSC would “continue this long-overdue move toward letting daylight in” on how it regulates Alabama Power. While she found it disappointing that the commission did not commit to public votes on all contracts, Brass noted that requiring Alabama Power to disclose basic information, such as the data center's name and maximum contracted electric capacity, represented important steps toward greater transparency.

Energy Alabama, an organization advocating for more renewable energy, also voiced disappointment that the PSC would not vote on all contracts. Daniel Tait, the executive director of Energy Alabama, commented that while “ninety days is better than 10, but silence still counts as yes.” He emphasized that a contract of such magnitude should never take effect without a public vote, stating that Alabamians deserve to see their regulators make decisions in public.

In a statement, Alabama Power affirmed its commitment to comply with all state laws. The company stated that it would continue to require large load data center customers to pay the full cost to serve their energy needs, ensuring that costs are not shifted to existing customers. Alabama Power added that state law affirms this standard and that the PSC approves contracts meeting this standard while promoting positive benefits for other customers. The PSC did solicit public comments to determine the contract approval process, though not all suggestions, such as Energy Alabama's request for a public utility fixed pricing plan rulebook, were adopted.