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Bassett: APCo increase would be 'job killer'

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WYTHEVILLE — Appalachian Power depends on coal as an electricity-generating fuel.

But desperation fueled much of the public testimony generated at a hearing last Wednesday night in Wytheville about a proposed "fuel factor" rate increase by the utility.

The Virginia State Corporation Commission's three commissioners listened as customer after customer protested APCo's latest request to charge more for the electricity it delivers.

They heard from businesspeople, pastors, the elderly, poverty fighters, politicians and residential customers. They heard from those already struggling to pay higher electric bills associated with a base rate increase granted by the SCC last year that increased the monthly bill of a typical residential customer by 17 percent to 19 percent.

The consistent message that commissioners heard was this: Residents and businesses in Southwest Virginia already are struggling to pay for food, medicine and groceries. They cannot afford another increase in their electric bills to cover Appalachian's higher than anticipated costs for coal.

Doug Bassett, executive vice president and chief operating officer for Vaughan-Bassett Furniture Co. of Galax, received enthusiastic applause from the crowd of about 80 people gathered at Wytheville Community College when he described the company's commitment to continue manufacturing wooden bedroom furniture in the United States.

Bassett said the company's annual electric bill in 2007 was $758,000 and anticipates it will be about $1.2 million this year.

He said another double-digit rate increase "would be a job killer."

Mark Christie, chairman of the SCC, opened the hearing with an acknowledgement of the hardships faced by many in Appalachian Power's service area — people who have lost their jobs, people on fixed incomes, businesses struggling in the midst of a terrible recession.

But he emphasized also that the commission must operate within the law, guided by facts and statutes. And Virginia law allows electric utilities to recover, dollar for dollar, the money it spends for electricity-generating fuel.

But Christie promised the crowd that the commission will scrutinize the facts to ensure that Appalachian's customers "do not pay one cent more than is absolutely required by the law and the facts of the case."

Several politicians, recognizing that the facts of the case could support Appalachian's request for a fuel factor rate increase, called on the utility to withdraw its petition until economic conditions improve.

But John Shepelwich, a spokesman for Appalachian, said the utility must recover its costs and that delaying recovery will just mean that customers will pay even more later.

The fuel factor calculation includes actual fuel costs during the preceding year and predictions for costs in the coming year.

A host of speakers questioned the coal prices that Appalachian cited as support for increasing the fuel factor. They noted that spot prices for coal are much lower now. But Shepelwich said Appalachian has already incurred the coal costs, buying the fuel through long-term contracts to hedge against spiking prices.

Appalachian also has asked the SCC to approve an increase in a separate surcharge that would allow the utility to recover costs associated with complying with environmental regulations and maintaining a reliable system to provide electricity. The commission will review that filing later this year.

If the SCC grants the utility's requests as submitted to increase both the fuel factor rate and an environmental and reliability surcharge, the monthly bill of an average residential customer consuming 1,000 kilowatt hours would exceed $100 for the first time.

The so-called E&R surcharge would take effect Jan. 1.

Commissioners also heard from two ministers and a mayor about dramatic increases in requests from parishioners and townspeople for emergency assistance to help pay their electric bills.

Many speakers emphasized that residents of Southwest Virginia have been hard hit already by manufacturing layoffs.

One man, citing the plight of the elderly living on fixed incomes, observed that recession-related wage freezes have fixed the income of other age groups, too.

Shepelwich said Appalachian "wouldn't present this case unless it was necessary."

"We're not here to beat up customers," he said. "We're here to serve customers, to provide electricity."

Ken Schrad, a spokesman for the SCC, said commissioners might rule in the fuel factor case in a few weeks.