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State grants two AEP hikes

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State regulators last week approved two rate increases sought by Appalachian Power Co., and later this month will hold a public hearing on a third proposal that could increase customers' electricity costs by an average of nearly 24 percent.

The approved rates were less than the company originally requested, but spokesman Todd Burns said the electric utility supported the State Corporation Commission's decisions.

One case involved Appalachian's request for a fuel rate increase.

The fuel rate rider on customers' bills recovers, dollar-for-dollar, the utility's costs for fuel used to generate electricity.

Appalachian relies on coal for about 90 percent of its power generation, Burns said. Both he and the SCC said coal costs have increased significantly this year.

On Sept. 1, the utility set an interim fuel rate of 2.255 cents per kilowatt hour, up from 1.418 cents per kilowatt hour. The SCC dropped the increase to 2.16 cents per kilowatt hour, an adjustment the commission said will save the average residential customer about $1.14 a month. The new rate, a 52 percent increase, takes effect today, Monday.

Appalachian's other request sought a surcharge increase to recover money spent by the utility between Oct. 1, 2006, and Dec. 31, 2007, to improve environmental performance and the reliability of the company's power grid.

The commission approved a net increase in the surcharge of about $11.7 million, an amount nearly $6 million less than the company first sought.

The surcharge will apply to service on and after Jan. 1. The SCC estimates the increase on a residential electric bill will be less than 2 percent.

As for that big base rate increase Appalachian wants, the SCC will hold a public hearing at 10 a.m. Oct. 29 in Richmond to solicit input.

"That case is still out there," said Andy Farmer, a spokesman for the corporation commission.

The day before, Oct. 28, Appalachian could establish an interim rate to apply until the SCC rules on the utility's request for the base rate increase. If the utility goes the interim route and overshoots the rate ultimately approved by the SCC, it could face refunding millions of dollars to customers.

Burns said Appalachian has not made a decision about initiating an interim increase.

Utility officials have acknowledged that the base rate hike for which they've filed would add burdens to customers already struggling to buy gas, groceries and other necessities. But the company says it "is in a precarious financial situation in Virginia" and needs the money.

Farmer said the SCC has received about 17,000 comments so far — via e-mails, letters and petitions — about the base rate hike and the two aforementioned cases. Those comments have included, among other issues, concerns cited about how a significant increase in the base rate could affect a household's budget, he said.