Allegheny Power plan to raise electric rates 16% will affect most Rappahannock County homes, with more hikes planned
By James P. Gannon
Most Rappahannock County residents can expect their electricity bills to increase in coming months as Allegheny Power Company pursues a plan to raise rates 16% this year and more in the coming three years.
The utility, based in Greensburg, Pennsylvania, said it serves about 4,000 residential customers in Rapphannock County. Its service area covers about four-fifths of the land area of the county and most of the population; the rest are served by Rappahannock Electric Co-op, based in Fredericksburg, VA.
Last month Allegheny Power filed a request with the Virginia State Corporation Commission to increase its residential electric rates by 16% as of July 1, but it now appears the SCC will not rule before that date so the increase may be postponed. A utility spokesman said Thursday that the SCC, which regulates electric rates in Virginia, has set a hearing for August 7. Allegheny has asked to put its rate increase into effect July 1 on an interim basis subject to refund pending SCC action, but the utility hasn’t yet been granted permission to do that, the spokesman said.
Whatever the ultimate effective date, Allegheny Power customers can expect to begin paying more for electricity some time this year and to see rates increase gradually but steadily over the next three years as well, under the utility’s phased-increase plan.
Allegheny Power said it has not raised rates in Virginia for more than six years and the increase is necessary because of the rising costs of generating and purchasing power. Since 2000, the cost of coal has risen 41% and the cost of natural gas, also used to fire power-generating plans, has soared 74%, the utility said.
In its April 12 announcement, Allegheny Power said it planned to spread the electric rate increase over a period of four years, because a one-time rate increase to offset higher costs would have been too hard on its residential customers.
“If there were no plan to help customers transition to current prices, it would be necessary for Allegheny to request an $85 million rate increase,” stated David E. Flitman, President of Allegheny Power. “But we recognize the financial impact that a large, one-time rate increase would have on our customers, so we have proposed a transition plan to moderate the increase and spread it over four years.”
Under the request pending before the state agency, rates for a typical residential customer would increase by 16 percent effective July 1, 2007. Without the proposed transition plan, the residential rate increase would have been 41 percent, based on the company’s estimated cost of purchasing power. The utility said that purchased power costs not recovered through the July 2007 increase would be deferred for recovery over the subsequent 3-year period.
“We really don’t know at this point when rates may actually change,” said Allan Staggers, spokesman for Allegheny. The effective date and the ultimate amount of the increase will be set by the SCC.
The utility said its Virginia rates, which have been capped in Virginia since Jan. 1, 2001, are currently among the lowest in the nation. Even after the July 1 adjustment, it said, the company’s residential rate would still be well below state and national averages. Allegheny Power said that under its proposal, the July 2007 monthly bill for an average residential customer using 1,000 kilowatt-hours would rise from about $68 to $77, as compared to the state average of $85 and the national average of $104.
County Administrator John McCarthy said all of the county’s public buildings are served by Allegheny Power, as are the county’s two public schools. He said the county would implement some energy-saving moves to try to offset part of the coming increase but still plans on a “modest” increase in overall power costs. The Rappahannock County Public Schools have already announced plans for some energy saving efforts, such as changing from incandescent bulbs to energy-saving fluorescent lighting wherever practical.
Rappahannock Electric Co-op has 925 residential customers in Rappahannock County, spokesperson Ann Smith said. The electrical co-op has no plans for a rate increase, she said. REC has not made a general rate increase since 1992, she added, but it does pass on increased costs of purchasing power through a “fuel factor adjustment” that is added to the residential electrical rate.
-- James P. Gannon
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