Appalachian Power announces rate reduction

The average Appalachian Power residential customer in Virginia will soon see about a $10 drop in their monthly bill, according to an announcement made Wednesday by the public utility subsidiary of Ohio-based American Electric Power Co.

On Oct. 9, Virginia’s State Corporation Commission, which has regulatory authority over utilities, approved an interim fuel factor rate of 3.1 cents per kilowatt-hour for service rendered on and after Nov. 1 . The current rate is 4.1 cents. The fuel factor represents the cost of fuel used to generate electricity.

Appalachian Power requested the decrease Sept. 12.

“This is what we expect fuel to cost for our customers for the year moving forward,” George Porter, a spokesperson for Appalachian Power, said Thursday.

The fuel factor makes up about 20% of a residential customer’s electric bill, according to the utility.

“We were coming off the post-COVID years, the war in Ukraine … so we expect fuel to go down a little bit,” Porter said.

To comply with the Virginia Clean Economy Act, the 2020 law that mandates zero emissions in energy production by 2050, Appalachian Power is bringing on more renewables.

“That’s less need for fuel,” he said.

The utility serves about 550,000 customers in central and southwestern Virginia.

By the end of this month, Appalachian Power expects to have an unrecovered deferred balance of about $62.2 million in fuel costs. In October 2023, it had a deferred fuel balance of about $273.2 million.

The SCC will issue a final order following a public hearing on March 3.

Signed by Gov. Glenn Youngkin in March, House Bill 2621 went into effect July 1.

Championed by Southwest Virginia lawmakers concerned about their constituents’ electric bills, the law allowed for securitization to reduce monthly bills, placed a six-month moratorium on interest and late fees and a nine-month freeze on disconnect and reconnect fees, and prohibited rate increases during the winter.

The SCC held a public hearing Oct. 1 on Appalachian Power’s request to issue about $1.4 billion in securitized utility bonds. The financing will cover about $141 million in Appalachian Power’s storm recovery costs from Jan. 1, 2024, to March 31, 2025. It will also finance about $1.2 billion to cover Virginia’s share of the unrecovered building balances on the coal-fired John Amos and Mountaineer power plants in West Virginia.

Normally, customers would foot these costs in their monthly bills. By using this method of financing, which has a favorable interest rate, a customer using 1,000 kilowatt-hours could save about $11.44 a month.