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| Rate hike to be in effect Dec. 12 |
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Tuesday, November 24, 2009
By MICKEY POWELL - Bulletin Staff Writer
Appalachian Power’s planned 17-percent rate hike will take effect next month, but electricity bills could rise even more at the start of the new year.
The State Corporation Commission (SCC) will approve or deny Appalachian’s request for a $154 million increase in base rates after a hearing in March. But the increase will be imposed on Dec. 12, said Ken Schrad, director of the commission’s public affairs office.
State law lets such an increase be imposed before the SCC decides whether to approve it. If the commission eventually denies the increase, or approves a lesser one, Appalachian customers will be refunded the money they are owed, plus interest, officials with the commission and the utility said.
Under Appalachian’s plan, customers using 1,000 kilowatts of electricity per month — about what a typical household uses — would see their bills rise by 17.1 percent, from $91.49 to $107.14, the SCC has determined.
That amount takes into account a small increase in transmission surcharges that the SCC already has approved and that will take effect Dec. 12, according to Todd Burns, Appalachian’s corporate communications manager.
On Jan. 1, Appalachian aims to impose an increase in its environmental and reliability surcharge to recover costs incurred in 2008, Burns said.
The utility has said that the increase would cause a typical household’s bill to rise by about 3.5 percent. Based on information he has received, though, Burns said he thinks the increase would be “a little less than 3 percent.”
He said the SCC likely will render its decision on that increase by Dec. 31.
The commission will hold an “evidentiary hearing” on the base rate increase request at 10 a.m. March 16 in Richmond. Schrad said the hearing’s purpose is to hear “expert testimony” from people directly involved in the rate hike request, such as Appalachian and SCC staff and lawyers for both sides.
“It will be a very courtroom-like atmosphere,” he said.
Public hearings on the base rate hike request were held last week in Rocky Mount and Abingdon. Still, comments will be taken from public witnesses — whom Schrad described as “any customer (of Appalachian) who is not a formal participant in the case” — at the start of the March hearing.
Written comments will be accepted until March 3. They can be sent to the Clerk of the State Corporation Commission, Document Control Center, P.O. Box 2118, Richmond, Va. 23218-2118. Refer to case PUE-2009-00030.
Comments also will be taken online at www.scc.virginia.gov/case. Click on the “public comments/notices” link and the “submit comments” button for the specific case.
“Every statement by every public witness,” and everyone who spoke during public hearings, “becomes part of the formal record on which the case will be decided” and therefore influences the outcome of the case, Schrad said.
According to the SCC, state law gives electric utilities an opportunity to recover through their rates “reasonable and prudent” operating expenses, plus a fair rate of return (profit) on their “rate base,” which is the value of their capital investment in things such as electricity generating plants and power distribution grids. Yet rates must be “just and reasonable.”
The SCC is under no obligation to grant Appalachian’s entire rate increase request, or any of it, said Schrad.
“It is obligatory on the company,” he said, to prove that it needs the rate hike.
Burns said Appalachian needs more money from customers because “our costs are increasing dramatically.”
“Our customers are using more power than ever before,” he said, “and we’ve got to be able to supply it.”
As an example, he noted that at one point on Jan. 16, Appalachian set an all-time high in terms of peak demand for power at 8,293 megawatts. The previous record was 8,132 megawatts in February 2007, he said.
A watt is a unit used to measure power consumption. A megawatt equals 1 million watts.
To meet that demand, the company must build new substations and install other new equipment, Burns said.
Under new federal environmental laws, Appalachian has had to install equipment enabling the company to “produce cleaner energy,” he said.
Furthermore, when it is unable to completely fulfill its customers’ electricity needs, Appalachian must buy power on the wholesale market, he said, noting that wholesale prices are rising.
At the same time, Burns said, “we recognize that increasing electric rates is not popular” with customers and understand that many people already find it hard to pay their power bills.
For that reason, Appalachian raised the amount of money in its Neighbor to Neighbor assistance program from $100,000 to $500,000 this year, he said. |
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