CHARLESTON, W.Va. — Appalachian Power Company electric bills in the Mountain State are set to increase next month, but won’t rise further for another year.
Appalachian Power officially announced Tuesday that the Public Service Commission (PSC) approved its monthly base rate increase proposal of $4.84 per 1,000 kilowatts used, effective June 1. The approval was contingent upon Appalachian Power not filing for a base rate increase again until after June 2027.
Appalachian Power spokesperson George Porter said this move will mediate “rate fatigue.” He said customers get frustrated with many different rate increases. Rather than the company continuing to go to the PSC for approval on individual rising costs, this move wrapped several base-rate requests into one.
“Being able to roll all of this into one and not have any other base-case files until after June of next year, it’s a benefit for our customers,” Porter explained. “Also, we’re able to get a little revenue requirement to help us continue to invest in our power grid. For us, we feel like it’s a win.”
Porter said the company is calling it an inflation-based rate adjustment. He said it will be a four-percent increase for residential and commercial customers, and prices will rise 2.5 percent for industrial-based customers. The base rate totals $40.1 million for the company.
There’s an important distinction about the rate hike. The addition of $4.84 is per 1,000 kilowatts used, Porter said. The more energy a customer uses, the higher their electric bill will be. For example, he said, if a customer uses 2,000 kilowatts in a month, the increase would be around $10.
Another initiative at play is Appalachian Power’s work with securitization. Porter said the company is working to securitize around $2 billion to help decrease customers’ bills. Securitization is when a company goes to a bond market, and interested parties buy the bonds. The company gets the money right away, and but then has to pay back the bond holders over time.
“It’s just another mechanism to keep these electric bills reasonable for our customers,” Porter said. “Anything that we can do to keep those costs down. As everyone knows right now, there’s a real pinch on making ends meet. We want to try and be helpful as best we can.”
“We don’t know exactly how much that’s going to save customers yet, but we do know that’s going to be a decrease on their bills,” Porter continued.
There are many costs that Appalachian Power is responsible for, Porter said. He listed depreciation costs for some of the company’s coal-fired plants, major storm costs, and environmental controls as priorities.
“Instead of customers paying that off over time, over the next 10, 15, however many years it takes, we’re just going to wrap all of that, and that’s where the $2 billion number comes in at,” Porter said. “We’re going to take that, and wrap that in. It’s almost like refinancing for a lower rate. By refinancing that, or going to that securitization, instead of customers paying a larger amount over a longer period of time, they’re going to pay a smaller amount now over that same period.”
“It’s something that other utilities throughout the country have also utilized, and we saw it as an opportunity to help keep costs down for customers,” Porter added.
Securitization is a unique approach, Porter admitted. He said this push is part of Appalachian Power’s move towards thinking outside the box. In the end, he said, it’s about keeping costs down while maintaining a high level of service for customers.
“They deserve reliable power. We have to continue to invest in the grid, we have to meet the demand, we have to bring in new infrastructure,” Porter said. “So, how do you do that? How do you keep those costs down, as well as invest? And that’s where we looked at securitization as one where we know we can take some of those previous expenses already on the books and wrap those up, and we can get those expenses off the books.”
Porter said securitization enables Appalachian Power to look toward the future to meet the rising demand in the area. He encouraged customers to be cognizant of how they can impact their own bills.
Porter shared several tips to keep energy usage down:
– Caulk windows and doors
– Thermostat adjustment for those who are not home during the day
He said these small factors can play a big role in lowering costs.
“Our rates, they are what they are,” Porter said. “We’re doing our best to get those rates down, but a lot of factors play into that.”
“If you think about it, how many businesses are actually trying to get people to use less of what they offer?” Porter continued. “That’s what we’re doing, because we understand the situation. It’s not about keeping high usage, it’s about helping our region, helping our customers understand how they can make these deals more reasonable.”
Porter noted that Appalachian Power employees are customers to the company as well. Rather than it being a company-versus-customer battle, Porter said Appalachian Power wants to help residents as much as it can. To do that, he said the constant question from the company is “how can we help?”
“We feel like securitization, as well as this inflation-rate adjustment, is going to help our customers,” Porter said. “That’s something that we’ve been working with the PSC, and we’re not taking credit for it, but it’s conversations we’ve had with the PSC on, ‘could we get to a more inflation-based rate,’ so we’re not having to come in with these large increases every year that impact customers. Keep those costs minimal, keep those increases minimal, year over year.”