Why Appalachian Power May Not Get Rate Hike

Aug 21, 2020

Electric bills in Virginia could be going up if state regulators agree with Dominion and Appalachian Power on a single question: When does a new regulation take effect? 

If a utility can show state regulators that it needs more money, they’re likely to greenlight an increase in rates, and both Dominion and Appalachian Power claim they made less money than allowed by law in 2019.  That’s because they closed down coal-burning power plants – and rather than deduct that cost over time, they claimed the whole expense for a single year.

Delegate Suhas Subramanyam sponsored a bill giving state regulators more control over electric company rates and accounting.
Credit Suhas Subramanyam

Freshman legislator Suhas Subramanyam saw that coming and proposed a bill that would let the state determine when expenses can be deducted.

“They should be the ones deciding how these assets are written off – not the utility companies!" he says.   "By letting the utility companies do this, you’re letting the fox guard the hen house."

The legislature agreed, and the measure passed in March, but Appalachian Power says it filed for a 6.5% rate hike before that date, so it should be allowed the full deduction.  That, says Subramanyam, is nonsense.

“I specifically contemplated this rate case when I introduced the bill.”

The utilities say new laws should only apply retroactively if legislation says they will, but Virginia’s attorney general disagrees.  The State Corporation Commission will decide that question, but whatever the case, Dana Wiggins at the Virginia Poverty Law Center says rate hikes now are a bad idea.

“At this point any increase in rates would be detrimental to recovery economically for most folks.”    

Dominion Power also deducted the cost of closing several coal burning plants and will likely use that expense to argue against providing any refunds to customers.