Appalachian Power Co. (APCo) plans to appeal the state’s recent denial to allow the utility’s plan of increasing electric rates by double-digits.
The State Corporation Commission denied the utility from increasing its rate for the next three years while also decreasing the APCo’s profit margins slightly from 9.42 percent to 9.2 percent. APCo told the commission it needed to increase profit to 9.99 percent.
Two days after the Nov. 23 ruling, APCo notified the Commission of its plans to appeal to the Supreme Court of Virginia.
By ruling rates cannot increase, the Commission potentially stymied APCo’s plans to use the rate increases to offset the $88 million cost of retiring eight coal-fired plants six years ago. The utility notified the Commission in December 2019 that it was seeking to write off the $88 million.
The write off confused Liz Graves of the Cloverdale area, who wanted to know why a corporation could write off tens of millions of dollars while still making healthy profits. “What’s the saying, who you know,” she asked.
APCo said the rate would amount to roughly $10 a month on customers utility bill. Graves, who was loading her Subaru with groceries at the Daleville Food Lion last week, did some quick math saying $120 would have paid for her food bill.
“To APCo it’s only $10 a month, but some it’s a week or two worth of groceries. I wish corporations would see it like that, but they just care about making more profits,” she said.
But in the end, she agreed the possibility of a three-year freeze on power bills is a good decision by the Commission.
Virginia media outlets reported the write off was so massive it allowed the utility to claim it had underearned over the last three years despite filing tens of millions in over earnings in 2017 and 2018.
APCo, the second largest utility in the state serving more than 500,000 customers in and around Southwest Virginia, argued a law change in the Grid Transformation and Security Act of 2018 permitted it to expense costs associated with the retirement of fossil fuel plants to be passed along to consumers. Additionally, the utility argued the “the language of the law” doesn’t allow the Commission from “weighing whether or not the decision has been reasonable.”
The arguments came after Virginia’s Attorney General Marking Herring’s office testified before the Commission earlier this year that the increase is “highly unreasonable” and “unconscionable.”
And confusion sets in
The Attorney General’s Office and the Virginia Poverty Law Center argued a new consumer protection law, House Bill 582, actually mutes APCo’s argument that the Commission doesn’t have the authority to determine the amount of time the cost of a retired plant can be recovered.
However, the Commission disagreed with the Attorney General’s Office and the Virginia Poverty Law Center stating the rate increase cast was filed before the July 1 law went into effect.
However, the Commission found it had the authority to determine what is a reasonable write off and rejected last December’s accounting. November’s rate increase denial stated APCo “treated” the facilities closures as “normal retirements” But suddenly “fundamentally changed course.”
The Commission ruling states APCo’s over earnings in 2017 and 2018 were just south of $2 million, but customers most likely will not see a refund, as Virginia law states one is not due unless the utility earns more than 0.7 percent above its approved profit margin.
The Attorney’s General Office said it thought it had a strong case for APCo customers to receive a rate refund and a rate decrease. The statement also expressed disappointment that the Commission’s order didn’t include issues raised during the hearing earlier this year.
