MONTGOMERY, Ala. – The Alabama Public Service Commission unanimously adopted a procedure Tuesday allowing automatic approval of Alabama Power’s contracts with large load data centers if the commission fails to take a vote within 90 days of submission.
Chief Administrative Law Judge Luke Bentley had recommended that the PSC adopt a policy requiring a vote on every large load data center contract but did not include a time window for a vote, which is standard for PSC procedures. Following legislation, the PSC defines large load data centers as facilities that require 150 megawatts or more of electricity and operate on one piece of land.
Commissioners Chris Beeker and Jeremy Oden expressed concerns about contracts potentially falling through because of the PSC not acting in a timely manner. Oden called the automatic approval procedure a “consequence” for the PSC not voting.
“I want the commission to vote, but then again, I understand if they do not vote, then it’s not on the company and it’s not on the data center. It’s really and truthfully back on the commission …” Oden said. “Saying, ‘Well, since we just didn’t bring it up and vote, it’s gone,’ I don’t think that’s a good move, I don’t think it’s a good economic presentation for the state if we do that.”
Though she ultimately introduced an amendment setting up an automatic approval in the case of the PSC’s inaction, PSC President Cynthia Almond said she felt strongly that the commission should take a public vote on data centers because of the public’s concern about the massive facilities that power artificial intelligence. She included the 90-day window for voting in her amendment.
“We should not follow the ‘deemed approved’ process that we’ve been following for a number of years,” Almond said. “The current (rate) FCR deals with industry that is one megawatt or greater, and we’re talking about industry now that is at least 150 megawatts, and those are some of our smaller data centers. So these are just to me different animals, and it should be a very public process that we go through.”
Data centers previously fell under the general rate flexible contract rate docket – rate FCR – like all commercial and industrial customers with accounts of at least one megawatt. The rate FCR for data centers temporarily had a turnaround time of 45 days, up from the standard 10, while the commission established new procedures.
Under Almond’s amendment, the commission is supposed to vote on the contracts within 90 days. If it doesn’t, the contract will automatically be approved. The new procedure does not mandate a public hearing about proposed data center contracts.
Tuesday’s vote came after a monthslong general proceeding seeking input from members of the public about how the commission should evaluate Alabama Power’s contracts with data centers. Legislation requiring data centers to pay for the additional electricity they need and refining the longstanding public interest standard sparked the proceeding.
Nineteen people and organizations submitted initial comments in the proceeding, while 10 offered reply comments, Bentley said.
The newly approved procedure for evaluating contracts also establishes specific reporting requirements for Alabama Power and its data center customers, including a public petition naming the entities behind the facility, its maximum electric capacity and the municipality or county where the center will be.
Alabama Power, the state’s largest utility, will now also be required to submit a full copy of its contracts to the PSC and the attorney general’s office. This submission will be confidential.
The company must also include in the confidential submission an estimate of impacts on other customers’ costs, how much revenue the project would generate for the company and the cost of the incremental capacity required. It also has to provide a detailed explanation of how the contract meets the public interest standard expanded in Senate Bill 270.
That legislation, which established that data centers are in the public’s interest only if they “promote positive benefits” to other customers, went into effect Oct. 1. Lowering the cost for other customers, increasing the efficiency of the power system and contributing to economic growth in the community where a data center is located are examples of positive benefits the bill lays out.
The new procedure also forbids the utility from informally submitting information to the PSC or attorney general’s office before filing the public petition.
Alabama Power told Alabama Daily News that it is committed to complying with all applicable regulatory requirements, including the one approved Tuesday.
“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 a statement. “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.”
Though Energy Alabama and the Southern Environmental Law Center celebrated some of the new transparency requirements created by the PSC on Tuesday, the advocacy groups said in statements that they wished the commission had done more to loop the public into its future decision-making.
Daniel Tait, executive director of Energy Alabama, said that customers should be able to participate in the process fully since they “are the ones who pay if one of these deals is priced wrong.” In addition to requesting a public vote every time, Energy Alabama had asked in its general proceeding comments that Alabamians be able to see a redacted version of the data center 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,” Tait said in a statement. “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.”
The SELC said that Tuesday’s procedure made “some important steps towards transparency” but called the automatic approval provision “a blow for data center accountability.”
Jaclyn Brass, a staff attorney in SELC’s Birmingham office, said she hopes the PSC continues to increase transparency about how it regulates Alabama Power.
“I am hopeful this is only the beginning of a deeper conversation about how to protect Alabama Power customers from the costs and risks of the data center boom,” Brass said. “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. For too long, these negotiations have taken place largely behind closed doors.”
Alabama Power now has 10 days to submit a tariff complying with the requirements of the commission’s new procedure.