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Appalachian Power seeks 19% rate hike in Virginia

Staff Report • Jul 15, 2009 at 12:00 AM

Appalachian Power kicks in over $1 million to help low-income customers

Appalachian Power customers in Virginia may be in store for another rate increase.

Appalachian Power, a subsidiary of American Electric Power, filed requests Wednesday with the Virginia State Corporation Commission (SCC) to increase rates by 16 percent overall and by 19 percent for residential households.

If approved, residential customers using an average of 1,000 kilowatt-hours a month would pay about $3.61 a day for their electricity, up 55 cents from today’s rates.

Meanwhile, Appalachian Power announced it will boost its contributions from $210,000 to more than $1 million this year to help low-income customers pay their electric bills. And it announced changes to its deposit and collections policies to help customers having difficulty paying their electric bills.

The company made three separate filings in Virginia on Wednesday. Two will directly affect customer rates.

The first is an initial filing under the commonwealth’s regulatory statutes. It is referred to as a pre-biennial review, and its purpose is to determine a utility’s costs of providing service and correspondingly fix base rates for a period of two years — essentially through 2011. In accordance with the law, electric utilities are required to file similar cases every two years.

The second rate-related filing is for a new bill component to recover transmission costs. The new component recognizes federal regulatory authority over transmission services and allows the company to recover charges approved by those regulators for the transmission of power flowing through the transmission grid. The filing will remove transmission costs from base rates and apply it to customer bills.

The base rate filing seeks adjustments that will increase current base rates by $169 million, while the transmission adjustment will increase rates by about $24 million for a total increase of $193 million, or about 16 percent over current rates overall. Residential customers will see an increase of approximately 19 percent.

The company said the residential increase reflects the proposed removal, in part, of rate subsidies historically provided for residential customers by larger commercial and industrial customers under the company’s rate structure.

A third filing will not increase rates. It seeks approval of two demand response tariffs that allow commercial and industrial customers to be rewarded for agreeing to reduce power consumption during periods of high prices and emergencies and actually doing so when notified by the company.

“These applications come when our customers and the company are attempting to balance rising costs with a recessionary economy,” said Dana Waldo, Appalachian Power president and chief operating officer. “In order to reliably serve our Virginia customers, the company must spend substantial amounts of money for mandated environmental and other necessary energy-related programs at a time when capital is more difficult and expensive to obtain.

“The company continues to tighten its belt with serious cost-containing measures resulting in essentially a flat level of discretionary expenditures as we go forward. Consequently, our filings today reflect the total level of costs Appalachian requires to serve its customers and ensure that the electric infrastructure is ready as we begin to help turn around the area’s economy.”

Waldo acknowledged recent comments and concerns from customers and elected officials throughout Southwest Virginia regarding the effects of rising energy costs.

“We recognize the impact of increased costs of electricity being added to the growing costs of housing, food, transportation and other necessities,” he said. “That is one reason I’m pleased to also announce today a number of steps we are taking to help.”

He said the company will immediately increase from $210,000 to $1.025 million its contribution to low-income energy assistance programs in its service territory.

The company will also initiate improved deposit and collections efforts for customers with a history of delinquency, and will make it easier for customers to make “settle-up payments” under the company’s budget billing plan.

These efforts, when combined with federal funding for weatherization programs that has grown to $96 million in Virginia, will provide a big boost for customers who have difficulty paying for electricity, according to the company.

Waldo noted that part of the pre-biennial rate application also asks approval of an Economic Development Rider, which will provide incentives for larger commercial and industrial customers to grow their businesses in Virginia.

“We are doing our best, within the terms and conditions of our service in Virginia, to soften the economic impact on our customers. We continue to search for innovative ways to keep our costs as low as possible, help customers through these troubled times, and prepare for better days ahead,” he said.

Appalachian Power provides electricity to 1 million customers in Virginia, West Virginia and Tennessee, including in the Kingsport area. Wednesday’s rate requests do not affect Appalachian Power’s Tennessee customers.

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