ROANOKE, Va., Sept. 29, 2006 – Appalachian Power will implement an interim increase in Virginia retail customer base rates beginning October 2.  

Appalachian filed a request May 4 with the Virginia State Corporation Commission (SCC) seeking approval of a $198.5 million increase in customer rates. On May 30, the SCC established a schedule for the case and ordered that rates could be implemented on an interim basis beginning October 2.

The interim rates, which will increase the company’s Virginia revenues approximately 25 percent, will be collected subject to refund based on the final decision of the SCC following public witness testimony November 7 and hearings scheduled to begin December 6 in Richmond.

Appalachian estimates implementation of the new rates will increase the monthly bill paid by a residential customer for 1,000 kilowatt-hours of electricity from the current amount of $61.57 to $75.23, excluding taxes—an increase of $13.66.

The last time the company was granted a general base rate increase by the Commission was in 1993.   Its last base rate change was a decrease in 1999.

The company has implemented numerous technological advances and management programs to improve efficiency and reduce costs but, in recent years, the measures have not kept pace with increased operating costs.

Appalachian’s retail base rate request seeks recovery of these significant new costs, such as compliance with environmental requirements and rising costs for facilities related to system growth and reliability. It is investing more than $1.4 billion to comply with mandated clean air laws at several power plants resulting in cleaner air at the lowest possible cost.
 
Electric utility base rates have been capped in Virginia since 2000 but may be revised on a limited basis based on approval of the SCC. For example, the existing fuel factor component of customer bills allows the company to recover and “true-up” fluctuating fuel costs used for power generation on an annual basis.

Appalachian’s rate filing (known as SCC PUE-2006-00065) is the first under a Virginia statute that delays implementation of market pricing for electricity until 2011 under the state’s Electric Utility Restructuring Act. It allows the company to request a change in its base rates prior to June 30, 2007 and one additional change between July 1, 2007 and the end of 2010.  

Such periodic adjustments to electric utility rates are critical to maintaining the financial health and power-delivery capabilities of companies serving customers in the Commonwealth.

Appalachian has an additional $21 million environmental and reliability cost-recovery case pending before the SCC. Allowed by statute, it was filed in July 2005 seeking timely recovery of actual expenses related to those issues incurred during the period from July 1 2004 through September 30, 2005. Environmental and reliability costs addressed in the newest filing are separate and not duplicative.

Customers are urged to manage their energy use wisely and to go to the company’s Internet site ( www.AppalachianPower.com) for energy-saving tips and a free home energy calculator that helps customers better understand how they use power. The site also provides information on payment options available to customers.

Appalachian Power ranks among the lowest-cost providers of electricity in Virginia and in U.S. comparisons. The most recent national survey of electric rates by the Jacksonville (Fla.) Electric Authority placed the company as third lowest of the 56 utilities surveyed. An Edison Electric Institute 2005 report issued in January listed Appalachian prices in Virginia as seventh lowest among 178 suppliers nationwide.

Appalachian Power provides electricity to 1 million customers in Virginia, West Virginia and Tennessee.  It serves more than 500,000 customers in southwestern Virginia.  It is a unit of American Electric Power (NYSE:AEP), one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states.  AEP ranks among the nation’s largest generators of electricity, owning nearly 36,000 megawatts of generating capacity in the U.S.