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Fees Dampen Demand For Rooftop Solar In Alabama

Alabama Power, which serves two-thirds of electricity customers in the state, assesses people who have rooftop solar systems a fee of $5.00 a month for each kilowatt their systems generate. Some residential customers are challenging those fees.

Like many utility companies, Alabama Power charges a monthly fee to residential customers with rooftop solar systems. It claims it needs to do so in order to make sure everyone pays their fair share to maintain the electrical grid — the poles, wire, transformers, and substations that carry electricity from central power plants to people’s homes. It the present time, the charge is $5 per month for each kilowatt a rooftop solar system can generate. If you live in Alabama and have a 5 kilowatt rooftop solar system — a fairly typical system size — you will be charged $25 extra per month on your utility bill.

Rooftop solar in Alabama

Image credit: GRID Alternatives

Jim Bankston of Tuscaloosa tells Channel 19 News that after he installed solar panels on his home, he noticed new, unexpected fees on his utility bill. The explanation he got from Alabama Power was that he was being charged the $5.00 per month fee for his solar system. “I am having to pay them just to use the photons that are hitting my own roof,” Bankston says. When he purchased his system, he assumed it would pay for itself in 20 years, but those monthly fees mean paying the system off could take twice as long.

Teresa Thorne had a 4 kilowatt system installed on the roof of her home in Blount County, Alabama because she wanted to support solar and save a little money on her utility bill. But the monthly assessment has changed the calculus she made when she decided to get the system. “It cuts my savings in half. I would not have done it if I’d known. That’s the bottom line. If I truly understood it was going to cost me half of the savings,” she says.

“It’s discouraging the use of solar,” says Keith Johnston, managing attorney for the Birmingham office of the Southern Environmental Law Center. “We call it a solar tax.” His group says the average cost of a residential solar panel system is about $10,000. The monthly fees can add another $9,000 on top of the system cost over its projected lifespan of 30 years. That dramatically increases a homeowner’s cost and reduces any financial benefit they might see from installing rooftop solar. Johnston says the fees charged by Alabama Power are among the highest of any investor-owned utility in the United States.

Jim Bankston and others have filed a petition with the Alabama Public Service Commission asking to bar the utility company from collecting the rooftop solar fees. A hearing on the petition is scheduled for November 21.

For its part, Alabama Power says its fees are reasonable and proper. In fact, it says the monthly assessment should by $5.42 per kilowatt. It claims, in effect, that it is acting as a backup battery for customers who have rooftop solar systems. “There is a cost to having backup power available to customers, including customers with solar systems who remain tied to the grid for backup service,” its  spokesperson, Michael Sznajderman, says.

He points out that people could avoid the fees completely if they simply went off grid entirely and severed their relationship with Alabama Power. He adds that his company is “focused on protecting all our customers and ensuring that those who use certain services pay for those services.” Be careful what you wish for, Mr. Sznajderman. You just might get it. As the prices of battery backup systems continue to fall. more and more people will be more than happy to tell your company goodbye.

The issue of fees on rooftop solar system has arisen in New Mexico, Arizona, and other states, causing clashes between renewable energy proponents and utilities. A power company in Iowa unsuccessfully pushed lawmakers to approve a fee that would require a homeowner with an average solar array to pay about $27 a month. “I think they are really intended to discourage customers from installing solar,” says Gwen Farnsworth, a senior energy policy adviser with Western Resource Advocates, a Colorado-based conservation group.

Farnsworth is quite correct. The typical attitude of many utility companies is, “We have a monopoly on electricity. It’s our electricity, dammit, and we will decide who uses it and how much they pay for it.” The idea of people generating their own electricity is simply anathema to them. Their argument makes as much sense at gasoline companies sending electric car owners a bill each month for the gas they didn’t use because the companies still have to keep their refineries and pipelines running.

Hopefully the Alabama Public Service Commission will rein in such rapacious fees but don’t hold your breath. Such regulatory agencies have a history of protecting the interests of the utility industry rather than those of consumers.

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Written By

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. 3000 years ago, Socrates said, "The secret to change is to focus all of your energy not on fighting the old but on building the new." Perhaps it's time we listened?


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