Alabama to Update Data Center Power Contract Review

New regulations will extend oversight periods to protect retail customers from rising infrastructure costs.

Updated on Oct. 5, 2026 in Data Centers

Isometric editorial illustration of a high-voltage transmission pylon and electrical transformer units, representing utility infrastructure regulation. — The Alabama Public Service Commission meets Tuesday to finalize new oversight procedures for data center electricity contracts to protect retail utility ratepayers. AI Illustration. Upload story photo >

Live Poll

Should industrial data centers be required to pay the full costs of their own electricity infrastructure?

The Alabama Public Service Commission will meet on Tuesday, October 6, 2026, to finalize new procedures for reviewing electricity contracts for large data centers. These measures address concerns that current utility rate structures, which date back to 1996, do not account for the massive energy demands of modern facilities.

Why it matters

The state aims to prevent data centers from shifting the burden of expensive infrastructure and generation costs onto existing residential and industrial retail customers. This shift is necessary because the unprecedented scale of modern high-demand facilities has rendered traditional oversight processes outdated.

The proposed regulations define a large load data center as a customer with a peak electricity demand of at least 150 megawatts. This update increases the formal review window to 60 days, significantly longer than the 10-day period previously used for industrial customers.

The players

Alabama Public Service Commission

The state regulatory agency responsible for overseeing utility rates and ensuring reliable infrastructure.

Alabama Power

The primary electric utility provider currently subject to new industrial contract review standards.

Alabama Attorney General

The chief legal officer of the state who will receive unredacted access to all power contract filings.

The details

The PSC intends to mandate that Alabama Power submit detailed evidence demonstrating the incremental costs and economic benefits of each proposed connection. By requiring this transparency, regulators hope to isolate the financial impact of high-draw data centers from the broader rate base. The commission also plans to weigh whether to implement ongoing monitoring of these contracts after initial approval to assess their actual effect on electricity rates.

1996: The Rate FCR industrial customer electricity schedule was established.
July 8, 2026: The Public Service Commission opened the proceeding on data center contracts.
October 1, 2026: New state law regarding data center energy oversight took effect.
Tuesday, October 6, 2026: The commission will consider final procedures for contract reviews.

The Tech Race

This move follows the recent enactment of state legislation aimed at balancing utility capacity with the rapid growth of compute-intensive infrastructure. It aligns Alabama with other regions struggling to integrate high-density data center clusters without destabilizing retail electricity prices.

Residents and business customers in Alabama may see more transparent utility rate filings as the PSC increases scrutiny on large-scale power consumption. These changes are designed to keep infrastructure development costs from impacting monthly retail electricity bills.

The takeaway

Regulators are moving to ensure that the massive energy needs of data centers do not inflate costs for everyday users. Watch for the PSC's decision on Tuesday regarding whether they will continue to audit the impact of these high-demand connections after they have been approved.