Appalachian Power residential customers in Virginia will see a decrease of about 4 percent in their total electric bills beginning this month. The decrease is the result of the reduction or expiration of three rate adjustment clauses.
The Environmental RAC ended on Feb. 12, the Generation RAC was reduced on Feb. 15, and the Renewable Portfolio Standard RAC was suspended Feb 1. These changes will result in an Appalachian Power Virginia residential customer paying about $114.92 for 1,000 kWh of electricity a month. That is a reduction from more than $119 at the beginning of 2015.
The decrease will vary depending on electricity usage. There is a current refund credit being issued to customers that is not included in the 4 percent rate reduction calculation.
The changes in the overall customer bill are due to the use of RACs for the collection of costs that are mandated or does the Virginia State Corporation Commission specifically approve investments. RACs are regulated by the SCC and generally provide no profit for the company.
RAC adjustments are separate from the base rate. The base rate accounts for about 60 percent of the bill customers pay for electricity. The other major component of the bill is determined by RACs, which are adjusted periodically to reflect actual costs.