For Release: July 15, 2011
For media inquiries only, contact: Brian J. Gottstein
Email: bgottstein@oag.state.va.us (best contact method)
Phone: 804-786-5874
Cuccinelli: APCO gets less than half of requested rate increase; lower rates coming to customers August 1
- SCC reduces company’s requested rate increase by $92 million -
RICHMOND (July 15, 2010) – Attorney General Ken Cuccinelli announced today that he was pleased with the State Corporation Commission’s decision to deny the approximately $154 million base rate increase sought by Appalachian Power Company (APCO). In rejecting the requested increase, the SCC did approve a $61.5 million rate increase, $92.5 million less than the request. The attorney general’s office had argued on behalf of customers for the significant reduction in the rate increase.
While the State Corporation Commission did grant an increase, because of an expected $101 million reduction in fuel costs, APCO customers can now expect to pay lower rates for electricity than they did last year.
The attorney general and others had opposed the $154 million base rate increase requested by Virginia’s second largest electric utility. “As consumer counsel, the Office of the Attorney General was involved in this case from its inception. Along with the other parties, we made every reasonable effort to make certain that electricity prices remained as low as possible. We are pleased that, when coupled with the decrease in fuel costs, APCO’s customers can now expect to pay less for electricity than they did last year,” stated Cuccinelli.
In reducing the company’s requested base rate increase by more than $90 million, the SCC accepted all of the attorney general’s office’s recommendations in the case.
“In analyzing today’s decision, one thing must be remembered. Various federal regulations and rulings of the Federal Energy Regulatory Commission (FERC) limited how much the SCC could reduce what customers pay,” said Cuccinelli. The SCC noted in its opinion that it is limited in its jurisdiction regarding certain FERC-approved matters, and therefore, could not address some of the issues that resulted in a rate increase for Appalachian Power.
“No change in Virginia law can alter the reality that regulatory decisions made in Washington have real impacts on the citizens of Virginia,” said Cuccinelli. He also noted, “When Congress and the federal bureaucracy address energy issues, whether with proposed ‘cap and trade’ legislation or with less publicized matters such as FERC mandates, all Virginians feel the effect in their electric bills. If cap and trade passes, we will see several more rounds of federally-driven rate increases, and APCO customers will be some of the hardest hit in Virginia. If federal regulations continue to increase the cost of electricity, Virginia’s consumers, businesses, and economy will foot the bill.”
Base rates are only one component in determining the final costs to the consumer. Other factors include the cost of the fuel that the utility uses to generate the electricity. On June 10, APCO made a filing with the SCC for a reduction of $101 million in its fuel costs going forward. Assuming the SCC approves the reduction, APCO’s customers will see a reduction in electricity costs because the $101 million fuel cost reduction more than offsets the $61.5 million base rate increase.
Cuccinelli praised the efforts of the lawyers and staff from the Office of Attorney General’s Division of Consumer Counsel for their efforts on the case. Cuccinelli said, “I appreciate the tremendous efforts of the entire Division of Consumer Counsel, especially Ashley Macko and Meade Browder, on this case. The SCC repeatedly noted in its opinion that the arguments they made were compelling and led to significant reductions to the company’s requested rate increase. Virginia’s 500,000 APCO customers were well served by Ashley and Meade.”
In addition to opposing the full increase sought by APCO in the base rate case, the attorney general’s office had also opposed recent attempts of APCO to pass on certain costs to its customers. On June 2, the SCC agreed with the attorney general and denied the company’s request to pass on more than $200 million, on a net present value basis, in certain generation costs to its customers.
According to the SCC, an APCO customer is expected to pay $101.03 per 1,000 kilowatt-hour beginning August 1, a reduction from the current charge of $103.57. Had Appalachian’s rate request been approved in full, this amount would have been approximately $109.50. According to the U.S. Energy Administration, as of March 2010, the national average for a 1,000 kilowatt-hour residential bill is $108.60.