Published: July 18, 2008 09:15 pm      

Coal cost fuels rate increase

Virginia Appalachian Power requesting an additional 11.7 percent

TAZEWELL, Va. — Times could soon be getting tougher for residents of Southwest Virginia.

Appalachian Power filed for a 11.7 percent rate increase Friday with the Virginia State Corporation Commission. The fuel factor filing is in addition to an earlier 24 percent rate increase request by the company still pending with the commission.

Appalachian Power, a subsidiary of American Electric Power, is seeking an increase in the fuel factor component on its Virginia-side customer bills. The filing reflects dramatic increases in the cost of coal caused by a growing global market and a relatively weak dollar leading to higher costs to fuel the company’s power plants, a company press release said.

If approved by the SCC, a residential customer using 1,000 KWH in a month would see an average increase from the current bill of $71.48 to $79.85 — or 11.7 percent.

Sen. Phillip Puckett, D-Russell, is encouraging residents of Southwest Virginia to write, e-mail and call the Virginia State Corporation Commission to protest the earlier 24 percent rate increase request still pending with the SCC. However, Puckett said the fuel factor increase is allowed by law, and could be more difficult to stop.

“The fuel factor is something — if the figures are right — there is probably not a whole lot that can be done,” Puckett said. “That is allowed by law. They don’t make a profit in the fuel factor. But when coal increases like it does, it does make a difference in their cost.”

However, Puckett said he is concerned that low-income and elderly residents of Southwest Virginia could be facing a growing crisis with soaring gas, food and energy prices — combined with the approaching winter and the cost of heating one’s home.

“I really have some concerns about what will happen this winter,” Puckett said. “If we are unfortunate, and have a severe winter, it could be tough. That is tough when you are on the income level that a lot of folks are, and you are facing fuel prices that probably more than double now than what they were (a year ago). It is a difficult time, and I don’t see any relief in site. One of the things we are going to have to do is encourage our energy suppliers to take that into consideration.”

Puckett said many may have a hard time paying their monthly electric bill if the rate increases are approved.

“The main thing is I don’t want people to be in a situation where they lose their power, and it is cut off,” Puckett said. “The main thing being not because they aren’t paying, but because they aren’t paying enough.”

Dana Waldo, president and chief operating officer of Appalachian Power, said the company’s proximity to major coal supplies has not necessarily tempered increases in coal costs.

“Appalachian Power plants use mainly Central (CAPP) and Northern Appalachia (NAPP) coals,” Waldo said in a press release. “The coal from suppliers in these regions is in greater demand from overseas and existing domestic markets. Production from mines in these nearby areas has not geared up to meet growth in demand from both markets. As a result, we have seen a significant increase in the cost of these coals for our plants. For example, the price for a ton of CAPP coal has increase from $60 to about $140 — or approximately 133 percent — in just the last six months. However, the company has been able to use long-term contracts to mitigate the huge increases.”

— Contact Charles Owens at cowens@bdtonline.com