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SCC Orders Reduction to APCo Rate Request, Refunds to Customers with Interest

From staff reports

Although the State Corporation Commission has agreed to allow Appalachian Power Company to raise its rates, the increase is significantly less than the amount the company requested.

Earlier this year, APCo filed a request last spring with the SCC to increase its operating revenue by $198.5 million. By Virginia law, the increase was implemented on an interim basis in October 2006 and local customers scrambled to let the company and elected officials know the hardship the increase was causing.

On May 15, the State Corporation Commission (SCC) gave Appalachian Power Company (APCo) approval to increase its annual operating revenue by $24 million. The amount is $174.5 million less than what the company requested and has been charging customers on an interim basis since October.

The SCC rejected a company request to delay implementation of the lower rates and to take up to six months to provide refunds to customers. The SCC’s final order directs the company to begin charging the lower rates in 30 days and make refunds, with interest, to customers within 90 days.

Noting that customers have endured three rate increases over the past year which includes paying significantly higher rates as a result of APCo’s request in this case, the commission said, “APCo’s customers deserve better treatment than the company wishes to impose upon them.”

APCo filed its $198.5 million rate request in May 2006. By law, the increase was allowed to take effect Oct. 2, 2006 on an interim basis, subject to refund with interest.

The company’s requested amount represented a 25.4 percent increase in annual operating revenue. The SCC’s final order allows for an increase of 3.1 percent.

For an APCo residential customer using 1,000 kilowatt-hours of electricity a month, the SCC’s order means the monthly bill will be approximately $11.80 less than the current interim rate. Refunds will appear as a credit on customer bills.

APCo had also claimed that this particular rate case should be governed, in part, by legislation enacted during the 2007 General Assembly session. The commission noted that it “would not typically address a statute that has yet to take effect,” in an order in a case filed earlier, but “since Appalachian has asserted the new statute applies…we are compelled to address” APCo’s assertions in the order in this case.

The commission said, “If Appalachian is correct, we acknowledge that application of the new statute to the current proceeding would result in a rate increase that can be estimated to be approximately $47.65 million more than the rate increase we otherwise approve herein.”

However, the commission rejected Appalachian’s assertion that the new law should apply to this case stating that neither the Constitution of Virginia nor the rules of Virginia statutory interpretation supports Appalachian’s claim.

APCo serves approximately 500,000 customers in all or parts of 31 counties in Southwest Virginia.

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