Alabama Power
Alabama Power Company is an investor-owned, tax-paying electric utility headquartered in Birmingham, Alabama, and the second-largest subsidiary of Southern Company, providing reliable electricity to approximately 1.5 million residential, commercial, and industrial customers across 44,500 square miles of the state.[1][2][3] Founded on December 4, 1906, by William Patrick Lay in Gadsden, the company originated with a vision to harness Alabama's rivers for hydroelectric power, addressing the widespread lack of electricity in a predominantly agricultural state where nearly 90% of the population was without service at the turn of the century.[4] Under subsequent leaders like James Mitchell and Thomas W. Martin, Alabama Power expanded infrastructure, building dams, over 84,000 miles of power lines, and generating facilities that enabled industrialization and economic growth, while maintaining a service reliability rate exceeding 99%.[4][1] Today, Alabama Power operates more than 80 generating units with a total capacity surpassing 14,000 megawatts from sources including natural gas, coal, nuclear, hydroelectric, and solar, alongside commitments to environmental stewardship, energy efficiency programs, and community support through the Alabama Power Foundation.[2][1] The utility has faced historical legal challenges, such as the 1936 Ashwander v. Tennessee Valley Authority Supreme Court case contesting federal competition, but continues to prioritize affordable, dependable service amid evolving energy demands.[5]History
Founding and Early Development (1906–1930s)
Alabama Power Company was incorporated on December 4, 1906, in Gadsden, Alabama, by William Patrick Lay, a former riverboat captain and entrepreneur who served as its first president.[4][6] Lay envisioned harnessing the Coosa River's rapids for hydroelectric power generation to fuel industrial growth, particularly in the Birmingham district, and secured congressional approval for dam construction despite limited initial local financing.[4][7] The company established Alabama's first central station generation and long-distance transmission system, marking a shift from isolated local power sources to a networked utility infrastructure.[6] Early operations faced capital shortages, prompting Lay to seek foreign investment; in 1912, James Mitchell acquired control with London financing and assumed the presidency, accelerating development.[4][6] The company's inaugural steam plant opened in Gadsden in 1913, followed by the completion of Lay Dam—the first large-scale hydroelectric facility—on the Coosa River in late 1913, with generation commencing in April 1914 and transmission lines reaching Birmingham by July of that year.[8][6] The Gorgas Steam Plant on the Warrior River came online in 1917 to support World War I industrial demands, while connections extended to Muscle Shoals by the same year.[6] Under Thomas W. Martin, who became president in 1920 following Mitchell's death, the company expanded its hydroelectric capacity amid supportive legislation like Alabama's Public Utility Act (1920), which empowered state regulation, and the federal Federal Water Power Act (1920), facilitating dam licenses.[4][6] Key projects included Mitchell Dam (1923, Coosa River), Martin Dam (1926, Tallapoosa River), Jordan Dam (1928, Coosa River), Yates Dam (1928, Tallapoosa River), and Thurlow Dam (1930, Tallapoosa River), collectively boosting output to serve growing urban and industrial loads.[6] These developments intertwined with Alabama's industrialization, providing reliable power to steel mills and factories, though the onset of the Great Depression in the 1930s strained finances and introduced competition from the Tennessee Valley Authority (TVA), which targeted areas Alabama Power had electrified since 1912, leading to legal challenges.[6][9] Despite economic pressures, the company pursued rural electrification initiatives, such as early efforts in Madison County during the 1920s.[6]Expansion Amid Industrialization and Regulation (1940s–1970s)
