After the State Corporation Commission (SCC) denied Appalachian Power Company (APC) a rate increase, the company is appealing to the Virginia Supreme Court, according to a notice of appeal filed with the SCC Monday. The company requested a rate change last year, but the SCC has reiterated its denial of the request on March 26.
“The rates Appalachian Power customers currently pay for electricity were set in 2011 and are based on 2010 costs,” states a March 2020 APC press release announcing the initial request. “Since then, the company has continued to maintain and improve its distribution and generation infrastructure, integrated renewables into the electric grid, complied with environmental regulations, and deployed new technology to improve reliability and communication with customers.”
The rate increase would have averaged about five percent – about a $10 monthly increase for average consumers, according to the press release. It would have also had rate discounts December through February, when customers’ bills are already high due to heating needs. The company argued in SCC filings that not granting the revenue increase would violate the U.S. and Virginia Constitutions by taking private property for public use – in other words, blocking the company from making a profit in order to keep consumer rates low.
“Over the upcoming triennial period, Appalachian’s costs will exceed revenues by tens of millions of dollars. Without a corresponding increase in rates, the Company will assuredly be unable to recover its prudently incurred operating costs and earn a fair return on invested capital. Such an outcome would deprive the Company of its fundamental right to just compensation for the use of its private property for public purposes, as enshrined in the federal and state constitutions, and embodied in precedent,” an October brief states.
But in November, the SCC denied the request. “Appalachian Power Company has earned a rate of return (profit) that is within the range authorized by Virginia utility law for calendar years 2017, 2018 and 2019,” a November SCC press release states.
APC earned 9.48 percent profit according to the triennial review – slightly higher than the 9.42 percent authorized by law, but low enough to avoid triggering customer refunds, according to the November SCC final review.
“The Commission recognizes that the public interest is not well served if a utility is permitted to charge its customers more than necessary to earn a reasonable return,” the review states.
APC petitioned the SCC to reconsider the decision, leading to the SCC’s March 26 re-affirmation of its earlier decision.
“Accordingly, the Commission continues to find on reconsideration that the potential detrimental rate impacts that could be imposed on residential and other customer classes support rejection of the proposed changes to cost allocation and revenue apportionment based on the instant record,” the SCC concluded.
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