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Appalachian Power proposes rate change for Virginia customers

March 31, 2020

As required by Virginia law, Appalachian Power today presented the State Corporation Commission (SCC) with its first triennial rate case. If approved, the request would raise rates for its Virginia customers an average of 5 percent.

“We’re aware that we are filing this application at an unprecedented time in our history,” said Chris Beam, Appalachian Power president and COO, in reference to the COVID-19 pandemic.  “We are required by law to make this filing now. We must follow that law, while balancing our customers’ expectations of safe and reliable service. We will work with the SCC and all interested parties as this application is considered during these uncertain times.”

Under the 2018 Grid Transformation and Security Act, Appalachian Power must submit a rate case filing on March 31, and the SCC is required to rule on the application by Nov. 30.  If the Commission decides to grant a rate increase, it would not take effect until 2021.

The rates Appalachian Power customers currently pay for electricity were set in 2011 and are based on 2010 costs. Since then, the company has continued to maintain and improve its distribution and generation infrastructure, integrated renewables into the electric grid, complied with environmental regulations, and deployed new technology to improve reliability and communication with customers.

To address the concern customers have around bills during the winter months, the company is proposing to implement a rate discount effective December through February each year. With the new seasonal rate structure, customers with higher winter usage, such as those with electric heat, may see little or no increase, or even a decrease in their annual bills. Roughly 66 percent of Appalachian Power’s low-income customers heat with electricity.

“We have made efforts in this case to not only minimize impacts to our low-income customers, but also to help industrial customers and major employers,” said Beam. The filing includes a rate proposal to support economic development efforts that encourage the expansion of existing, and the recruitment of new, industry and business.  

The proposed increase will vary depending on customer class and usage. If approved as requested, residential customers using 1,000 kilowatt hours (kWh) a month - whose current monthly bills are virtually the same as they were in 2010 - will see an approximate $10 increase in their monthly bill. Even with the rate change, Appalachian Power’s Virginia rates would remain well below the national average.

Appalachian Power has 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power). It is part of American Electric Power, which is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions. AEP’s more than 18,000 employees operate and maintain the nation’s largest electricity transmission system and more than 219,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.4 million customers in 11 states. AEP is also one of the nation’s largest electricity producers with approximately 32,000 megawatts of diverse generating capacity, including 5,300 megawatts of renewable energy.

This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: changes in economic conditions, electric market demand and demographic patterns in AEP service territories; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability or cost of capital to finance new capital projects and refinance existing debt; the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material; decreased demand for electricity; weather conditions, including storms and drought conditions, and AEP’s ability to recover significant storm restoration costs; the cost of fuel and its transportation, the creditworthiness and performance of fuel suppliers and transporters and the cost of storing and disposing of used fuel, including coal ash and spent nuclear fuel; the availability of fuel and necessary generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire renewable generation, transmission lines and facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs; new legislation, litigation and government regulation, including oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances that could impact the continued operation, cost recovery, and/or profitability of AEP’s generation plants and related assets; evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including coal ash and nuclear fuel; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions, including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance; resolution of litigation; AEP’s ability to constrain operation and maintenance costs; prices and demand for power generated and sold at wholesale; changes in technology, particularly with respect to energy storage and new, developing, alternative or distributed sources of generation; AEP’s ability to recover through rates any remaining unrecovered investment in generation units that may be retired before the end of their previously projected useful lives; volatility and changes in markets for coal and other energy-related commodities, particularly changes in the price of natural gas; changes in utility regulation and the allocation of costs within regional transmission organizations, including ERCOT, PJM and SPP; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of AEP debt; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, OPEB, captive insurance entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements; accounting standards periodically issued by accounting standard-setting bodies; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, naturally occurring and human-caused fires, cyber security threats and other catastrophic events; and the ability to attract and retain the requisite work force and key personnel.


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