Alabama Power Customers Paid More Than Any Customers In US In 2024; For Very Poor, 1/4 Of Income For Electricity [View all]

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Inside Climate News examined the 2024 federal filings of 100 of the largest electric utilities in the country. None reported higher total residential electric bills, on average, than Alabama Power. Because Alabama is one of the poorest states in the nation, that hits especially hard. Electricity customers here are among the most financially burdened in the nation, the U.S. Department of Energy found. And an analysis by think tank RMI showed that among households with extremely low incomes, Alabamians pay nearly a quarter of their earnings for electricity—the highest percentage in the country.

Experts point to lax regulation by the Alabama Public Service Commission, which is charged with regulating Alabama Power and overseeing any large spending or rate increases proposed by the utility. Robert Blanton, chair of the Department of Political Science and Public Administration at the University of Alabama at Birmingham, has been digging into the mechanisms that allow Alabama Power to earn record profits in such an impoverished state.

Ultimately, he said, there’s strong evidence that Alabama Power has effectively “captured” its regulator, the PSC. Academics use the concept of regulatory capture to describe a situation in which regulators are more beholden to the entities they are charged with regulating than the public they represent. The commission conducts much of its regulation of Alabama Power behind closed doors, with little to no access for the public or outside interest groups. It has consistently granted Alabama Power unusually high profit margins. The company’s return on equity was 11 percent in 2023, according to a utility analysis by financial firm S&P Global.

That’s down slightly from the company’s historical average of around 13 percent, but still among the highest of any utility in the country. Nationwide, the average rate of return approved for electric utilities in 2024 rate cases was 9.74 percent, according to S&P. “I don’t think there’s a single utility in the country that would be upset with an 11 percent earned ROE,” said Kent Chandler, former chairman of the Kentucky Public Service Commission, now a senior fellow in energy and environmental policy for the R Street Institute. “I mean, that’s like double what I know some utilities are actually earning.”

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https://insideclimatenews.org/news/03112025/alabama-power-electric-rates-profits/