Alabama’s Public Service Commission enacts data center rules, critics demand transparency

Alabama’s Public Service Commission approved a new set of data‑center regulations on Tuesday, mandating that all large‑scale server farms sign power‑purchase agreements with Alabama Power and meet stricter energy‑efficiency benchmarks. The rules, which replace a decade‑old framework that treated data centers like any other heavy industry, aim to curb the state’s soaring electricity demand and align with its climate‑action goals. The commission’s vote came after months of lobbying by the utility, tech firms, and state lawmakers.

The change arrives as Alabama has become a magnet for data‑center developers attracted by low land costs, cheap electricity and tax incentives. Between 2018 and 2023, the state added more than 5 gigawatts of server capacity, enough to power roughly 1 million homes. That rapid expansion pushed the grid to near‑capacity during summer peaks and raised concerns among environmental groups about the carbon footprint of power‑hungry facilities. Previously, the state’s rules required only generic industrial permits, leaving little oversight of how much power the centers would draw or how they would manage waste heat.

While the new policy is praised for introducing mandatory efficiency standards and a tiered rate structure, several watchdog groups argue that the contracts between data centers and Alabama Power remain opaque. The Sierra Club’s Alabama chapter says the agreements are not publicly disclosed, preventing consumers and legislators from seeing how rates are set or whether renewable‑energy credits are being honored. The Alabama Clean Energy Coalition added that the rules do not require facilities to report real‑time energy use, limiting the state’s ability to track progress toward its 2030 emissions target. Alabama Power defended the approach, saying the contracts protect proprietary business information while still meeting state energy‑conservation goals.

The commission has opened a 30‑day comment period, during which lawmakers and advocacy groups can push for greater transparency and stronger consumer protections. State legislators have already hinted at introducing amendments that would require public filing of power‑purchase agreements and periodic reporting of energy consumption. If the commission adopts those changes, data‑center operators could face higher compliance costs but would provide clearer data for policymakers. The outcome will shape how Alabama balances its growing tech economy with the need to keep the power grid reliable and the climate impact in check.