“If you’re using generation technology that requires a lot of fuel, customers are going to pay more than if you use a renewable source with no fuel,” Gilmore said. “Add the volatility and the spike in natural-gas prices because of global and other economic issues, then you see a direct correlation between increased bills and fossil-fuel prices.”
But fuel fees appear to be rising for other reasons, too, the study says. The charges include power purchases from other utilities, and last year, the report notes, the Virginia attorney general found that APCo was buying coal power at above-market rates from an affiliate company, Ohio Valley Electric Corp.
“Legislators should urge [regulators] to order refunds if APCo’s interaffiliate power purchases exceed market benchmarks,” the report suggests.
APCo may also be using more coal power than is cost-effective.
Across the country, plant operators have scaled back use of coal-fired units not just because the fuel itself is expensive, but because the aging plants cost a lot to operate and maintain. Last year, the average run time for U.S. coal plants was a little over 40%. But regulators in West Virginia — where APCo operates two coal plants — have ordered the utility to run the facilities at least 69% of the time, the report says, citing testimony from a recent rate case.
Passthrough of volatile fuel costs is a common problem for utility customers, Gilmore said. “But there are some specific APCo elements of this,” he said, “including uneconomic dispatch of their coal plants, and a sort of self-dealing with some of the APCo affiliate-owned coal plants.”
Perhaps the biggest challenge is the utility’s ballooning transmission fees. One problem, according to the study, is that the cost of building and maintaining these high-voltage electric lines in the area’s hilly terrain is spread among relatively few customers. The much larger Dominion Energy, for instance, charges less than half as much in transmission costs per household as does APCo.
Data centers could well be a factor, too. Though virtually none are in southwest Virginia, hubs in Ohio, northern Virginia, and elsewhere are crowding the grid run by the regional transmission organization PJM Interconnection. PJM allocates the resulting costs for upfitting lines across its member utilities, without factoring in where these large electric loads are located.
For its part, APCo said in an emailed statement that “investing in and maintaining [our] generation, transmission and distribution network is essential for minimizing and shortening outages, accommodating growing energy demands and integrating new energy sources.”
Like utilities nationwide, the statement continued, APCo faces high interest rates and inflation, driving up a number of the expenses associated with generating and delivering power, including “higher material and labor costs; … cost recovery for major storms; fuel-related costs not yet recovered through the fuel factor, and cost recovery for investments made in generating plants and distribution infrastructure.”
The company also touted its energy-efficiency programs and noted that a $10 decrease in fuel costs took effect Nov. 1.
The price cut grew out of the law Gilmore said inspired his group’s study, which notes, “given that methane gas prices are projected to double between 2024 and 2026, fuel costs are likely to increase again in the near future.”
Incoming Del. Franklin called the reduction woefully insufficient.
“It’s not a whole lot of relief when your wages haven’t gone up any, your groceries are still more expensive, and your rent’s really high — or your property taxes have gone up,” she said. “We have to have a more substantial plan to bring down rates.”
The recommendations in the plan by Clean Virginia, such as requiring utilities to pick up a share of fuel costs and reducing reliance on riders, echo a recent report that grew out of a bipartisan resolution from the 2024 General Assembly.
But Franklin believes neither party is fully united on how to lower prices.
“There are folks that think if we have an all-of-the-above approach — that is how we bring down costs,” she said. “Then you’ve got some people on both sides that think nuclear is the direction.”
Neither of those are quick fixes, Franklin said, with lead times of five to seven years for new gas plants and even longer timelines for nuclear.
Her own aspirations for office range from sweeping reforms, like prohibiting APCo and Dominion from making campaign contributions, to incremental steps like shifting some of the rate burden from residential customers to industrial ones and providing incentives for rooftop solar.
“And at the end of the day, we’ve got to help the people,” she said, “and that’s what I’m going to remind members of my party.”
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Great Job Elizabeth Ouzts & the Team @ Canary Media Source link for sharing this story.
