Energy policy in Alabama

in  Alabama

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Fracking in the U.S.
Energy policy in the U.S.
State fracking policy
State energy policy
Glossary of energy terms

Energy policy involves governmental actions affecting the production, distribution, and consumption of energy in a state. Energy policies are enacted and enforced at the local, state, and federal levels and may change over time. These policies include legislation, regulation, taxes, incentives for energy production or use, standards for energy efficiency, and more. Stakeholders include citizens, politicians, environmental groups, industry groups, and think tanks. A variety of factors can affect the feasibility of federal and state-level energy policies, such as available natural resources, geography, and consumer needs.

This article outlines state-level oil and gas regulations, renewable energy requirements, and energy efficiency standards in Alabama.

See the tabs below for further information:

1. Policy: This tab provides information about state regulations on energy production and policies related to oil and gas production, fracking, renewable energy generation, energy efficiency, and net metering.
2. Production: This tab provides information about total energy production by energy source in Alabama.
3. Usage: This tab presents information about electricity consumption by energy source.
4. Prices and taxes: This tab presents information about average energy and electricity prices, per capita spending on energy, and fuel taxes.
5. Utilities: This tab presents information about public and private utilities, electricity markets, the types of utilities in Alabama, and the electric reliability organizations in Alabama.
6. Background: This tab provides information about the types of nonrenewable and renewable energy sources produced and used in the United States, an energy profile of Alabama, a state profile of Alabama from the Almanac of American Politics (2016), and economic indicators in the state, such as median income.

## Contents

* 1 Policy
* 1.1 State regulations
* 1.1.1 Fracking
* 1.2 Renewable energy policies
* 1.2.1 Renewable Portfolio Standard
* 1.2.2 Grant programs
* 1.2.3 Loan programs
* 1.2.3.1 AlabamaSAVES
* 1.3 Energy efficiency regulations
* 1.4 Net metering
* 1.5 Recent legislation
* 1.6 Ballot measures
* 1.6.1 Energy policy ballot measures
* 1.6.2 Utility policy ballot measures
* 2 Production
* 2.1 Total energy production
* 2.2 Nonrenewable energy production
* 2.3 Oil and gas production (2004-2014)
* 2.4 Oil and gas production on federal land
* 2.4.1 Land leased
* 3 Energy usage
* 3.1 Consumption
* 4 Prices and taxes
* 4.1 Energy prices
* 4.2 Energy spending
* 4.3 Fuel taxes
* 4.4 Federal tax
* 5 Utilities
* 5.1 Background
* 5.2 Electricity markets
* 5.3 Electric reliability organizations
* 5.3.1 Alabama EROs
* 6 Background
* 6.1 Background on energy resources
* 6.2 Alabama energy profile
* 6.3 State profile
* 6.3.1 Presidential voting pattern
* 6.3.2 Economic indicators
* 6.4 See also
* 6.5 Recent news
* 6.6 Footnotes

# Policy[edit]

### State regulations[edit]

The State Oil and Gas Board of Alabama has statutory authority to issue rules and regulations related to oil and natural gas production in the state. The governor appoints three members of the board for six-year terms. State rules and regulations apply to all onshore oil and natural gas production in Alabama. These regulations cover the drilling of all wells used for oil or gas exploration, the spacing of wells, injection wells used to enhance oil and gas recovery or to dispose of waste water, the drilling or conversion of a well to create a reservoir or to store liquid or gaseous hydrocarbons underground, the underground storage of natural gas, and other oil and gas operations. Operators must receive state approval for drilling or converting a well, the use of directional drilling, fracking, disposal of fluids related to oil and gas operations, the transportation of oil and gas products, and related activities. In addition, operators must have adequate technologies to prevent the blowout of a well and must test these technologies in accordance with state regulations. The board also issues regulations on the prevention of oil or gas leaks in wells, water intrusion in oil and gas wells, pollution of fresh water from oil, gas, salt water, and other contaminants, and the drilling or operations of a well in a way that may cause injury to persons or property. Other regulations require operators to file reports on the location of oil and gas wells, to plug and restore wells after they are used, and to post bonds or other financial resources to ensure that companies meet environmental and safety regulations. The state's oil and gas regulations can be found in Chapter 400 of the Alabama Administrative Code. [1][2][3]

#### Fracking[edit]

See also: Fracking in Alabama

Under state regulations, fracking operations must ensure that there is no irreparable to oil and natural gas wells and that no fresh water supply or resource are adversely impacted. Oil and gas operators must obtain approval from the supervisor of the State Oil and Gas Board of Alabama before a well can be fracked. A proposal to fracture a well must include the specific casing and cementing program used by the operator to ensure well integrity, information on pressure tests performed by the operator on the formation that will be fracked, and a program describing how the fracking operation will occur. Operators must submit information on the maximum length of the proposed fracture, the types of materials and fluids used, an inventory identifying all fresh water supplies and resources within a one-quarter mile radius of the well, and a statement affirming that the operator has evaluated the well's construction, the pressure test results, and other relevant information to ensure that the proposed fracking operation will not adversely affect a fresh water supply or resource. Alabama's fracking regulations are detailed in Chapter 400-1-9-.04 of the Alabama Administrative Code.[1]