During World War II, Alabama Power expanded steam generation to support defense industries and military bases, lobbying to locate such facilities in Alabama despite challenges like the 1941 drought.[6] Expansions at Gorgas Steam Plant added Unit No. 5 (60,000 kW) in 1941 and Unit No. 4 in 1944, while Chickasaw Steam Plant gained two 40,000 kW units online in 1941 and 1943.[10] Post-war, the company announced $30 million in capital expenditures to extend service to 30,000 additional customers, capitalizing on industrial conversion from military uses and broader economic growth.[11] Customer numbers rose from 150,407 in 1940 to 355,282 by 1950, reflecting urbanization and electrification amid Alabama's 57 percent urban population increase during the war years.[10][12] In 1949, Alabama Power integrated into the newly formed Southern Company holding structure, resolving prior Securities and Exchange Commission litigation under the 1935 Public Utility Holding Company Act.[6] The 1950s saw further steam plant development, including the James M. Barry Steam Plant (250,000 kW) operational in July 1954 north of Mobile and the Gadsden Steam Plant's two 60,000 kW units in April 1949.[10] Hydroelectric expansion accelerated with congressional repeal of Tennessee Valley Authority dam site reservations in 1952, enabling projects like Lewis Smith Dam (80,000 kW, dedicated 1961) on the Sipsey Fork and Weiss Dam (72,900 kW, 1961) on the Coosa River.[6][10] These efforts supported industrial recruitment, offering cheap hydroelectric power to attract manufacturing, with customer base reaching 583,559 by 1956.[10] The 1960s featured intensive dam construction on major rivers: Bankhead Dam (45,125 kW, 1963) and Holt Dam (1968) on the Black Warrior, Logan Martin Dam (128,250 kW, 1964) and Neely Henry Dam (72,900 kW, 1966) on the Coosa, and Bouldin Dam (225,000 kW, 1967).[6][10] Steam additions included a 350,000 kW unit at Barry Steam Plant in 1967.[10] Under Alabama Public Service Commission oversight via the regulatory compact, the company maintained rate reductions from 1913 levels until requesting its first general increase in 1968 amid rising inflation and construction costs, approved in 1969 for $6.3 million additional revenue.[6][10] Federal Power Commission licensing facilitated interstate hydroelectric developments, such as the 1954 Coosa River Act enabling further projects.[10] This era's infrastructure boom aligned with Alabama's post-war industrialization, powering sectors like chemicals and metals while navigating competition from public entities like the TVA.[6]Modernization and Diversification (1980s–Present)
During the 1980s and 1990s, Alabama Power emphasized environmental upgrades and efficiency enhancements amid regulatory pressures following events like the 1979 Three Mile Island accident, which influenced nuclear operations at the Joseph M. Farley Nuclear Plant, where Unit 2 entered commercial service in 1981 to bolster baseload capacity. The company hosted a 250-MW low-nitrogen oxide burner demonstration at Plant Gaston in the 1990s, marking early adoption of combustion technologies to reduce emissions from coal-fired units. These efforts aligned with broader industry shifts toward cleaner fossil fuel operations, as Alabama Power maintained a generation mix dominated by coal and hydroelectric power while completing infrastructure like its Birmingham headquarters in 1990.[13] Entering the 2000s, Alabama Power's fleet peaked with significant coal capacity, but strategic planning anticipated retirements and repowering, culminating in announcements to shutter or convert Plant Barry Unit 5 and all units at E.C. Gaston by 2028, slashing coal generation from historical highs of over 20 GW system-wide under parent Southern Company to about 4.4 GW. Modernization accelerated with the 2023 commissioning of Plant Barry Unit 8, a 727-MW combined-cycle natural gas facility completed on time and within budget, enhancing efficiency through advanced gas and steam turbine pairing and positioning Barry as Alabama Power's largest plant. Planned turbine upgrades at Barry's existing units from 2027 to 2029 further support operational reliability, while carbon capture pilots at Barry, including GE-led exhaust gas recirculation tests, explore emissions mitigation for gas plants.[13][14][15] Diversification of the energy mix has intensified since the 2010s, with Alabama Power incorporating renewables under Alabama Public Service Commission mandates, securing approvals in 2023 for a 480% increase in renewable capacity via power purchase agreements for solar projects like the Letohatchee facility tied to Mercedes-Benz. As of 2024, renewables contribute modestly—about 20% of clean energy output alongside nuclear's two-thirds share—but align with Southern Company's 2050 net-zero goal, including 45 solar sites system-wide. Grid infrastructure upgrades, such as undergrounding overhead lines, deploying fiber-optic networks for rural broadband and reliability, and integrating supervisory control and data acquisition systems, have improved resilience against storms and supported data-driven operations.[16][17][18]Corporate Structure and Operations
