The Public Service Commission of West Virginia has approved without change a settlement previously filed in Appalachian Power and Wheeling Power’s general rate case. The Commission order grants the companies a combined annual increase in revenues of approximately $44 million or 5.5 percent, effective July 28, 2006. In addition, the order approved a mechanism to adjust rates in the future for the on-going costs of environmental improvements at the company’s Mountaineer and John Amos generating plants. Based on current projections, this would provide for increases of approximately $36 million in 2007, $14 million in 2008 and $18 million in 2009. Finally, the order reinstates a mechanism to reflect changes – both increases and decreases – in the costs of fuel and purchased power. Future rate adjustments under these mechanisms will occur no earlier than July 2007.
Basics of the rate increase
The impact on residential customers
The rate increase will vary among customer classes to more closely align rates with the cost of providing service. For example, residential customers using 1,000 kilowatt hours a month will see their bills rise from $55.28 to $58.98 this year, a $3.70 increase.
Usage is increasing
Rates for Appalachian Power customers in West Virginia have been stable for more than 20 years. In 1984, residential customers paid about $60 a month for 1,000 kilowatt hours of electricity. Even with the increase, customers will still pay less than they did then, and rates will remain among the lowest in the nation.
At the same time though, usage has gone up 39%. The chart below summarizes the changes in electricity rates and demand.
Why rates are increasing
The price of coal is going up
Coal and purchased power prices increased by about 30% in the last two years.
Appalachian Power is installing environmental controls
Appalachian Power is investing more than $1.4 billion to build flue gas desulfurization units – scrubbers at Mountaineer and Amos plants. Scrubbers remove sulfur dioxide from emissions. Mercury emissions also will be reduced by the combination of scrubbers and selective catalytic reduction units – SCRs – which are already in place at the plants. These environmental controls
- Result in cleaner air at the lowest possible cost.
- Are needed to comply with mandated federal and state clean air laws.
- Mean that our existing coal-fired plants will stay open – keeping jobs, tax revenue and other benefits in the state.
Appalachian Power is investing in service reliability
A small part of the included costs are for the construction of the Wyoming-Jacksons Ferry transmission line, which improved reliability for southern West Virginia and southwest Virginia customers when it was energized at the end of June 2006. Additionally, another small amount is for an increase in vegetation management and tree trimming for our distribution and transmission lines.
Additional resources
