Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 27, 1991 TAG: 9102270067
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
Russell Cunningham, the SCC's senior hearing examiner, recommended Tuesday that the commission cut more than $27 million from the utility's request. He would grant the company the right to raise rates by $15.9 million, or 3 percent.
Also on Tuesday, Attorney General Mary Sue Terry said she will ask the SCC to decrease Apco's rates by $3.8 million. Terry, along with the Old Dominion Committee for Fair Utility Rates, last year asked the SCC to reduce Apco's requested increase.
"We remain convinced that the rates should be even lower, and indeed that no increase is justified," she said.
Each side in the case will have until March 13 to file comments on the examiner's decision, according to SCC spokesman Ken Schrad. The commission probably will begin considering the case four to six weeks from now, he said.
If adopted by the SCC, the reduction would save Apco's average residential customer $3.70 a month. A consumer using 1,000 kilowatt-hours of electricity per month would pay $1.90 more than under Apco's former rates instead of the interim rate of $5.60 a month already in effect. If the lower increase is approved by the SCC, Apco would be required to refund with interest the additional amounts it has collected since August.
Cunningham rejected Apco's claim that it needs higher rates to pay its parent, American Electric Power, for its share of electricity generation based on an unusually cold period in December 1989. He said the utility's payment ratio should be based on a period with more normal weather.
The examiner also turned down Apco's request for recovery of construction costs for a number of small projects. Finally, Cunningham said, Apco is entitled to an authorized 13 percent rate of return on equity instead of a requested 13.5 percent.
The company is "disappointed that the hearing examiner's recommendation is substantially below our requested amount," said Apco spokesman Dick Burton. He said the company will study Cunningham's recommendation.
Apco had been counting on higher rates to help recoup from its 34 percent earnings decline last year.
"If the SCC doesn't grant our rate request, either our financial position will continue to deteriorate or we'll go back to the commission" with another request, Apco President Joseph Vipperman said in a recent interview.
Vipperman told the SCC in September that his company was facing the possibility of a financial emergency if it doesn't get its rate request approved. Apco's requested 8.3 percent increase was the utility's first filing for a higher base rate in four years and its largest requested increase in 12 years.
In August, the SCC's staff recommended a larger cut of $30 million from the proposed $43.3 million rate increase. The staff said its investigation had determined that Apco should be allowed to increase rates by about $13.6 million.
***CORRECTION***
Published correction ran on February 28, 1991.
A State Corporation Commission hearing examiner's recommendation, if adopted by the SCC, would save Appalachian Power Co. customers $3 per month under the interim rates placed in effect under bond last August. The recommended rate would be $2.60 per month more than the average electricity customer was paying before August. Inaccurate numbers reported by the SCC were included in a story Wednesday.
Memo: CORRECTION