Appalachian Power is seeking regulatory approval for a base rate increase that could raise the average Virginia residential customer’s monthly bill by $9.10 as early as March of next year.
Regulators will consider the company’s request while also evaluating a proposal related to complying with a state renewable energy law. That proposal, which is separate from the request to raise base rates, would increase that average residential monthly bill by about $4, also beginning in March.
The company said in a news release Friday that the base rate increase is the lowest it’s asked for in nearly 30 years, thanks to savings generated by bundling certain costs into bonds for investors, a process that’s known as securitization and that was made possible by a Virginia law passed last year.
“We understand that any increase can affect our customers’ household budgets, and we do not take that lightly,” Brian Abraham, who became Appalachian Power’s president and chief operating officer last month, said in the release.
If approved by state regulators, the base rate increase would allow the company to earn $61.4 million more per year. The company cited investments in tree trimming, major storm recovery expenses and inflation as among the reasons for the request.
Last year, the Virginia General Assembly passed a law allowing Appalachian Power to take certain expenses out of its base rates and package them into bonds. Those expenses include $1.2 billion in costs related to its two West Virginia coal power plants, along with $141 million incurred in 2024 and 2025 related to Hurricane Helene and other storms.
That securitization process reduces the monthly impact on customers’ bills but spreads the payments out over a longer period of time.
Appalachian Power said that without that securitization, it would be requesting a higher base rate increase that would have added another $8.38 to the average residential customer’s monthly bill.
“We appreciate the legislators who helped make this law possible and supported a solution that is providing real benefits for Virginia families today,” Abraham said.
Appalachian Power, a subsidiary of American Electric Power (NASDAQ:AEP) serves about 540,000 customers in western Virginia, of which about 466,000 are residential customers.
State regulators will review company’s plan
The company’s request kicks off the SCC’s biennial review of Appalachian’s rates, during which interested organizations and members of the public will have an opportunity to comment.
Under the same state law that allows securitization, the SCC must issue its final order on the company’s request no later than Jan. 15. Any changes in rates can take effect no earlier than March 1.
The company’s last rate case was decided in November 2024, when the SCC approved an increase that raised the average monthly residential bill by about $1.39.
In that case, Appalachian had sought a higher increase of about $10.
The company defines an average residential customer as one who uses 1,000 kilowatt-hours per month.
That customer’s total monthly bill — which includes base rates, fuel costs and other charges — is about $171 today, up about 10% from $155 in 2023 and up about 48% from $115 in 2018, according to a 2024 SCC report.
Additional charges for renewable energy
In its separate request designed to comply with a state renewable energy law, Appalachian Power is asking state regulators for permission to raise the average residential bill $3.99 per month for a year, beginning in March.
That would cover $115 million in costs related to solar and wind energy purchases that the utility says are needed to meet requirements of the Virginia Clean Economy Act.
The act was passed in 2020 and set targets for the utility to add renewable energy assets to its portfolio.
The utility’s plan includes purchasing two solar facilities totaling 255 megawatts in Indiana and buying about 251 megawatts of power produced by two wind facilities in West Virginia and Illinois.
Although the solar and wind facilities are not in Virginia, Appalachian says they are eligible to meet the Clean Economy Act’s requirements because the states are all part of the same multistate electric grid.
The cost figure also includes recovering about $4.3 million in engineering and legal expenses from three projects that fell through, including battery energy storage projects on the Glade-Whitetop circuit in Grayson and Smyth counties and in Wythe County.
While the upfront costs of purchasing solar, wind and battery storage assets can be paid by Appalachian Power customers, renewable energy lowers the fuel costs that the utility passes on to customers.
In October, Appalachian said it wanted to lower its fuel charges by about $10 a month for the average residential customer. That decrease took effect in November on an interim basis while the SCC reviews the request.
While most of the fuel-cost reduction is related to a decrease in energy prices following a spike in 2021 and 2022, the utility also credited renewable energy sources for lessening its need to buy fuel.
Appalachian Power not alone in raising rates
Appalachian Power joins other electric utilities in Virginia in seeking higher rates.
On Jan. 1, the first of two phases of a Dominion Energy rate increase approved last year took effect, raising the average residential monthly bill by $11.24, with another $2.36 average monthly increase slated for next year.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
In March, the Craig-Botetourt Electric Cooperative said it needs to raise rates to the tune of $7.31 for the average residential customer.
Earlier this month, Dominion warned that its rising costs for fuel and purchased power could lead to more bill increases.
Also this month, Old Dominion Power, which serves 28,000 customers in five Southwest Virginia counties, said it is requesting a rate hike that would increase its average residential customer’s monthly bill by $43.
