The state's largest electric utility will begin the program in the Birmingham area and plans to move it statewide by the end of 2010, company spokesman Pat Wylie said.
To sign up, residents of homes or apartments must have one of Alabama Power's new "smart meters." They are digital meters that communicate directly with the utility.
About 300,000 have been installed in the Birmingham area, and all 1.4 million Alabama Power customers statewide should have them by the end of 2010, Wylie said.
Customers who choose the cutoff plan will have a device installed on their air conditioner. When demand for electricity hits a peak on hot weekday afternoons between June and September, the utility will be able to cut off the air conditioners for 15 minutes out of every 30 minutes.
PSC staff members said air conditioners can be turned off between 2 p.m. and 7 p.m. on weekdays for up to a maximum of 120 hours during the four months. Customers who participate will get a $20 credit each November on their power bill.
PSC staff members said the program is aimed at homes and apartments where the residents are at work on weekday afternoons. Most shouldn't notice any difference in the temperature by the time they get home in the evenings, they said.
People who leave their thermostats around 75 degrees when they go to work should realize a cost savings from the program, but people with well-insulated homes who turn their thermostats to 80 degrees or above while at work probably won't see much difference in their power bills, they said.
Alabama Power is required by the PSC to meet customers' peak demands and the new plan should help.
The plan should save money in the short term by keeping Alabama Power from having to operate its most expensive plants to meet peak demand and in the long run by possibly reducing the need for new plants, officials said.
"This is really going more toward energy efficiency and conservation," Commissioner Susan Parker said.
Alabama Power started a similar program in 1992 that used pager technology to cut off air conditioners. The program, called Centsable Switch, had 20,000 participants at its peak, but is now down to less than 7,000.
Smart meters could also allow for a similar program that could cut off homes' hot water heaters in the afternoon, said John Free, manager of the PSC's electricity section.
The meters, which are becoming more common throughout the country, don't require meter readers because the units communicate directly with the power company. They also notify the power company immediately when electric service goes out.