Alabama Power plans to supply more solar and wind power, but not to all customers

Source: Daniel Cusick, E&E reporter • Posted: Friday, July 17, 2015

This week’s announcement by Alabama Power Co. that it will seek to build or procure up to 500 megawatts of renewable energy was welcomed by clean energy advocates as another block falling from what had once been an impenetrable wall halting alternative energy from entering the state.

But it would be a mistake to view Alabama Power’s decision as a hearty embrace of renewable energy. In a June 25 filing with the Alabama Public Service Commission, the company makes clear that it is responding to shifting regulatory and market forces that are compelling utilities like Alabama Power to add more wind, solar, biomass and other renewable fuels to their power portfolios.

And not all Alabama Power customers will receive the power. Rather, it will be sold to business and industrial customers that are “looking to meet renewable mandates pushed down from their headquarters,” said Tony Smoke, Alabama Power’s vice president of marketing, in a post published on the company’s online news site.

Nick Sellers, the Birmingham-based utility’s vice president of regulatory and corporate affairs, said in a statement that the proposal “provides a common-sense path for expanding renewable in Alabama.” But he added that that state regulators have made clear that they do not want renewable energy resources “to be subsidized by all of our customers.”

If fully developed over a proposed six-year schedule, the 500 MW of new renewable energy capacity could power roughly 100,000 homes and would account for between 4 and 5 percent of the company’s entire generation, Sellers said. Alabama Power already imports 404 MW of wind energy from sites in Kansas and Oklahoma under a power purchase agreement with Tradewind Energy Inc. of Lenexa, Kan. (ClimateWire, Nov. 27, 2012).

Under the new proposal, Alabama Power said it would solicit individual projects of up to 80 MW in size to ensure that the new generation is properly scaled to meet customers’ demand without compromising the integrity of the company’s power grid, which serves more than 1.4 million customers in the state.

Clean energy and clean air advocacy groups, meanwhile, characterized Alabama Power’s petition to add 500 MW of clean energy as “a small step in the right direction.” But they said the company can and should do much more.

“When it comes to renewable energy, Alabama has lagged not only the rest of the country, but also our Sun Belt peers — with whom we compete for jobs and industry,” said Stacie Propst, executive director of Birmingham-based advocacy group GASP, in an email. “The sun shines in Alabama, and clean energy is our future. Renewable energy development will benefit our economy, our environment, and our health.”

But at least in the near term, Alabama Power wants clean energy on its own terms, or at least the terms of its large customers that are pressing the company to provide more options to meet growing power demand.

In its filing to the state PSC, Alabama Power notes that while the state lacks a renewable portfolio standard and is under no pressure from lawmakers to increase its renewable energy offerings, “the company is now receiving inquiries from existing and potential customers as to whether [it] can facilitate those customers’ compliance with internal corporate goals relating to renewable energy consumption, carbon footprint reduction, or both.”

Alabama Power’s ability “to respond to customers in this respect helps promote the continued supply of cost effective electric service by protecting existing loads and enhancing the chances of the state’s leaders attracting new industry and growing the job base for citizens,” the filing states.

Pressure from companies and the military

Such job creators include Fortune 500 companies like Wal-Mart Stores Inc., one of the nation’s largest solar energy consumers, and the U.S. armed services, which operate major bases and training facilities in Alabama and provide a critical economic base to the state and region (ClimateWire, May 29).

In Alabama, the Defense Department operates four major bases: Maxwell-Gunter Air Force Base in Montgomery and three Army installations — Redstone Arsenal near Huntsville, the Anniston Army Depot and Fort Rucker in rural Dale County, one of the nation’s primary helicopter training bases.

The Army has committed to produce or procure 1,000 MW of renewable energy by 2025. Alabama Power told the PSC that it “must be prepared to pursue whatever practical measures are available in order to help protect the state’s bases, along with their associated jobs and economic infrastructure, and thereby avoid negative impacts to other customers’ rates.”

But groups like GASP say state regulators should also remove other utility-backed barriers to solar in Alabama, including a $5-per-kilowatt-hour surcharge it imposes on residential solar systems that are linked to Alabama Power’s grid.

“There are legitimate costs to maintaining the electric grid,” Propst said. “However, such tariffs rob Alabamians of energy independence, discourage investment in solar and distort the already declining cost of renewable energy.”

She pointed to neighboring states like Georgia, where solar power has surged as new state policies take effect that encourage both utility-scale and residential solar systems, including the opening of the state’s electricity market to competition from independent solar firms.

Alabama Power also is responding to the looming implications of new federal regulations targeting power-sector carbon emissions, including U.S. EPA’s Clean Power Plan. That plan would force Alabama to reduce its carbon emissions rate by nearly 27 percent and effectively force Alabama Power and other utilities in the state to shift their generation portfolios away from coal and gas in favor of sources like hydropower, nuclear, solar and wind.

According to EPA, Alabama’s power plants release more carbon into the atmosphere annually than 40 other states, in large part because so much of its electricity comes from coal.

Alabama has fiercely opposed the Clean Power Plan and has joined a coalition of states seeking to block its implementation through the courts. Nevertheless, Alabama Power told the PSC in its filing that “the pervasiveness of these programs and policies nationally is beginning to influence the company’s existing and potential customers.”

Hearings on Alabama Power’s petition will be held Aug. 12 in Montgomery, according to a PSC notice. Petitions from other interested parties must be filed with the commission by July 29.