### Renewable energy policies[edit]

States have implemented funding and financial incentive programs to subsidize or otherwise increase investment in renewable energy resources such as wind, solar, and hydroelectric power. These programs include renewable portfolio standards, grants, rebate programs, tax incentives, loans, performance-based incentives, and more. The aim of the policies generally involves reducing the cost of renewable energy production for consumers, reducing regulatory compliance costs, reducing investment risks involving renewable energy, and/or increasing the adoption of renewable energy sources by individuals and businesses.[4]

#### Renewable Portfolio Standard[edit]

See also: Renewable Portfolio Standard

A Renewable Portfolio Standard (RPS), also known as a renewable electricity standard, is a mandate intended to increase the amount of renewable energy production and use. Under these standards, a utility company can be required by a state to have a certain percentage of its electricity come from certain renewable energy resources. In addition, states may give tax credits to utility companies to fulfill these requirements.[5][6]

As of February 2017, Alabama was one of 20 states that did not have a Renewable Portfolio Standard or a voluntary renewable energy standard or target.[7]

#### Grant programs[edit]

States, nonprofit organizations, and/or private utilities may operate grant programs for renewable energy. These programs may include state or private funding for energy installation costs, research and development, infrastructure and business development, system testing, and renewable energy feasibility studies (studies that look into the potential for renewable energy use in specific areas). Grants can be provided with or without requiring a recipient to match the grant. Additional incentives, such as lower interest loans, may be included with a grant.[4]

As of March 2015, Alabama was one of 26 states that did not have state-run, utility-run, or locally run grant programs for renewable energy. See the map below for grant programs by state.[4]

States with grant programs for renewable energy as of March 2015 (Source: Environmental Protection Agency)

#### Loan programs[edit]

Loan programs may be used to offer lower interest loans or other financing options to individuals and businesses to reduce the upfront costs of purchasing and installing renewable energy technologies. Loan programs may include programs that use payments from earlier borrowers to provide loans for new borrowers, programs in which building owners reduce their energy consumption to pay their upfront costs for renewable energy technologies, and programs that allow individuals with a higher debt-to-income ratio to purchase homes that use less energy, among others.[4]

As of March 2015, Alabama was one of 24 states with a state-run loan program and locally run, utility-run, and/or privately run loan programs for renewable energy technologies.[4]

##### AlabamaSAVES[edit]

The Alabama Department of Economic and Community Affairs operates a renewable energy loan program known as AlabamaSAVES, which is funded by the state government and the U.S. Department of Energy. The program involves third parties that provide loans to commercial, industrial, and nonprofit businesses in Alabama. Loans are given for energy efficient fixtures and retrofits for heating, ventilation, and air conditioning, hot water, lighting, insulation, doors and windows, and refrigeration on existing properties. Eligible businesses may receive loans for developing solar energy, biomass, biofuels, geothermal energy, methane capture, or fuel cell technologies on their properties.[8][9][10]

As of February 2017, local governments administered the Alabama WISE Home Energy Program, a loan program operated statewide and partially funded by the U.S. Department of Energy. The program devotes financial and technical resources for individuals that implement energy efficiency measures in private homes. Certified energy contractors may work with homeowners to perform a home energy assessment, which includes information on how individuals may implement energy efficiency measures. The program also includes financing for energy efficiency measures identified in a home energy assessment. As of May 2016, individuals must have a minimum credit score of 600 and be a member or affiliate of the RedStone Federal Credit Union to be eligible for the program.[11]

A complete list of state, local, and private incentive, loan, grant, and assistance programs for renewable energy and energy efficiency in Alabama can be found here.

See the map below for renewable energy loan programs by state.

States with loan programs for renewable energy as of March 2015 (Source: Environmental Protection Agency)

### Energy efficiency regulations[edit]

As of February 2017, Alabama required new residential and commercial buildings to meet energy efficiency standards. In March 2010, the Alabama State Legislature passed legislation authorizing the Alabama Energy and Residential Code Board to adopt mandatory residential and commercial energy efficiency codes, which were based on the International Energy Conservation Code and similar standards. The state's energy efficiency code for residential buildings, which can be found here, went into effect in October 2016. The state's energy efficiency code for commercial buildings, which can be found here, went into effect in January 2016.[12][13]

In May 2006 and in November 2011, the governor of Alabama issued executive orders requiring state departments and agencies to consider energy conservation measures for existing state-owned buildings. The orders were issued to reduce energy consumption by 30 percent from 2005 levels in all conditioned, state-owned facilities by the end of fiscal year 2015. State agencies must designate an officer to study and recommend potential energy conservation procedures. At the end of each fiscal year, officers for each state agency must submit a progress report to the state's Energy Division on the agency's progress on energy efficiency targets. The Energy Division submits consolidated reports to the Alabama Department of Finance and the governor’s office. In December 2008, the Alabama Building Commission adopted the 2006 International Energy Conservation Code (IECC), which was developed by the International Code Council. The code requires new state-owned buildings to meet energy efficiency standards. The full text of the 2006 code can be found here.[14]

### Net metering[edit]

Net metering is a billing system in which customers who generate their own electricity, usually using renewable sources (such as solar panels) are able to sell their excess electricity back to the electric grid, which is an interconnected network that is used to deliver electricity. This requires electricity to be able to flow both to and from a consumer.[15][16][17]

As of October 2016, Alabama was one of nine states without a statewide, locally operated, or privately run net metering policy. For a complete list of net metering programs by state, click here.[7][18]

### Recent legislation[edit]

The following is a list of recent energy policy bills that have been introduced in or passed by the Alabama State Legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

### Ballot measures[edit]

#### Energy policy ballot measures[edit]

See also: Energy on the ballot and List of Alabama ballot measures

Ballotpedia has not covered any ballot measures relating to state and local energy policy in Alabama.

