By Steve Haner

Three western Virginia politicians have penned a press release masquerading as a serious proposal. They seek to decertify a major monopoly electric utility which serves 540,000 Virginia accounts, the Appalachian Power Company, a division of American Electric Power.  

The letter was sent to the State Corporation Commission and then released, with probably the best coverage provided by the online Cardinal News. It reported:

Citing “ever increasing bills,” Sens. Bill Stanley, R-Franklin County; Todd Pillion, R-Washington County; and Travis Hackworth, R-Tazewell County, said that “our region deserves better than an out-of-state company who doesn’t work with [its] struggling customers and continually works to extract maximum profit for an essential utility service.”

The letter asks a series of questions about how the territory and customers could legally be taken away from the Appalachian Power Company, also known as APCO. But then what? Will APCO’s service territory be given to Dominion Energy instead? Be converted into a very large member-owned cooperative?  How much might Appalachian customers be paying to the AEP shareholders (which include many APCO customers) in compensation for taking their assets and dividends? The “be careful what you ask for” warning has never been more relevant.

No General Assembly session in recent memory has been more obsessed with energy issues, and none has more totally demonstrated that legislators are often clueless. Some APCO customers are in an uproar over recent high winter bills and are looking for scapegoats, and finding scapegoats is a legislative specialty. A host of proposed laws have been aimed at this company, the target of amazing anti-corporate rhetoric mostly flowing from Republicans. Also from the three senators:

“During our numerous attempts to find solutions that work for all parties, APCO has not only failed to provide solutions, but they have also insulted the lived experiences of their customers and attempted to convince us all that the problem lies with our overuse of electricity,” the senators said in a joint statement separate from the letter.

The letter and accompanying statement can be found on Facebook.

The one thing no customer wants to hear is they need to burn less electricity, especially when it gets this cold. What, turn down my thermostat? Unplug the third TV? Weather data for Roanoke, in the center of Appalachian’s Virginia territory, shows January 2025 was the tenth coldest January out of 78 years measured. It was the coldest since 2014, when indeed the utility rates were far lower. 

A few other facts are missing from the discussion so far:

There is no reason to believe a different company would have lower rates. Cost of service is cost of service. As a regulated monopoly, APCO has its books examined and the SCC has the authority to disallow expenses it deems improper. Customers and their representatives have the same opportunity to dig deep into the books. A contested rate review was just recently completed and what resulted is rates blessed by the SCC as fair and reasonable. 

Who was in the case on behalf of consumers? That would be the senators’ fellow Republican, Attorney General Jason Miyares. 

APCOs rates are above average for this region of the United States, but the last time the SCC compared it with peer utilities, five other utilities on the list had higher rates per kilowatt-hour. Admittedly that may have changed since that point. At $174 per 1,000 kilowatt hours in APCO’s Virginia territory and $176 for its West Virginia customers, APCO’s cost exceeds Dominion’s by about $30.

The SCC report referenced above also compared the details of APCOs residential bills with those of Dominion. That pointed to two obvious reasons why APCO’s bills were higher. 

At the time of comparison, July 1, 2024, an Appalachian customer using 1,000 kilowatt hours was paying $41.39 to cover the cost of fuel while a Dominion customer was paying $23.96. 

Both companies were hit by the rapid rise in fuel costs following the Russian invasion of Ukraine and accrued unpaid balances, but Dominion has been more aggressive about spreading out those costs over multiple out years. Appalachian has been passing them on to customers in a more timely fashion, and next year it should see some of that excess fuel factor come off the bill. 

Another obvious difference is what that customer was paying in transmission charges, just under $10 for Dominion residential customers and $36.46 for Appalachian’s. Those two lines alone, fuel and transmission, create a $44 difference and by themselves explain the gap in price between the two utilities. APCO has almost no generation located in Virginia anymore. Its power has to come quite a distance.

With all the new generation being added. much of it ordered by politicians, the transmission charge for all utilities is climbing. Dominion just raised the price of its offshore wind project due to transmission costs. Any replacement service provider blessed by the three senators would face the same economic challenges of fuel and transmission costs, and the issues discussed next.

Appalachian’s customer base is far thinner, less dense, than Dominion’s, with perhaps a dozen or fifteen customers pre mile of line compared to more than 40 per mile for Dominion. Those lines stretch over quite a bit of rugged territory vulnerable to storm damage.

But the biggest problem is that part of Virginia is economically stagnant. It has been losing population. Energy sales are flat at best and have been sinking in the past. At least one and perhaps two of Virginia’s “rural” electric cooperatives seeing an influx of data centers have now passed Appalachian in revenue and energy sales. APCO is no longer the number two provider in Virginia and may be number four. Think about that.

That is the problem the politicians should be focusing on. That part of the state needs a major infusion of jobs, preferably in the industrial and larger commercial user categories to absorb more fixed costs. None of the many proposals advertised as lowering APCO’s rates would have done so, and the Assembly continues to pass bills which just add to future prices instead. It will be time to tally the damage and separate the sheep and goats soon.