Melissa French keeps the doors of her home closed, unplugs electrical devices when she isn’t using them and has even installed a new heat pump — all in an effort to lower her monthly electric bill from Appalachian Power.
“We have done everything in our house possible to try to cut the rates back,” French, a Bland County resident, said Monday.
Nonetheless, she said, her bill continues to go up. French was one of 11 people who spoke during a virtual public hearing as Virginia’s State Corporation Commission considers Appalachian’s latest request to raise its customers’ rates.
“I think their rates are outrageous and something should be done about it,” French said. The SCC, which regulates electric utilities in Virginia, took public witness testimony during a hearing styled much like a court case, with a judge and attorneys for various stakeholders present at the virtual meeting.
In March, Appalachian asked state regulators for permission to increase its annual revenue by $95.1 million, or 5.1%, and increase its return on equity — essentially, its profit margin — from 9.5% to 10.8%. The company said it needs the additional money to pay for investments, including making its service more reliable.
Even before Monday’s hearing, the proposed rate hike was opposed by residents, businesses and nonprofits who sent comments and written testimony to the SCC. In June, the utility lowered its request for additional annual revenue to about $78 million, and on Monday, Appalachian spokesperson Teresa Hamilton Hall said in an email that “following the testimony of all interested parties in the case,” the utility later decreased its request again to $64.2 million.
Appalachian’s proposal now would raise the average residential customer’s monthly bill by $6.75, or 4%, compared to $10, or 6%, under its earlier request. It comes as the average bill has already risen by about $50, to $173, over approximately the past two years.
Ten of the 11 people who spoke Monday opposed Appalachian raising electric rates, while one speaker focused on new rules that Appalachian has proposed related to data centers. It’s unclear whether those 10 were aware of the utility’s newer request, but more than one criticized Appalachian’s overall recent history of cost increases in addition to the idea of further rate hikes.
Their testimony will be added to the SCC’s public record, where it will join more than 150 individually submitted online comments, a letter from the Charlottesville-based advocacy group Clean Virginia with more than 3,600 electronic signatures, a letter from more than a dozen state lawmakers and multiple resolutions passed by county boards of supervisors.
“The rate hike that Appalachian Power are asking for will literally cause people to have to choose between having power, having food, having medications they need,” Robin Belcher of Grundy said during Monday’s public hearing.
Belcher said she knows that Appalachian Power must bear the costs of running a company and that many things are getting more expensive — but, she said, that means the utility’s customers are facing higher costs, too.
“I understand they’re a business and they’re in the business to make money, but at the same time you can’t destroy the people you’re providing a service for,” Belcher said.
Randall Schiera of Abingdon said he signed up for Appalachian Power service when he moved to Southwest Virginia in 2018.
“At the time, I thought their rates were relatively reasonable,” Schiera said.
Since then, the cost of his electricity has risen nearly 50%, and he said Appalachian hasn’t shown him that the increase has been justified.
“I just don’t think it’s worth it, and I don’t understand what they’re doing, other than making sure that their shareholders make lots of money,” Schiera said.
Appalachian Power is a subsidiary of publicly traded American Electric Power (NASDAQ:AEP). With approximately 540,000 customers in Western Virginia, Appalachian is Virginia’s second-largest electric utility, after Dominion Energy, and is the largest in Southwest Virginia.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
Appalachian has said it needs more revenue to cover the costs of restoring service after storms; to handle higher capital, material and labor costs; and to pay expenses associated with vegetation management to improve service reliability.
“We understand that increases are never welcome, but we continue to invest in projects that improve reliability for our customers,” Appalachian Power spokesperson George Porter told Cardinal News last month.
As a regulated utility, Appalachian must submit its rates to the SCC for review every two years. State law allows the company to recover “reasonable and prudent” costs and earn a “fair” rate of return, but what constitutes “reasonable,” “prudent” and “fair” is up for public debate during any rate case.
In the latest case, SCC staff recommends allowing Appalachian Power an annual revenue increase of about $47 million. Ultimately, the decision is up to the state commissioners, who must issue their final order by Nov. 20.
The next step in the case comes Tuesday when the agency will hold another hearing. This time, Appalachian Power and other stakeholder groups, such as Walmart and the Virginia Poverty Law Center, will have an opportunity to voice their viewpoints. It will be streamed online starting at 10 a.m.
