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.