Alabama electricity generation and pollution

Henry Thompson

 

Alabama has natural resources including coal, natural gas, and rivers for hydroelectric dams for electricity generation.  Alabama has three nuclear generators and another under construction.  Over the years, the electric companies have invested in generation and transmission facilities.  Alabama sells about one third of its generated electricity to Georgia and Florida.  The franchise areas of the electric companies go across state borders with competition at the wholesale level. 

The major utilities in Alabama are Alabama Power and the Tennessee Valley Authority (TVA) in north Alabama.  Generation and transmission of both companies are multi-state systems designed for their regions.  Both companies enjoy monopoly power but prices are regulated by the Public Service Commission in Alabama PSC.  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 higher priced states like Georgia and Florida would choose to buy cheaper Alabama electricity.  With retail competition in SERC generators in Alabama would be free to sell to customers in other states increasing prices in Alabama.  For more information on interstate trade see http://www.auburn.edu/~thomph1/interstate.htm.

There is local pollution due to electricity generation.  While newer gas fired generators are relatively clean, coal is 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.  Alabama has some EPA noncompliance areas with pollutants above standards. 

          At present, Alabama exports electricity and suffers the extra pollution.  The economic question is whether the income from selling electricity is worth the cost of pollution.  The political question is who would make any changes as the electric industry restructures.