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

DATE: SATURDAY, May 20, 1995                   TAG: 9505220027
SECTION: BUSINESS                    PAGE: A6   EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE:                                 LENGTH: Medium

APCO RATES MAY BE DENIED

The State Corporation Commission's staff has recommended that Appalachian Power Co. be denied all of a proposed $15.7 million annual rate increase that the company began charging on an interim basis in November.

If the commission agrees with its staff recommendation, the average residential power customer's bill will drop by $1.88 a month, and Apco will have to refund, with interest, all the excess money it has collected under the interim rates, commission spokesman Ken Schrad said.

Apco spokesman Don Johnson said Friday the company had not seen the staff's recommendation but was disappointed in what it had heard about it and disagreed with some of the positions.

Apco had asked for the rate increase to help pay for damage caused by ice storms in early 1994. The commission staff, however, said the Roanoke-based utility earned its approved rate of return despite the ice damage, which was estimated at $24 million.

"After conducting a review of the company's rate filing, the staff determined that rate relief is not necessary because current rates provide Appalachian Power a rate of return for its investors that was authorized by the SCC in the company's last rate case," Schrad said. The company's authorized rate of return on common equity is 10.5 percent to 11.5 percent, he said.

At the same time the company asked for the rate increase, it also applied to reduce the amount it charges for the fuel it buys to produce electricity by $28 million a year. The SCC approved that request.

The combined effect last November of the $15.7 million rate increase and the reduction in fuel charges amounted to an overall $12.3 million annual reduction in customer charges. That equaled a 36-cent-a-month cut on the bill for an average residential customer using 1,000 kilowatt hours of electricity.

The further reduction of $1.88 per month for an average customer will occur if the SCC agrees with it staff, Johnson pointed out.

Apco disagrees with the commission staff that it earned its approved rate of return despite the storm damage, Johnson said. If the costs are looked at in the year they occurred, then the company earned "well below" its approved profit, Johnson said.

The SCC will hold a public hearing on the rate request on June 6 at 10 a.m. in the commission's downtown Richmond courtroom and expects to continue on June 19 to receive testimony from Apco, the SCC staff and others.

by CNB