HB403 • 2026

Electric Utilities; review by Public Service Commission of certain contracts with large load customers further provided

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Rafferty
Last action: 2026-03-17
Official status: Passed by House of Origin
Effective date: Not listed

Plain English Breakdown

The official text defines incremental costs for a 'large load data center customer,' but the general definition of 'Large Load Customer' does not explicitly restrict it only to data centers, though the context implies large industrial loads.

Rules for Electric Utility Contracts with Large Load Customers

This law requires the Public Service Commission to review and approve special electricity contracts for customers who need at least 100 megawatts of power, ensuring these deals cover extra costs and help other users.

What This Bill Does

Adds a new section (37-4-22.1) to the Alabama state code regarding utility contracts with large load customers.
Requires the Public Service Commission to check if contract pricing covers all extra costs caused by serving these specific customers.
Mandates that approved contracts must promote positive benefits, such as lower rates or better efficiency for other electricity users.
Defines specific terms like 'incremental costs' and 'large load customer' to guide how officials review agreements.

Who It Names or Affects

Electric utilities in Alabama
Customers who sign contracts requiring at least 100 megawatts of peak power demand on one or more connected pieces of land.
The Public Service Commission, which must review and approve these specific contracts.

Terms To Know

Incremental Costs: Extra expenses for making, moving, selling, or furnishing electricity that the utility would not have if it did not serve this large load customer.
Large Load Customer: A buyer of electricity whose contract requires a peak power demand of 100 megawatts or more at one location or connected locations.

Limits and Unknowns

The law lists examples like lower costs and increased efficiency as positive benefits, but does not set specific dollar amounts for these benefits.
This act becomes effective on October 1, 2026.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

QNGTN14-1

R 946

Adopted

Plain English: This amendment requires Alabama's Public Service Commission to check if big electricity contracts cover extra costs and help other customers before approving them.

It defines a 'large load customer' as one needing at least 100 megawatts of power on connected land, such as data centers.
The commission must ensure these large customers pay for the specific extra electricity costs they create that other users would not have to cover.
Contracts can only be approved if they are expected to lower costs or improve system efficiency for regular home and business customers.

The text does not explain exactly how much money must be saved by other customers to count as a 'positive benefit'.
It is unclear what happens if the commission finds that a contract fails these new tests.
This law will only take effect on October 1, 2026.

Bill History

2026-03-17 House
Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 947 (Yeas 104, Nays 0)
2026-03-17 House
Motion to Adopt - Adopted Roll Call 946 (Yeas 104, Nays 0)
2026-03-17 House
Third Reading in House of Origin (Yeas 103, Nays 1)
2026-03-17 House
Engrossed
2026-03-17 House
Rafferty 1st Substitute Offered
2026-02-10 House
Read for the Second Time and placed on the Calendar
2026-02-10 House
Reported Out of Committee House of Origin
2026-02-05 House
Pending Committee Action in House of Origin
2026-02-05 House
Read for the first time and referred to the House Committee on Transportation, Utilities and Infrastructure

Official Summary Text

Electric Utilities; review by Public Service Commission of certain contracts with large load customers further provided

Current Bill Text

Read the full stored bill text

HB403 ENGROSSED
Page 0
HB403
QNGTN14-2
By Representatives Rafferty, Hulsey, Tillman
RFD: Transportation, Utilities and Infrastructure
First Read: 05-Feb-26
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HB403 Engrossed
Page 1
First Read: 05-Feb-26
A BILL
TO BE ENTITLED
AN ACT
Relating to utilities; to add Section 37-4-22.1 to the
Code of Alabama 1975; to provide specific considerations for
the Public Service Commission's review and approval of retail
electric service contracts between a utility and a large load
customer, including determining that such contracts provide
for the recovery of incremental costs and promote other
positive benefits.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 37-4-22.1 is added to the Code of
Alabama 1975, to read as follows:
§37-4-22.1
(a) For purposes of this section, the following terms
have the following meanings:
(1) INCREMENTAL COSTS OF RETAIL ELECTRIC SERVICE. The
additional costs associated with the generation, transmission,
distribution, sale, or furnishing of electricity to a large
load data center customer, including fuel costs and taxes,
which the utility would not incur but for the large load data
center customer contract.
(2) LARGE LOAD CUSTOMER. A customer of the utility
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HB403 Engrossed
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(2) LARGE LOAD CUSTOMER. A customer of the utility
which has executed a contract for retail electric service with
the utility which requires the utility to serve an expected
total peak demand of 100 megawatts or greater at one or more
contiguous parcels of land.
(3) TERMS AND CONDITIONS. The provisions in a contract
for service between a customer and utility which address
matters such as minimum term for contract length, upfront
payments, security and collateral, and minimum payment.
(b) For purposes of Section 37-4-22(b), a contract for
retail electric service between a utility and a person that
qualifies as a large load customer is consistent with the
public interest where the commission determines that the
contract pricing and contract terms and conditions over the
contract term are expected to:
(1) Provide for the recovery of the incremental costs
of retail electric service to the large load customer's
premises from the large load customer; and
(2) Promote positive benefits to other retail electric
customers of the utility.
(c) The determination of whether a contract between a
large load customer and a utility promotes positive benefits
under subdivision (b)(2) includes considerations such as:
(1) Whether the pricing and terms and conditions of the
contract could lower costs for other residential, commercial,
and industrial customers of the utility; and
(2) Whether the large load customer is expected to
increase the efficiency of the utility's power system.
Section 2. This act shall become effective on October
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HB403 Engrossed
Page 3
Section 2. This act shall become effective on October
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HB403 Engrossed
Page 4
1, 2026.
House of Representatives
Read for the first time and referred
to the House of Representatives
committee on Transportation,
Utilities and Infrastructure
................05-Feb-26
Read for the second time and placed
on the calendar:
0 amendments
................10-Feb-26
Read for the third time and passed
as amended
Yeas 104
Nays 0
Abstains 1
................17-Mar-26
John Treadwell
Clerk
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