Appalachian Power Co. plans to use more of the sun and wind to generate its electricity, but it could cost the average residential customer an extra $2.37 on their monthly bill.
The utility detailed how it will comply with Virginia’s renewable energy mandates in a recent report to the State Corporation Commission.
Passed by the General Assembly last year, the Clean Economy Act requires Appalachian to provide its 530,000-some customers in Western Virginia with all carbon-free electricity by 2050.
Over the next three years, Appalachian will add nearly 500 megawatts of solar and wind power to its energy portfolio, almost half of that from a wind farm in Illinois that will be operational by December 2024.
The purchase of several solar facilities, including a 150-megawatt operation in Pittsylvania County and a smaller one in Amherst County, are also in the works.
“This is our company’s most extensive filing yet,” Appalachian president and chief operating officer Chris Beam said in a news release Tuesday. “The update filed with state regulators reflects the in-depth analysis necessary to ensure sufficient resources are in place to provide affordable and reliable power for our customers, while continuing to build our renewables portfolio and meet our VCEA requirements.”
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The filing also includes plans for an energy storage project in Southwest Virginia and the purchase of renewable energy certificates, which are market-based instruments that can be sold after the owner has fed the energy into the grid.
To cover the costs of its investment in green energy, the company will seek approval of a rate increase from the SCC.
An exact amount is dependent on a number of factors such as customer class, usage and regulatory outcomes, according to the news release. But if approved as requested, the proposal would mean that residential customers using 1,000 kilowatt hours a month will see an increase of $2.37.
That would be on top of about a half-dozen rate increases that Appalachian has sought over the past two years.
Taken together, residential bills would go up by about $27 a month if all of the requests are approved.
The SCC approved three rate major increases last year — one to recover transmission costs, a second to pay for environmental upgrades to two coal-burning power plants and the third to cover the higher cost of coal and natural gas — that will amount to about $16 a month for the average residential customer.
Those increases followed a denial by the regulatory agency in November 2020 of a base rate hike that would have boosted the bill by about $10. Appalachian has appealed that ruling to the Virginia Supreme Court, where it remains pending.
The investor-owned company says its rates remained flat for a decade before the increases, and that its customers still pay less than the national average.
However, more increases are expected as the Clean Economy Act pushes Appalachian to shed its long-held reliance on fossil fuels.
As of Sept. 30, 2021, 64.5% of the power generated or purchased by Appalachian came from coal, and natural gas provided another 19.1%, according to spokeswoman Teresa Hall.
Wind and hydro-electric power accounted for the remaining 16.4%.
Those numbers were calculated before the company’s first solar project, in Henry County, went online late last year, Hall said. Smaller solar panels installed on the rooftops and property of homeowners and businesses do not generate enough electricity to factor into the equation.