#### Utility policy ballot measures[edit]

See also: Local utility tax and fees on the ballot

Ballotpedia has not covered any ballot measures relating to local utility tax and fees in Alabama.

# Production[edit]

The sections below include statistics on total energy production in Alabama, oil and natural gas production in Alabama, oil and gas production in Alabama over time (2004-2014), and oil and gas production on federal land, including the amount of federal land leased in Alabama for production.

### Total energy production[edit]

The table below provides information regarding energy production in Alabama in British thermal units (Btu). A British thermal unit is used to measure the heat contained in different fuels. The U.S. Department of Energy defines a Btu as "the quantity of heat required to raise the temperature of 1 pound of liquid water by 1 degree Fahrenheit." Fuels are discussed in terms of Btu to compare fuels with different energy content and prices. For example, one gallon of gasoline equals 120,524 Btu.[19]

Electricity production in Alabama, 2014 (in billion Btu)

State | Biomass | Coal | Crude oil | Nuclear energy | Natural gas | Renewable | Total*
Alabama |  0  |  414,366  |  57,002  |  431,368  |  196,237  |  254,752  |  1,353,725
Florida |  0  |  0  |  12,917  |  291,474  |  740  |  248,608  |  553,739
Georgia |  14,312  |  0  |  0  |  340,652  |  0  |  257,304  |  612,268
Mississippi |  0  |  39,072  |  141,207  |  107,228  |  56,766  |  58,570  |  402,843
U.S. average | 38,759  |  404,181  |  307,301  |  160,980  |  585,731  |  187,132  |  1,684,085
*Total figures were computed by Ballotpedia.
Source: U.S. Energy Information Administration, "Google Sheets API"

### Nonrenewable energy production[edit]

The table below provides information regarding nonrenewable energy production in Alabama. For coal data, the phrase productive capacity refers to the maximum amount of coal that could be expected to be produced in 2014. The natural gas and crude oil production data refer to the amounts of natural gas and crude oil produced in December 2014 and April 2016, respectively.[20][21]

Nonrenewable energy production

State | Coal, productive capacity
(short tons)  | Natural gas
(million cubic feet)  | Crude oil
(thousand barrels)
Date  |  2014  |  December 2014  |  April 2016
Alabama |  19,445,029  |  14,152  |  616
Florida |  0  |  21  |  167
Georgia |  0  |  0  |  0
Mississippi |  8,700,000  |  4,761  |  1,750
U.S. average |  24,874,314  |  43,350  |  4,388
Source: U.S. Energy Information Administration, "Google Sheets API"

### Oil and gas production (2004-2014)[edit]

Note: This section provides information about oil and gas production on private and state-owned lands. Information on oil and gas production on federal lands is accessible here.

The graph and table below provide information about crude oil production in Alabama. Information from select surrounding states is provided for comparative purposes.[22]

Crude oil production in Alabama and select surrounding states,
in thousand barrels

State | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | Percent of total 2014 production | 2014 Rank
Alabama | 7,443 | 7,861 | 7,539 | 7,171 | 7,696 | 7,189 | 7,155 | 8,373 | 9,525 | 10,391 | 9,826 | 0.31% | 16
Georgia | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% | N/A
Mississippi | 19,242 | 17,695 | 17,356 | 20,672 | 22,104 | 23,632 | 24,080 | 24,216 | 24,154 | 24,345 | 24,466 | 0.77% | 13
Tennessee | 361 | 324 | 192 | 284 | 338 | 268 | 350 | 350 | 371 | 334 | 330 | 0.01% | 27
United States | 1,991,394 | 1,891,227 | 1,857,044 | 1,853,166 | 1,830,002 | 1,952,670 | 2,000,861 | 2,060,398 | 2,377,806 | 2,722,171 | 3,180,813 |  \--  |  \--
Source: U.S. Energy Information Administration, "Crude Oil Production"
Note: The data above are field production data.

The graph and table below provide information about natural gas production in Alabama. Information from select surrounding states is provided for comparative purposes.[23]

Natural gas production in Alabama and select surrounding states,
in million cubic feet (MMCF)

State | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | Percent of total 2013 production | 2013 rank
Alabama | 565,249 | 504,365 | 470,108 | 451,906 | 424,069 | 403,055 | 365,179 | 342,190 | 302,844 | 303,108 | 271,986 | 0.91% | 15
Georgia | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% | N/A
Mississippi | 161,676 | 176,329 | 189,371 | 212,081 | 272,878 | 346,465 | 352,888 | 401,660 | 443,351 | 452,915 | 413,329 | 1.38% | 12
Tennessee | 1,803 | 2,100 | 2,200 | 2,663 | 3,942 | 4,700 | 5,478 | 5,144 | 4,851 | 5,825 | 5,400 | 0.02% | 26
United States | 24,118,978 | 23,969,678 | 23,456,822 | 23,535,018 | 24,663,656 | 25,636,257 | 26,056,893 | 26,816,085 | 28,479,026 | 29,542,313 | 30,005,254 | \-- | \--
Source: U.S. Energy Information Administration, "Natural Gas Gross Withdrawals and Production"
The data presented above are gross withdrawals in million cubic feet (MMCF). Production data for 2014 were estimated for some, but not all, states; "--" indicates data were not available.

