Alabama Power near bottom in energy efficiency ranking, disputes report

Alabama Power scored as one of the lowest utilities in the country in a new energy efficiency report published this week, ranking 51st out of 53 utilities surveyed.

Alabama’s largest electricity provider scored just 5 out of 100 possible points in the scorecard, published Thursday by the American Council for an Energy Efficient Economy.

The utility earned a 0 for categories such as overall energy savings, programs aimed at low-income populations, achieving energy efficiency targets, peak demand reduction and setting energy efficiency targets for the future.

“The Southeast region as a whole struggles with energy efficiency,” said Mike Specian, lead author of the report and utilities manager for ACEEE. “If you look at the achievements of Southeastern utilities, they tend to be among the worst in the country just as a cohort.

“And to be near the bottom of that cohort is kind of an ignominious distinction.”

Specian said Alabama Power was one of six utilities included in the scorecard that chose not to respond to ACEEE’s survey, meaning all the information had to be pulled from publicly available sources. The company finished dead last in the 2020 scorecard.

Alabama Power spokesperson Alyson Tucker said the company chose not to participate in the scorecard because they feel it does not adequately give them credit for things they are doing to assist customers.

“Alabama Power has robust energy efficiency programs and energy-reduction programs that support our customers and their desire to be more energy efficient,” Tucker said in an email. “We do not participate in the ACEEE survey and feel their scoring methodology excludes some energy-efficiency and reduction programs that have made a real difference for Alabama Power customers.

“Alabama Power is committed to providing our customers options to best manage their bill,” Tucker said. “Our company continues to heavily emphasize a number of energy efficiency tips for all seasons, geared toward making the customer’s home more energy efficient, while also keeping them comfortable.”

Tucker said those programs include:

• A list of energy savings tips on the company web site.
• A budget billing plan, which averages out monthly bills over a year’s worth of service.
• An online tool that allows users to manage their daily energy usage and set alerts.
• Multiple assistance programs and tools, such as Project SHARE and The Alabama Business Charitable Trust Fund, for customers who are having trouble paying their power bill.
• Rebate programs when customers buy and install qualifying hybrid water heaters or smart thermostats.
• An online energy checkup tool that analyzes home energy usage and provides customized energy tips and recommendations based on individual reports.

But those programs didn’t impress ACEEE.

According to the scorecard, Alabama Power earned its five points for the following:

• Alabama Power earned 1 of 3 possible points for residential efficiency programs offered
• 2 of 3 possible points for commercial and industrial programs
• 1 point for offering a time of use rate that encourages power use during off-peak hours
• 1 point for including energy efficiency in its integrated resource plan

“The thing that we weight most importantly, is just what has the utility accomplished,” Specian said. “It’s largely a question of are they investing any of their revenue and energy efficiency programs? And are they achieving savings through those investments?”

Alabama Power was the only Alabama utility included in the scorecard. The Tennessee Valley Authority, which provides power for much of north Alabama, was not included because it is a wholesaler and efficiency programs vary among the local power companies that operate within TVA territory, none of which are large enough to make the scorecard.

Specian said the ranking was not just a reflection of Alabama Power itself, but also of the state legislature and the Alabama Public Service Commission, which regulates the utility.

“In truth, all three of those things generally need to be working in concert, working together for a utility to be able to effectively help its customers save energy, lower their bills, reduce energy burdens, improve in-home comfort, help the grid as an energy resource and all the myriad benefits that energy efficiency brings,” he said.

Part of the problem comes down to money, Specian said.

Alabama Power, like most regulated utilities, earns a rate of return on the infrastructure like power plants that it needs to serve its customers. So building more power plants means more profit for the company. Encouraging customers to use less energy does not.

“Energy efficiency doesn’t fit into that model,” Specian said. “With energy efficiency, you’re lowering electricity demand which not only reduces volumetric sales, but reduces the need to have more equipment out there, more infrastructure.”

Alabama Power in recent years has focused on building new infrastructure, including a $1.1 billion expansion approved in 2020 that involved the purchase of one existing natural gas plant, and the construction of a new natural gas unit at Plant Barry in Mobile County.

The company also recently applied for license to build a new energy storage facility on Chandler Mountain, before withdrawing its application amid a fierce public backlash.

“A utility that chooses to focus on just building more generation is depriving its customers of the ability to have a system that meets their energy demands with less resources,” Specian said. “If you can meet energy demands with less resources, that’s less revenue, that’s less profit that goes into the utility themselves.”

Ohio Edison finished last in the scorecard, with a score of 2.5.

Specian said that an Ohio state law enacted in 2020 blocked utilities from offering efficiency measures, effectively canceling many of the programs in the scorecard.

That state law, primarily a $1.3 billion bailout for Ohio utilities, was passed only after what has been called the “biggest corruption scandal in state history,” as Ohio utilities funneled more than $61 million to state politicians to ensure the passage of the bill.

Ohio’s House Speaker and the head of the state GOP were convicted of racketeering and sentenced to prison for their role in the scandal. There is now a bipartisan effort in Ohio to pass a bill that would allow energy efficiency programs to resume.

Specian said that efficiency measures can benefit all utility customers, not just the customers who choose to take advantage of programs offered.

“Whenever a single customer helps to reduce demand on the system, that reduces the need for all this infrastructure that is paid for by all ratepayers,” he said.

The programs can also help customers live in comfort year-round, during blazing hot summer days and cold winter mornings.

“A big reason that people tend to engage in these programs is not only to save money, but also for comfort,” Specian said. “Weatherization measures, for example, having a better roof with better insulation and better ventilation — is often cited as the number one reason why people engage in those programs.”