
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, May 27, 1993                   TAG: 9305270112
SECTION: BUSINESS                    PAGE: B7   EDITION: METRO 
SOURCE: GEORGE KEGLEY STAFF WRITER
DATELINE:                                 LENGTH: Medium

ATTORNEY GENERAL URGES APCO TO TRIM ITS PRICES

Rather than increase its electricity rates $31.3 million a year, Appalachian Power Co. should reduce its prices 1 percent, said state Attorney General Stephen Rosenthal.

Apco's revenues are excessive by up to $7.4 million a year, Rosenthal said this week after filing testimony with the State Corporation Commission that he had received from four utility regulatory experts who will be witnesses at an SCC hearing on the Apco request starting July 6 in Richmond.

Apco said in December that higher rates were needed so it could pay for a steady increase in its cost of doing business. Its last base rate increase, of 4.8 percent, was effective in August 1990.

The contested increase adds $4.05 per month to the bills of a residential customer using 1,000 kilowatt hours of electricity. Under SCC procedures, Apco was allowed to put the higher rate in effect this month. If the SCC denies the increase, the utility will have to refund that amount to its customers.

Rosenthal said Apco's request "may appear reasonable at first glance," but a slight reduction seems to be in order "when you look critically at the facts."

The Old Dominion Committee for Fair Utility Rates, a group of large power users, has told the SCC to allow just half of Apco's request.

The committee - representing Roanoke Electric Steel, Georgia-Pacific, DuPont and about a dozen other large companies operating in Apco's territory - asked the SCC to carve $15.1 million from the request, leaving the utility with an increase of $16.2 million a year.

Apco officials had no comment Wednesday on the moves to reduce its request.

Two accountants, filing testimony for the attorney general's office, challenged Apco claims of increased operating costs.

Michael G. Ellison, an economic analyst, and David C. Parcell, an economist, said Apco's request represents a 12.75 percent authorized return on equity, and that is too high. They said the return on equity - the allowed profit needed to attract investors - should be about 10.75 percent.

The SCC staff will file testimony next week and Apco will be able to rebut the claims.

by CNB