Alabama Power charges residential solar customers $5.41 per kilowatt of installed capacity every month, on top of a normal bill, just for having a grid-connected system. A 6 kW rooftop array costs about $32/month in fees before a single kWh is counted. A federal court upheld the charge in March 2026, ending a five-year legal challenge.
If you’re evaluating solar anywhere outside California, this is worth understanding before you sign a contract. Not every utility does this, but the ones that do can meaningfully change your payback math.
Before you sign a solar contract, know exactly what your utility charges beyond the panels.
Model my real solar payback →What Alabama Power Actually Charges
The fee is called a Capacity Reservation Charge, billed under Rate Rider RGB. It applies to any customer with on-site generation connected in parallel with the grid, residential solar included. The Alabama Public Service Commission approved the original version in December 2012 at $5.00/kW (secondary service), and approved an increase to the current $5.41/kW secondary ($4.87/kW primary) in 2020.
Alabama Power’s argument: a grid-tied solar customer still relies on the grid for backup power at night, during clouds, and whenever their system underproduces. The utility says it has to keep capacity ready for that customer whether or not they’re buying much energy from it, and the charge recovers the cost of reserving that capacity.
The Legal Fight, and Why It Kept Going
Solar advocates saw it differently. The Greater Birmingham Alliance to Stop Pollution (GASP), represented by the Southern Environmental Law Center, filed a formal complaint with the Alabama PSC in 2018 arguing the fee was discriminatory and effectively punished customers for installing solar. The PSC dismissed the complaint in 2020 and approved the fee increase in the same order.
GASP and several individual solar customers then sued in federal court (Bankston et al. v. Alabama Public Service Commission, M.D. Ala. No. 2:21-cv-00469), arguing the charge violated the federal Public Utility Regulatory Policies Act (PURPA), which restricts how utilities can treat small generators. The case survived a jurisdictional challenge in 2024 and went to the merits. On March 25, 2026, the court granted summary judgment for the PSC and Alabama Power, finding the charge was adequately tied to real backup-capacity costs. The Southern Environmental Law Center said afterward it was reviewing its legal options, but as of this writing the fee remains fully in effect.
Alabama has one of the lowest rates of residential rooftop solar adoption in the country. Whether the fee is a cause or just a contributing factor is genuinely disputed, but it’s not a coincidence that advocates keep fighting it.
It’s Not Just Alabama
Alabama isn’t the only place this happens; it’s just the most litigated. Several other utilities bill solar owners a fee that never appears on a non-solar customer’s bill, structured differently in each case:
| Utility (state) | Fee structure | Status |
|---|---|---|
| Alabama Power (AL) | $5.41/kW-month secondary | Upheld by federal court, March 2026 |
| Duke Energy Carolinas (NC) | $0.96/kW-month, plus $2.05/kW-month above 15 kW | Currently billed under Rider RSC |
| Duke Energy Carolinas (SC) | $0.38/kW-month, plus $5.86/kW-month above 15 kW | Currently billed, effective Jan 2025 |
| Salt River Project (AZ) | $20-40/month service charge plus on-peak demand charges | Currently billed under rate plan E-27 |
| Red River Valley Cooperative (MN) | First 3.5 kW free, then ~$3.64/kW-month, capped ~$39/month | Currently billed |
| Arizona Public Service (AZ) | Solar-specific surcharge added after 2022 rate case | Vacated by AZ Court of Appeals, June 2026 (due-process grounds; not a merits ruling) |
| We Energies (WI) | Proposed solar standby charge, ~$3.79/kW | Overturned by Dane County Circuit Court in 2014 |
A few things stand out. Duke Energy’s version, billed under Rider RSC in both North Carolina and South Carolina, works almost exactly like Alabama’s: a flat monthly charge tied to your system’s nameplate capacity in kW, on top of your normal bill, whether you’re on a bidirectional meter or not. Salt River Project (a separate Arizona utility from APS, not subject to the same state regulator) puts new solar customers on a distinct rate plan, E-27, with a higher fixed service charge and demand charges that don’t exist on its standard residential plan; that plan is scheduled to stay in place through November 2029. And South Carolina is a useful reminder to read the fine print: the state also has a small distributed-energy-resources fee that every residential customer pays (about $10-12/year, solar or not), which is a completely separate line item from Duke’s solar-specific Rider RSC charges.
