A rise in the cost of coal, natural gas, and purchasing power over the past year will increase the rate Virginia customers pay for electricity starting November 1. Appalachian Power, a utility subsidiary of American Electric Power (Nasdaq: AEP), outlined the effect of rising energy market prices and the steps it is taking to reduce customer costs in its annual fuel factor update filed this week with the Virginia State Corporation Commission (SCC).
The SCC reviews the company’s fuel factor each year to determine whether it should be in- creased or lowered. Fuel costs are the portion of a customer’s bill used to recover the cost of purchasing natural gas and coal for its power plants, as well as the cost of purchasing power. Appalachian Power does not earn revenue from fuel.
Energy costs began to spike in 2021. The rapid rise was due to several factors including the resurgence of the economy following the COVID-19 pandemic, inflation, and the ongoing war in Ukraine.
Instead of recovering the increased costs over one year, the company has asked the SCC for approval to spread the amount over a two-year period, decreasing the impact on customers. For a typical residential customer using 1,000 kilowatt hours in a month, this will result in an approximate $20 monthly increase in their bill.
“We recognize these are challenging financial times for many people and families,” said Chris Beam, Appalachian Power president, and chief operating officer. “We strive each day to keep fuel costs as low as possible, continuously monitoring energy markets for opportunities to purchase fuel and energy at prices that are advantageous to customers.”
Incorporating more renewable sources of power into the company’s energy mix is another step in reducing customer fuel costs. As Appalachian Power adds more renewables, there is less need for coal and natural gas to generate power. At present, approximately six percent of the power used by the company’s customers is generated by renewable sources including solar and wind. The company will continue to add to its renewables mix to comply with the Virginia Clean Economy Act, which requires Appalachian Power generate electricity from 100 percent carbon-free sources by 2050.
Customers experiencing difficulty paying their monthly bills are encouraged to contact the company for assistance. Appalachian Power offers energy efficiency programs and payment options including the Average Monthly Payment Plan (AMP), which helps customers avoid seasonal spikes in their monthly bills by spreading costs throughout the year.
Appalachian Power has 1 million customers in Virginia, West Virginia, and Tennessee (as AEP Appalachian Power). It is a part of American Electric Power that is focused on building smarter energy infrastructure and delivering new technologies and custom energy solutions. AEP’s approximately 16,700 employees operate and maintain the nation’s largest electricity transmission system and more than 224,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.5 million customers in 11 states. AEP is also one of the nation’s largest electricity producers with approximately 31,000 megawatts of diverse generating capacity, including 7,100 megawatts of renewable energy.
