On December 2, 2025, the Alabama Public Service Commission (PSC) approved a proposal from Alabama Power, a Southern Company subsidiary, to effectively freeze customer electric rates through the end of 2027. While the company framed the move as one that will provide rate stability and predictability for customers grappling with rising costs, investors should interpret this action as a strategic regulatory de-risking initiative by Southern Company in the face of potential political headwinds.
The two-year rate stability period aligns with a crucial political event: the November 2026 PSC election, in which two of the three seats on the Alabama PSC will be contested. Alabama Power operates under a historically supportive regulatory framework in the state, and maintaining commission stability is paramount for Southern Company’s regulated business model.
A Similar Strategy Elsewhere
Alabama Power’s strategy mirrors a playbook employed by fellow Southern Company subsidiary Georgia Power, which secured Georgia PSC approval of a three-year rate freeze in July 2025. Despite this proactive move, the November 2025 election in Georgia saw energy affordability become a potent issue, so much so that it contributed to the defeat of two sitting Georgia PSC commissioners. This outcome served as a strong warning to utilities: that customer costs—a topic increasingly being elevated to a national “pocketbook strain” issue—can successfully mobilize voters, even in traditionally uncompetitive down-ballot races.
Alabama Power’s rate freeze proposal, filed just weeks after the Georgia results, appears to be a calculated move to neutralize affordability as a major point of attack in the 2026 Alabama PSC elections. The proposal was submitted on November 21st, following conversations with the PSC and the Attorney General’s Office, and was approved less than two weeks later. By voluntarily delaying the implementation of rate components tied to new plant costs (Rate CNP, Part A) and freezing those related to environmental compliance (Rate CNP, Part C), the utility is absorbing short-term bill pressure to ensure regulatory stability and the re-election of incumbent commissioners. The plan also maintains the current Energy Cost Recovery (ECR) interim factor through December 2027, which addresses fuel costs.
Conclusion
This action suggests a strategic awareness and sensitivity to political risk. Recognizing that Alabama has historically been among the most supportive jurisdictions for utilities, the company has proactively moved to mute the impact of the issue of energy affordability in the upcoming elections, potentially forestalling a deterioration of the current regulatory environment. Alabama Power's proposal, therefore, is a prime example of a regulated utility managing the political dimension of its business by trading a small, temporary financial forbearance for long-term regulatory security. The decision reflects a new reality, one in which utility bill affordability is now a key factor in regulatory-political risk modeling.
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.
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