Judge Backs Alabama Power in Solar Fee Fight

A federal court ruling in a closely watched energy case has left Alabama Power’s controversial solar fees in place, handing a practical win to State regulators while the broader legal fight continues.

The lawsuit was brought by the Greater-Birmingham Alliance to Stop Pollution (GASP) and several Alabama residents, with legal backing from the Southern Environmental Law Center. Plaintiffs argue the fee violates the Public Utility Regulatory Policies Act of 1978 (PURPA) by discouraging small-scale renewable energy. 

The case, GASP, Inc., et al. v. Alabama Public Service Commission, was filed in the U.S. District Court for the Middle District of Alabama in 2021. It challenges a policy approved by the Alabama Public Service Commission allowing Alabama Power to charge customers a monthly fee for generating their own electricity through rooftop solar.

Since then, the case has moved slowly through the courts. In 2024, U.S. District Judge Myron Thompson rejected efforts to dismiss the lawsuit, ruling that federal courts can review whether State utility policies violate federal law. The case remains active, but the fee itself has stayed in place throughout — a reality critics say amounts to a win for Alabama Power.

At issue is a “capacity reservation charge” first approved in 2012. The policy allows Alabama Power to charge $5.41 per kilowatt of installed solar capacity each month. For a typical homeowner with a 5-kilowatt system, that adds about $27 to the monthly bill—roughly $9,000 over the life of the system.

Alabama Power has long argued the fee is necessary to maintain the electric grid and ensure reliability when solar production drops. But opponents say it goes far beyond standard costs already paid by all customers.

The numbers reflect the divide. Alabama has installed roughly 966 megawatts of solar capacity—less than one percent of its total electricity mix. Neighboring States, including Mississippi and South Carolina, have far more despite smaller populations.

Nonprofit advocacy group Energy Alabama blasted the outcome in a public statement this week:

“Let's be clear about what this means.

“If you install solar panels on your home, Alabama Power charges you $5.41 per kilowatt of capacity, every single month, on top of your regular bill. On a typical 5-kilowatt home system, that's $27 a month and roughly $9,000 over the 30-year life of your panels. The Alabama Public Service Commission first authorized this charge in 2012, and it has been crushing solar adoption ever since.

“The results speak for themselves. Alabama has just 966 megawatts of solar installed, less than 1% of our electricity. Mississippi, with about 57% of our population, has more than double that: 2,052 megawatts. South Carolina has triple: 3,061 megawatts. This fee has done exactly what it was designed to do.

“Alabama Power says customers who use the grid should pay for the grid. But every Alabama Power customer pays for the grid. Solar customers pay the same base charges as everyone else. This fee is above and beyond that. It exists for one reason: to make solar uneconomical so you stay dependent on Alabama Power.

“This fight was never just about solar panels. It is about whether you have the right to reduce your dependence on a monopoly utility.”

This ruling comes at a time of rising frustration with the Alabama Public Service Commission, which has come under fire as power bills remain among the highest in the nation. Lawmakers have floated proposals to eliminate the Commission altogether, while divisions inside the Alabama Republican Party have exposed deeper disagreements over how utility regulators should be chosen.

Recent controversy has only added fuel to these fires. A leaked phone call involving Alabama Power and Energy Alabama raised new questions about transparency, while advocacy groups have stepped up pressure on the Legislature, and on the Commissioners to act.

Energy Alabama says the fix is simple — and immediate:

“The courts sided with Alabama Power. But there is a faster fix that doesn't require a single new law or court ruling: the Alabama Public Service Commission could vote to eliminate this charge. Three Commissioners. One vote. Done.”

That vote will come in the primary election on May 19. And, as the case moves forward in federal court, Alabama’s solar policy — and the cost of going around it — remains unchanged.