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SCC approves 2% APCo surcharge

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For many customers of Appalachian Power Co. feeling knee-capped by their electric bills for December, news from the Virginia State Corporation Commission might feel like the addition of insult to injury.

Specifically, the SCC announced last Thursday that it had approved an increase in an “environmental and reliability surcharge.”

The amount approved is less than the increase first sought by Appalachian; the utility had agreed to the lesser amount in October.

The SCC said the new surcharge will increase the monthly bill of a residential customer by less than 2 percent and add about $2.28 to the bill for a customer consuming 1,000 kilowatt hours of electricity per month.

The surcharge took effect Friday.

The SCC released a statement that said the commission recognizes “that many people and businesses in [Appalachian’s] service territory are suffering from economic hardship and any rate increase is burdensome.”

Virginia law allows Appalachian to recover money spent to comply with environmental regulations and costs associated with providing a reliable source and delivery of electricity.

Appalachian relies almost exclusively on coal to generate electricity, and coal is not an environmentally friendly fuel. Appalachian, its parent company American Electric Power, environmentalists and industry observers all expect environmental compliance costs will continue to rise.

AEP reports that it is “the largest purchaser of coal in the Western Hemisphere.”

The SCC approved two other rate increases for Appalachian in 2009 — an increase in a fuel factor and in a charge for recovering a portion of the utility’s transmission costs.

On Dec. 12, Appalachian started charging an interim increase in its base rate. A related SCC decision is pending, and the utility might be forced to credit customers’ bills, with interest, if the commission approves a lesser amount later this year.

In May, Appalachian had filed for an increase in the environmental and reliability surcharge of about 3.6 percent.

But in October the utility, SCC staff, the Virginia Municipal League and the Virginia Association of Counties all agreed to the lesser increase, according to Todd Burns, a spokesman for Appalachian.

In view of that October stipulation, Burns described the SCC’s order Thursday as “reasonable.”

And costs covered by the latest environmental and reliability surcharge were incurred in 2008, he said.

After this year, surcharge as currently defined will be discontinued. But Appalachian will still have opportunities to recover costs not associated with the base rate through filings for other surcharges.