APCo to provide rebates to customers, has approved profit reduced

economic-forecast-headerAttorney General Mark Herring’s team helped win a victory on Wednesday for more than 500,000 customers of Appalachian Power in central, southwest, and southside Virginia.

The State Corporation Commission agreed with the Attorney General that Appalachian Power had overearned during 2012 and 2013 and ordered $5.825 million in rebates to customers to be distributed over the next six months according to each customer’s usage. Additionally, the SCC granted the Attorney General’s request that it reject a proposed doubling of the monthly “customer charge” for residential customers, small businesses, and places of worship. Finally, the SCC agreed with the Attorney General that APCo’s rate of return should be reduced and set it at 9.7%. This is the first time the rate has been set below 10.0% in decades and should help ensure the lowest rates possible for APCo customers.

“Although we fought for more relief for Virginians, I’m glad to see that APCo customers in central, southwest, and southside Virginia will be receiving some rebates from past overearnings,” said Attorney General Herring. “I’m also encouraged to see the SCC agreed with us that APCo’s proposed doubling of the customer charge on homes, small businesses, and churches should be rejected. Although the SCC didn’t reduce APCo’s allowed profit as much as we recommended, this adjustment should help protect residents and small businesses in the years ahead. As Attorney General, I will continue to fight for the lowest reasonable utility bills.”

After reviewing extensive evidence from Attorney General Herring’s Division of Consumer Counsel, SCC staff, APCo, and various advocates, the SCC determined that APCo’s profit was approximately 11.86% during the earnings review period from of 2012 and 2013. That is lower than the 12.25% calculated by the Office of Attorney General, but still higher than its maximum allowable profit of 11.4%. According to state law, 60% of surplus profits, or $5,825,380 must be returned to consumers by credits on their bills over the next six months. Refunds will begin within 60 days and the amount credited to each customer will depend on their individual usage.

The SCC also reduced APCo’s approved rate of return to 9.7%, which is lower than APCo’s proposed rate of 10.52%, but not as low as the Attorney General’s proposed rate. Although no base rate reduction could occur during this review, the finding that APCo overearned in 2012/2013 means that the SCC could order a base rate reduction if the company is found to have exceeded this new reduced rate during its next biennial review in 2016.

The Attorney General’s Office also opposed APCo’s proposal to double the monthly “customer charge,” or minimum bill, on residential customers, small businesses, and places of worship, from $8 to $16. The SCC “agree[s] with Consumer Counsel and Staff that APCo has not established that it is reasonable to increase such costs to these customers at this time and in the manner proposed by the Company.”

The Attorney General serves as consumer counsel for the Commonwealth in matters related to the regulation of public utilities, particularly as such regulation affects rates and services to residential and small business customers. This case was handled by section chief and Senior Assistant Attorney General Meade Browder, Assistant Attorney General Kiva Pierce, and Assistant Attorney General Mitch Burton.


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