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SCC upholds its denial of Appalachian Power's bid to raise rates

SCC upholds its denial of Appalachian Power's bid to raise rates

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State regulators are standing by their decision that Appalachian Power Co. is not entitled to a base rate increase.

In a ruling Friday afternoon, the State Corporation Commission addressed questions raised by Appalachian and the Virginia Attorney General’s Office about its Nov. 24 ruling, while leaving its basic finding intact.

The SCC denied a request by Appalachian to raise its base rates by 6% for the average residential customer, which would have added about $10 to their monthly bill.

After hearing five days of testimony and arguments, the commission found that Appalachian had earned a profit within its authorized range during a three-year period from 2017 to 2019, which precluded a rate increase.

After Appalachian and the attorney general questioned different parts of the ruling, the SCC agreed to reconsider its unanimous vote. Friday’s decision makes it final.

The power company, however, has indicated that it will appeal the ruling to the Virginia Supreme Court. Appalachian spokeswoman Teresa Hall said Friday that officials were still reviewing the SCC’s 25-page decision and had no further comment.

Under state law, the SCC sets a rate of return on equity for regulated monopolies such as Appalachian.

Appalachian had argued that it earned well below its approved level of 9.42%, and that U.S. Supreme Court cases have established that “rates must be set high enough to allow the utility not only to recover its prudent operating costs, but also earn a rate of return that will maintain the utility’s financial integrity.”

Critics counter that Appalachian recovers more than its authorized return on equity, at the expense of customers who pay more than they should. The utility had nearly $2 million in excessive earnings for the most recent triennial review period, the SCC found.

Meanwhile, Appalachian is seeking a different rate increase, this time for improvements to its transmission infrastructure.

If approved, the increase would add about $11 to the monthly bill of an average residential customer, Appalachian said in a news release earlier this year.

Through a rate adjustment clause, the company is seeking to increase by nearly $113 million the amount it spends — currently about $225 million — on transmission infrastructure improvements and increased costs.

A rate adjustment clause allows utilities to adjust parts of their bills periodically for specific costs not included in their base rates.

The SCC is taking public comments on the request before a hearing scheduled for next month. Written comments can be submitted through April 19 by going to the commission’s website. Select “cases” and then “submit public comments,” then scroll down to case No. PUR-2021-00018.

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Laurence Hammack covers environmental issues, including the Mountain Valley Pipeline, and business and enterprise stories. He has been a reporter for The Roanoke Times for more than three decades.

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