Alabama’s New Data Center Rules Still Leave Customers in the Dark, Critics Say

Alabama adopted a formal review process for contracts between Alabama Power and new large data centers. The rules are meant to determine whether projects serve the public interest and whether data centers pay the full cost of supplying them with electricity. They replace rules that treated data centers like other large industrial customers.

Alabama Power must send unredacted contracts to the Public Service Commission and the state attorney general. Those offices have 90 days to examine infrastructure, fuel, and other service costs. A redacted version must then be made available to the public, including the facility’s location, maximum capacity, and company ownership.

The process takes effect November 23. The PSC is supposed to vote publicly on each contract within 90 days. However, a contract is deemed approved if the commission takes no action, a loophole advocates say could weaken public accountability.

A data center is a facility that houses computer servers, data storage, networking equipment, and related systems. These facilities process and store digital information. The article calls them “massive, power-hungry data centers,” but does not define the technology inside them.

Their electricity use comes from several constant demands. Servers and storage devices need power to operate. Networks and backup systems also consume electricity. Cooling equipment removes heat from the machines and keeps them running safely. Unlike many businesses, a data center may operate continuously rather than only during daytime hours.

The article focuses on the policy result, not engineering measurements. It says new data centers can require enough electricity to raise concerns about infrastructure, fuel, and costs for other customers. That is why Alabama’s rules require contracts to be reviewed for full cost recovery and public interest before service begins.

The article does not state a specific megawatt figure or directly compare data centers with households or ordinary industrial customers. It does make the central distinction clear: Alabama previously treated massive, power-hungry data centers like any other large industrial operation, even though their demand can be unusually concentrated.

In general, a household uses a small amount of electricity compared with a large industrial facility. A major data center may operate continuously and require substantial power for computing equipment, cooling, and supporting systems. Its total demand can therefore reach an industrial scale, rather than resembling the load of a normal business or home.

The missing comparison matters because size affects who pays for new infrastructure and fuel. Alabama’s new process requires regulators to check whether the data center covers those costs. Advocates still want the underlying calculations released so the public can test whether the assigned costs are accurate and fair.

If a data center does not pay the full cost of serving it, Alabama families and businesses could help finance the project through electricity rates. The concern is not only the power consumed by the facility. It also includes new infrastructure, fuel, and other expenses needed to provide reliable service.

For example, Alabama Power may need to build or expand facilities for a new data center. Under the stated standard, the data center should cover those costs. If regulators underestimate them or allow some costs to be recovered from other customers, existing households and businesses could subsidize the new customer instead.

The new rules are intended to prevent that outcome, but critics say the public cannot fully test the result. The rate-impact method and findings may remain confidential. Advocates want the calculations disclosed so they can verify that families and businesses are not paying a data center’s bills.

The Alabama Public Service Commission and the state attorney general are supposed to determine whether a proposed contract is consistent with the public interest. They must also check whether the data center customer will cover every cost of providing electricity, rather than shifting expenses to existing customers.

Their review uses unredacted contracts supplied by Alabama Power. The rules specifically identify new infrastructure and fuel as costs that must be covered. This gives regulators access to the complete agreement while they examine the financial and public-interest consequences of the proposed service.

The agencies have 90 days to conduct that review. The PSC must then publicly vote to approve or reject the contract within that period. Critics say the public still cannot independently check the rate-impact calculations because the method and findings may remain confidential, even though regulators have access to them.

The new rules require Alabama Power to provide the public with a redacted copy of each data center contract. That copy must identify where the facility is located, its maximum electricity capacity, and the company involved. It must also name the company’s parent company.

The public will not necessarily see every important financial detail. The rule allows other information to remain confidential. Most notably, the information used in the rate-impact test can be withheld. Advocates say the cost method and findings are among the numbers that matter most.

This creates a split between regulatory access and public access. The PSC and attorney general receive unredacted contracts for their review, but outside groups may not see the calculations behind the decision. Critics say that makes it difficult to verify whether Alabama families and businesses are protected or whether other energy resources received fair consideration.

Utility regulators generally examine the costs a new customer creates and assign those costs through a contract or rate. The goal is to prevent existing customers from paying expenses caused by someone else. For a large electricity user, that review can include new power facilities, transmission, fuel, and related service costs.

In Alabama’s process, the PSC and attorney general receive an unredacted contract and have 90 days to review it. They must determine whether the agreement serves the public interest and whether the data center covers the full cost of providing electricity. The PSC then votes to approve or reject the contract.

The article also shows the process’s limitation. The public may not see the rate-impact method or findings used by regulators. Advocates therefore support the full-cost standard but want enough information to check the calculations and confirm that costs are not shifted to families and businesses.