Ownership and Governance
Alabama Power Company is a subsidiary of The Southern Company, a publicly traded energy holding company (NYSE: SO) that owns and oversees multiple electric utilities in the southeastern United States.[19][20] Southern Company holds the common stock of Alabama Power, enabling centralized strategic direction while Alabama Power maintains operational autonomy in retail electric service within its territory.[21] Alabama Power also issues publicly traded preferred stock, which provides fixed dividends to investors but does not confer voting control over corporate governance.[22] Governance is managed by Alabama Power's board of directors, which oversees executive performance, risk management, and alignment with regulatory and shareholder interests.[23] Jeff Peoples has served as chairman, president, and chief executive officer since April 1, 2023, leading the executive team in developing strategic initiatives focused on reliability, economic development, and compliance with Alabama Public Service Commission mandates.[24][25] The board, as of 2024, comprises nine members: Angus R. Cooper III, Lee Goodloe, O.B. Grayson Hall Jr., Larry Howell, Anthony A. Joseph, Bobbie Knight, Jeff Peoples, Kevin B. Savoy, and Will Wilson.[23] Recent board elections include Lee Goodloe (president and CEO of the Economic Development Partnership of Alabama), Larry Howell (president and CEO of the Chamber of Commerce Association of Alabama), and Will Wilson (former Alabama Secretary of Commerce) in April 2024; and Bobbie Knight (president of Miles College) in July 2023.[26][27] This composition emphasizes local business, economic development, and educational leadership to represent the served communities, while stock ownership guidelines for executives promote alignment with long-term shareholder value.[23][28] Ultimate accountability rests with Southern Company's board and oversight, ensuring integrated governance across subsidiaries.[29]Service Territory and Customer Base
Alabama Power delivers electricity to approximately 1.5 million customers throughout the southern two-thirds of Alabama, a service territory spanning 44,500 square miles.[1] This area, delineated by state law, excludes northern regions primarily served by the Tennessee Valley Authority and other cooperatives, focusing instead on central and southern counties that include urban centers like Birmingham, Montgomery, and Mobile.[30] The utility maintains over 84,000 miles of distribution and transmission lines to support this coverage, enabling reliable access amid varying terrain from coastal plains to inland hills.[1] Of its customer base, roughly 86% consists of residential accounts, with the remaining 14% comprising commercial and industrial users, reflecting the region's mix of households and manufacturing hubs such as automotive and steel production facilities.[31] Retail sales to these customers accounted for about 77% of the company's total energy sales in 2021, underscoring the dominance of end-user demand over wholesale transactions.[32] Service boundaries are fixed by legislative assignment, preventing territorial overlap with municipal utilities or rural electrification entities, which ensures monopoly provision within designated zones subject to regulatory oversight.[30]Regulatory Framework and Rate Setting
Alabama Power, as an investor-owned electric utility serving retail customers in Alabama, is primarily regulated by the Alabama Public Service Commission (APSC), which oversees rates, service quality, and compliance to ensure just and reasonable charges under state law.[33] The APSC's authority stems from the Alabama Constitution and statutes, including the Alabama Public Service Commission Act, empowering it to approve rate schedules, investigate complaints, and conduct audits.[34] Federal oversight by the Federal Energy Regulatory Commission (FERC) applies to wholesale power sales, interstate transmission, and certain interconnections, but retail rate setting remains a state function.