SCC approves a reduced APCO rate hike

The State Corporation Commission approved an increase of 19.3%. Appalachian Power wanted a 23.9% increase to its base rate.

By: WSLS News Staff news@wsls.com | WSLS
Published: November 17, 2008

Prepare for a permanent rate hike on your electric bill for the foreseeable future.

The State Corporation Commission approved a reduced rate hike that Appalachian Power requested. Instead of the full 23.9%, the SCC allowed a 19.3% increase. The percentages represent a cut of nearly $40 million. APCO originally filed for a $207.9 million base rate hike back in May. The SCC cut that figure down to $168 million.

In agreeing to a nearly 1/5th increase on the base rate, the SCC stated:

"“[W]hile we are cutting Appalachian’s rate increase substantially from its request, we understand that the rate increase approved will still represent a hardship on many of Appalachian’s residential and business customers. We find, however, that this rate increase is consistent with the facts and laws that govern this case.”

The SCC noted that a significant portion of the increase related to capital expenditures made to generation and distribution facilities needed to provide service to customers. The Commission wrote, “A large portion of this increase is attributable to environmental improvements made to the generation facilities to comply with federal laws and regulations. Additionally, Appalachian has made improvements to maintain the reliability of its distribution network in Virginia. These expenditures, plus associated operating costs and depreciation, have contributed to an upward pressure on rates.”

The SCC noted that in APCo’s prior base rate case, the company sought to recover in rates much of this investment by projecting capital expenditures, but the Commission denied recovery because the funds had not actually been expended. Since the company has now actually spent these amounts, state law provides for their recovery in rates.

APCO had already begun charging the full 23.9% rate hike on an interim basis on October 28th, until the SCC made its ruling. Appalachian Power will have to pay back extra money it has already collected, plus interest.

According to a SCC news release, "For an APCO residential customer using 1,200 kilowatt-hours of electricity a month, the SCC’s order means the monthly bill will be approximately $3.82 less than the current interim rate."

APCO plans to make the refunds as credits on future electric bills.