### Oil and gas production on federal land[edit]

See also: Oil and natural gas extraction on federal land

The federal government leases federally managed land to private individuals and companies for energy development, including crude oil and natural gas drilling, solar energy development, and geothermal energy development. Approximately 166 million acres of federal land were available to be leased for energy development as of December 2014. The U.S. Bureau of Land Management (BLM) is responsible for regulating oil and gas drilling on federal lands in the United States.[24][25]

The table below provides information about oil and natural gas production on federal lands in Alabama in 2014. Information from select surrounding states is provided for comparison.[26][27]

Oil and natural gas production on federal land, 2014

State  |  Oil production (in thousands of barrels)  |  Natural gas production (in million cubic feet)
Alabama |  25  |  18,431
Florida |  0  |  0
Georgia |  0  |  0
Mississippi |  409  |  252
U.S. average |  2,976.06  |  49,996.92
Source: Office of Natural Resource Revenue, "Statistical Information"

#### Land leased[edit]

Private oil and natural gas companies apply for leases from the U.S. Bureau of Land Management (BLM) to develop energy resources on federal lands. After a lease is approved, the company must submit information to the BLM about how it will conduct its drilling and production operations. The BLM also inspects a company’s operations during production.[28]

The table below provides information about oil and gas producing leases and acres on federal lands in Alabama from 2013 to 2015. Information from select surrounding states is provided for comparison.

Oil and gas producing leases and acres on federal land by state, 2013-2015

State  |  FY 2015  |  FY 2014  |  FY 2013
Producing leases  |  Producing acres  |  Producing leases  |  Producing acres  |  Producing leases  |  Producing acres
Alabama |  24  |  7,842  |  24  |  7,707  |  23  |  7,667
Florida |  0  |  0  |  0  |  0  |  0  |  0
Georgia |  0  |  0  |  0  |  0  |  0  |  0
Mississippi |  76  |  37,999  |  71  |  34,192  |  75  |  38,186
U.S. average |  485  |  257,505  |  483  |  258,996  |  480  |  262,870
Source: U.S. Bureau of Land Management, "Oil and Gas Statistics"

# Energy usage[edit]

The section below includes statistics on electricity consumption in the state by energy type (in 2014).

### Consumption[edit]

The table below provides information about energy consumption by source in Alabama in 2014. Information from select surrounding states is provided for comparison.[20]

Energy consumption in Alabama, 2014 (in billion BtuBtu or British thermal units is a means of measuring the heat contained in fuels. "It is the quantity of heat required to raise the temperature of 1 pound of liquid water by 1 degree Fahrenheit." Fuels are often converted into Btu to make it easier to compare different types of fuels with different energy contents and prices. For comparison, one gallon of gasoline equals 120,524 Btu.[29])

State | Coal | Crude oil and petroleum products | Natural gas | Nuclear energy | Solar | Wind | Geothermal | Hydropower | Wood and wood waste | Biomass
Alabama |  575,912  |  519,666  |  651,532  |  431,368  |  151  |  |  141  |  90,030  |  164,430  |  186,649
Florida |  557,882  |  1,610,828  |  1,246,670  |  291,474  |  51,589  |  |  10,056  |  2,010  |  184,953  |  250,043
Georgia |  482,657  |  872,483  |  666,771  |  340,652  |  2,329  |  |  315  |  29,142  |  211,206  |  252,985
Mississippi |  116,537  |  440,093  |  440,003  |  107,228  |  35  |  |  958  |  |  57,577  |  71,994
U.S. average |  359,931  |  716,746  |  544,353  |  172,585  |  20,739  |  531,323  |  16,555  |  61,397  |  65,345  |  101,581
Source: U.S. Energy Information Administration, "Google Sheets API"

# Prices and taxes[edit]

The sections below include information on energy prices and spending in Alabama, fuel taxes and state taxes in Alabama and in neighboring states, and an overview of the federal tax on gasoline.

### Energy prices[edit]

The price of electricity is affected by supply and demand. The supply of electricity is affected by fuel prices, environmental and energy regulations, power plant capacity, weather, and other factors. Demand for electricity also affects the price. Because electricity cannot be stored for long periods of time, it must be produced and used when it is needed. As demand for electricity increases, the price also generally increases.[30][31]

The table below provides information about energy prices in Alabama as of April 2016. Information from select surrounding states is provided for comparison.[20]

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis.

Energy prices in Alabama

State | Natural gas
Dollars per thousand cubic foot  | Electricity
Cents per kilowatthour
Date  |  April 2016  |  April 2016
Alabama |  $14.3  |  9.3
Florida |  $17.8  |  9.9
Georgia |  $16.5  |  8.9
Mississippi |  $11.1  |  8.3
U.S. average |  $11.20  |  10.41
Source: U.S. Energy Information Administration, "Google Sheets API"

Electricity prices can vary depending on the type of consumer; consumer categories include residential, commercial, industrial, and in some cases, transportation. The ratemaking process is both political and economic. The table below presents information about electricity prices by consumer type in Alabama in April 2016. Information from select surrounding states is provided for comparison.