Not every fight goes the utility’s way. Wisconsin’s PSC approved a solar standby charge for We Energies in 2014, and a state court overturned it for lack of supporting evidence. Arizona Public Service added a solar-specific surcharge after its 2022 rate case; the Arizona Court of Appeals vacated it in June 2026, but on due-process grounds (APS never properly proposed the specific charge that got approved), not because the underlying idea was ruled illegal. It’s a live regulatory fight in multiple states, not a settled question, and the outcome depends heavily on your state’s utility commission and courts.
New York’s Version: A Fee Tied to When You Went Solar
New York takes a different approach that’s worth knowing about separately, because the mechanism and the justification are both different from Alabama’s. Every major New York utility (Con Edison, National Grid, NYSEG, RG&E, Central Hudson, and others) charges a Customer Benefit Contribution on residential solar systems interconnected on or after January 1, 2022. It’s billed per kW of installed capacity per month, updated annually by each utility, and ranges from roughly $0.97/kW-month (National Grid) to $1.67/kW-month (Central Hudson) as of 2026, meaning a 7 kW system runs somewhere between $7 and $12/month depending on your utility.
The stated purpose isn’t “grid backup capacity” the way Alabama frames it. New York’s charge is meant to recover the cost of statewide public-benefit programs (things like low-income assistance and energy-efficiency funding) that a net-metered solar customer would otherwise avoid paying into through their reduced volumetric bill. If you installed solar in New York before 2022, you’re grandfathered out of it. If you install after, it’s a fixed, published, non-negotiable part of your bill for as long as you’re net metering, and it should be in your payback math from the installer’s first quote, not a surprise on your first bill.
This Is Not the Same Thing as California’s New Fixed Charge
If you’ve read about California’s new Base Services Charge (the $6-$24.15/month fee now on every PG&E, SCE, and SDG&E bill), it’s worth being precise about the difference. California’s charge applies to every residential customer, solar or not. It was designed under AB 205 to redistribute fixed grid costs more broadly (with income-based tiers), not to single out solar owners. See California’s new fixed charge, explained for the full mechanics.
Alabama’s Capacity Reservation Charge, by contrast, is triggered specifically by having a grid-connected generator. Two different policy tools solving two different framed problems, and it matters which one your utility uses, because only one of them changes your solar payback math directly.
What to Check Before You Buy Solar Anywhere Outside California
Ask your utility directly whether it has a standby, capacity reservation, or grid access charge for net-metered or grid-tied generation. This is not always advertised clearly on a rate schedule, and installers don’t always mention it in a sales pitch.
If you’re on a rural electric cooperative, check your state’s specific statute. Co-ops in states with a law like Minnesota’s are legally permitted to add fees investor-owned utilities in the same state might not be able to.
Model any known fee as a fixed monthly cost against your system, not against your bill savings. A $30-40/month capacity charge on top of a system that was supposed to save you $80/month cuts the real savings by a third or more, and that math needs to be in your payback calculation from day one, not discovered after your first post-solar bill.
Don’t assume a fee that exists in one state applies elsewhere, or that “no fee” in one utility’s territory means the same next door. Salt River Project and Arizona Public Service serve neighboring parts of the same state under completely different rules. Duke Energy charges a solar fee in the Carolinas; plenty of other utilities in other states charge nothing comparable. These structures vary by utility, not just by state, and are frequently in active litigation. What’s legal and in effect somewhere today may be vacated, revised, or upheld differently next year.
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Dana Whitmore
Energy Engineer & Billing Analyst · Optiwatt Energy Advisor
Dana has spent the past three years analyzing residential electricity billing data across PG&E, SCE, and SDG&E service territories. She's reviewed billing records for thousands of California households, and built the simulation engine that powers this site's rate-plan comparisons. She holds a degree in Electrical Engineering and lives in the Bay Area.