Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 8, 1993 TAG: 9301080310
SECTION: BUSINESS PAGE: A3 EDITION: METRO
SOURCE: GEORGE KEGLEY STAFF WRITER
DATELINE: LENGTH: Medium
SCC SUSPENDS APCO'S RATE INCREASE
Appalachian Power Co.'s 5.5 percent rate increase, which would add $4.05 a month to the average residential customer's bill, was suspended Thursday by the State Corporation Commission.In a filing in December, Apco asked the SCC for authority to put the increase in effect on Jan. 3, under bond. But the SCC in a routine action suspended the request through May 3, pending a hearing that has not yet been scheduled.
Apco "reluctantly" sought the $31 million rate increase from its retail customers in Virginia, largely because of factors beyond its control, said Joseph Vipperman, president of the utility. One of these factors, he said, is a mandated change in funding of benefits for employees after retirement.
Through the third quarter, Apco earnings were running below a year ago because of mild weather and lower sales to other utilities, Vipperman said in a statement to employees about 1993 goals.
These factors were partially offset by a strong rebound in industrial sales and good results in marketing, he said. Both factors should contribute to better financial results in 1993, Vipperman said.
Earnings can be put back on track, he told employees, by "reasonable treatment" from the SCC on the rate increase, a return to more normal weather and a strong economy. None of these things may happen, he added, "so our best recourse is hard work coupled with new ideas."
Vipperman talked about the benefits of reducing costs for customers, communities, investors and employees. Higher costs make it tougher for industries to locate and stay in the area, and harder for everyone to pay for electric service, he said. They also provide lower earnings for stockholders and less secure jobs for employees, he added.
Apco reported 1992 savings of $7.4 million from an improvement program that explored cheaper and better ways of doing business. Its employees have saved $33.6 million, far ahead of company goals, in this program during the past five years, company spokesman Don Johnson said.
The mandated change in accounting procedures to pay for employee benefits after retirement is expected to amount to an average increased cost per customer of less than 1 percent, Johnson said. Apco is paying for the change from earnings, but the cost will be passed on to customers in the proposed rate increase if the SCC approves.
Under the accounting change, utilities can accrue the cost of retirement benefits before an employee retires.
C&P Telephone Co. took the increased cost in a one-time payment from earnings in 1991 "because we knew it was coming" in a ruling from the Financial Accounting Standards Board, according to Don Reid, C&P manager in Roanoke. No customer rates increased, Reid said.
Roanoke Gas Co. expects its costs to rise about 0.5 percent, starting with its next fiscal year in October, to meet the accounting charge, said Frank Farmer, president. But Farmer did not say the company would file for a rate increase.
The accounting change, covering such benefits as medical and dental insurance, life insurance and legal services, is intended to reflect more accurately the financial position of the companies, according to the SCC.