Sunday, February 07, 2010
Lawmakers hear power bill woes
General Assembly members have put aside other work to try to find some relief for their constituents.
General Assembly 2011
Among the major issues: The state's continuing efforts to provide services with fewer dollars and Gov. McDonnell's plan to privatize liquor stores. Session ends Feb. 26.
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RICHMOND -- When Southwest and Southside Virginia legislators traveled to Richmond last month for the start of the General Assembly session, they couldn't escape the constant complaints from constituents about skyrocketing electric bills.
A retired teacher in Ridgeway who lives frugally saw her electric bill go from $145 in December to $580 in January, said Sen. Roscoe Reynolds, D-Henry County.
A constituent of Del. Anne Crockett-Stark, R-Wytheville, told her that his family business would shut down because its power bill had gone from $1,400 a month to $2,600.
"We're getting hundreds of e-mails and phone calls from people, and everybody has the same story," Crockett-Stark said Wednesday during a meeting of the General Assembly's Commission on Electric Utility Regulation.
The stories of desperation and outrage put Appalachian Power Co. in the crosshairs of state lawmakers who represent the company's Virginia service area. The legislative session began one month after Appalachian imposed an interim base rate increase of 12.8 percent, and as a prolonged stretch of severe cold weather caused customers to increase their power consumption.
"I hate the analogy, but it was the perfect storm," Appalachian spokesman Todd Burns said Thursday.
Legislators from both parties introduced bills that would limit Appalachian's ability to increase rates. Some sought to end the process of allowing utilities to impose "interim" rate increases before the State Corporation Commission actually approves them. Some proposed returning Appalachian to the traditional cost-of-service regulatory model that existed before Virginia began a failed attempt to deregulate electric utilities in 1999. The 1999 decision was supposed to open up the electric system to more competition, but that didn't happen. The state now has what's essentially a hybrid between the old and new models.
Those pressures brought Appalachian executives to the negotiating table. President and Chief Operating Officer Dana Waldo met with several Southwest Virginia legislators in Richmond late last month, and the company enlisted former state Attorney General Bill Mims to lobby on its behalf.
Last week, Appalachian agreed to suspend its interim base rate increase under proposed legislation that would accelerate the timetable for state regulators to act on the company's pending permanent rate increase request. The SCC would rule on the rate request by July 15 and a new increase would take effect Aug. 1.
The monthly bill for a typical residential customer who uses 1,000 kilowatt hours a month would decrease slightly -- from $117.86 to $105.81 -- while the suspension of the interim increase is in effect, Appalachian officials said. Because the decrease will be applied to the first bills issued after the legislation is signed, consumers could get a reduced rate on electricity consumed during parts of January and February if the legislation moves quickly.
One piece of legislation on the interim suspension (House Bill 1308), sponsored by Del. Bill Carrico, R-Grayson County, cleared a House committee on Thursday and should come up for a vote in the full House this week. A Senate committee on Monday will take up an identical measure (Senate Bill 680) sponsored by Sen. Phillip Puckett, D-Russell County.
"We really had to put pressure on them," said Del. Terry Kilgore, R-Scott County, the chairman of the House Commerce and Labor Committee. "Once they saw that we had the votes to pass some legislation out of this year's General Assembly, I think they realized they're going to have to do something and they better be at the table."
But consumer advocates and some legislators said that the compromise legislation will provide little lasting relief to customers.
"The interim rate deal will take away some immediate pain, but it will not reduce the amount of money the utility ultimately gets by much," said Irene Leech, a professor of consumer studies at Virginia Tech and president of the Virginia Citizens Consumer Council.
Leech called the compromise bill "a perfect political solution to appearing to do something while not really doing anything."
"It won't keep many dollars in consumers' pockets," Leech said.
Del. Ward Armstrong, D-Henry County, called the legislation "a good first step" but nothing more.
"For constituents who have seen their power bills go up by as much as two, three and four hundred dollars, I think it's not going to give them a great deal of solace that they are going to get this for a period of three or four months," said Armstrong, the House minority leader.
Armstrong said he will support the legislation but also wants to push ahead with two bills that could have the effect of restricting the size and frequency of future rate increases. He plans to present his bills to a House subcommittee on Tuesday. But Appalachian officials said those measures would torpedo the compromise by restricting the company's ability to recover its costs.
Asked Thursday about Appalachian's opposition to his bills, Armstrong nodded toward the front of the House of Delegates chamber and said, "I don't see AEP on that voting board."
Appalachian officials said sustained cold weather has triggered a surge in power consumption and contributed to the eye-popping bills customers received last month. But customers also are reeling from a succession of rate increases that increased bills by about 60 percent over the past three years.
Appalachian Vice President Dan Carson told legislators Wednesday that the rate increases have covered necessary expenses, including compliance costs associated with more stringent federal environmental standards.
"We went for 23 years with no changes in rates, from 1983 to 2006," Carson explained to the Commission on Electric Utility Regulation. "We have invested huge sums of money, and that's the primary reason our rates have gone up."
Carson said an 8 percent increment of Appalachian's current rate covers deferred environmental compliance expenses and will expire at the end of this year.
"All other things being equal, our rates are going to drop by that amount at the end of 2010," he told the commission.
Kilgore said the compromise legislation represents a victory because it will lead to an immediate, if temporary, rate reduction.
"The way I look at all the bills we've had, yeah, we could try to do a lot of things to AEP," Kilgore said. "But all of that wouldn't take effect until July 1. So we've got to try to play the hand we're dealt and try to get some immediate relief.
"What I hope happens is that people are appreciative of the fact that, without the legislators getting involved, this wouldn't have happened," Kilgore said. "Without us calling the president [of Appalachian] down, this wouldn't have happened. We as legislators spent more time on this than any other issue going on here, so I hope they're appreciative of that."
Staff writer Duncan Adams contributed to this report
