Echoes of Appalachia

State regulators approved a request from Appalachian Power to raise the average residential electric bill by $4.36 beginning March 1. The increase allows the company to recover costs tied to renewable energy developments.

With the change, the typical household bill should reach around $168 next spring. That amount reflects a rise of roughly $44 compared with July 2022. Earlier in the year, the average bill reached $174, though regulators later authorized a temporary reduction in fuel costs passed along to customers. A typical residential household uses about 1,000 kilowatt-hours of electricity each month.

The latest rate increase allows the utility to recover about $69 million connected to renewable energy projects already generating electricity or expected to begin operating between March 2026 and February 2027.

The company sought the increase while working toward a carbon-free electricity portfolio by 2050, a goal required under the Virginia Clean Economy Act. That law requires utilities to obtain approval for solar, wind, and battery storage developments.

In addition to projects tied to the $4.36 increase, the company also requested approval from the Virginia State Corporation Commission for several other renewable initiatives.

Those proposals included plans to:

• recover costs tied to purchasing the 255-megawatt Livingston Wind Project in Illinois, currently under development by EDF Renewables and scheduled to begin operation in 2029;
• acquire and operate a 52-megawatt battery storage system in Wythe County designed for four hours of energy storage and developed by RWE, expected to begin operation in 2027;
• purchase solar power from the 7.5-megawatt HCE Collier Solar Project once the project begins operating in May 2027.

Regulators approved future cost recovery related to the Livingston wind project under certain conditions. The project must remain within its estimated $1.07 billion cost and secure major federal tax credits before those incentives expire under the One Big Beautiful Bill Act.

That legislation ends tax credits for wind facilities entering service after Dec. 31, 2027 unless construction began before July 4, 2026. Regulators stated that the loss of those incentives could make future projects required by the Virginia Clean Economy Act harder to secure.

Although the wind project sits in Illinois, it qualifies toward renewable energy requirements because both the project and Appalachian Power’s Virginia customers operate within the regional electric grid managed by PJM Interconnection. That network handles wholesale electricity transmission across Illinois, Virginia, eleven additional states, and Washington, D.C.

Regulators also approved the company purchasing electricity from the Wise County solar project. However, they rejected the request to operate the Wythe County battery storage system. Officials concluded that the project’s $164 million cost would fail to provide strong value for ratepayers even with federal incentives.

A spokesperson for Appalachian Power said the company welcomed the ruling, stating that it helps the utility meet clean-energy requirements in a cost-effective way while using federal tax credits to lower expenses for customers. The company also expressed disappointment regarding the rejected battery storage proposal while saying it plans to continue pursuing new energy infrastructure investments.

The utility also serves customers in West Virginia and filed a request with regulators there earlier in the year to recover part of the costs tied to these renewable projects. A public hearing in that case is scheduled for Dec. 16.

In a separate regulatory case, the Virginia State Corporation Commission recently allowed the company to temporarily reduce the amount customers pay for fuel and purchased electricity. That step was expected to lower bills by about $10 beginning Nov. 1 while regulators review the request.

Earlier this month, the commission also granted permission for the company to spend money evaluating a site in Campbell County for a potential Small Modular Reactor. The utility has indicated it may seek approval next year to recover those evaluation expenses.

Another rate review case should arrive in May, as state law requires utilities to file those reviews every two years. During the previous case, the company requested roughly a $10 increase in the average customer bill. Regulators approved a smaller increase of $1.39.

Two additional regulatory proposals currently under review include a $135 million plan to upgrade grid technology and a project to modernize 18 miles of transmission line in the New River Valley. Estimated impacts on customer bills from those plans remain unclear.

The company, a subsidiary of American Electric Power, serves roughly 540,000 customers across western Virginia.

Many customers feel frustrated with the steady rise in electricity costs. Critics argue that utilities continue pursuing higher rates and new projects while households struggle to keep up with bills. Some residents believe power companies will remain unsatisfied until every possible nickel flows from consumers’ pockets, while executives and shareholders reap the largest financial rewards.

Questions also remain about the growing electricity demand from large AI data centers being built across parts of Appalachia. Those facilities require enormous amounts of energy, which often leads utilities to expand power generation, transmission lines, and grid infrastructure. When companies build that infrastructure, the costs frequently appear in future rate increases for customers.

-Tim Carmichael