[35] The company's rate structure operates under the Rate Stabilization and Equalization (RSE) framework, first established by the APSC in 1982 to provide predictability amid volatile fuel costs following the energy crises of the 1970s.[36] This mechanism decouples base rates from frequent fuel price fluctuations by allowing monthly adjustments via a fuel cost factor, calculated from market indices for natural gas, oil, uranium, and other inputs, with APSC review to cap earnings within a predefined range (typically 5.75% to 6.75% return on equity).[37][38] Under RSE, base rates are frozen unless modified through formal rate cases, where the APSC evaluates embedded costs, capital investments, and revenue requirements using a test-year methodology; for instance, between 1968 and 1982, Alabama Power filed 10 rate increase requests amid rising construction and fuel expenses.[39] Rate cases involve public hearings, intervenor participation, and evidentiary proceedings, though fuel adjustments under RSE have faced criticism for limited transparency, with decisions sometimes made in executive sessions without full public input.[40] If actual earnings exceed the authorized range, the APSC mandates refunds, as in February 2023 when it ordered a $62 million credit applied to August bills due to 2022 overearnings exceeding the cap by that amount following three prior rate hikes totaling about $6.81 monthly for a typical residential customer.[41][42] Conversely, under-earnings can prompt requests for base rate increases, subject to APSC approval based on demonstrated need, such as capital expenditures for grid reliability or generation upgrades.[43] Additional riders address specific costs, including environmental compliance, storm recovery, and energy efficiency programs, all filed with and approved by the APSC to pass through verifiable expenses without altering the core RSE earnings test.[44] This hybrid approach balances investor returns with consumer protection, though advocacy groups have challenged its adequacy in reflecting modern decarbonization pressures or market competition.[37]Power Generation and Infrastructure
Hydroelectric Facilities
Alabama Power operates 14 hydroelectric facilities across the Coosa, Tallapoosa, and Black Warrior river systems, generating emission-free electricity that typically accounts for 5% to 8% of the company's annual energy production.[45][46] These plants harness water flow for rapid-response power generation, flood mitigation through reservoir management, and support for regional ecosystems and recreation, impounding over 157,000 acres of water across 11 lakes with more than 3,500 miles of shoreline.[46] The combined installed capacity exceeds 1,600 megawatts, enabling efficient peaking power to meet variable demand.[47] The company's hydroelectric development began with Lay Dam on the Coosa River, completed in 1914 as its inaugural facility.[46] Expansion continued through the 1920s and 1930s with dams like Mitchell (1923), Martin (1926), Jordan (1928), Yates (1928), and Thurlow (1930), followed by post-World War II projects including Weiss (1961), Logan Martin (1964), and others into the 1980s.[47] These structures form integrated chains: on the Coosa River (Weiss, Neely Henry, Logan Martin, Lay, Jordan, and Walter Bouldin), Tallapoosa River (Yates, Thurlow, Martin, Mitchell, and R.L. Harris), and Black Warrior River (Lewis Smith, Bankhead, and Holt).[47] Operations emphasize coordinated water releases for power, navigation, and environmental flows under Federal Energy Regulatory Commission licenses.[46]| Dam Name | River System | Year Completed | Capacity (MW) |
|---|---|---|---|
| Lewis Smith | Black Warrior | 1961 | 157.5 |
| Bankhead | Black Warrior | 1963 | 54.0 |
| Holt | Black Warrior | 1968 | 49.0 |
| Weiss | Coosa | 1961 | 87.8 |
| Neely Henry | Coosa | 1966 | 72.9 |
| Logan Martin | Coosa | 1964 | 128.3 |
| Lay | Coosa | 1914 | 177.0 |
| Mitchell | Tallapoosa | 1923 | 170.0 |
| Jordan | Coosa | 1928 | 100.0 |
| Walter Bouldin | Coosa | 1967 | 225.0 |
| R.L. Harris | Tallapoosa | 1983 | 135.0 |
| Martin | Tallapoosa | 1926 | 154.2 |
| Yates | Tallapoosa | 1928 | 45.5 |
| Thurlow | Tallapoosa | 1930 | 85.0 |
Nuclear Facilities
