Alabama Lawmakers Push Major Utility Reforms with New Bills

BREAKING: Alabama lawmakers have just introduced a critical three-bill package aimed at regulating data center incentives and utility operations, a move that could reshape the financial landscape for many residents. The legislation, unveiled on February 5, 2024, seeks to rein in excessive tax breaks for data centers and ensure that these massive electricity consumers don’t unfairly burden everyday ratepayers.

The proposed bills, now under review by the Senate Committee on Fiscal Responsibility and Economic Development, are designed to address the growing concerns surrounding utility costs linked to high-demand data centers. These facilities are known to consume vast amounts of electricity—often over 150 megawatts, enough to power approximately 112,000 homes.

Among the key measures, Senate Bill 270, sponsored by Senator Bell, mandates that utilities must charge large data centers for the additional costs they incur. This bill aims to protect consumers from potential spikes in their electricity bills due to the energy needs of these tech giants.

Senate Bill 268 proposes significant changes to the appointment process for the Public Service Commission. Instead of allowing public elections, this bill would enable political leaders to make appointments, starting in 2028. The governor would appoint the commission president, while the House Speaker and Senate President Pro Tempore would select associate commissioners. This shift has raised alarms among consumer advocates, who fear it could reduce public oversight of utility regulations.

“Alabama Power is so scared of voters that they are trying to take you out of the equation completely,”

said Daniel Tait, Executive Director of Energy Alabama, emphasizing the implications of these changes for consumer rights. “If the Alabama Power Grab passes, the public loses oversight and the utility gains insulation once and for all.”

Additionally, Senate Bill 265 targets Alabama’s lucrative tax incentives for data centers, currently allowing tax breaks of up to 30 years. The new bill would cap these incentives at 20 years for any agreements made after January 1, 2027. Furthermore, large data centers—those consuming 100 megawatts or more—would be required to pay state sales taxes on their purchases, although the governor could waive this requirement for facilities in economically struggling areas.

While the legislation extends the expiration for existing tax breaks from 2028 to 2032, the funds generated from the new sales taxes on big data centers would be redirected to the state’s general fund rather than educational initiatives, stirring further debate about the prioritization of resources.

This legislative push comes amid Alabama’s recent influx of major data center projects, which have been attracted by low electricity costs and generous tax breaks. However, the rising demand for power raises concerns about the impact on local consumers, potentially leading to higher electricity prices.

As the Senate Committee reviews these bills, their passage could significantly alter the regulatory framework governing utilities in Alabama, with implications for both consumers and corporate entities. Stakeholders are urged to follow this developing story closely, as any changes could take effect by 2026.

Stay tuned for further updates as the situation unfolds and the committee deliberates on these critical reforms.