Electricity prices in Alabama by sector (in cents per kilowatthour)

State | Commercial | Industrial | Residential | Transportation | Average (all sectors)
Date  |  April 2016  |  April 2016  |  April 2016  |  April 2016  |  April 2016
Alabama |  11  |  5.9  |  12.4  |  N/A  |  9.8
Florida |  9  |  7.5  |  11.1  |  9  |  9.2
Georgia |  9.5  |  5.2  |  11.2  |  9.5  |  8.8
Mississippi |  9.4  |  5.4  |  11  |  9.4  |  8.8
U.S. average |  10.48  |  7.45  |  13.05  |  10.47  |  10.36
Source: U.S. Energy Information Administration, "Google Sheets API"

### Energy spending[edit]

The table below provides information about energy spending in Alabama as of 2014. Information from select surrounding states is provided for comparison.

Energy spending in Alabama, 2014 (in millions of dollar except per capita spending)

State | Petroleum | Coal | Natural gas | Nuclear | Per capita spending
Alabama |  $13,078  |  $1,677  |  $3,521  |  $344  |  $4,982
Florida |  $40,058  |  $1,858  |  $7,468  |  $216  |  $3,336
Georgia |  $21,955  |  $1,521  |  $4,963  |  $292  |  $3,935
Mississippi |  $10,071  |  $383  |  $2,129  |  $94  |  $5,328
U.S. average |  $17,267  |  $1,322  |  $3,786  |  $574  |  $5,304
Source: U.S. Energy Information Administration, "Google Sheets API"

### Fuel taxes[edit]

Click to enlarge.

Revenue collected by federal, state, and local governments from fuel taxes is usually used to fund transportation infrastructure such as roads and bridges. Some states may charge an excise tax based on how much gas or diesel is purchased. Some states may charge retail tax based on the average price of gas over a certain period. Additionally, some states may charge an environmental tax to be used for environmental projects. The Tax Foundation, which created the map to the right, used data from the American Petroleum Institute, which converted each state's different tax structure into cents per gallon to compare each state's gas taxes. In 2016, gas taxes accounted for 23 percent of the price of gasoline. Crude oil accounted for 40 percent of the price of gasoline, refining accounted for 24 percent of the price, and distribution and marketing accounted for 13 percent of the remainder.[32][33]

The table below provides information about state fuel taxes by type (excluding the federal gas taxes) in Alabama as of January 2016. As of January 2016, Alabama levied a 20.9 cent state gasoline tax and a 21.9 cent state diesel tax. Alabama ranked 40th highest in total gasoline taxes (federal and state) and 40th highest in total diesel fuel taxes as of January 2016.[34][35]

State motor fuel taxes in cents per gallon, January 2016

State | State gasoline tax | Total gasoline tax | Rank | State diesel tax | Total diesel tax | Rank
Alabama |  20.9  |  39.3  |  40  |  21.9  |  46.3  |  40
Florida |  36.6  |  55  |  7  |  33.8  |  58.2  |  12
Georgia |  31\.  |  49.4  |  17  |  34.7  |  59.1  |  8
Mississippi |  18.8  |  37.2  |  45  |  18.4  |  42.8  |  45
U.S. average |  30.29  |  48.69  |  N/A  |  30.01  |  54.41  |  N/A
Source: American Petroleum Institute, "Motor Fuel Taxes"

### Federal tax[edit]

The first federal tax on gasoline was proposed by Secretary of the Treasury Ogden L. Mills under President Herbert Hoover (R) as a revenue generating measure to balance the budget during the Great Depression. A 1-cent tax per gallon of imported gasoline and fuel oil was passed as part of the Revenue Act of 1932 and signed by President Franklin D. Roosevelt (D). The 1-cent tax continued until 1951 when the tax was increased to 2 cents in part to raise revenue during the Korean War. In 1956, the tax was raised to 3 cents to fund the Interstate Highway System. During this time, the Highway Trust Fund was created as a means to fund highway construction. Since 1956, there have been increases to the tax. As of April 2016, the gas tax was last raised by President Bill Clinton (D) in 1993 to 18.4 cents per gallon.[36]

# Utilities[edit]

The sections below include general information on utilities, an overview of utilities and electricity markets, information on the types of utilities in Alabama, an overview of electricity reliability organizations (EROs), and the EROs that oversee electricity in Alabama.

