Power companies to offer incentives

February 17, 2019

Appalachian Power, along with Wheeling Power, is offering new or expanding businesses an extra incentive to operate in West Virginia: a discount on their electric service.

“We’re looking at every possible tool we can provide to make our state more competitive on a national and international scale,” said Appalachian Power President and Chief Operating Officer Chris Beam in an interview last week. “We want to encourage companies to come to the state and grow their business here. We’re hoping this incentive rate will help tip the scales in West Virginia’s favor as businesses choose where to locate or expand.”

The new rate applies to new or existing customers who have new demand of 500 kilowatts or more and create at least 10 jobs or invest at least $2.5 million in their West Virginia expansion. The rate discount will amount to about 15 percent overall on their electric service, according to Beam.

“It’s built around a five-year window to help new and expanding businesses get through a transition period and after the fifth year would go to normal rates,” he explained. “The increased electrical load would benefit all customers in the state by spreading fixed costs among more customers.”

Beam added that the discount will not cause any increase to current customers’ bills.

“New or existing companies will work with Appalachian Power to determine how they can take advantage of the incentive rate and how it will affect their overall electricity costs,” Beam said.

David Lieving, president and CEO of the Huntington Area Development Council (HADCO), said the new incentive rate plan gives economic development organizations in the state a competitive edge.

“Economic development is extremely competitive, and even though we are fortunate in West Virginia to have competitive energy costs, this rate incentive will give us a great tool for new growth opportunities,” he said. “This will help us to encourage existing business expansion and to attract new businesses and jobs to our region.”

Beam says a large factor in the company’s recent rate increase request for residential, business and industrial customers was the population loss West Virginia continues to experience.

“Everyone is well aware that West Virginia is losing population and has been for a good while,” Beam said. “This is creating an issue as our fixed costs are passed off to our customer base and as that base continues to go down it means fewer customers to spread these fixed costs to, which can mean increased rates.”

Beam said one possible solution to increased rates for everyone is to incentivize businesses to come back to West Virginia.

“This helps all customers by spreading fixed costs over a larger base,” he said.

In November, the West Virginia Public Service Commission accepted for review a settlement agreement for a rate increase by Appalachian Power that calls for a 4 percent hike for residential customers and freezes that rate for two years.

Under the proposed settlement agreement, residential customers using 1,000 kilowatt hours of power monthly will pay an extra $5.38 per month under the new fee structure. Customers using 2,000 kilowatt hours a month or more in their homes will pay $1.37 less per kilowatt hour under the new plan.

A residential winter rate discount that was in effect last year would continue under the proposed rate agreement.

March 5 is the deadline for the PSC to issue the order to accept, modify or put out a completely different resolution to the case.

The agreement would also require Appalachian Power to set up an economic development fund, consisting of up to $1.2 million a year annually collected in fees from customers, then matched by the utility. The state Department of Commerce would work with Appalachian Power to work on site development, training and other projects designed to attract industry and produce jobs.

Beam says outside of the proposed agreement’s economic development fund, the company is doing more on its own to promote economic development.

“We have changed our economic development strategies to be more holistic in our approach,” he said. “Our economic development activities must include everyone in the communities we serve. From local elementary schools to community and technical colleges to large universities, we are investing more in education and training. We’re doing more than ever before, from supporting broadband expansion, to workforce development, to helping with aerospace-ready work, grants and more.”

Beam says the company is supporting broadband expansion by modernizing its own fiber optic network.

“We want to help with broadband development to rural places in our service areas,” Beam said. “We are trying to modernize our system and are starting more fiber bundle installations. We want to upgrade our network and make some of it available by lease to third parties that could be used by communities in those rural areas. We don’t make any money, but we are meeting the need to modernize our system and meeting a social and economic need in communities currently without broadband access.”

In the area of workforce development, Beam says the power company has turned to a regional approach that includes West Virginia, southern Ohio, eastern Kentucky and western Virginia.

“Many of these areas are in the same economic despair, so we have teams in each area working to do workforce assessment analysis so that we can develop the best workforce development programs,” Beam said.

He said some of the company’s workforce studies have shown that former coal miners, steel and aluminum workers’ skills can translate to the aerospace industry, so in 2017 the company and its regional economic development partners launched “Appalachian Sky,” an initiative that began in AEP’s Kentucky territory and grew to encompass AEP territories in the Tri-State region that includes eastern Kentucky, southwestern Ohio and western West Virginia.

The company commissioned a leading aerospace consultancy to determine the viability of aerospace in Appalachia’s coal and steel country. The consultancy certified 14 counties as “AeroReady” in the Tri-State region, furthering the belief that aerospace can thrive in Appalachia.

“We continue working toward getting others certified,” he said.

Beam says Appalachian Power also offers Economic Development Growth Enhancement (EDGE) grants of up to $20,000 to nonprofit city, county, or regional economic development organizations in its service territory.

“These grants support marketing and promotion, business retention and expansion, or programs to support site and building development,” he said.

He said a little over $330,000 in EDGE grants were awarded this past year and about $902,000 has been awarded since 2012.

Beam said all of this economic development activity may not sound like something a traditional utility company does.

“We believe we can play a vital role in economic development,” he said. “We want to provide economic development assistance beyond the conventional boundaries of power quality and price. We want to provide assistance in any way possible to help drive businesses to locate new or expanded facilities in the areas we serve.”