Alabama cuts utility giant's profit rate, but customers still get a $5 monthly charge hike

Spire Alabama secured approval to raise its customer fee even though state regulators pared back the earnings rate the gas utility can make.

For many households, that means monthly bills may stay about the same, even as a larger share of the total shifts into a fixed cost.

Here's what to know

Instead of the 10.5% return on equity it sought, Spire Alabama will be limited to 9.4% for the next two years under a vote by the Alabama Public Service Commission.

In the same action, regulators approved a total $5 increase in the utility's monthly customer charge to be phased in over time, according to Alabama Reflector.

Regulators said a lower usage rate would offset the higher fixed fee, keeping bills broadly steady.

For Spire's roughly 500,000 Alabama customers, the monthly charge will rise by $2.50 on October 1, 2026, and by another $2.50 on October 1, 2027.

Cynthia Almond, president of the Public Service Commission, said, "These recommendations lower the return on equity for both Spire companies from their current levels. There is also an adjustment to the monthly customer charge."

For Spire Gulf, the commission set return on equity at 9.6% rather than the 10.75% the company had requested.

Luke Bentley IV, executive director of the PSC, said in a prepared statement that "the Attorney General's ROE recommendation is the most reasonable and more accurately reflects Spire Alabama's cost of equity."

More background

The Alabama PSC had not opened a rate case since the 1980s.

The case followed failed talks between the company and the Alabama Attorney General's Office over the Rate Stabilization Equalization figure that helps determine the return a utility is allowed to earn.

The decision also comes amid broader frustration over energy costs in Alabama. Alabama's June price was about 16.4 cents per kilowatt-hour, compared with a regional average of 14.89 cents.

A higher fixed monthly charge leaves less of a bill tied to energy use, reducing how much households can cut that portion through lower consumption. Even when an overall change is described as revenue neutral, shifting costs from usage to a recurring fee can be especially significant for people trying to manage monthly expenses.

Almond said the adjustment "shifts a portion of the recovery of fixed customer costs away from the volume metric, or usage-based, portion of the bill into the monthly customer charge."

What's being done?

State regulators did take a step consumer advocates had pushed for by reducing the returns Spire wanted to earn. Energy Alabama had argued for an even steeper cut, proposing returns of about 8.3% for both Spire Alabama and Spire Gulf.

Sheree Martin, deputy director and general counsel of Energy Alabama, welcomed the ruling in a statement: "Energy Alabama thanks the Commission for opening this first-of-its-kind rate investigation and for its decision to bring Spire's return on equity down to a more reasonable level."

Lawmakers passed HB 475, and the version signed by Gov. Kay Ivey expanded the PSC from three members to seven and made it harder for the commission to open future rate cases on its own.

Under the law, a new Secretary of Energy can control meeting agendas and call rate cases, while commissioners would need a supermajority to do so on their own.

Spire said the lower return could affect the company's future plans.

Reynolds Anderson, vice president of external affairs for Spire Energy, said, "We know it is going to directly impact our ability to invest in growth and economic development in the state of Alabama. We remain committed to providing safe, viable natural gas service for our customers."

Where can I learn more?

Across the country, utilities and regulators are making decisions that shape monthly bills, how much of those costs are fixed, and how much customers can save by using less energy.

• In Maryland, BGE customers could pay $8 more a month after the utility posted $578 million in profit.

• In Florida, Duke Energy used tax savings to avoid a 2027 rate hike for customers.

Each of these cases shows a different way utility policy can push bills up or keep them in check. They also show why fights over fixed charges, profit levels, and cost recovery can have real consequences for household budgets.

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