Alabama's 150-Megawatt Rule Took Effect. Data Center Contracts Changed.

Alabama's Senate Bill 270 took effect October 1, setting statewide terms for how the state's largest data centers buy power. The law defines a large load customer as one requiring peak demand of 150 megawatts or greater across one or more contiguous parcels and operating solely for data processing. Those customers must now cover the incremental costs of their own retail electric service, and the Alabama Public Service Commission must review each contract before it takes effect.

The bill, carried by Senator Bell, directs the commission to confirm two things in every large load contract: that it recovers the incremental cost of generation, transmission, distribution, fuel and taxes tied to serving that customer, and that it produces positive benefits for other customers through lower costs, improved grid efficiency or economic growth. The commission opened a generic proceeding in July to build the review procedure and took public comment through early August, finishing the work before the October 1 date. The review window for these contracts runs 45 days, replacing the 10-day window that had applied to Alabama Power filings.

Alabama Power filed three large load contracts during 2026: Dotier, LLC, a Meta subsidiary, on June 18; Alabama ADC Holdings, LLC, tied to Nebius, on July 24; and Woostor, LLC, on August 14. Southern Company has told investors that Alabama Power holds roughly four gigawatts of data center load under contract. At least a dozen developments have been proposed across the state. A 300-megawatt facility is under construction in Birmingham's Oxmoor Valley, and the developer behind Project Red Clay in Lowndes County asked Alabama Power for 1,500 megawatts of capacity.

For electrical contractors, the change is about timing and cost allocation rather than code. Nothing in the law alters the National Electrical Code or Alabama licensing. What it alters is when a job gets released. A 150-megawatt campus now waits on a contract that has to survive a 45-day commission review, and the cost of the substations, high-side feeders, switchgear and transformers built to serve it is written into that contract instead of spread across the general rate base.

That moves the electrical scope closer to the customer's own balance sheet, which tends to make a schedule firmer once a contract clears. Four gigawatts under contract is substation, medium-voltage and switchgear work measured in years rather than months, and it is landing in a state where that skill set has not historically run deep. Contractors staffing these campuses are hiring journeymen who can terminate medium-voltage cable, set and align gear, and work through a commissioning sequence.

The law is not a moratorium. Contracts take effect automatically once the 45-day period expires without disapproval, so no affirmative commission vote is required, and the pricing terms in the filings so far are heavily redacted. Alabama's pipeline is still growing. What changed on October 1 is who pays for the wire.