State regulators on Thursday signed off on a request by Appalachian Power to raise electricity rates, which will increase the average residential customer’s bill by about $16 a month, or about 10%.
The State Corporation Commission order said the new rates will take effect 60 days from the date of the order, which would be Jan. 29. The development follows a recent SCC report that said an average Appalachian customer’s monthly bill rose by about $35 just between July 2022 and July 2023, to $157.62.
The SCC’s approval allows Appalachian to, among other things, increase its annual revenue by $127.3 million; pursue a return on equity of 9.5%, up from its current state-authorized ROE of 9.2%; and put $18.8 million toward vegetation management operations such as clearing trees away from power lines.
“We are pleased with the final order,” company spokesperson Teresa Hamilton Hall said in an email. “With the order, we received approval of our plan to ramp up the company’s vegetation management and other work to improve the reliability of our electric service.”
The SCC’s order approves nearly all parts of a compromise agreement that arose among Appalachian and groups including Appalachian Voices, the Virginia Poverty Law Center and Walmart after the utility initially filed a request on March 31 that would raise an average customer’s bill by about $25 monthly. The utility commonly cites 1,000 kilowatt-hours per month as average usage.
In an exception to the compromise, the commission said Thursday it will not approve eliminating an $8 monthly basic service charge for low-income customers, which Appalachian has said would have affected about 7% of its users. The commission cited a section of Virginia code that states, “It shall be the duty of every public utility to charge uniformly therefor all persons, corporations or municipal corporations using such service under like conditions.”
Nonetheless, it instructed Appalachian to assess whether such an exemption, or another form of assistance for low-income customers, could be part of the Percentage of Income Payment Program, which the Virginia General Assembly approved in 2021.
Among other things, the program caps electric bill payments for eligible customers of Appalachian and Dominion Energy, Virginia’s two largest electric utilities, at 6% of a participant’s annual household income if the household’s primary heating source is not electricity and at 10% if it is electricity. The program is funded by a universal service fee paid by utility customers.
“We respectfully understand the Commission’s legal position regarding our proposal to reduce costs for Appalachian Power’s lower income customers,” Hall said. “Going forward, we will continue to look for new ways and opportunities to work with and assist our lower income households.”
Dana Wiggins, director of outreach and consumer advocacy for the Virginia Poverty Law Center, said Appalachian could look at ideas beyond the SCC’s suggestion, such as offering more flexible payment plans, working more closely with customers to lower disconnection rates and increasing the amount of information the utility provides to customers about rebates and other forms of assistance.
“There’s no lack of ideas,” Wiggins said. “Figuring out what will work for the utilities and the customers can sometimes be tricky, but these are solvable problems.”
In approving the increase, the SCC said it was “cognizant of the economic pressures that are impacting all utility customers” but is required to follow state law.
‘We are sensitive to the effects of rate increases, especially where customers have seen significant increases in recent years,” the commission said in its order.
An SCC report dated Nov. 1 said Appalachian’s typical monthly residential bill has increased by $91.01, or 136.63%, between July 1, 2007, and July 1, 2023.
For context, inflation in the U.S. rose 47% during that same period, according to the U.S. Bureau of Labor Statistics.
The largest share of Appalachian’s billing increase — nearly half — was from rate adjustment clauses, followed by fuel costs and then base rates, according to the report.
Rate adjustment clauses pay for expenses such as transmission services, building new electrical infrastructure, power plant improvements, and offering broadband access in Bland, Grayson and Montgomery counties.
Over the 12 months ending July 1, 2023, Appalachian’s typical monthly residential bill increased by $35.37, according to the report.
By comparison, Dominion’s typical monthly residential bill increased by $34.53, or 38.12%, from July 1, 2007 to July 1, 2023, the report said. Over the 12 months ended July 1, 2023, Dominion’s typical monthly residential bill decreased by $11.81, the report said.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
In September, Appalachian filed for a decrease in its fuel factor, which went into effect on an interim basis Nov. 1 and lowered a typical residential customer’s bill by about $1.80.
The rate increase approved Thursday was part of a regular review of Appalachian’s rates and earnings, which was last done in 2020.
With this approval in hand, Appalachian faces another review in four months. Legislation passed this year changes the utility’s regulatory review schedule from every three years to every two years and sets the first review to begin March 31, 2024.