EPSA Eye on Rate Hikes in Non-Restructured States

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The examples listed below clearly confirm that vertically-integrated states are not immune to major rate increases.  In this time of challenging economics, it is more important than ever to test utility resource decisions against all available alternatives, including those offered by competitive power suppliers, so consumers can be assured they are receiving the best possible deal.  With double digit increases, the rate hikes listed below in vertically-integrated states are well in excess of the Energy Information Administration's projected national average increase of 2.3 percent in 2009 and 2.0 percent in 2010.  This is not an exhaustive list: numerous vertically-integrated utilities are raising rates across the United States.

• Electricity rates for most North Carolina customers could increase 50 – 100 percent if Duke Energy and Progress Energy proceed with plans for $35 – 40 billion in new utility-built power plants, according to a report released by the North Carolina Waste Awareness & Reduction Network (NC WARN).  The report’s findings, including a large oversupply of electricity in the Southeast, validate the need for strong competitive procurement policy in North Carolina, to ensure that all regional supply options are considered in a non-discriminatory manner to the benefit of all customers.

  For further information, the report can be found here:  North Carolina's Energy Future

• In May 2008, the Georgia Public Service Commission approved a $222 million rate hike for Georgia Power to pay for higher fuel costs.  The increase follows $372 million and $323 million rate increases from February and December 2007, respectively.
• West Virginia customers of American Electric Power subsidiaries Appalachian Power and Wheeling Power are seeing a 12.1 percent increase in their power bills after the West Virginia Public Service Commission recently approved a $355 million rate increase.  The rate hike will be phased in over the next four years and was reduced from the 43 percent increase American Electric Power initially requested.  According to AEP, the high cost of coal is the cause of the jump in rates.
• Dominion Virginia Power customers saw their monthly power bills jump $16 in July 2008, after the State Corporation Commission approved an 18 percent rate increase.  The rate hike is the largest one-time rate increase in three decades.  Dominion North Carolina Power customers are seeing a $16.04 monthly increase for average residential households, beginning in January 2009, due to a 17.7 percent rate increase.  More recently, the utility filed for a $250 million increase, but following opposition from the state Attorney General, agreed to file a proposed settlement to refund $268 million in excess earnings from 2008 to customers through the end of 2010.  The proposed settlement, filed in November 2009, if approved, would also credit an additional $129 million in transmission rights and excess fuel costs to customers.
• In May 2009, Xcel Energy Inc. asked the Colorado Public Utilities Commission to approve a $180.2 million base rate increase, amounting to an 11.25 percent return on equity.  The PUC is holding hearings on the request in October and November of 2009 and is among groups like the Office of the Consumer Council and the Colorado Energy Consumers Group who have advocated a lower increase.
• In Minnesota, Xcel Energy Inc. received approval for a $90-92 million rate increase in September 2009.  This is a reduction from an interim rate increase of $132 million already in place and is a further reduction from the $156 million increase Xcel had originally asked for.  The new rates represent a 3.6 percent increase across the board from rates customers were paying the previous year.
• In August 2009, Allegheny Power requested a base rate increase of $122 million from the Public Service Commission of West Virginia.  Such an increase would represent a 14 percent, or $12 per month, increase for average customers.  According to Allegheny, the request covers the costs of doing business and maintaining financial stability.
• Florida Power & Light Company’s 4.5 million customers could begin to see their monthly bills increase starting January 2010 following a request for an additional billion dollars a year in base rates, to be followed by another $247 million starting in 2011.  Approval of this request would mean a 31 percent increase in base rates for 2010.
• Progress Energy Florida customers have voiced significant displeasure following a 25 percent increase for monthly electricity bills in 2009, caused by rising fuel costs, investment in nuclear energy, and environmental improvements.  The hike, which means an extra $27.29 each month for average residential customers, has prompted nearly 200 complaints to the Public Service Commission just in the first week of January 2009, with people demanding some powerful relief.
• Meanwhile, Progress Energy’s residential customers saw their monthly bills increase $10 starting December 2008 following a 10.2% rate hike in North Carolina.  In June 2008, Progress Energy had asked for a 16.2 percent increase due mostly to an increase in the prices of coal and natural gas, but later agreed to spread the increase out over three years.
• In June 2009, Kansas City Power and Light received approval for a combined $154 million rate increase in Missouri and Kansas. The Missouri Public Service Commission approved a $95 million rate hike and the Kansas Corporate Commission approved a $59 million rate increase.  Average residential customers in Missouri and Kansas saw a $12.82 and $10.36 increase in their monthly electricity bills, respectively.
• The Tennessee Valley Authority’s biggest rate increase since 1974 went into effect in October 2008, as customers began to see a 20 percent increase in their monthly electricity bills.  The average residential home can expect to pay between $15.80 and $19.80 more per month, an increase TVA attributes to rising coal and natural gas costs.  This is the second rate increase TVA customers saw in 2008, following a 7 percent increase last April.
• Alabama Power customers saw their rates increase for the second time in three months, totaling just over 13 percent, after state regulators in Alabama approved the utility’s effort to cover increased fuel costs.  After the initial increase in October 2008, the second increase began January 2009.  With these rate hikes, average residential households saw their monthly electricity bills increase $15.07.  The 13 percent rate increase is the largest for Alabama Power since the state Public Service Commission established the current rate-setting process in 1982.

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EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities. EPSA seeks to bring the benefits of competition to all power customers.  For more information, go to www.epsa.org.

Details on these and additional rate hikes.