Spire asked to increase earned profit, APSC voted to do the opposite

MONTGOMERY, Ala. (WBRC) – The Alabama Public Service Commission (APSC) voted to cut how much profit Spire, a natural gas company, is allowed to earn from its gas customers Tuesday. This means customers won’t pay as much as they would have under Spire’s old rate term, according to APSC President Cynthia Almond.

“Because of this reduction, customer rates set during the next budget process will be lower than they would have been if the company had maintained the previous RSE terms,” Almond said after the vote.

The 3-0 vote concludes a rare, contested case that WBRC has followed for weeks. The rate case proceeding was ordered following months of failed negotiations between Spire and the Alabama Attorney General’s Office. The AGO acts on behalf of ratepayers in all proceedings involving utilities with the APSC.

How much profit Spire is allowed to earn from its natural gas customers is one of five issues investigated during this rate proceeding, which operated like a trial. Spire put on expert witnesses to make its case. The AGO and Energy Alabama, a clean energy nonprofit, intervened in this rate case with their own experts and tested Spire’s data.

Spire CFO Brittany Mathis answers questions during a rare rate hearing.(WBRC)

For customers, one of the most impactful issues involves earned profit. Spire was earning 9.7% return on equity, or ROE. It requested a bump to 10.5% to be more competitive, noting the APSC allows Alabama Power Company to earn around 11% ROE. The Attorney General’s Office and Energy Alabama put on evidence showing that number needed to be lower, as illustrated below.

Your natural gas rates are set by an adjustable rate formula called Rate Stabilization and Equalization, or RSE. Earned profit, or ROE, is part of that formula and it operates within a set band. If Spire’s earned ROE rises above the top of the band, the company must refund customers. If it falls below the bottom of the band, the formula triggers a rate increase, so Spire can recover its allowed earnings.

Spire’s ROE band was 9.50%-9.90%. The company wanted it raised to 10.30%–11.00%. The Attorney General’s Office and Energy Alabama argued for a lower band.

Spire also requested an increase in its customer charge, which is $7.98 and hasn’t changed in more than 70 years. The APSC granted this request, phasing in a $2.50 increase in October 2026 and another $2.50 in October 2027. Almond said this would not impact most customers.

“The change is revenue neutral,” Almond explained. “It does not increase the total revenue the companies are authorized to collect. Instead, it shifts a portion of the recovery of fixed customer costs away from the volumetric or usage-based portion of the bill and into the monthly customer charge.”

Here are the five points investigated during the rate proceeding.

Almond said this rare rate case gave the commission a new opportunity to explore Spire’s rates with fresh eyes.

“The mission of the PSC is to ensure a regulatory balance between the regulated company and consumers,” Almond noted. “In order to provide consumers with safe, adequate, and reliable services at rates that are just and reasonable. That balance is not always easy to achieve, and these are not decisions that we take lightly.”

Commissioner Jeremy Oden acknowledged all the work it took by staff, intervenors, and Spire to get the APSC to the point of voting on this rate case.

“This is the way the process works for the people and we appreciate everybody who did this…I think this may set a change and I think it’s a good change,” Oden added.

It’s estimated the ROE drop could cut Spire’s revenue by about $3 million a year.

“The ROE decrease means that our ability to invest in growth and economic development opportunities is going to be impacted,” commented Reynolds Anderson, Spire’s VP of External Affairs. “So what that really means is our ability to support the state of Alabama’s activities.”

Alabama Public Service Commission: September 2026(WBRC)

Spire confirmed it would not appeal this decision to the Alabama Supreme Court.

Energy Alabama’s Deputy Director Sheree Martin applauded the APSC for what she called a first-of-its-kind rate investigation and for its decision to bring Spire’s return on equity down to a more reasonable level.

“Spire came in seeking a higher return on equity, but got a reduction instead,” Martin said in a written statement. “Energy Alabama asked for a bigger reduction than the PSC approved, but the final result is still a big win for consumers. We are committed to continuing to push for clean and more affordable energy for all Alabamians.”

The same points were also investigated separately for Spire Gulf.

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