An Alabama Power lawsuit can mean several different things depending on which dispute you’re following. The utility, a subsidiary of Southern Company and the state’s largest electric provider, has faced federal and state cases over a monthly fee charged to rooftop solar customers, contamination of private water wells in Vandiver, Clean Air Act violations at five coal-fired plants, and the public’s exclusion from the process that sets fuel-cost rates. The most prominent of these, the solar fee challenge, ended in March 2026 with a federal judge siding with the company.
The Solar Fee Lawsuit
Alabama Power charges residential customers who install rooftop solar panels a monthly “capacity reservation charge” of $5.41 per kilowatt of installed solar capacity. For a typical home system, that comes to roughly $25 to $39 a month, regardless of how much electricity the customer actually draws or sends back to the grid. The Alabama Public Service Commission first approved the fee at $5 per kilowatt in 2012 and raised it to the current rate in September 2020.1Alabama Reflector. Federal Court Rules Alabama Power Can Impose Extra Charge on Customers With Solar Panels
The company says the fee makes solar customers pay their share of maintaining the grid they still rely on when their panels aren’t producing. Without it, Alabama Power argues, those backup costs would shift to customers without solar.2AL.com. Alabama Power Can Continue Charging Solar Power Users a Fee, Federal Judge Rules
Critics argue the fee erases the savings that justify installing solar in the first place. On a standard 5-kilowatt system, it adds about $300 a year, or roughly $9,000 over a 30-year installation. Alabama ranks last in the country for per-capita residential solar capacity, and opponents of the fee point to it as a major reason.3Canary Media. Alabama Power Charge Rooftop Solar Fee
Who Sued and Why
In July 2021, the Greater-Birmingham Alliance to Stop Pollution (GASP) and four Alabama Power customers, including the Rev. Mark Johnston, filed suit in the U.S. District Court for the Middle District of Alabama. They were represented by the Southern Environmental Law Center and Ragsdale LLC.4SELC. Court Allows Alabama Power Solar Fees to Continue The plaintiffs claimed the fee violated the federal Public Utility Regulatory Policies Act of 1978 (PURPA) by discriminating against solar users, forcing them to pay for backup power they never asked for, and resting on assumptions rather than real cost data.2AL.com. Alabama Power Can Continue Charging Solar Power Users a Fee, Federal Judge Rules
The suit followed a Federal Energy Regulatory Commission decision not to take enforcement action against the PSC, though two FERC commissioners wrote separately that the petitioners had presented a “strong case” that the state commission was violating federal law.5GASP. GASP Sues PSC for Approving Alabama Power Solar Charges
How It Ended
On March 25, 2026, U.S. District Judge Annemarie Carney Axon granted summary judgment for Alabama Power and the PSC and dismissed all claims. She found that the plaintiffs had “not presented any evidence from which a factfinder could conclude that Alabama Power violated” PURPA.6WBHM. Judge Rules Alabama Power Can Keep Its Solar Fee, Among the Nation’s Highest
The ruling turned on three findings. The plaintiffs didn’t dispute Alabama Power’s underlying data, only the modeling built on it. The fee isn’t discriminatory, the court said, because every customer’s bill includes backup power costs; solar customers simply pay their share through this line item. And customers agree to receive backup energy from Alabama Power when they sign their service agreement, so they aren’t being forced into an unwanted purchase.2AL.com. Alabama Power Can Continue Charging Solar Power Users a Fee, Federal Judge Rules
SELC senior attorney Christina Tidwell called the ruling “a disappointing day for Alabama Power customers who want to use solar energy.”1Alabama Reflector. Federal Court Rules Alabama Power Can Impose Extra Charge on Customers With Solar Panels As of late March 2026, SELC said it was reviewing the decision with its clients. No appeal to the Eleventh Circuit had been filed or announced.4SELC. Court Allows Alabama Power Solar Fees to Continue
A Separate Solar Compensation Appeal
Paul Whitehurst, a Northport attorney, has filed a separate appeal in a Montgomery court challenging what Alabama Power pays him for the excess electricity his solar system sends back to the grid. Whitehurst says he still pays $50 to $75 a month even though he generates more than he uses. Alabama doesn’t offer net metering; excess power is credited at the utility’s avoided-cost rate, well below the retail rate customers pay for electricity they consume. Alabama Power says its compensation rates are approved by the PSC and comply with PURPA.7Tuscaloosa Thread. Northport Solar Energy Dispute3Canary Media. Alabama Power Charge Rooftop Solar Fee
