11/30/2018
Increased cost of fuel offset with accelerated tax reduction for Virginia customers of Appalachian Power

ROANOKE, Va., Nov. 30, 2018 – Despite rising costs for fuel used in power generation, Appalachian Power customers in Virginia will not see an increase in rates they pay for electricity during traditionally higher-usage winter months.

This fall, the company implemented an increase to the fuel factor on customer bills. At the same time, it expedited the return of federal income tax-related savings to customers through a credit rider.

“Combined, these two filings with the Virginia State Corporation Commission (SCC) allow us to offset the fuel increase—and in some cases reduce the unit price customers pay during a time when many face higher bills primarily caused by heating needs,” said Brad Hall, Appalachian’s external affairs vice president.

“While some customers may see a higher total bill during the winter months, it will be from increased power consumption and not from rate increases,” Hall added.

Appalachian Power makes annual filings with the SCC to adjust collection of its fuel factor—the rate adjustment that covers costs of coal and natural gas used for generation of power. This year that adjustment would have increased rates about 4-percent.

Enabled by the 2017 Tax Cuts and Jobs Act, the company also filed an accelerated tax rate reduction (ATRR) rider that allows customers to receive savings benefits earlier than its required 2019 implementation. Customers are already benefitting from an interim reduction in rates due to reduced corporate tax rates implemented in August 2018.

The tax rider reduction and fuel factor increase were implemented on a service rendered basis beginning November 1. Customers will see a full-month impact from the changes on their December bills.

For example, a residential customer using 1,000 kilowatt-hours (kWh) in the December billing month will see an increase of fuel factor charges of $3.78. However, that will be more than offset by a decrease of $4.83 as a result of the ATRR.

That total customer bill is $110.06, or about 11-cents/kWh.  The U.S. average is 13.24-cents/kWh (Edison Electric Institute, 12 months ending June 30, 2018).

Appalachian Power has 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power). It is a unit of American Electric Power, one of the largest electric companies in the United States. AEP is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to customers. AEP’s more than 18,000 employees operate and maintain the nation’s largest electricity transmission system and more than 219,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.4 million regulated customers in 11 states. AEP also is one of the nation’s largest electricity producers with approximately 32,000 megawatts of diverse generating capacity, including 4,340 megawatts of renewable energy.

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John Shepelwich
(540) 985-2968
jeshepelwich@aep.com

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This policy was last revised on December 13, 2017.

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