Alabama’s New Data Center Rules Still Leave Customers in the Dark, Critics Say

Nearly all observers agree that Alabama’s new data center policies released this week are an improvement over the state’s old rules, which treat massive, power-hungry data centers like any other large industrial operation. 

But several groups say the new rules for contracts between the data centers and Alabama Power, the state’s largest electric utility, don’t go far enough to require transparency and protect other electric customers from paying extra to support data centers. 

“The process that was adopted is better than what we had before,” said Jaclyn Brass, an attorney in the Southern Environmental Law Center’s Alabama office.

“But much more needs to be done to ensure that customers aren’t going to foot the bills for the data center build-out,” Brass said. “And more also needs to be done to increase accountability and transparency in Alabama Power regulation across the board.”

The Alabama Public Service Commission issued its final order establishing the new rules this week after commissioners voted 3-0 to approve the framework at a meeting earlier this month. Alabama Power filed a new tariff outlining the process on Wednesday. The new processes will take effect on Nov. 23, according to Alabama Power’s filing. 

“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,” the company said in an email. “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.”

Under the new rules, copies of contracts between Alabama Power and new data center developments must be provided unredacted to the PSC and the Alabama Attorney General’s office, which is the state’s dedicated ratepayer advocate under Alabama law. 

These agencies will have 90 days to review the contracts to ensure that they are “consistent with the public interest,” and that the data center customer will cover all the costs of providing electricity, including any new infrastructure and fuel. 

Then a redacted copy of the contract is to be provided for the public. The public copy is required to list the location and maximum capacity of the data center, and the company involved, including its parent company. But other key information can still be held back.  

Monika Gerhart, executive director of the

Association, said her group filed comments in the PSC docket urging more transparency. The final rule delivered “a good share of it,” she said, but fell short by allowing the information used in the rate impact test to remain confidential.

“The numbers that matter most are still secret,” Gerhart said in an email. “The cost method and the findings stay behind closed doors. Nobody outside the Commission can check that Alabama families and businesses aren’t paying a data center’s bills, or that resources with no fuel bill, like solar, got a fair shot.”

Claire Douglass, senior advisor and spokesperson for Manifest Energy, said it’s crucial for the public to be able to check behind these state agencies and ensure their figures are accurate and that data center contracts really are in the public interest. Manifest Energy is a nonprofit that works with government agencies, utilities and other stakeholders to promote grid modernization, more energy efficiency and lower costs. 

“We want to see the math, we want to see the receipts,” Douglass said in an interview. “Just saying, ‘Trust us, this is going to benefit families,’ isn’t really a good governance model.”

The new rules also state the PSC must publicly vote to approve or reject each contract within 90 days of receiving the application, but there is a loophole. The final order includes a “deemed approval” provision, meaning that the contracts are considered approved if the commission takes no action within the provided review period. 

Advocates worry this provision could allow the commission to avoid voting publicly on controversial projects, though projects approved by default would be announced at the next commission meeting. 

A spokesman for the Alabama Public Service Commission said the agency had considered many public comments in deciding to keep the deemed-approval provision in place.

“The final approved process retains that ‘deemed approved’ provision while making clear the Commission intends to vote on each contract within the 90-day review period,” the spokesman said. “The provision does not eliminate the Commission’s commitment to greater accountability and regulatory oversight or change the public interest standards that must guide these decisions.”

Daniel Tait, executive director of Energy Alabama, said the group was glad that the new rules will require a vote, but disappointed about the deemed-approval provision. 

“We commend the Commission for identifying what it will review before voting on the contract but are disappointed the actual details of what will be required are not made public,” Tait said in an email. “We wanted more, and we’ll keep making that case.”