Alabama faces a number of obstacles to the implementation of energy efficiency program portfolios. Alabama’s regulators have not pushed the state’s sole investor owned utility (IOU), Alabama Power, to pursue energy efficiency and as a result, the utility has yet to implement a comprehensive set of programs. Alabama Power’s IRP process does not provide a meaningful opportunity for the public to question the level of Alabama Power’s effort with respect to energy efficiency, as it is “submitted” rather than “filed” in a docketed proceeding. The utility’s IRP contains almost no meaningful data, making it unclear how efficiency is modeled and what type of role it could play as a utility resource (APC 2010).
In contrast, TVA and its distribution utilities in northern Alabama are moving forward with substantial increases in their energy efficiency programs. The other public utilities in the state (primarily associated with the PowerSouth system), as well as Alabama Power, approach energy efficiency very skeptically, claiming it increases rates without providing enough benefits to justify implementation.
The state's only regulated investor-owned utility, Alabama Power, reported savings of 19,665 MWh and spending of $6.1 million in 2009, according to the Energy Information Administration. Overall, Alabama electric utilities reported efficiency program savings of 63,382 MWh in 2009, about 0.08% of sales. This total includes savings from Tennessee Valley Authority (TVA) programs.
Alabama’s state government offers retrofit and audit incentives for industry and the public sector. The state also funds educational programs. TVA partners with rural cooperative utilities in Alabama to offer rebates and loans.
There are no natural gas efficiency programs in Alabama.
Lost revenues from energy efficiency can be accounted for in the annual revenue projection under a rate rider, and rates can be set annually so that lost revenues are recovered. Alabama Power and Alabama Gas Company can recover lost revenues by projecting losses and adjusting rates annually through Rate RSE. Rate RSE includes caps on rate increases and automatic rate reductions when profits or expenses exceed authorized ranges. The Commission opened a docket to consider additional policies, however both Alabama Power and Alabama Gas Company maintain that the integrated resource planning process combined with Rate RSE adequately address efficiency disincentives and the Commission opted not to adopt additional policies. See Docket No. 31045
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