AEP’s Kingsport Power requests a base rate increase

Kingsport Power Company—doing business as AEP Appalachian Power—has made a filing with the Tennessee Regulatory Authority (TRA) requesting an increase in its base electric rates.

Kingsport is seeking approval of an increase in total revenues of about $12 million annually along with a six-year plan to realign rates among its customer groups. Under the company’s proposal, the bill for a residential customer using 1,500 kilowatt-hours in a month would add about $17.21 a month—or about 13 percent. With that change, Kingsport’s residential rates will be approximately 22 percent below the national average.

“The company operates as efficiently as possible, but we must seek an increase to reflect such things as current cost levels. We have also added funding for right-of-way maintenance to improve customer reliability and to allow recovery of costs for current and proposed demand side management programs,” said Isaac Webb, district manager for Kingsport. “A rate increase is never easy, but our existing base rates are not adequate to recover reasonable operating costs and to earn a fair and reasonable rate of return on our investment.”

The current company rate of return is about 1.1 percent. An approved request would provide a projected rate of return of 6.69 percent.

Kingsport’s current base rates were established in 1992 by the Tennessee Public Service Commission, predecessor of the TRA. Since 1992, periodic rate adjustments have occurred under the company’s Fuel Adjustment Clause and a Purchased Power Adjustment Rider.  These adjustments increase or decrease monthly or annually to recover fuel, generation and transmission costs that are not included in base rates.

The TRA will establish a schedule for hearing the proposed rate change. If approved, the company anticipates implementing new base rates no later than July 1, 2016.

The company serves 47,000 residential, commercial and industrial customers in the City of Kingsport, parts of Sullivan, Washington and Hawkins Counties, and the Town of Mount Carmel, all in Tennessee.

Kingsport Power operates as AEP Appalachian Power and is a unit of American Electric Power, one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states.