The Vandiver Water Well Case
Twelve residents of Vandiver, Alabama, are suing Alabama Power over claims that a fiber optic drilling project drained their private water wells beginning in January 2025. The residents allege that replacement wells provided by the company tested positive for chloroform, E. coli, and elevated iron and minerals. Alabama Power installed chlorination systems with the new wells, but residents say they must manually inject household bleach into the water and don’t feel safe drinking it. One resident estimated the annual maintenance cost at about $700.8Yahoo News. Vandiver Residents Likely Trial Against Alabama Power
A settlement attempt on January 12, 2026, failed. Attorney Bruce Romeo said the case will likely go to trial, though it could be at least 18 months before a jury hears it. Alabama Power says the replacement wells underwent extensive testing by hydrogeologic experts and that temporary water supplies were discontinued by the end of 2025. The company has declined further comment, citing the pending litigation.8Yahoo News. Vandiver Residents Likely Trial Against Alabama Power
Clean Air Act Enforcement at Five Coal Plants
In 2001, the U.S. Department of Justice sued Alabama Power under the Clean Air Act’s New Source Review provisions, alleging that the company had made major modifications to units at five coal-fired power plants during the 1980s and 1990s without obtaining permits that would have required pollution controls. The plants were James H. Miller Jr., Barry, Gaston, Gorgas, and Greene County.9DOJ. U.S. v. Alabama Power Co.
The case produced two settlements. In April 2006, a consent decree resolved claims at Miller Plant Units 3 and 4 in Jefferson County. Alabama Power agreed to spend more than $200 million on pollution controls, including scrubbers to cut sulfur dioxide emissions by at least 95% and year-round operation of selective catalytic reduction technology for nitrogen oxides. The company paid a $100,000 civil penalty and bought and retired $4.9 million in SO2 emission allowances. The combined target was about 28,000 tons per year in reduced sulfur dioxide and nitrogen oxides.10EPA. Alabama Power Company Clean Air Act Settlement11DOJ. Alabama Power Company Clean Air Act Settlement
Claims at the other four plants were resolved in June 2015 through a modification of the consent decree. Alabama Power agreed to permanently retire three coal-burning units (Barry Unit 3 and Gorgas Units 6 and 7), convert Barry Units 1 and 2 and both Greene County units from coal to natural gas, and operate year-round pollution controls at Gorgas Unit 10. The company paid another $100,000 penalty and was required to invest $1.5 million in electric vehicle charging infrastructure at the Birmingham-Shuttlesworth International Airport.12DOJ. Alabama Power Modification of Consent Decree13AL.com. EPA, Alabama Power Agree to Settlement
The Fight Over Public Access to Rate Changes
A separate legal battle, now pending before the Alabama Supreme Court, concerns whether the public has any right to participate when Alabama Power’s fuel-cost rate is adjusted. The PSC changes the Energy Cost Recovery (ECR) rate frequently, sometimes monthly, through interim consent orders based on the company’s own recommendations. Public input on this process has been closed off since 2008.14Alabama Reflector. Advocates Appeal Exclusion From Energy Rate Process to Alabama Supreme Court
In May 2024, the nonprofit Energy Alabama petitioned the PSC to intervene in the ECR docket. The PSC refused, saying the rate adjustments aren’t a “proceeding” under state law and don’t allow third-party intervention. Energy Alabama appealed to the Montgomery County Circuit Court, where Judge Brooke Reid ruled against the group in July 2025, finding that the PSC’s reading of its own rules was entitled to deference.15WAKA. Judge: Public Service Commission Can Decide Alabama Power Price Hikes Behind Closed Doors Energy Alabama appealed to the Alabama Supreme Court in August 2025 and filed its reply brief in December 2025. The case was still pending at that point.16Energy Alabama. Supreme Court Filing ECR Energy Cost Recovery Intervention Appeal
The dispute matters because of how much money moves through the ECR mechanism and the broader rate structure. Alabama Power’s annual profits nearly doubled between 2013 and 2024, from $712 million to $1.4 billion, while residential rates rose 45% over the same period.17Inside Climate News. Alabama Power Electric Rates Profits In 2025, Southern Company reported $1.516 billion in post-tax profit from Alabama Power, up $113 million from the prior year.18WBRC. Alabama Power Net Profit Rose $113M in 2025