RICHMOND — With his constituents up in arms over skyrocketing electric bills, Del. Ward Armstrong, D-Henry County, wants to turn back the clock and put Appalachian Power Co. under different rules than those applied to other Virginia utilities.

Armstrong, the House minority leader, said Monday he will file legislation to return Appalachian to a cost-of-service regulatory model that existed before Virginia began deregulating utilities in 1999, a move that could limit the company’s ability to raise rates.

Armstrong said he was moved by concerns he heard from constituents during his re-election campaign, that some “are very much struggling trying to meet the basic needs of life.” He said electricity rates were the dominant topic of a town hall meeting he held over the weekend in Carroll County.

“It has reached such proportions that I cannot, as the representative of the 10th House District and my region of the state, not do something about it,” Armstrong said.

Armstrong bemoaned the succession of rate increases Appalachian has requested since 2005, including a 12.8 percent interim base rate increase that took effect in December but remains subject to approval by the State Corporation Commission. He organized a bus trip to take opponents to Rocky Mount for a November SCC hearing on the rate increase.

Virginia began moving toward deregulation of utilities in 1999 but abandoned it in 2007 after competition failed to materialize. The General Assembly approved a “hybrid” regulatory scheme that gives the SCC some discretion in setting rates but also permits utilities earnings that will keep them competitive and enable them to expand generating capacity.

Armstrong’s proposed regulatory change would not apply to other Virginia power companies, such as Richmond-based energy giant Virginia Dominion Power. Armstrong acknowledged that politics played a role in that decision.

“For whatever reason, we’ve not experienced the kind of rate increases coming out of Dominion and other utilities as we’ve seen from AEP,” Armstrong said. “I’m also mindful of the fact that Dominion Power’s strenuous opposition to a bill makes it very, very difficult to pass.”

But Armstrong’s bill likely will face strenuous opposition from Appalachian. Company spokesman Todd Burns said the utility “would have concerns with legislation that would limit our abilities to recover our expenses from our customers.”

Burns said the “vast majority” of Appalachian’s rate increases have been fuel factor changes, and most of the others have been to cover environmental compliance costs.

Burns said the pre-1999 regulatory structure makes it more difficult for utilities to recover costs associated with building new infrastructure.

“In the long run, for our customers’ benefit, we need to be able to make the investments in infrastructure that they need, as well as comply with environmental mandates,” Burns said. “We are still a cost-of-service-based company.”

Burns said the company understands customers’ concerns about rate increases and has options available to those who have difficulty paying their bills.

Armstrong’s legislation also would prohibit any utilities from billing customers for rate increases before the SCC approves them. And he wants utilities to offer economic incentives to businesses seeking to locate or expand in Virginia.

By Michael Sluss
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