NewsStocksAlabama Regulators Ask Alabama Power to Stop Billing Customers for Advertising Ahead of 2029 Ban

Alabama Regulators Ask Alabama Power to Stop Billing Customers for Advertising Ahead of 2029 Ban

Author: Fortune Crypto·

Key Takeaways

  • •The Alabama Public Service Commission unanimously voted to ask Alabama Power to voluntarily stop charging customers for advertising expenses immediately, rather than waiting for a state prohibition to take effect in 2029.
  • •Under existing rules, Alabama Power may bill customers for half of its non-public-safety advertising costs, and the new law will require the company to absorb those expenses in corporate profits.
  • •Alabama Power spent more than $6 million on general advertising last year, roughly $4 per customer, according to its filings with the Federal Energy Regulatory Commission.
  • •If Alabama Power consents to the commission's request, the interim measure would be reflected in its Rate Stabilization and Equalization filings for 2027 and 2028.
  • •The vote is among the final actions of the current three-member commission, which will expand to seven members in January and be overseen by Alabama's first secretary of energy.
Alabama Regulators Ask Alabama Power to Stop Billing Customers for Advertising Ahead of 2029 Ban

The Alabama Public Service Commission, meeting on a busy election day, voted Tuesday to formally request that Alabama Power voluntarily stop billing customers, effective immediately, for the television commercials and other advertising the utility buys to promote various aspects of its business. The move precedes a state law that will prohibit the practice — but not until 2029.

Alabama Power is the largest electricity provider in Alabama, with a service territory covering about two-thirds of the state. Though it operates as a monopoly, the company spends millions of dollars each year on advertising touting its reliability, customer service and other aspects of its operations. In recent months, it has launched a series of television commercials promoting a rate freeze it announced late last year amid heavy criticism over rising electricity prices.

Under current rules, the utility is allowed to bill customers for half of its non-public-safety advertising costs. The state law passed earlier this year will prohibit Alabama Power from including the cost of such commercials in customers' electric bills, meaning the company will have to absorb all of those dollars in corporate profits. The new law, however, will not take effect until 2029.

During Tuesday's meeting, PSC President Cynthia Lee Almond moved to "request" that the company voluntarily begin excluding those costs immediately.

"I don't see any reason why we shouldn't go ahead and take steps now to begin that process, rather than waiting until Jan. 1, 2029," Almond said during the meeting.

Her motion was not on the meeting agenda, but came after the regular report from the commission's electricity division.

"I move that the commission request that Alabama Power consent to exclude all advertising expenses from retail rate setting until after Dec. 31, 2028, when the new law takes effect," Almond said. "Assuming Alabama Power consents, this interim measure would be reflected in its [Rate Stabilization and Equalization] filings for 2027 and 2028."

Commissioners Jeremy Oden and Chris Beeker IV voted yes after a brief discussion.

More Than $6 Million in Annual Ad Spending

According to company filings with the Federal Energy Regulatory Commission, Alabama Power spent more than $6 million on general advertising last year, roughly $4 per customer. The federal filing does not make clear how much of that total was passed on to customers, or how much might be affected by the new prohibition. The figures come from federal disclosures, while the costs themselves reach customers through the state's retail rate-setting process — the same mechanism the commission's request targets.

Alabama Power did not immediately respond to a request for comment.

Consumer Group Response

Daniel Tait, executive director of Energy Alabama, said the move was a boon to Alabama Power customers, who have faced some of the highest electric bills in the country in recent years.

"We are grateful for the leadership of President Almond and the full commission for acting to end customers paying for Alabama Power's advertising," Tait said. "Once in place, Alabama will have one of the strongest customer protections in the nation on this front."

Vote Comes Ahead of Major Commission Overhaul

The action will be among the last taken by the commission under its current structure before a major overhaul takes effect. In January, the panel will expand from three members to seven. Outgoing Gov. Kay Ivey has appointed four new commissioners, who will take office in January, including the PSC's two first-ever Black members.

Oden and Beeker will also leave the commission in January after being defeated in Republican primaries. Cullman County Sheriff Matt Gentry will take Oden's Place 1 seat, and former state auditor and PSC Commissioner Jim Zeigler will replace Beeker in Place 2.

Zeigler, a perennial candidate in Alabama across several decades, will return to the commission 48 years after leaving the PSC. He served one term from 1975 to 1979, during an era of skyrocketing energy costs and protracted political battles over electric rates between Alabama Power and then-Gov. George Wallace.

Almond will be the sole remaining member of the current commission.

The new seven-member commission will be overseen by the state's first secretary of energy, who will be selected by Gov.-elect Tommy Tuberville. The new secretary will set the commission's agenda, and overruling the secretary will require a vote of five of the seven commissioners.

Tuberville has not yet announced his pick for the position. The only statutory requirement is that the secretary "must have experience in utility regulation or energy policy or a related field."

This article originally appeared on Inside Climate News, a nonprofit, nonpartisan news organization that covers climate, energy and the environment. The story was originally featured on Fortune.com.