MONTGOMERY, AL – August 29, 2026 (STL.News) Alabama Attorney General Steve Marshall is pressing state utility regulators to strengthen consumer protections as Alabama experiences a rapid expansion of artificial intelligence and large-scale data centers that could dramatically increase electricity demand.
Marshall has urged the Alabama Public Service Commission to provide greater public participation and regulatory scrutiny when reviewing electricity contracts between Alabama Power and large-load data center customers.
The debate centers on who ultimately pays for the new generation, transmission and other infrastructure required to supply enormous amounts of electricity to data centers.
“There must be a procedure developed to allow for public participation,” Marshall wrote in a filing with the PSC. “Many Alabama citizens believe that electricity rates will be higher because of data centers.”
His intervention comes as regulators consider how to implement a new Alabama law designed to ensure data center customers cover the incremental costs associated with serving them rather than shifting those expenses to households and other businesses.
Alabama weighs new rules for data center power contracts
The Alabama Public Service Commission opened Docket 33709 on July 8 to establish procedures for reviewing electric service contracts between Alabama Power and large-load data center customers.
The commission initially proposed allowing Alabama Power to submit contracts to PSC staff for review while simultaneously notifying the attorney general. Under that proposal, a contract could receive approval if commissioners did not reject it within 60 days.
The proceeding follows passage of Act 2026-610, which establishes a specific public-interest standard for large-load data center electricity contracts.
Under the law, regulators must determine whether a contract’s pricing and terms are expected to recover the incremental costs of providing electricity to the data center. The agreement must also be expected to produce positive benefits for the utility’s other retail customers.
The law takes effect Oct. 1.
Marshall is asking regulators to consider a broader question than whether an individual data center contract meets technical requirements.
He argues that commissioners also need enough information to determine what the overall expansion of large electricity users means for Alabama consumers.
“Ultimately, the PSC has the responsibility to protect ratepayers, and there must be a procedure in place for commissioners to understand the impact of large load electric contracts on ratepayers,” Marshall wrote.
Marshall and staff attorney Olivia Martin also pointed to Alabama’s long-standing regulatory system for reviewing contracts with large electricity customers.
According to Marshall’s filing, the PSC has not conducted a formal electricity rate hearing since 1981, while commission staff has played a central role in reviewing and approving contracts since 1996.
The attorney general wants state officials, lawmakers and members of the public to have greater visibility into decisions that could influence future electricity costs.
Alabama Power says data centers will pay their costs
Alabama Power disputes the suggestion that residential customers will be left paying the costs created by data centers.
“Large load data center customers pay for their cost of service and do not shift those costs to other customers,” the company said in its PSC filing.
The utility says its large-load agreements include protections such as minimum bills, minimum contract terms, upfront payments, collateral and other financial safeguards.
Those provisions are intended to protect existing customers if a data center project is delayed, reduced in size or abandoned after the utility has invested in infrastructure to serve it.
Alabama Power also says the agreements submitted for regulatory review include analyses showing how pricing is expected to recover incremental costs and how the projects could affect other customers, power-system efficiency and economic development.
The company maintains that data center projects vary considerably and argues against imposing a rigid, one-size-fits-all regulatory structure.
The issue has nevertheless become increasingly important because of the extraordinary electricity requirements associated with hyperscale data centers.
Alabama Power has estimated that by 2029 it could face insufficient electricity supply to meet demand, adding urgency to questions about future generation capacity and infrastructure investment.
Data centers being proposed and developed around Alabama have also generated opposition from residents concerned about electricity rates, water consumption, land use, environmental impacts and transparency.
Some residents participating in the PSC proceeding have argued that important financial terms in data center electricity contracts should be more accessible to the public.
Alabama Power counters that commercially sensitive information must remain confidential while emphasizing that regulators and the attorney general receive complete agreements and supporting information even when portions of publicly available versions are redacted.
What happens next for Alabama consumers
The PSC is expected to consider the data center rules at its Sept. 1 meeting.
The outcome could help establish how Alabama handles one of the most significant changes facing electric utilities nationwide: enormous new electricity demand from AI computing and cloud infrastructure.
For consumers, the central issue is relatively straightforward.
If data centers require billions of dollars in additional power plants, substations, transmission lines and other infrastructure, regulators must determine whether the companies creating that demand are paying an appropriate share of those costs.
Act 2026-610 explicitly requires the PSC to determine that large-load data center contracts recover incremental costs from the data center customer and promote positive benefits for other retail customers.
How regulators implement that requirement will determine how meaningful those protections are in practice.
Marshall’s filing puts the attorney general firmly into that debate, arguing that protecting consumers requires not only reviewing the contracts but also allowing greater scrutiny of their potential effects on ratepayers.
Alabama Power, meanwhile, says the protections are already built into its agreements and that data centers will not be allowed to shift their costs onto ordinary customers.
With electricity demand rising and additional data center projects being proposed across Alabama, the PSC’s decision could establish a regulatory framework that influences utility investment and consumer electricity costs for years to come.
Sources: Alabama Public Service Commission Docket 33709; Alabama Power; Alabama Attorney General filing; Act 2026-610; AL.com reporting.
