Appalachian Power Company’s residential customers will see no increase in base rates on their electric bills next year under a proposed settlement of the utility’s latest rate request.  There will be a modest increase in March 2028, the second year of the coming regulatory period.  

The staff of the State Corporation Commission (SCC) and several other stakeholders that joined the case at the SCC have agreed with Appalachian on a stipulated resolution that includes provisions on other issues beyond rates.  The judges of the SCC will have the final say.  A hearing on the case is set for this morning at the SCC’s courtroom in Richmond.

Appalachian had requested a $61 million, 3.3 percent increase in its overall revenue for the 2027-2029 rate period, which would have required a 5.4 percent increase in residential base rates.  A residential customer would have seen an increase of $9.10 on a bill of 1,000 kilowatt hours under the original request, and it would have been higher but for the company’s proposal to spread out several costs over a multi-year securitization period.

The securitization proposal disappeared in the stipulated settlement and so did most of the residential rate hike. The approved hike for the second year of the agreement will be less than $1 per 1,000 kilowatt hours.  Rates for other customer classes are also changing only slightly.  The allocation of costs between the various classes is being adjusted slightly to the benefit of residential customers.  

The agreement covers base rates but not other portions of monthly bills, such as fuel costs and compliance cost with the Virginia Clean Economy Act.  A possible $4 per 1,000 kilowatt hour increase in those VCEA compliance costs for 2027 is pending before the SCC in a separate application.  

One reason the company sought additional base rate revenue was to cover a higher allowed profit margin during the two-year period of up to 10.5 percent.  The stipulation drops that back to 9.8 percent.

Appalachian Power Company is part of the Ohio-based American Electric Power Company, Inc., and serves about 550,000 residential and commercial customers in Western Virginia, with most of its generation assets located in other states.  It is also part of the PJM Interconnection regional transmission organization. 

Joining in the negotiated settlement with the company and the SCC staff are the large retailers Kroger and Walmart, data center developers Google and STACK, the environmental advocate Sierra Club and industrial customers represented by the Old Dominion Committee for Fair Utility Rates.  Local government representatives also signed it but the Office of the Attorney General’s opinion is not reported. 

Other stakeholders have said they have no objection to the settlement, but there are a few issues not covered by it that will continue to be litigated in front of the SCC.  One of those will be allegations that Appalachian Power paid too much to another arm of the parent American Electric Power for power generated in the Ohio Valley.  That was through a power purchase outside the purview of PJM. 

The stipulation calls for changes to the company’s Large Load Special Terms and Conditions and those customers, mainly data centers, will have the option to pay directly for any substations or radial distribution lines required to connect to the grid.  The general Appalachian ratepayers will be protected from those costs.

Within 90 days, Appalachian will propose a new Large Load rate class, separate from its current Large Power Service class, to further clarify how those biggest customers will pay for transmission and generation investments required to serve them.  The SCC changed those rules for the data center customers of Dominion Energy Virginia earlier this year.  

Changes will also be made to the General Service class for smaller and medium-sized business customers, including increasing the demand and distribution portions of their bills.   The company will work with those customers on other efforts to reduce class cross-subsidization before its next rate case in two years.  

The extensive settlement (almost 40 provisions) also covers special programs for solar power serving low-income customers and the charging costs for electric vehicles. Disconnection notices will have to include the Spanish language.  If the overall agreement or even individual elements of it are rejected, the parties can withdraw and the case will proceed to a litigated outcome.