Three area legislators on Tuesday voiced concerns about Appalachian Power Co.’s request to raise its rates to recover costs associated with meeting voluntary state renewable energy standards.
Dels. Don Merricks, R-Pittsylvania County, and Ward Armstrong, D-Bassett, and state Sen. Roscoe Reynolds, D-Ridgeway, addressed the State Corporation Commission (SCC) at its courtroom in Richmond. Tuesday’s hearing dealt with the last of four rate cases Appalachian has pending before the SCC.
In this rate case, Appalachian is asking the SCC to allow it to raise its rates by 0.5 percent to recover $6 million in costs incurred in meeting the Commonwealth’s Voluntary Renewable Portfolio Standards, said company spokesman Todd Burns.
Passed by the General Assembly in 2007, those standards encourage utilities to use renewable energy, Burns said. Appalachian has purchased wind power to meet the standards, he added.
“We’re only asking for the actual costs we’ve incurred to meet a program the state established as important,” he said.
Together, the four pending rate cases would increase rates 9.6 percent. That would put the rate for a customer using 1,000 kilowatt hours of electricity a month at about $100, Burns has said, adding that that would return rates to where they were in 2010.
During Tuesday’s hearing, Merricks, who became a delegate the year after the portfolio legislation was passed, said he told commissioners that he does not think it was the law’s intent to allow Appalachian to recover costs for expenses that were not incurred in Virginia.
“I told them if they (Appalachian) didn’t spend in Virginia, I don’t think they should be reimbursed,” he said after the hearing.
According to Burns, the wind energy Appalachian uses to meet the standards is generated in Indiana. However, Burns said he believes what is important is where the energy is used – in this case, in Virginia – rather than where it is generated.
“This is renewable energy that’s going online (in Indiana) and being taken off and used for Virginia customers,” he said.
Merricks said he also urged the commissioners to remember that many Appalachian customers cannot afford higher energy bills.
“Economic conditions where we live haven’t changed,” he said. “When we started the downturn, businesses and families could sustain for a while, but we’ve been in it so long now, we can’t sustain,” he said. “I asked them to keep that in mind as they were looking at what to do.”
Armstrong said he made three points for the SCC.
First, he repeated his call for a freeze on rate hikes.
“I told the SCC I continue to be disappointed the General Assembly didn’t give them the discretion they need to set rates at a level they believe is appropriate. Nothing short of a freeze, coupled with an overhaul of regulations, was going to do that,” he said later Tuesday.
Second, he gave the SCC about 300 post cards from rate hike opponents. He had submitted about 3,000 similar post cards at the last SCC rate hike hearing, and the 300 came in after that, Armstrong said.
And third, he said there “is some evidence to suggest” that in this rate hike request on renewable energy, Appalachian may be “trying to push expenses that they are maybe incurring outside Virginia onto Virginia rate payers. I can’t tell for sure.”
Armstrong said the utility’s rate filing includes thousands of pages of documents, and he urged the SCC to scrutinize them closely. If the SCC finds he is right, he said he asked it to deny the rate hike.
“We have no business subsidizing expenses in West Virginia,” he added.
Armstrong said he could not remember how he voted on the 2007 legislation that established the renewable portfolio standards. He added that he supports the use of renewable energy.
According to the Virginia Legislative Information System, Armstrong voted for HB 3068 in 2007, which authorized Virginia Code Section 56-585.2 on the renewable portfolio standards.
“The thing I’m critical of is that they not only get reimbursed for expenses but they make a profit on top of that,” he said. He added that a utility can recover a capital expense and get a guaranteed rate of return and a bonus on top of that.
“I think they’re making too much off the rate payers,” he added.
Reynolds said in a news release that he voted against the 2007 legislation and noted that efforts to repeal it have been unsuccessful.
He said he told the SCC on Tuesday that he opposes Appalachian’s request for “an additional million dollars a year” for the renewable energy program.
Reynolds also lauded Armstrong and Merricks for appearing before the commission.
“I am grateful that Del. Ward Armstrong and Del. Don Merricks joined me in voicing concerns about the negative effect that additional rate increases will have on the people, businesses, governments, and charities in the Appalachian service region,” he said in the release.
Burns noted that Appalachian’s current rates are lower than they were a year ago and said the company is trying to keep rate requests down.
“We’ve worked hard to try to limit the size of the requests,” he said.
He encouraged any customers who are having difficulty paying their bills to take advantage of company programs designed to help them, such as one that allows customers to avoid spikes in their bills by making an average monthly payment each month.
Burns said he expects the SCC to rule on all four rate cases by the end of the year.
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