With a new year comes the possibility of a higher electric bill for some Botetourt County residents, as Appalachian Power Co. requested an increase in its annual revenue requirements of $65 million, a 5 percent rise in overall revenue.
The State Corporation Commission (SCC) estimates the average bill of a household using 1,000 kilowatt-hours of electricity each month will be $120.10, a 6.5 percent increase or $10 monthly. The SCC is required to make a final decision by Nov. 30. If the commission agrees to the increase, higher bills are expected to take effect in early 2021. APCo serves most of Botetourt County areas and supplies transmission for the Craig-Botetourt Electric Cooperative.
Filling her Dodge Ram at a gas station on Route 220 in Daleville, Loretta Green, a 63-year-old store clerk in Roanoke, isn’t pleased with the possibility of a rate increase. Even at $10 a month, she may have to rearrange her already tight budget – somewhat. “It’s $10, but still can hurt” financially, she said. “I haven’t seen a raise in a couple years and won’t see one this year, either.”
With $12 quickly coming up on the gas pump digital screen, Green quicky released the handle, explaining she budgeted $12 for gas until mid-week. “Ten dollars is almost my weekly gas budget,” she said, with a smile of resignation.
Next to Green, Andy Masters, a mechanic, said $10 a month isn’t much of a bump in his power bill, but did question why APCo, a multi-million-dollar utility, requested such a large amount – $65 million. “I cannot wrap my head around that number. Why, when so many people in this area are suffering financially, would they request a rate hike? People will suffer,” said Masters, adding he sees people living on the financial cusp daily, struggling to pay for car repairs.
Teresa Hamilton Hall, a spokesperson for APCo, said the utility is trying to cushion the increase for lower-income customers. To address power bill concerns customers have during the winter month, APCo is proposing to implement a rate discount effective during the coldest winter months – December, January and February – of each year. “With the new seasonal rate structure, customers with higher winter usage, such as those with electric heat, may see little or no increase, or even a decrease in their annual bills. Roughly 66 percent of Appalachian Power’s low-income customers heat with electricity,” she said.
APCo President and Chief Operating Officer Chris Beam said in a press release announcing the rate increase that the company has made “efforts in this case to not only minimize impacts to our low-income customers, but also to help industrial customers and major employers,” said Beam. “The filing includes a rate proposal to support economic development efforts that encourage the expansion of existing, and the recruitment of new, industry and business.”
In March, Appalachian Power told the SCC it’s requesting a rate increase since currently customers are paying for electricity rates set in 2011 and are based on 2010 costs. Since then, APCo has continued to maintain and improve its distribution and generation infrastructure, added renewable energy sources into the electric grid, complied with stiff environmental regulations and deployed new technology to improve reliability and communications with its customers, the company said.
However, some question the timing of the increase, given the country is in the grip of a pandemic, high unemployment and industries aren’t bouncing back as predicted.
“We’re aware that we are filing this application at an unprecedented time in our history,” said Beam, in reference to the COVID-19 pandemic, in late March when APCo filed for a rate increase. “We are required by law to make this filing now. We must follow that law, while balancing our customers’ expectations of safe and reliable service. We will work with the SCC and all interested parties as this application is considered during these uncertain times.”
Opposition to the increase is heavy. During public hearings two weeks ago, scores of comments were submitted against the request. In thousands of pages of comments reviewed by The Fincastle Herald, available at https://www.scc.virginia.gov/DocketSearch#caseDocs/140546, responses against came from local governments, Virginia’s Attorney General’s Office Mark Herring, Virginia Poverty Law Center, farm groups, to the SCC’s own staff members.
Defending the rate increase, APCo’s attorney, Noelle Coates, was a thesaurus of doomsday adjectives, saying if the rates are not approved, the outcome would be “punitive,” “unfair,” “inexplicable.” She continued that denying the rate increase is “not good regulatory or public policy.”
Others comments described her scenarios as wrong. SCC staff and Herring’s office argued that rates should not increase, but new return on equity be set aside at slightly more than 8.7 percent. Testifying for the Attorney General’s Office, J. Randall Woolridge, a finance professor at Penn State University, said, “Over the last decade, capital costs have come down, interest rates have come down, so utilities’ earned returns are above the returns to investors required.” Speaking specifically of APCo, Woodridge said the utility has access to money. APCo has a “very good credit ratings,” he said.
SCC and AG’s office disagreed on the overearnings of APCo. An SCC staff member testified the commission believes APCo has over earned $4.6 million during the triennial period. Herring’s office said that figure is very conservative, estimating it is closer to $36 million and Virginia customers should receive refunds. In Virginia, utility rates are reviewed every three years, known as triennial reviews. APCo’s last review period was between 2017-2019.
The Fincastle Herald did not see comments from government leaders or residents of Botetourt County during its review of comments.