Bassett speaks out at AEP hearing

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ROCKY MOUNT — Speaker after speaker passionately, pleadingly or sometimes testily implored the Virginia State Corporation Commission last Thursday to take action that current state law is unlikely to allow — that they fully reject or drastically reduce another rate increase proposed this year by Appalachian Power Co. that would further increase customers' electric bills.

Doug Bassett, executive vice president and chief operating officer of Galax-based manufacturer Vaughan-Bassett Furniture, was among nearly 200 people who attended a public hearing held by the SCC at Franklin County High School. The hearing's focus was Appalachian's request for an increase in the base rate it charges customers.

"This mess has largely been created by the changes enacted by our legislature governing the regulation of Virginia's electricity," Bassett said.

He described as "obscene" Appalachian's request for a base rate increase that would raise by about 14.5 percent the monthly electric bill of a residential customer consuming 1,000 kilowatt hours.

The base rate is intended to allow regulated electric utilities to recover the costs of owning, operating and maintaining power generation plants, as well as money spent for the distribution of electricity, related maintenance, depreciation, financing expenses and return on investment.

Bassett said the rate increases hurt businesses struggling during a recession.

He said Vaughan-Bassett paid $758,000 for electricity in 2007, $872,000 in 2008 and is on pace to pay nearly $1.3 million this year. He acknowledged the company is "using a bit more electricity than a year ago," but attributed the rising costs primarily to Appalachian's new rates and fees.

"There is no doubt in my mind that the rate increases already approved by the SCC are costing us jobs at Vaughan-Bassett," Bassett said.

Vaughan-Bassett and Bassett Furniture Industries helped pay for two chartered buses to travel from Hillsville and Martinsville to transport citizens, most of them elderly, to share with commissioners the struggles they face living on fixed incomes.

Del. Ward Armstrong (D-Henry County) helped organize the bus rides, which brought 75 residents of his district to the meeting.

He represents a district hard-hit by years of manufacturing job losses. In September, Martinsville once again had the state's highest jobless rate at 20.2 percent. Henry County's rate was 13.4 percent.

Locally, jobless rates for September range from 10.3 percent in Galax to 10.4 percent in Grayson County and 11.3 percent in Carroll County.

These figures are above the state average of 6.6 percent and the national average of 9.5 percent.

Speaker Ross Brant of Ridgeway, a World War II veteran and DuPont retiree, challenged the SCC's three commissioners — Chairman Mark Christie, James Dimitri and Judith Jagdmann — to consider the night's testimony, which he described as heartfelt, "and then look Appalachian straight in the eye, rub eyeballs, and say, 'We are not going to give you an increase.' "

One of those heartfelt pleas came from Phil Curran and Bonnie Lee Witt of the Henry County Ministerial Association, who cited several instances where citizens with serious illnesses lost their power because they could not pay utility bills.

“Please remember those who shiver in the night,” Curran said.

Speaker Mary Martin of Henry County told commissioners she understands they face a dilemma.

She suggested that so-called "re-regulation" legislation adopted by the 2007 General Assembly has limited their discretion in rate cases before the SCC. Legislators opened the door, she said, and Appalachian has used these policies "to full advantage."

She said new legislation is required to restore the SCC's full authority.

Armstrong said he does not begrudge Appalachian or any other company's desire to earn a fair return on their investment, but added, "At some point, we need to ask, 'When is enough, enough?' "

He had left the auditorium before Martin addressed commissioners. She did not name him specifically, but suggested that any legislator who had voted for "re-regulation" and then opted to speak last Thursday night against Appalachian's base rate request was a hypocrite.

Before the meeting, Armstrong acknowledged he had voted for the legislation. "The bill was as thick as a Roanoke phone directory," he said. "It was one of the most complicated pieces of legislation I've seen in my 18 years" in Richmond.

But he said the legislation seemed necessary at the time as a strategy to re-establish relevant SCC regulation after a state experiment with partial deregulation.

The Rocky Mount public hearing was the second on the topic last week. The first occurred last Wednesday in Abingdon, where only nine people spoke.

A formal hearing — which will include testimony by lawyers — is scheduled in Richmond for March 16.

Until a final commission ruling on the base rate case, Appalachian plans to implement, as allowed by state law, an interim base rate increase Dec. 12, which will increase by 14.5 percent the monthly bill of the residential customer previously described.

If the commission ultimately approves a lesser rate adjustment, Appalachian will be required to credit customers' bills for the difference.

Irene Leech, a professor of consumer studies at Virginia Tech and president of the Virginia Citizens Consumer Council, noted that the re-regulation laws have limited the SCC's authority. "Legislators essentially give the utilities the ability to write their own check," she said.

Ken Schrad, a spokesman for the SCC, would not comment about Leech and Martin's suggestions that the commission has less authority.

In an e-mail, he responded, "I can say that the SCC is required to follow the laws that are applicable to the factual evidence in the record."

Meanwhile, Leech readily noted that Appalachian and parent company American Electric Power have earned less than their allowed rate of return in Virginia for a long time. "AEP feels, with some justification, that they have been held back for many years and have been under-earning," she said.

But she and others have said they would like Appalachian to consider the recession-related economic struggles in the region and voluntarily reduce its base rate request this year — even if that means paying more later for electricity. And she noted that AEP earned a tidy profit $1.4 billion in 2008.

To date, the SCC has ruled on two of Appalachian's four requests for increased rates or surcharges. A transmission surcharge will take effect Dec. 12, the same day as the interim base rate charge begins.

An increase in the fuel factor rate, which recovers the utility's costs for fuel, took effect in August.

The base rate case and an environmental and reliability surcharge case are pending.

In December 2007, the average monthly bill of a residential customer consuming 1,000 kilowatt hours was $71.71. The December 2009 bill, which will include rate increases already approved by the SCC as well as the interim base rate, will be $115.78, according to Appalachian.

Written comments on the proposal must be submitted by March 3, 2010. All correspondence should be sent to the Clerk of the State Corporation Commission, Document Control Center, P.O. Box 2118, Richmond, Va., 23218-2118, and refer to case number PUE-2009-00030.

To submit comments electronically, visit www.scc.virginia.gov/case. Click on the "Public Comments/Notices" link and the "Submit Comments" button for case number PUE-2009-00030.