Court limits environmental costs utility can recoup

9:08 am | November 2, 2012

RICHMOND, Va. (AP) — Appalachian Power can recover only $6 million of $33.3 million in disputed environmental costs, the Virginia Supreme Court ruled Thursday.

The justices unanimously ruled that the utility is entitled to recover from customers the environmental costs that it did not collect through its base rates in 2009 and 2010. The court said the State Corporation Commission used flawed methodology in denying recovery of those costs, which amounted to $6 million.

But the court affirmed the commission’s denial of $27.3 million in environmental costs embedded in the “capacity equalization” charges Appalachian Power paid to its affiliates. Those are charges the utility pays for extra electricity when demand exceeds its own generating capacity.

The commission ruled that evidence of “actual costs” was insufficient, and the justices said they were in no position to overturn that finding.

Attorney General Ken Cuccinelli, who backed the commission’s actions, praised the court’s ruling as a victory for consumers.

“While we certainly would have preferred the court to have upheld all of the SCC’s decision, the fact remains that we prevailed on the majority of what APCo sought to recover in this appeal,” Cuccinelli said in a statement. “With the recovery limited to $6 million as opposed to the full $33.3 million sought, the impact on an individual customer’s monthly electric bill is greatly reduced.”

In its March 2011 petition to the SCC, the utility sought to recover $77 million that it spent comply with state or environmental laws or regulations. A hearing examiner slashed that to $63.3 million. The commission further reduced the recovery to $30 million, and Appalachian Power appealed to the Supreme Court.

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