Kingsport Power expects up to 20% rate hike Jan. 1

Rick Wagner • Nov 14, 2008 at 12:00 AM

KINGSPORT — Kingsport Power Co.’s 46,000 customers face a possible 17 percent to 20 percent increase in their electric bills starting Jan. 1.

It would bring a monthly 1,500 kilowatt residential bill from about $94 next month to $115 in January.

Kingsport Power is a subsidiary of American Electric Power Co. Inc. (AEP) and buys power from fellow AEP subsidiary Appalachian Power Co. (APCo).

John Shepelwich, APCo’s Richmond-based corporate communications manager, said Friday the proposed increase — which was delayed earlier this year but requested this week from federal and state regulators — would cover increased costs of doing business.

Isaac Webb, Kingsport-based manager of distribution services for APCo, said those include environmental upgrades to power-generating facilities in West Virginia and Virginia that in some cases cost as much or more than building the original plant.

However, electric company officials also said Friday even with the increase and other changes in electric rates throughout the region, Kingsport area power rates would remain the lowest in the Tri-Cities also served by the Tennessee Valley Authority.

Fluctuating fuel costs are passed along quarterly by TVA and monthly by APCo.

Webb said if the proposed increase goes into effect Jan. 1 — and accounting for a TVA fuel surcharge decrease — the monthly charge for 1,500 kilowatt hours in the greater Tri-Cities would be as follows:

•About $115 for Kingsport Power, up from about $93.89 in December and $98.32 in November. Kingsport Power serves the greater Kingsport area including eastern Hawkins County and part of middle Sullivan County.

•$146.05 for the Johnson City Power Board, which serves Colonial Heights and part of south Kingsport.

•$156.49 for Bristol Virginia Utilities.

•$132.40 for Bristol Tennessee Essential Services.

•$142.08 for Holston Electric Cooperative, which serves most of Hawkins County.

•And an Oct. 28 implemented interim rate of $136.45 for Appalachian Power in Scott County and other service areas of far Southwest Virginia. That is a number Webb predicted would decrease some before the Virginia Corporation Commission makes it permanent.

Webb said rates are higher for customers in Virginia, including the 12,000 customers in Scott County, because customers are farther apart compared to Kingsport Power’s more compact service area and because of regulatory costs.

APCo on Thursday filed a wholesale rate increase request with the Federal Energy Regulatory Commission, and Kingsport Power filed a rate increase request Friday afternoon with the Tennessee Regulatory Authority.

The retail increase, if approved, would mark the first rate increase for Kingsport customers since 1992, followed by a modest reduction in 1999 because of lower generation service costs. However, fuel cost changes have caused bills to go up and down throughout the period.

Barry Thomas, APCo’s Richmond-based director of regulatory services for Tennessee and Virginia, said the proposed increase works out to about 24 percent.

However, because of a decrease in fuel costs, the net increase is between 17 percent and 20 percent, he said.

“Our rates are going to go down about 4.5 percent (because of a fuel cost decrease) effective December 2nd,” Webb said.

TVA on Oct. 1 initiated a 20 percent increase passed along to consumers through local distributors, although TVA announced Thursday it was reducing rates 6 percent Jan. 1 because of decreased fuel costs.

Webb said AEP, APCo and Kingsport Power have streamlined operations and use economies of scale to save money by doing a better job with fewer employees, utilizing Virginia-based workers in Tennessee and vice versa.

AEP officials proposed basically the same increase in March but delayed it for negotiations with the East Tennessee Energy Consumers Group, a group of AEP’s largest Kingsport Power customers. Those include Air Products, which does work for Eastman Chemical Co., Eastman Chemical, Domtar and AGC Flat Glass.

“This is a rate increase we’ve put off for a long, long time,” Webb said. “This is something for us that is unavoidable.”

Webb suggested all customers consider using compact fluorescent bulbs to save energy.

Shepelwich said customers can go to the AEP Web site to get other tips including adding insulation, storm or new windows, as well as weatherstripping, caulking and water heater insulation blankets.

The Neighbor-To-Neighbor program allows customers to contribute to those in need of help paying electric bills, and APCo plans to put at least $55,000 toward the program in the Tennessee and Virginia service areas.

Shepelwich also urged those struggling to pay their electric bills to contact the electric company and set up a payment plan or get assistance before they get behind on bills.

“We believe part of our responsibility is to work with them to the max,” Thomas said.

For more information visit www.appalachianpower.com or www.aep.com.

For energy saving tips visit www.wattwhyandhow.com.

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