Appalachian Power president defends rate increase

CHARLESTON, W.Va. — Even with this week’s approved rate increases for customers of Appalachian Power and Wheeling Power, one company executive maintains thousands of West Virginians are still getting good prices for electricity.

“Before people rush to judgment about how the company is run or what we do or think that they can do it better, they really (need to) look at the underlying costs of providing electricity because this is no longer a declining cost business,” said Charles Patton, Appalachian Power’s president and chief operating officer.

“You’re going to see us move more toward the national average,” he said while talking about the rate increases on Wednesday’s MetroNews “Talkline.”

According to him, the national average price for a kilowatt hour of electricity is 12.24 cents. West Virginians who are customers of Appalachian Power or Wheeling Power, Patton said, will pay 10.8 cents per kilowatt hour after the 16.1 percent increases for residential customers are phased in during the next two years.

The initial hike, set to take effect immediately, will be 11.8 percent. Once fully implemented, the increases will add up to $19.50 more each month for average customers.

Such costs are paid in a largely rural state that, Patton said, poses unique problems for the power system.

“The first time I drove around (in West Virginia), all I could say was, ‘Oh my God.’ I never understood the challenges of trying to maintain an electric system in an environment like this. It is very difficult,” he said.

The company’s original proposal was for an additional $226 million.

The $123 million rate increase the state Public Service Commission approved Tuesday for both Appalachian Power and Wheeling Power included $79 million in base rate increases for infrastructure improvements throughout the system along with $44.5 million in surcharges to fund a new vegetation management program.

There are different increase percentages for customer classifications, meaning commercial and industrial customers will not see hikes as high as 16.1 percent.

“It’s really important that the company be financially healthy for the long-term benefit, not only of the company, but also for ratepayers,” Patton argued.

In Bluefield, Va., he noted, average customers are paying about $112 per month for electricity. Across the state line in Bluefield, W.Va., the average monthly bill for the same power is $96 — a pricing difference that Patton said is due to different views from the two regulatory commissions.

As for the West Virginia PSC, “The commissioners themselves are really smart and capable people and they are trying to balance the economic realities of West Virginia with the financial realities of the company,” Patton said.

“Getting those two things to line up perfectly and getting the appropriate balance is not an easy task.”

Appalachian Power last saw a rate increase in 2011, prior to the devastating storms of 2012 in the forms of the June derecho and October’s Superstorm Sandy.

Together, Wheeling Power and Appalachian Power, both American Electric Power subsidiaries, serve 24 West Virginia counties.

At one point on Wednesday morning, more than 4,000 power outages were reported throughout Appalachian Power’s service area in southern West Virginia following strong thunderstorms on Tuesday night.

In Calhoun County, schools were closed Wednesday because of power outages and downed lines.





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