Questions & Answers on Alabama electricity generation and pollution
Q: What makes it easier/cheaper to generate power here in Alabama?
Alabama has natural resources for electricity generation, including coal, natural gas, and rivers for hydroelectric dams, and Alabama has two nuclear generators . Over the years, the electric companies have invested in generation and transmission facilities.
Q: Where does the power made here go?
Alabama sells about one third of its generated electricity, on net to Georgia and Florida. Since the franchise areas of the electric companies cross state borders and there is competition at the wholesale level, the state borders do not mean much in the scheme of generation and transmission.
Q: Who's selling it?
The major utilities in Alabama are Alabama Power, part of the Southern Company, and the Tennessee Valley Authority (TVA) north Alabama. Generation and transmission of both companies are multi-state systems designed for their franchise regions. Both companies enjoy a degree of monopoly power but prices are regulated by the Public Service Commission in Alabama (PSC) inside the state. The electric systems are also regulated by the Southeastern Electric Reliability Council (SERC) of the Federal Energy Regulatory Commission (FERC) in the US Department of Energy. The industry is restructuring and regulation is passing from the states to regional and national levels.
FERC has proposed “retail competition” which means that electric customers would be free to choose their electric company. Customers in high priced states (Georgia and Florida) would choose to buy cheaper Alabama electricity if they could. With retail competition in SERC, generators in Alabama would be free to sell to customers in other states but it is not clear whether customers in Alabama would have to be served first and whether the Alabama PSC price would rise to a regional level. For more information on interstate trade, see http://www.auburn.edu/~thomph1/interstate.htm.
Q: Does this mean that Alabama gets a dispoportionate amount of pollution?
There is local pollution due to electricity generation. Newer gas fired generators are relatively clean but coal remains the main fuel. The Environmental Protection Agency (EPA) requires the best available technology (BAT) for controlling emissions but living near a coal burning electric generator harms health even with BAT. Alabama has some EPA “noncompliance” areas with pollutants above standards.
At present, Alabama exports electricity and effectively imports pollution. The economic question is whether the income from selling electricity is worth the cost of pollution. A fellow living near a stockyard was asked about the smell and said “It smells like money to me.” The political question is who will make any changes as the electric industry restructures.