Wednesday, November 18, 2009
Editorial: Rising power bills
The SCC has many factors to consider as it carefully weighs an increase to electricity rates.
From the RoundTable blog
Read the latest entries
Appalachian Power Co. would burn less coal this week if it could harness the energy of customers angered by its plan to increase rates.
On Dec. 12, Appalachian will raise its base rate 14.5 percent. Whether that interim price will be made permanent is the topic of two public hearings this week before the State Corporation Commission.
The power company has sought four rate adjustments this year. Three of the increases are largely pass-through charges to customers for fuel prices, transmission fees and money spent on environmental improvements.
The company already won approval to recoup $111 million in fuel costs and $21.7 million in transmission costs. An additional $41.6 million environmental charge awaits a decision.
While many customers object to all rate requests, the SCC does not have as much flexibility in deciding the outcome of pass-through requests as it does regarding the base rate charge.
That catch-all charge is the topic on which the SCC will take testimony today in Abingdon and tomorrow in Rocky Mount.
Appalachian maintains that it needs to raise $154 million more in revenue in order to meet its operating costs, maintain its bond rating and turn a profit for shareholders. The power company claims it has, like other industries, tightened its belt on expenses.
Its customers will maintain Appalachian's profit comes at their expense. Residents and business owners weathering the recession will make convincing cases of the hardship befalling them and how it could worsen by sharply increased utility charges.
By law, Appalachian is permitted to seek a base rate that allows for a fair profit, a likely term of contention for those submitting comments to the SCC.
The company said that last year it earned a scant 2 percent return in Virginia, though the SCC allowed them 10.2 percent.
Appalachian's customers should understand that their electric bills will continue to rise to offset increasing fuel costs and to pay for desirable environmental controls. They might not like the bigger bill, but ought to be able to accept those reasons. Customers will not tolerate paying padded dividends to power company shareholders when their own business and home accounts are depleted.
The SCC should take great care in determining a fair profit margin.
