SCC approves latest increase in Appalachian Power bills on an interim basis | Local News

Effective Monday, Appalachian will be allowed to raise — on an interim basis — its bills to pay for the higher cost of coal and natural gas, which generate about 80% of its electricity.

The State Corporation Commission will decide next year whether to make the increase more lasting.

If the SCC were to approve all of the pending rate increases being sought by Appalachian, and the Virginia Supreme Court were to reverse an earlier denial by the regulatory agency, bills would go up by about $25 a month compared to the first of the year.

“We are sensitive to the effects of rate increases, especially in times such as these,” the SCC said in a Sept 23 order approving the interim increase for fuel costs, which are adjusted yearly.

“The Commission, however, must and will follow the laws applicable to this case, as well as the findings of fact supported by evidence in the record.”

Under Virginia’s system of regulating large electric companies that have a monopoly on the market, the SCC considers changes to base rates every three years.

Other proposed increases or decreases are handled individually as rate adjustment clauses, or riders, for a variety of factors such as the cost of fuel, transmission expenses and environmental compliance.

Already this year, the SCC has approved riders — including one to recover transmission costs and another to pay for environmental upgrades to two coal-burning power plants — that will cost about $13 a month for the average residential customer, or someone who uses 1,000 kilowatt hours of electricity per month.

Appalachian’s most recent rider request was made in September, when it said it needed another $42 million in revenue for the upcoming rate year to adapt to changes in the prices of coal and natural gas caused by the easing of the COVID-19 pandemic.

Increasing the fuel factor would mean the average residential customer would pay another $3 a month.

In its Sept. 23 order, the SCC allowed the rider to take effect Nov. 1 on an interim basis, increasing the bill for an average residential customer from $117.31 to $120.32 per month.

The agency’s staff will conduct an investigation, and other parties will have the opportunity to join the case.

A public hearing will be held Feb. 2 by telephone conference. The next day, a hearing examiner for the SCC will consider testimony from Appalachian, agency staff, and other parties such as the attorney general’s office, advocacy groups and environmental organizations.

The hearing examiner will then make a recommendation for final action by the SCC, a three-judge panel whose members are elected by the General Assembly.

In November 2020, the commission denied a request by Appalachian to raise its base rates by 5% overall, which would have had a residential customer paying another $10 per month.

Whether a utility is entitled to raise its base rates is determined by its earnings over a three-year period immediately prior to the request. If earnings fall below a return on equity authorized by the SCC , the commission can approve a rate increase.

If, on the other hand, earnings over the triennial period exceeded the allowed return on equity, the utility could be prohibited from collecting even more revenue through a rate increase.

Both Appalachian and the attorney general’s office have appealed the SCC denial, raising different arguments.

If Appalachian prevails, it will be allowed to raise base rates. The attorney general, however, is arguing that the utility has overcharged its customers, which could possibly entitle them to a refund, the amount of which has not yet been determined.