Thursday, January 14, 2010
Power bills spin upward after cold snap
Appalachian customers have been hit with a combination of rate increases and weather.
JEANNA DUERSCHERL The Roanoke Times
Kathy Meckley of Moneta said she was "infuriated" after seeing her $99.05 electric bill for November jump to $263.27 in December. That's an increase of 166 percent.
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Moneta resident Kathy Meckley and her husband reviewed their electric bill for December and were stunned.
And ticked off.
"I'm infuriated," she said Monday. "This is by far the highest electric bill we've ever had."
She is far from alone.
For most residential customers across Appalachian Power Co.'s service area, bills soared from a comparatively warm November to December, when the region endured a prolonged period of cold weather.
The Meckleys' bill increased by about 166 percent.
Like other Appalachian customers, Meckley wondered how much the utility's elevated rate charges ratcheted up her bill. The rate increases certainly contributed, but the utility says weather played a larger role.
Rate increases in 2009, either approved or implemented as an interim rate, increased the bill of an average residential customer by about 23 percent compared with December 2008, according to Appalachian. December 2009 rates were about 61 percent higher than in December 2007, the utility reports.
But the utility says December's cold weather was the main culprit and that homeowners who rely primarily on heat pumps to warm their homes might see especially startling increases.
Ken Schrad, a spokesman for the Virginia State Corporation Commission, offered a similar observation about the cold in an e-mail Wednesday.
"Division staff is getting calls about high electric bills and natural gas bills, regardless of the utility company providing the service, most of which are weather-related since we have been experiencing quite a cold spell during the most recent billing cycle," Schrad wrote.
"Colder weather results in higher use and thus higher than expected bills," he said.
Appalachian spokesman Todd Burns said customers began receiving December bills in early January.
"We've seen about a 30 percent increase in billing-related calls from our Virginia customers so far in January 2010 compared to last year," Burns said.
'Double take'
Rate increases have affected bills too, Schrad confirmed.
"It has not been tracked specifically by utility," he said. "But for any customer getting service from a utility with a recently implemented rate increase, approved or interim, higher usage in conjunction with the higher rate is going to make a lot of customers do a 'double take' when they see the amount owed."
In 2009, the SCC, which oversees regulated utilities in Virginia, approved increases in a fuel factor rate and an adjustment in how customers are charged to help cover some of Appalachian's transmission-related costs. The utility's request for an increase in an environmental and reliability surcharge is pending.
On Dec. 12, the utility began collecting the transmission adjustment as a separate line item, as well as an interim base rate increase. The SCC could lower the interim base rate in a ruling later this year, which would require Appalachian to credit customers' bills for the difference plus interest.
Burns said rate increases collected beginning Dec. 12 added about $26 to the Meckleys' bill.
So-called re-regulatory laws that took effect in January 2009 require a base rate review every other year by the SCC. This "biennial review" does not provide for the setting of interim rates because the SCC faces a new deadline -- it must make its final decision within eight months of a rate filing.
But the laws also hold that companies seeking emergency rate relief in a non-review year can implement an interim rate.
Meanwhile, Appalachian's rate increases are generating controversy, as well as payment struggles for businesses, low- and fixed-income residents and political heat as the Virginia General Assembly convenes.
State law allows regulated utilities to recover business costs, plus a profit, from customers. The SCC weighs related evidence and has some discretion to lower rate requests.
November vs. December
November was warmer than average.
The Meckleys' November bill was $99.05. Their December tally was $263.27.
But Appalachian meter readings suggest the couple's December bill reflects a substantial jump in electricity consumption -- increasing from 967 kilowatt hours in November to 2,468 kwh in December, an increase of about 155 percent.
Electric utilities charge by the kilowatt hour. A customer burning a 100-watt bulb for 10 hours consumes 1,000 watt hours of electricity -- or 1 kilowatt hour.
Burns noted, and the National Weather Service confirmed, that December delivered a prolonged cold snap.
"And during sustained cold a lot of things can happen differently with your heating system," Burns said.
Appalachian has about 500,000 customers in its Virginia service territory and Burns said virtually all experienced a colder December.
The utility is a subsidiary of publicly traded American Electric Power, one of the largest electric utilities in the United States.
In November, AEP said it anticipates 2010 ongoing earnings will be between $2.80 and $3.20 per share.
Ultimately, for many customers, the "whys" explaining the head-spinning bills for December are less important than the "hows" -- as in, wondering how they will manage to pay enough to avoid a service disconnect.
Burns said Appalachian will try to work with customers to develop payment plans they can afford. He also suggested people consider the utility's average monthly payment plan.
"We usually don't disconnect residential accounts when the temperature is at or below the mid-30s unless we are able to make a personal contact," he said.
Temperatures in the region are beginning to climb.
