More than 100 people have asked state regulators to deny Appalachian Power’s latest request to raise electric rates ahead of a public hearing next month.
Appalachian Power is asking regulators for permission to raise the average residential customer’s bill by about $10 a month, or 6%. The utility says it needs to earn $95 million, or 5.1%, more revenue annually to pay for higher expenses, including those related to service reliability.
The request comes on the heels of several cost increases over the past two years that have raised the average customer’s monthly bill by about $51 to approximately $173 total.
The State Corporation Commission must issue its final order on the latest request by Nov. 20, and any increase approved would not take effect before January.
“Appalachian Power rate increases are out of control and out of line with typical business cost increases,” a resident identified as Deborah Shenk of Roanoke wrote in an email filed as part of the rate case’s public record. “Please find ways to operate more efficiently and sustainably instead of relying on significant rate increases.”
“My bill continues to go up and we have no other option for electric companies,” wrote another, identified as Diane Isenhour of Bedford County. “There’s no competition and no other choice. … We can’t go without electricity, so they just charge us whatever they want and we have no recourse.”
“Please don’t saddle us customers with yet another rate increase so soon after the last one and in these difficult financial times,” wrote a commenter listed as Trent Crewe of Dublin.
They’re among the utility’s customers who have voiced their thoughts to the SCC as state regulators conduct a review of Appalachian’s rates. Under a recently passed state law, such reviews will take place every two years instead of every three as was done previously.
They have been joined by businesses and organizations including Walmart, the state attorney general’s Office of Consumer Counsel, the Virginia Poverty Law Center, Appalachian Voices and the Old Dominion Committee for Fair Utility Rates, which is a group of large industrial customers. None of the organizations are strangers to commenting on Appalachian Power’s rates.
Appalachian Power rate increase hearing
State regulators plan a public hearing on the rate case for Sept. 9. Anyone who wants to comment during the hearing must register by Sept. 4.
To register to speak:
- complete a form for case PUR-2024-00024 on the SCC’s website,
- email a PDF of the form to SCCInfo@scc.virginia.gov, or
- call the SCC at 804-371-9141 between 8:15 a.m. and 5 p.m. weekdays and provide a name and phone number that the commission should call during the hearing.
Each person will get 5 minutes to speak. The hearing will be livestreamed on the SCC’s website.
Lisa Perry, an attorney representing Walmart, said in testimony filed with the SCC that regulators should consider the impact that a rate increase would have on business customers and that “increased costs to retailers can put pressure on consumer prices and on other expenses required by a business to operate.”
As part of its request, Appalachian is asking regulators to allow it to earn a return on equity of 10.8%, up from its current state-authorized 9.5%. A regulated utility’s return on equity is essentially a measure of its ability to generate profits for investors; Appalachian Power is a subsidiary of American Electric Power (NASDAQ:AEP).
Perry said Walmart opposes the higher ROE, citing data that shows that 10.8% would be higher than what many other utilities are earning and noting that state law includes some leeway that allows Appalachian to earn up to 10.5% before it’s required to refund overages to customers.
Appalachian said while it is authorized to earn a 9.5% ROE, in 2023 it actually earned only 2.26%, which meant it saw $149.2 million less in pre-tax earnings than the state allows.
Dana Wiggins, director of consumer advocacy for the Richmond-based Virginia Poverty Law Center, said in testimony that the nonprofit opposes Appalachian’s requests to raise both its rates and its fixed basic service charge from $7.96 per month to $9, an increase of $1.04.
“Adding to the fixed portion of a customer’s bill reduces customers’ ability to control energy costs,” Wiggins said. “Managing usage is one of the only ways that captive utility customers have some control over the cost of their utility bills.”
Appalachian said that it has not increased its residential basic service charge since 2007 and that the proposed increase reflects the higher cost of providing residential service to customers.
“Ultimately, these fixed distribution costs, or at least a larger portion of them, should be recovered in the basic service charge because they do not vary with a customer’s day to day usage and are instead solely the costs necessary to connect a customer to the distribution system and maintain that connection,” Katharine Walsh, director of regulatory pricing and analysis for American Electric Power Service Corp., a subsidiary of AEP, said in testimony.
Wiggins also urged regulators to direct Appalachian to explore more ways to help low-income customers and reduce disconnections.
Legislators and local officials have also come out against the proposed increase. More than a dozen Central, Southside and Southwest Virginia state lawmakers wrote a letter to the SCC earlier this year opposing Appalachian’s request, and multiple county boards of supervisors have passed resolutions against it.
Appalachian is Virginia’s second-largest electric utility, after Dominion Energy. It has approximately 540,000 customers in Western Virginia and is the largest utility in Southwest Virginia.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
Appalachian announced its rate increase request in March. It said it needs the additional revenue to cover the costs of restoring service after storms; increases in capital, material and labor costs; rising interest rates; and expenses associated with vegetation management to improve reliability.
“We understand that increases are never welcome, but we continue to invest in projects that improve reliability for our customers,” said Appalachian Power spokesperson George Porter.
As the utility seeks higher rates, it also is asking regulators to allow it to decrease how much it charges customers for electric transmission, which would reduce an average bill by about $2.12 each month.
Appalachian is not the only power company seeking higher rates.
Old Dominion Power — which provides electric service to about 28,000 Virginia customers in Dickenson, Lee, Russell, Scott and Wise counties — is asking to raise its average residential customer’s monthly bill by $22.
Central Virginia Electric Cooperative — which is based in Nelson County and provides electric service for 39,000 members in 14 counties — recently raised its average customer’s monthly bill by $8.48.
