Why It Matters
Alabama Power’s expanding profits amid rising residential electricity rates underscore mounting scrutiny over utility pricing in the state. Recent legislative changes have restructured the regulatory framework overseeing rate approvals, setting up a consequential shift in how future rate cases will be reviewed.
What Happened
Alabama Power reported comprehensive income of approximately $435 million in the second quarter of 2026, up from $381 million in the same period of 2025, marking a 15% increase year-over-year. Over the first six months of 2026, the utility posted comprehensive income of $860 million, compared to $756 million in the first half of 2025—a 14% climb.
The profit growth comes as Alabama residential customers face higher electricity bills. In May 2026, Alabama residential customers paid an average of 16.77 cents per kilowatt-hour, representing a 4% increase from May 2025. That rate exceeded the cost in neighboring states: Mississippi residential customers paid 16.16 cents, Georgia 15.84 cents, Florida 15.17 cents, and Tennessee 14.47 cents per kilowatt-hour.
Alabama Power, a subsidiary of parent company Southern Company, saw retail revenues decline slightly from $1.718 billion in the second quarter of 2025 to $1.710 billion in the same period of 2026. However, wholesale revenues from affiliate customers jumped from $36 million to $55 million year-over-year. The utility also reduced operational and maintenance expenses and achieved cost savings through unregulated service lines and other operational efficiencies.
By the Numbers
$435 million — Alabama Power’s second-quarter 2026 comprehensive income
15% — year-over-year profit increase in Q2 2026
$860 million — Alabama Power’s comprehensive income for the first six months of 2026
16.77 cents per kilowatt-hour — Alabama residential electricity rate in May 2026
4% — Alabama residential rate increase over May 2025
$242 million — Southern Company’s Q2 2026 profits
Regulatory Overhaul
The Alabama Legislature enacted significant changes to utility oversight during its spring session. Lawmakers expanded the Alabama Public Service Commission from three to seven members and placed the commission under the authority of a newly created Secretary of Energy beginning next year. Under the new law, five of seven PSC members or the Secretary of Energy must approve any rate case hearing—a substantial shift in the approval threshold.
These changes have reshaped the political landscape surrounding rate regulation. James Gordon, the Democratic nominee for PSC Place 1, has campaigned on a platform to reduce electricity rates, stating he would seek a 25% rate reduction and proposing a negotiation goal of 4 cents per kilowatt-hour.
Zoom Out
Utility profitability amid rising consumer costs has become a flashpoint nationwide. States across the Southeast have grappled with balancing utility financial health against customer rate concerns, with some legislatures implementing stricter oversight mechanisms and others allowing market-based approaches. Alabama’s restructuring of its PSC reflects a broader trend of state-level legislative intervention in utility regulation, though the outcomes of such reforms remain subject to implementation and electoral factors.
What’s Next
The expansion and restructuring of the PSC and the establishment of the Secretary of Energy position take effect next year. Those changes will govern how future rate cases are reviewed and approved. The outcome of the PSC election, particularly Gordon’s race, may influence the regulatory direction of utility pricing in the state in subsequent years.