### Background[edit]

Utilities are firms that own and/or operate facilities to generate, transmit, and/or distribute electricity, gas, and/or water to the public. Electric utilities are commercial entities that own and operate facilities to generate, transmit, and distribute electricity to the public and/or the industrial sector. State and local regulators oversee transmission and distribution charges. Local utilities read electric meters and bill individuals or businesses, generally on a monthly basis.[37][38]

Utilities are defined differently in each state and in federal legislation. Two general types of utilities are private and public utilities. Private utilities, commonly known as investor-owned utilities, provide stocks to investors and sell bonds. These utilities are regulated by state regulatory agencies. State agencies are also responsible for setting retail rates charged by investor-owned utilities, overseeing utility infrastructure, and ensuring that investor-owned utilities respond to customer service demands. Public utilities include government or municipally owned utilities. Another type of utility is an electric cooperative. Cooperatives are nonprofit businesses voluntarily owned and managed by the individuals and businesses that use their services. They are commonly used in rural areas that do not have access to a larger state or region-wide electric grid.[38]

### Electricity markets[edit]

Electricity markets in each state are defined as regulated or deregulated. A regulated market includes utilities that own and manage the power plants that generate the electricity, the electricity transmission lines, and the distribution equipment (such as wires and electric poles). In addition, the utility rates are approved and regulated by local and state agencies. A deregulated market requires utilities to divest ownership in the generation and transmission of electricity. In this market, utilities oversee the interconnection from a meter at a household or business to the power grid and is responsible for billing ratepayers.[39][40]

Depending on the state and/or area, public utilities may provide most or all energy services to homes and businesses, or a state may allow other private electricity providers to transmit and distribute electricity in addition to other utilities. For example, one type of private provider is a retail energy provider, which sells electricity in areas with retail competition. The provider purchases wholesale electricity and the delivery services (such as transmission lines) and can price electricity to particular consumers.[39][40]

As of February 2017, Alabama was one of 40 states with a regulated electricity market. The Alabama Public Service Commission regulates one investor-owned electric utility— Alabama Power Co.—in the state. The commission oversees the company's revenues, expenses, rate base, equity and debt. Consumer-owned cooperatives and municipal utilities are exempt from state regulation, and the commission does not have regulatory authority over wholesale electric providers.[41]

As of February 2017, the Alabama Municipal Electric Authority, which was formed in 1981, was the wholesale power provider for 11 public power utilities in Alabama, which included approximately 350,000 customers in the cities of Alexander City, Dothan, Fairhope, Foley, LaFayette, Lanett, Luverne, Opelika, Piedmont, Sylacauga, and Tuskegee.[42]

### Electric reliability organizations[edit]

The Energy Policy Act of 2005 required the Federal Energy Regulatory Commission (FERC) to designate an electric reliability organization (ERO) for the United States. An ERO oversees the reliability of a nation's electric grid. In 2006, FERC granted authority to the North American Electric Reliability Corporation (NERC) to develop and enforce grid reliability standards for the United States. NERC, a self-regulated nonprofit corporation, is authorized to enforce grid reliability standards for all users, owners, and operators of the U.S. electrical system.[43]

NERC works with eight regional reliability organizations to oversee the U.S. electrical system. These organizations, known as regional entities, are composed of officials from investor-owned utilities, federal power agencies, electric cooperatives, and state and municipal utilities. Regional entities enforce NERC and regional reliability standards. Further, they forecast electricity demand and coordinate operations with other regional entities.[44]

#### Alabama EROs[edit]

As of February 2017, the SERC Reliability Corporation was the nonprofit regulatory commission that oversees electricity reliability in 16 central and southeastern states, including Alabama. SERC was authorized by the North American Electric Reliability Corporation in July 2006 to serve as an ERO under the Federal Power Act. SERC monitors compliance with electricity reliability standards and assesses seasonal and long-term electricity grid reliability.[45]

# Background[edit]

The sections below include an overview of the types of renewable and nonrenewable energy produced and consumed in the United States, an energy profile of Alabama (from the U.S. Energy Information Administration), a general profile of Alabama (from the 2016 edition of the Almanac of American Politics), and various economic indicators in Alabama.

### Background on energy resources[edit]

Nonrenewable energy sources, such as coal, oil, and natural gas (sometimes known as fossil fuels), and renewable sources, such as hydropower, wind, biofuels, and solar energy, are produced in each state, though at different levels depending on a state's geography, energy consumption, and the raw materials available in a particular state. For example, several states do not have coal, oil, and/or natural gas resources. States that lack these resources import these fuels.[46]

According to the U.S. Department of Energy, oil, coal, and natural gas comprise the majority of the resources used to generate power in the United States. In 2014, the top five energy-producing states were the top five fossil fuel-producing states—Texas, Wyoming, Pennsylvania, Louisiana, and West Virginia. These states' fossil fuel production accounted for approximately 42 percent of U.S. energy production in 2014. States with fewer coal, oil, and natural gas resources generally consume less energy. In 2014, the bottom five energy-producing states—Rhode Island, Delaware, Hawaii, Nevada, and New Hampshire—produced 0.2 percent of U.S. energy and consumed approximately 2 percent of total U.S. energy.[46]

The production of biofuels (liquid fuels created from plant or plant-derived materials) is generally concentrated in the Midwest—states such as Illinois, Iowa, Nebraska, and South Dakota—given the region's agricultural production of crops such as corn, which is used to make ethanol, a biofuel that can be blended with gasoline and used as a transportation fuel.[46]

Other renewable sources are used to generate power in the states include hydroelectric power, which accounted for about half of all renewable energy production in the United States in 2014.[46]

### Alabama energy profile[edit]

Alabama contains several coal deposits as well as natural gas and crude oil reserves. Areas in the southwest portion of the state contain rivers used for hydroelectric power, and Alabama's forests provide the state with biomass resources. The state is ranked in the top-quarter of all 50 states in energy consumption per capita. In addition, Alabama is above the national median in total energy consumption due to its industrial sector, which includes automotive, chemical, technology, forestry, metals manufacturing, and aeronautical industries. Alabama's industrial sector consumed more energy than the state's residential sector and transportation sector combined as of 2013. The state's residential and commercial sector accounted for approximately 33 percent of Alabama's end-use energy consumption despite high electricity use for cooling during the summer and heating in cooler months.[47]

