Later this month, state regulators will begin holding hearings on Appalachian Power’s request to raise electric rates.
APCo is asking regulators for permission to raise the average residential customer’s monthly bill by $9.10 in order to earn $61.4 million more per year, a 3.3% increase in revenue, starting no earlier than March 1.
The company’s request is for an increase in base rates, which a utility charges to cover operations, maintenance and certain infrastructure investments while earning a profit. Base rates are separate from fuel costs and other charges.
In a separate regulatory case, APCo is asking for permission to raise the average monthly residential bill by $3.99, also beginning March 1, to recover expenses associated with renewable energy projects.
Since the company submitted its base rate increase request to Virginia’s State Corporation Commission in May, more than a dozen public comments opposing the proposed increase have been submitted.
“Electric bills are already at an all-time high, and the citizens of VA are already suffering due to this and other rising costs,” wrote Betsy Hudson of Lynchburg.
Del. Will Morefield, R-Tazewell County, and Del. Mitchell Cornett, R-Grayson County, wrote a letter to the SCC saying that a rate increase would be an “unbearable burden” and people would be “forced to choose between paying the electric bill or buying groceries and medicine.”
How to weigh in
On Oct. 19, the SCC will meet to hear from the public about APCo’s request to raise base rates.
Anyone who wants to share their thoughts during that hearing must register by Oct. 15. During the hearing, the SCC will call each registered commenter and give them five minutes to speak.
On Oct. 20, the SCC will meet for an evidentiary hearing. SCC hearings are conducted similar to those in courts of law, with evidence and witness testimony.
The SCC continues to accept written comments via its website or by mail.
The commission must issue its final order by Jan. 15. Any change in rates would not take effect until at least March 1.
“Our offices have received an overwhelming number of calls from frustrated, scared and devastated families and seniors who are desperately struggling just to barely make it,” the delegates wrote.
APCo’s proposal would increase the monthly bill of an average residential customer using 1,000 kilowatt-hours of electricity per month by 5.4%.
An average bill is about $168 today, although some residents and state lawmakers in recent years have shared anecdotes about monthly bills that were hundreds of dollars more or even above $1,000.
The power company has said that without a financing tool called securitization, which was made possible by a 2025 state law, its proposed rate increase would be $8.38 per month higher for an average residential customer.
Securitization allows APCo to pay $1.4 billion in costs associated with two West Virginia coal power plants and some storm restoration with 20-year bonds instead of base rates. That spreads the expenses over a longer time, reducing the monthly impact on customers’ bills.
The company has said it needs to earn more revenue to cover the costs of tree trimming, major storm recovery and inflation. It also wants to increase its return on equity, which for a regulated utility is essentially its ability to earn profit.
In a May 29 news release, APCo President and COO Brian Abraham said that he has “traveled across our service territory and seen firsthand how hard our team works to reduce costs for customers without sacrificing reliable service.”
“That experience has also reinforced why securitization savings are so important to helping lessen the impact on customer bills,” Abraham said.
APCo, a subsidiary of American Electric Power, serves about 540,000 customers in western Virginia, of which about 466,000 are residential customers.
The company is required by Virginia law to submit its rates for review every two years. Its 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. Appalachian had sought a higher increase of about $10.
Some make the case for lower rates
One of the chief issues in APCo’s regulatory case is its request to increase its authorized return on equity from 9.75% to 10.5%.
As a regulated utility, APCo’s return on equity is essentially the amount of profit that state regulators allow the company to earn by charging customers.
In its application, APCo said that its actual return on equity in 2024 and 2025 was 4.655%, “well below” its currently authorized return of 9.75%.
Nationwide, regulated electric utilities that had rate cases decided in the first half of 2026 were authorized to earn a return on equity of 9.84% on average, according to the financial research firm S&P Global.
Ralph Smith, a Michigan-based certified public accountant whose firm specializes in utility regulation, filed written testimony in APCo’s rate case on behalf of Virginia Attorney General Jay Jones’ Division of Consumer Counsel.
Smith said in his testimony that if APCo’s return on equity were 9.325%, instead of the 10.5% that the company is asking for, APCo would only need $1.4 million, not $61.4 million, in additional revenue.
Smith used a return on equity calculated by another witness offering an opinion at the request of Jones’ office, Pennsylvania State University finance professor J. Randall Woolridge.
Woolridge said that a 9.325% rate would reflect the relatively low investment risk of the electric utility industry and of Appalachian Power in particular.
Staff of the State Corporation Commission suggested that instead of APCo’s base rate revenue increasing by $61.4 million, it should instead decrease by $5.5 million.
That’s based on several factors. One would be APCo having an authorized return on equity of 9.65%.
Another would be changing how the company recoups costs for vegetation management, which is the company’s practice of trimming trees to keep them from damaging power lines.
SCC staffers recommended removing that expense from APCo’s base rates and having the company recover it through a separate add-on to customers’ bills called a rate adjustment clause, for which the company would file an application with the SCC in 2027.
SCC staff also recommended against APCo’s request to raise the residential basic service charge, a fixed fee on customers’ bills, from $7.96 to $9 per month.
Other organizations that submitted written testimony for the SCC case file include Google, Kroger, Walmart, the Sierra Club, Virginia Organizing and the Virginia Poverty Law Center.
