Montgomery, AL – Actions by the Alabama Public Service Commission (APSC) and Alabama Power throughout 2024 are set to result in a 1.88% decrease in overall retail rates for Alabama Power customers in 2025.
The rate reduction comes at a time when many households are grappling with the financial strain of inflation. Since 2017, Alabama Power has reportedly reduced its operational costs by over $100 million, helping mitigate the impact of rising expenses on customer bills.
The rate decrease is notable against the backdrop of inflationary pressures within the energy sector. Over the past five years, Alabama Power has seen significant cost increases in essential materials, including a 204% rise in transformer prices, a 56% increase in power pole costs, and a 134% spike in the price of electrical wires.
Key Components of the Rate Reduction
- Fuel Cost Reductions: In July, the APSC approved a 2.04% rate reduction tied to declining fuel costs. This was followed by an additional 3.27% reduction announced in December for the same reason.
- Legal Judgment Return: Alabama Power will distribute $96 million to retail customers in 2025, resulting in a 1.44% reduction. These funds stem from a U.S. Court of Federal Claims judgment awarding damages related to the federal government’s handling of spent nuclear fuel. Customers will receive bill credits from January through March 2025.
- Rate Stabilization Adjustment: A 4.87% adjustment was implemented to address inflation-driven cost increases and investments in grid resilience and power generation infrastructure.
- Flat Compliance Rates: The APSC approved a request to maintain Rate CNP-C at current levels for 2025. This rate accounts for compliance costs associated with federal mandates and environmental regulations.
Electric utilities nationwide are facing mounting cost pressures. Since January 2021, electricity prices in the United States have risen 29.4%, outpacing overall inflation by 50%, according to the Wall Street Journal’s analysis of Bureau of Labor Statistics data.
Despite these challenges, the combined efforts of the APSC and Alabama Power aim to provide some financial relief for customers while addressing long-term investments to ensure reliable energy service in the state.
