State regulators have approved Appalachian Power’s request to raise the average residential customer bill by $4.36 starting March 1 to recover costs from renewable energy projects.

That means the average residential bill will be $168 next spring, up about $44 from July 2022. Earlier this year, that average stood at $174, but regulators recently approved an interim decrease in the cost that customers pay for fuel. An average residential customer uses 1,000 kilowatt-hours of electricity per month.

The latest increase, approved Friday, will allow the company to recover $69 million associated with renewable energy projects that are making electricity now or will come online between March 2026 and February 2027.

Appalachian Power requested the revenue increase as it works toward having a carbon-free energy portfolio by 2050, as mandated by the Virginia Clean Economy Act of 2020. The act requires Appalachian Power to seek regulatory approval for new solar, wind and battery storage projects.

Appalachian Power also sought regulatory approval related to several other renewable energy projects separate from those that are connected to the $4.36 bill increase.

The company asked the SCC for permission to:

• recover costs associated with acquiring the 255-megawatt Livingston Wind power plant in Illinois, which is under development by EDF Renewables and scheduled to begin operation in 2029;
• acquire and operate a 52-megawatt, four-hour battery energy storage system in Wythe County that is under development by RWE and expected to come online in 2027; and
• buy solar power from the 7.5-megawatt HCE Collier Solar project in Wise County once it begins operating in May 2027.

The SCC approved future cost recovery associated with the Livingston Wind power plant acquisition, but only under the conditions that the project doesn’t exceed its estimated $1.07 billion price tag and that it is able to receive significant federal tax credits before they expire due to the passage of the One Big Beautiful Bill.

The act ends tax credits for wind projects placed in service after Dec. 31, 2027, unless construction started before July 4, 2026. The SCC noted that the expiration of these credits means “future VCEA-compliant projects will be more difficult to secure.”

Although the wind project is in Illinois, it is eligible to meet Appalachian Power’s renewable energy requirements because both it and Appalachian’s Virginia customers are located within the regional electric grid operated by PJM, the organization that manages wholesale electricity transmission in Illinois, Virginia, 11 other states and Washington, D.C.

The SCC approved Appalachian Power buying energy from the Wise County solar power project.

It denied the company’s request to operate the Wythe County battery system, saying that the system’s $168 million cost would not be a good value for ratepayers even with federal tax credits.

Appalachian Power spokesperson George Porter said the company was pleased with the SCC’s ruling and said it will allow the company to meet VCEA requirements “in the most cost-effective manner, taking full advantage of federal tax credits to reduce costs for customers.”

“While we are disappointed that the SCC did not find value in our proposal to acquire and operate a utility-scale battery storage project in southwest Virginia, we remain committed to finding innovative solutions that allow us to invest in sustainable energy infrastructure while maintaining affordability for our customers,” Porter said in a statement.

Appalachian Power has customers in West Virginia, and this past summer filed a request with state regulators there to recover a portion of the costs associated with these renewable energy projects. A public hearing is set for Dec. 16.

In a separate regulatory case, the SCC recently allowed Appalachian Power to reduce, on an interim basis, how much expense it passes on to customers for fuel and purchased power. That was expected to lower customer bills by $10 starting this past Nov. 1 while the SCC considers the utility’s case.

Earlier this month, the SCC gave Appalachian Power permission to incur expenses associated with evaluating a Campbell County location for its potential for a small modular nuclear reactor, or SMR. The company has said it anticipates filing next year to recover those expenses.

In March, Appalachian Power is expected to file its next rate review case, which state law requires every two years. In its last rate review case, the company asked to raise the average customer bill by about $10, but the SCC approved an increase that raised that average bill by $1.39.

Two recent regulatory requests from Appalachian Power, whose potential costs to ratepayers have yet to be revealed, are a $135 million plan to upgrade grid technology and a proposal to upgrade 18 miles of transmission line in the New River Valley.

Appalachian Power, a subsidiary of American Electric Power, has about 540,000 customers in Western Virginia.