Alabama Power owns the Joseph M. Farley Nuclear Plant, a two-unit facility located in Houston County near Dothan, Alabama, along the Chattahoochee River.[49][16] The plant is operated by Southern Nuclear Operating Company and features Westinghouse three-loop pressurized water reactors fueled by uranium pellets.[49][16] Construction commenced in 1970, with Unit 1 achieving commercial operation on December 1, 1977, and Unit 2 on July 30, 1981.[50] Each unit has a net generating capacity of approximately 900 megawatts, yielding a combined capacity of 1,800 megawatts.[16][49] The facility supplies approximately 18% of Alabama Power's total electricity generation, contributing more than 10% of Alabama's overall power needs, and has cumulatively produced over 350 million megawatt-hours since startup.[16][49] Units typically operate for 12 to 18 months between refueling outages.[16] Farley employs a defense-in-depth safety design and complies with Nuclear Regulatory Commission standards, with structures engineered to endure severe weather, earthquakes, and potential threats.[16] The surrounding 1,850-acre site has been certified as a wildlife habitat since 1992, with 1,450 acres managed for conservation.[49] No other nuclear facilities are owned or operated by Alabama Power.[48][16]Fossil Fuel Facilities
Alabama Power operates multiple fossil fuel-fired power plants, encompassing both coal and natural gas units, which collectively provide a significant share of the company's baseload and peaking capacity exceeding 11,000 MW.[48] These facilities, located across central and western Alabama, support the utility's service to over 1.5 million customers amid growing demand, with natural gas units increasingly favored for flexibility and lower emissions compared to coal.[48] [51] Coal plants, while facing retirements and conversions due to regulatory pressures and economic factors, remain operational at select sites, including the James H. Miller Jr. Electric Generating Plant, which alone accounts for 2,640 MW and has been identified as the largest single-facility greenhouse gas emitter in the United States based on EPA data for multiple years through 2024.[48] [52] Key coal facilities include the Miller plant near West Jefferson, featuring four supercritical units commissioned between 1978 and 1991, equipped with advanced emissions controls such as selective catalytic reduction for nitrogen oxides and flue gas desulfurization for sulfur dioxide.[48] The Ernest C. Gaston Electric Generating Plant near Wilsonville operates five units with combined coal and gas capability totaling 1,880 MW, originally developed in the 1950s and upgraded over decades.[48] Similarly, the James M. Barry Electric Generating Plant on the Mobile River north of Mobile includes two coal units among seven total, yielding 3,246 MW overall, with coal operations dating to the 1950s alongside gas conversions for improved efficiency.[48] The Gorgas Steam Plant, once a major coal facility with units operational since the 1910s, ceased coal generation in 2019 following the retirement of its final units, with the site now repurposed for battery storage development announced in 2025.[53] Natural gas plants provide peaking and intermediate load support, with recent acquisitions expanding capacity. The Barry Electric Generating Plant has undergone conversions, including Unit 4 to exclusive natural gas operation completed by 2023, alongside existing gas units.[54] Dedicated gas facilities include the Calhoun Generation Facility near Eastaboga (743 MW across four units), Central Alabama Generating Station at Billingsley (885 MW), and Greene County Electric Generating Plant near Demopolis (1,220 MW across two units), all capable of oil backup.[48] Smaller cogeneration plants, such as Lowndes County (105 MW), Theodore (274 MW), and Washington County (123 MW), integrate with industrial processes for efficiency.[48] In 2025, Alabama Power received approval to acquire the 895 MW Lindsay Hill natural gas plant for $622 million, reflecting a strategy to bolster reserves amid projected deficits, following similar expansions totaling over 3,400 MW since 2020.[55] [56]| Plant Name | Primary Fuel(s) | Location | Capacity (MW) | Units |
|---|---|---|---|---|
| James H. Miller Jr. | Coal | West Jefferson | 2,640 | 4 |
| James M. Barry | Coal & Natural Gas | Bucks | 3,246 | 7 |
| Ernest C. Gaston | Coal & Natural Gas | Wilsonville | 1,880 | 5 |
| Calhoun Generation | Natural Gas & Oil | Eastaboga | 743 | 4 |
| Central Alabama Generating Station | Natural Gas | Billingsley | 885 | 1 |
| Greene County | Natural Gas & Oil | Demopolis | 1,220 | 2 |
| Lowndes County Cogeneration | Natural Gas | Burkville | 105 | 1 |