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Appalachian Power seeks another rate increase to cover rising energy prices

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Appalachian Power Company is seeking approval for a customer rate increase the utility says is needed to due higher costs for fuels to generate electricity.

Appalachian Power Co. is proposing another rate increase, this one to cover the rising costs of the fuel it burns to produce electricity. The price for an average residential customer will be about $20 more on their monthly bill.

The request was filed recently with the State Corporation Commission.

Since 2020, the SCC has approved at least four other rate adjustment clauses for Appalachian: an earlier one for the higher costs of coal and natural gas in 2021, a second for increased transmission costs, a third to pay for environmental improvements to two coal-burning plants in West Virginia and a fourth for renewable energy projects required by a state mandate.

Together, those increases added up to about $18 a month for an average residential customer, someone who uses 1,000 kilowatt-hours of electricity per month.

In addition, the Virginia Supreme Court last month reversed a 2020 denial by the SCC of Appalachian’s request to increase its base rate by about $10 a month. The case was sent back to the commission, and Appalachian has until Sept. 23 to file a revised proposal.

“We recognize these are challenging financial times for many people and families,” Chris Beam, president and chief operating officer of the utility, said in an announcement Friday.

“We strive each day to keep fuel costs as low as possible, continuously monitoring energy markets for opportunities to purchase fuel and energy at prices that are advantageous to customers,” the statement read.

The utility serves 500,000-plus customers in Western Virginia.

Energy costs began to spike in 2021. The rapid rise was due to several factors including the resurgence of the economy following the COVID-19 pandemic, inflation, and the ongoing war in Ukraine, Appalachian said.

With a fuel factor rate increase, higher costs are passed directly on to customers, and Appalachian does not earn revenue from the adjustment.

Instead of recovering the increased costs over one year, the company has asked the SCC for approval to spread the amount over a two-year period, decreasing the impact on customers.

Customers experiencing difficulty paying their monthly bill are encouraged to contact the company for assistance.

Appalachian offers energy efficiency programs and payment options including an average monthly payment plan, which helps customers avoid seasonal spikes in their bills by spreading costs throughout the year.

The last time Appalachian requested an increase in its fuel factor rate, the SCC allowed it to take effect on an interim rate Nov. 1, 2021, and later gave final approval.

Under Virginia’s system of regulating large electric companies that have a monopoly on the market, the SCC considers changes to base rates every three years.

Other proposed increases or decreases are handled individually as rate adjustment clauses, or riders, for a variety of factors such as the cost of fuel, transmission expenses and environmental compliance.

As part of a sweeping state law passed in 2020, Appalachian must supply all of the electricity to its Virginia customers from carbon-free sources by 2050. Currently, coal and natural gas make up about 83% of the company’s power portfolio.

Over time, the company says, customers will pay less for fuel as the transition is made to renewable energy.

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