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Saturday, July 19, 2008

Powerful price increase sought by Apco

Appalachian Power Co. has asked for its third rate increase, meaning electricity bills could rise by one-third.

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The big one, at least in terms of electrical prices, may be about to hit.

Appalachian Power Co. on Friday asked state regulators for a nearly 12-percent increase in electric bills Sept. 1 to cover skyrocketing coal costs.

The rate increase is the third requested in as many months. Now three proposals are pending with the Virginia State Corporation Commission. If all three increases are approved, bills could rise by about a third from where they are today.

It could mean that by early next year, the typical electrical bill for a modest home could rise from about $70 to $100 a month -- the latest squeeze for household budgets buffeted by rising prices for gasoline and food.

Users of more than 1,000 kilowatt hours a month, a typical load, could see larger increases, the utility said.

Appalachian says it wants more money from its 500,000 Virginia customers to cover a host of higher operating expenses.

In late May, the company petitioned for a base rate increase and a larger surcharge to recover the cost of environmental measures. Friday, the driving factor was an unusual spike in the price of coal.

Dana Waldo, president and chief operating officer of Appalachian Power, said in a release that central Appalachian coal -- the kind the company's power plants use -- has gone up from $60 a ton to $140 a ton during the past six months.

"It's been 30 years since we've seen any type of increase this large over such a short period of time," company spokesman John Shepelwich said.

William Raney, president of the West Virginia Coal Association, offered several explanations for the coal price increases.

China and Europe want American coal for electricity and steelmaking, he said. Normally voluminous Australian coal production has been interrupted by floods.

But although demand is up, coal production is not. Thus, higher prices.

That doesn't necessarily mean coal producers are striking it rich, Raney said. Many producers are supplying coal at contract prices set before the surge. In addition, producers' costs are up in many categories. Steel for underground rails, fuel to run equipment and safety investments to protect miners are becoming more expensive.

Unless coal production increases dramatically, which experts are not predicting, coal prices could continue to exert pressure on electrical bills.

For a host of reasons, Appalachian is urging customers to get smarter about managing rising energy costs.

"About 8 percent of your electric bill is for devices that are plugged in when not in use," reports the company's conservation site, www.wattwhyandhow.com.

"The VCR, DVD player, cellphone charger, the toaster and countless other appliances are all wasting electricity when not in use. Simply unplug them when you're not using them and you save money."

Other tips are familiar: Use a clothes line instead of the dryer. Install compact bulbs. Program your heating and cooling system to idle off when no one is around.

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