Appalachian Power, a utility subsidiary of American Electric Power (NYSE: AEP), has filed its annual fuel factor update with the Virginia State Corporation Commission (SCC) and is requesting a reduction in the fuel rate for its Virginia customers.
Fuel costs are about 20 percent of a residential customer’s electric bill. The fuel factor recovers those costs, which are mostly for natural gas and coal. The SCC reviews the company’s fuel rate each year to determine whether it should be increased or lowered.
“Managing fuel costs is an important part of service delivery,” said Chris Beam, Appalachian Power’s president and chief operating officer. “What we’ve witnessed over the past several months is a drop in natural gas costs. Our request before the SCC ensures that approximately $40 million in savings is passed along to our customers.”
The current fuel factor is 2.3 cents per kilowatt-hour (kWh). Appalachian’s proposal reduces the fuel factor to 1.999 cents per kWh, or a savings of $3.01 for a customer using 1,000 kWh/month.
If approved, the reduction will go into effect in November. With the adjustment, Virginia residential customers using 1,000 kWh/month will pay 10.6 cents/kWh, well below the national average. According to the Edison Electric Institute’s (EEI) January 2020 report, the average residential U.S. cost for electricity is 12.93 cents per kWh.
Appalachian Power has 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power). It is part of American Electric Power, which is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions. AEP’s approximately 17,400 employees operate and maintain the nation’s largest electricity transmission system and more than 221,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.4 million customers in 11 states. AEP is also one of the nation’s largest electricity producers with approximately 31,000 megawatts of diverse generating capacity, including 5,200 megawatts of renewable energy.