Appalachian Power Rates Increased in 2008-09
The following article about Appalachian Power Company's retail power rates is from the company's corporate website. It includes detailed explanations of the different rates charged by the company and shows an overall increase in rates from 2008 to 2009.
During 2008, Appalachian Power received several approvals from the Virginia State Corporation Commission (SCC) allowing increases to the retail prices paid by customers in the Commonwealth. There were three main cases that affected customer prices:
The first was a request for a fuel factor increase. The fuel factor is a pass - through element of the customer bill - meaning there is no profit for the company - that allows for the recovery of the variable or rising costs of fuel used for the generation of electricity. If those costs go down and remain stable, and the SCC sees that the company could recover more than its expenses, the factor is lowered.
During 2008, however, the company saw a dramatic increase in its costs for fuel, particularly coal, the primary source of fuel for electricity generated by Appalachian. In October, the SCC granted an increase of the factor to about 2.16-cents per kilowatt-hour (KWH). The fuel factor comprises about a third of a Virginia customer's price for electricity.
The SCC also approved a small increase in the Environmental and Reliability (E&R) surcharge applied to bills. The surcharge allows the company to recover expenses for required environmental and power delivery improvements that are not covered by other current Virginia regulatory statutes. This addition - about one percent - went into effect Jan. 1, 2009.
The third and largest adjustment occurred as a result of the company's request for a long - needed increase in its base rate. The request was the result of dramatic increases in the costs of commodities and business operations as well as a lowering rate of return.
As allowed by law, the company implemented a $208 million base rate increase on an interim basis in late October. In November, the commission revised the approved increase to $168 million and the new rate was applied in December 2008. In January 2009, the company credited to customer accounts the refunds resulting from the difference between the two rates collected during the interim period.
Combined, these three rate adjustments increased the prices currently paid by Virginia customers. For example, a customer using 1000KWH in May 2008 would have paid about $71.50; today, the same amount is about $92.90.