Crude oil was discovered in western Alabama in the mid-1940s. As of 2014, crude oil was produced in the northwestern portion of the state and along the Gulf Coast. In 2014, the state had 66 million barrels of proved crude oil reserves. Alabama also has onshore and offshore natural gas wells. As of 2014, the state produced less than 1 percent of total U.S. natural gas production. Around 60 percent of Alabama's natural gas production came from onshore wells in 2014. In addition, Alabama ranked 14th in total coal production among the 50 states in 2014. In that same year, around 67 percent of Alabama coal was exported. More than half of Alabama's coal is delivered by barge, truck, or railroad to electric power plants in the state.[47]

In 2014, Alabama was second to New York in hydroelectric power among states east of the Rocky Mountains. Twenty-four hydroelectric dams accounted for 6 percent of the state's net electricity generation in 2014.[47]

## State profile[edit]

Demographic data for Alabama

| Alabama| U.S.
Total population:| 4,853,875| 316,515,021
Land area (sq mi):| 50,645| 3,531,905
Race and ethnicity**
White:| 68.8%| 73.6%
Black/African American:| 26.4%| 12.6%
Asian:| 1.2%| 5.1%
Native American:| 0.5%| 0.8%
Pacific Islander:| 0.1%| 0.2%
Two or more:| 1.7%| 3%
Hispanic/Latino:| 4%| 17.1%
Education
High school graduation rate:| 84.3%| 86.7%
College graduation rate:| 23.5%| 29.8%
Income
Median household income:| $43,623| $53,889
Persons below poverty level:| 23.3%| 11.3%
Source: U.S. Census Bureau, "American Community Survey" (5-year estimates 2010-2015)
Click here for more information on the 2020 census and here for more on its impact on the redistricting process in Alabama.

* * *

**Note: Percentages for race and ethnicity may add up to more than 100 percent because respondents may report more than one race and the Hispanic/Latino ethnicity may be selected in conjunction with any race. Read more about race and ethnicity in the census here.

### Presidential voting pattern[edit]

See also: Presidential voting trends in Alabama

Alabama voted Republican in all five presidential elections between 2000 and 2016.

More Alabama coverage on Ballotpedia

* Elections in Alabama
* United States congressional delegations from Alabama
* Public policy in Alabama
* Influencers in Alabama
* Alabama fact checks
* More...

### Economic indicators[edit]

See also: Economic indicators by state

Alabama's GDP increased by 0.7 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.[48][49][50]

In September 2014, Alabama had the lowest unemployment rate among its neighboring states, at 6.6 percent. This was higher than the national unemployment rate, however. The greatest portion of its population earned annual incomes between 200 and 399 percent of the federal poverty level, with a median annual household income of $43,330.[51][52][53][54]

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Various economic indicators by state

State  |  Distribution of population by FPL* (2013)  |  Median annual income (2011-2013)  |  Unemployment rate  |  Total GSP (2013)†
Under 100%  |  100-199%  |  200-399%  |  400%+  |  Sept. 2013  |  Sept. 2014
Alabama |  17%  |  22%  |  33%  |  28%  |  $43,330  |  6.4%  |  6.6%  |  $193,566
Georgia |  16%  |  21%  |  32%  |  31%  |  $47,753  |  8%  |  7.9%  |  $454,532
Mississippi |  23%  |  20%  |  29%  |  28%  |  $40,338  |  8.4%  |  7.7%  |  $105,163
Tennessee |  18%  |  20%  |  34%  |  28%  |  $42,785  |  8.2%  |  7.3%  |  $287,633
United States | 15% | 19% | 30% | 36% | $52,047 | 7.2% | 5.9% | $16,701,415
* Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government."
† In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state."
Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

## See also[edit]

* Energy policy in the U.S.
* Fracking in Alabama
* Net metering
* Renewable Portfolio Standard
* Environmental policy in Alabama

## Recent news[edit]

The link below is to the most recent stories in a Google news search for the terms Alabama energy policy. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Energy policy in Alabama - Google News

