ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Saturday, May 25, 1996                 TAG: 9605290028
SECTION: BUSINESS                 PAGE: A-8  EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER 

AEP'S RATES DENIED UTILITY NOW OWES REFUNDS

The Virginia State Corporation Commission on Friday denied American Electric Power Co.'s request for a 2.2 percent rate increase. And because the company has been collecting the higher rates since November 1994 the utility's customers are due a healthy refund.

The SCC said that the company's previous rates are adequate to provide profits for its shareholders at the rate authorized during the company's previous rate case. In making the ruling, the commission agreed with the previous findings of its own staff and an SCC hearing examiner.

Denial of the higher rates that AEP sought means bills of the utility's average residential customers - those who use 1,000 kilowatt hours of electricity a month - will drop by $1.88 per month, from $60.92 to $59.04. Those same customers also are now due a refund of nearly $32 plus interest for the money the company over-collected while the higher rates were in place on an interim basis, the SCC said. Under Virginia law, utilities can charge the rates they seek while the SCC decides whether to make them permanent. If the higher rates are later denied, the company must refund the difference, plus interest.

If the rate increase had been approved it would have meant an additional $15.7 million in annual revenue for AEP. The company had requested the increase to help pay for $24 million in winter storm damage in its Virginia service territory during February and March 1994.

The commission, however, said the company earned its authorized rate of return on stockholder equity. The commission allows the company to make a rate of return of between 10.5 and 11.5 percent.

Despite turning down its request for more money, the commission offered AEP - which was operating as Appalachian Power Co. when it made the rate request - a pat on the back in lieu of the rate increase, commended AEP for its work in restoring service to customers following the winter storms.

AEP officials were unavailable for comment after release of the commission's ruling late Friday, but earlier the company said it disagreed with the commission staff's similar findings.

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