Alabama Public Service Commission moves to block Alabama Power from billing customers for corporate advertising ahead of legislative deadline

In a significant regulatory shift that arrived amid the noise of a high-stakes election day, the Alabama Public Service Commission (PSC) has moved to compel the state’s largest utility, Alabama Power, to cease charging its customers for the cost of corporate television commercials and marketing campaigns. The directive, issued during a Tuesday meeting, calls for a voluntary cessation of the practice, which currently allows the monopoly provider to pass 50 percent of its non-public safety advertising expenses onto the ratepayers who rely on its grid.

This development marks a pivotal moment in the ongoing tension between Alabama’s dominant energy provider and the regulatory body tasked with overseeing its operations. While state law has already mandated that such advertising costs be stripped from customer bills, that legislative requirement is not scheduled to take effect until January 1, 2029. By requesting that Alabama Power voluntarily relinquish these costs years ahead of the statutory deadline, the current commission has signaled a potential shift toward prioritizing consumer relief over the traditional cost-recovery models that have defined Alabama’s utility landscape for decades.

A History of Rate Disputes and Regulatory Oversight

To understand the weight of this decision, one must look at the historical relationship between Alabama Power and the PSC. Alabama Power, a subsidiary of Southern Company, maintains a monopoly that serves roughly two-thirds of the state’s population. For years, the utility has operated under a mechanism known as Rate Stabilization and Equalization (RSE), a formulaic approach to ratemaking that has often been criticized by consumer advocates for its complexity and its propensity to shield the company from market risks while guaranteeing steady returns.

The controversy over advertising costs is not merely about marketing budgets; it is a surrogate for a larger debate regarding the financial burdens placed on households. In recent years, Alabama Power has faced significant public and political scrutiny regarding the rising cost of electricity. As inflation hit household budgets, the visibility of the utility’s marketing campaigns—often touting reliability or service initiatives—became a flashpoint for critics who questioned why they were footing the bill for the company’s corporate image-building.

The legislative pushback culminated in a bill passed earlier this year that explicitly prohibits utilities from including advertising costs in their rate-setting calculations. However, the multi-year implementation delay was viewed by many as a concession to the utility sector, allowing for a phased transition. The PSC’s recent action effectively seeks to shorten that transition window.

Chronology of the Regulatory Pivot

The move to curtail these expenses emerged unexpectedly during a regular PSC meeting, following a report from the commission’s electricity division. PSC President Cynthia Lee Almond, spearheading the initiative, introduced a motion that had not appeared on the public agenda.

• 2025 (Mid-Year): Heightened public outcry regarding rising electricity rates leads to increased legislative interest in utility transparency and expense reporting.
• Late 2025: Alabama Power announces a rate freeze in response to pressure, launching a series of high-profile television commercials to publicize the move.
• Early 2026: The Alabama State Legislature passes a bill to prohibit the inclusion of advertising costs in retail rate calculations, with an effective date set for January 1, 2029.
• June 2026: Governor Kay Ivey announces the appointment of four new commissioners as part of a legislative overhaul that expands the commission from three to seven members.
• November 3, 2026: The three-member PSC formally requests that Alabama Power voluntarily exclude all advertising expenses from rate-setting filings for the 2027 and 2028 fiscal years.

Financial Implications and Data Analysis

The financial stakes, while seemingly minor in the context of the company’s multi-billion-dollar revenue, are significant for the average consumer. According to filings submitted to the Federal Energy Regulatory Commission (FERC), Alabama Power reported general advertising expenditures exceeding $6 million in the previous fiscal year.

A simple mathematical breakdown suggests this equates to roughly $4 per customer annually. While critics argue this is a nominal amount, advocates for consumer protection, such as Daniel Tait, executive director of Energy Alabama, maintain that the principle of the matter is paramount.

"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 stated following the vote. "Once in place, Alabama will have one of the strongest customer protections in the nation on this front."

However, the lack of transparency in current filings makes it difficult to determine exactly what portion of the $6 million is currently being passed to ratepayers. Under existing regulations, "public safety" advertisements—such as notices about downed power lines or storm preparedness—are exempted from the ban. The utility has the discretion to categorize its marketing, and it remains to be seen how broadly the company will define "safety" in future filings should they agree to the PSC’s request.

The Looming Transition of the Commission

The decision to request the voluntary ban is perhaps the final significant act of the current three-member PSC configuration. As of January 2027, the body will undergo a structural transformation, expanding to seven members in an attempt to provide broader representation and oversight.

The transition comes with significant political change. Current commissioners Jeremy Oden and Chris Beeker IV, both defeated in the Republican primaries, will vacate their seats. Their replacements—Cullman County Sheriff Matt Gentry and former state auditor Jim Zeigler—will inherit a regulatory environment that is fundamentally different from the one their predecessors navigated.

Zeigler’s return to the commission is particularly notable. Having served from 1975 to 1979, he returns to a body that is grappling with many of the same core issues that defined the late 1970s: high energy costs, public frustration, and the intricate dance between government oversight and private utility monopolies.

Furthermore, the new commission will operate under the guidance of a soon-to-be-appointed Secretary of Energy, a position created to centralize the state’s energy policy. Gov.-elect Tommy Tuberville will be responsible for the appointment. The statutory requirement that the Secretary must have experience in utility regulation or energy policy suggests that the administration intends to bring a technical, rather than purely political, focus to the oversight process.

Broader Implications for Utility Regulation

The voluntary nature of the PSC’s request places the ball squarely in Alabama Power’s court. Should the company refuse, the commission has little immediate legal recourse until the 2029 law takes effect. However, a public refusal could prove damaging to the utility’s public relations efforts—the very thing the advertising budget is designed to protect.

From a regulatory standpoint, this move underscores a growing trend in the Southeast: the decoupling of marketing and image-building costs from the essential services that residents are required to pay for. In many jurisdictions, the logic is that a monopoly utility, which faces no competition for its services, has no legitimate business reason to use ratepayer funds to "sell" its brand.

As the state prepares for the transition to a seven-member commission and the appointment of the new Secretary of Energy, the focus will likely remain on the tension between profit-driven operations and the mandate to provide affordable, reliable power. Whether this latest effort at voluntary reform leads to a long-term shift in the state’s energy policy or remains a footnote in the transition of the PSC, it highlights the increasing scrutiny that Alabama’s utility regulators will face in the coming years.

Alabama Power has yet to issue a formal response to the request. As the company reviews its financial strategy for the upcoming fiscal years, the industry and the public alike are watching to see if the utility will prioritize its public image by complying with the request, or if it will rely on the current law to continue its current billing practices until the 2029 deadline forces its hand.