## Footnotes[edit]

1. ↑ 1.0 1.1 State Oil and Gas Board of Alabama, "State Oil and Gas Board of Alabama Administrative Code," January 2017
2. ↑ State Oil and Gas Board of Alabama, "Home page," accessed March 13, 2017
3. ↑ Alabama Administrative Code, "Chapter 400 - State Oil and Gas Board of Alabama," accessed March 15, 2017
4. ↑ 4.0 4.1 4.2 4.3 4.4 U.S. Environmental Protection Agency, "Chapter 3. Funding and Financial Incentive Policies," accessed March 1, 2017
5. ↑ National Renewable Energy Laboratory, “State & Local Activities,” accessed January 30, 2014
6. ↑ National Conference of State Legislatures, "State Renewable Portfolio Standards and Goals," accessed March 14, 2017
7. ↑ 7.0 7.1 Institute for Energy Research, "Alabama Energy Facts," accessed March 15, 2017
8. ↑ Alabama Department of Economic and Community Affairs, "Energy Financing Programs," accessed March 13, 2017
9. ↑ AlabamaSAVES, "Overview," accessed March 13, 2017
10. ↑ AlabamaSAVES, "AlabamaSAVES Summary," accessed March 13, 2017
11. ↑ DSIRE, "AlabamaWISE Home Energy Program," May 9, 2016
12. ↑ DSIRE, "Alabama - Building Energy Code," October 22, 2015
13. ↑ Alabama Department of Economic and Community Affairs, "Alabama Energy and Residential Codes," accessed March 15, 2017
14. ↑ DSIRE, "Energy Standards for State Agencies - Alabama," May 9, 2016
15. ↑ Database of State Incentives for Renewables and Efficiency, "Glossary," accessed October 22, 2014
16. ↑ Edison Electric Institute, "Straight Talk About Net Metering," September 2013
17. ↑ Call Me Power, "What is the difference between wholesale and retail electricity?" March 12, 2015
18. ↑ DSIRE, "Net metering programs," accessed February 28, 2017
19. ↑ U.S. Energy Information Administration, "British Thermal Units (Btu)," December 15, 2014
20. ↑ 20.0 20.1 20.2 U.S. Energy Information Administration, "Alabama State Energy Profile," May 19, 2016
21. ↑ U.S. Energy Information Administration, "Table 13. Productive Capacity and Capacity Utilization of Underground Coal Mines by State and Mining Method, 2014," accessed July 19, 2016
22. ↑ U.S. Energy Information Administration, "Crude Oil Production," July 31, 2015
23. ↑ U.S. Energy Information Administration, "Natural Gas Gross Withdrawals and Production," July 31, 2015
24. ↑ Congressional Research Service, "Federal Land Ownership: Overview and Data," December 29, 2014
25. ↑ U.S. Bureau of Land Management, "Public Land Statistics 2014," May 2015
26. ↑ Western Energy Alliance, "Production," accessed November 25, 2015
27. ↑ James M. Inhofe - U.S. Senator, Oklahoma, "Inhofe Introduces Bill to Achieve Domestic Energy Independence Through State Control of Federal Energy Resources," June 26, 2013
28. ↑ U.S. Bureau of Land Management, "Oil and Gas Lease Sales," accessed October 20, 2014
29. ↑ U.S. Energy Information Administration, "British Thermal Units (Btu)," December 15, 2014
30. ↑ RWE, "How the electricity price is determined," accessed April 21, 2015
31. ↑ Forbes, "How The Price For Power Is Set," December 26, 2012
32. ↑ U.S. Energy Information Administration, "Gasoline and Diesel Fuel Update," accessed April 25, 2016
33. ↑ Tax Foundation, "How High Are Gas Taxes in Your State?" July 23, 2016
34. ↑ The Washington Post, "A (very) brief history of the state gas tax on its 95th birthday," February 25, 2014
35. ↑ American Petroleum Institute, "Motor Fuel Taxes," accessed April 27, 2016
36. ↑ U.S. Department of Transportation, "When did the Federal Government begin collecting the gas tax?" November 18, 2015
37. ↑ Business Dictionary, "Electric utility," accessed February 28, 2017
38. ↑ 38.0 38.1 U.S. Department of Energy, "A Primer on Electric Utilities, Deregulation, and Restructuring of U.S. Energy Markets," May 2002
39. ↑ 39.0 39.1 Electric Choice, "Map of Deregulated Energy States and Markets (Updated 2017)," accessed February 28, 2017
40. ↑ 40.0 40.1 Allied Power Services, "Deregulated States," accessed February 28, 2017
41. ↑ Alabama Public Service Commission, "Electricity Section," accessed March 15, 2017
42. ↑ Alabama Municipal Electric Authority, "Who we are," accessed March 15, 2017
43. ↑ WhatIs.com, "North American Electric Reliability Corporation (NERC)," accessed February 28, 2017
44. ↑ North American Electric Reliability Corporation, "Frequently asked questions," August 2013
45. ↑ SERC Reliability Corporation, "About SERC," accessed March 15, 2017
46. ↑ 46.0 46.1 46.2 46.3 U.S. Department of Energy, "How Much Energy Does Your State Produce?" November 10, 2014
47. ↑ 47.0 47.1 47.2 U.S. Energy Information Administration, "Alabama - State Profile and Energy Estimates," accessed March 14, 2017
48. ↑ Academy Health, "Impact of the Economy on Health Care," August 2009
49. ↑ The Conversation, "Budget explainer: What do key economic indicators tell us about the state of the economy?" May 6, 2015
50. ↑ Health Affairs, "Socioeconomic Disparities In Health: Pathways And Policies," accessed July 13, 2015
51. ↑ The Henry J. Kaiser Family Foundation, "Distribution of Total Population by Federal Poverty Level," accessed July 17, 2015
52. ↑ The Henry J. Kaiser Family Foundation, "Median Annual Household Income," accessed July 17, 2015
53. ↑ The Henry J. Kaiser Family Foundation, "Unemployment Rate (Seasonally Adjusted)," accessed July 17, 2015
54. ↑ The Henry J. Kaiser Family Foundation, "Total Gross State Product (GSP) (millions of current dollars)," accessed July 17, 2015

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