CHARLESTON, W.Va. - Higher-than-expected coal prices and dwindling sales of electricity to other power plants has prompted Appalachian Power to request the largest rate hike ever proposed by a West Virginia utility, company executives said Monday.

Appalachian Power and Wheeling Power filed a request with the state Public Service Commission Monday to raise electric rates by 18.5 percent, starting in July. The two companies, both subsidiaries of American Electric Power, also want to increase rates by 14.5 percent next year and 13.2 percent in 2011.

"It's a large amount," said Jeri Matheny, corporate communications director with Appalachian Power. "That's why we want to work with the PSC. The higher costs mean it's more expensive to generate electricity."

The company had predicted it would sell $248.5 million in power to other electric utilities between July 2008 and this June, but those sales have almost disappeared. Revenue generated from those sales - electricity unused by AEP customers - keeps rates down.

"It has dried up," said Appalachian Power spokesman Phil Moye. "The slowing economy reduces the opportunity for off-system sales. Any profit from those sales goes back and is credited to our customers. It has historically been a big help in keeping our costs down."

AEP said the $442 million rate hike and three-year phase-in plan is necessary to recoup what the company spends for coal - and to purchase power and comply with more restrictive environmental regulations.

The company is asking for the PSC to spread the rate hike over three years because it would require a 43 percent rate increase to recover the $442 million in one year.

If the PSC approves the request, residential customers using 1,000 kilowatt-hours a month would see their monthly bills increase from $72.28 to $83.85 after the rate hike takes effect in July.

Compounded over three years, residential customers would see their bills rise 53.6 percent - or from $72.28 to $111 by 2011 for 1,000-kilowatt hour users.

Last year, the company requested a 17 percent rate hike, and the Public Service Commission approved an 11.35 percent increase.

"Had the 17 percent been granted last year, it would have resulted in a lesser percentage this year," Moye said.

More than 95 percent of Appalachian Power's electricity is produced from coal. Last year, coal prices spiked at $135 a ton, far above the company's projections when it set rates last year, Moye said.

"Even when coal prices lowered, they stabilized at a price that was higher than our [projected] rate," he said.

Moye and Matheny said the company has taken measures to cut costs this year.

CHARLESTON, W.Va. - Higher-than-expected coal prices and dwindling sales of electricity to other power plants has prompted Appalachian Power to request the largest rate hike ever proposed by a West Virginia utility, company executives said Monday.

Appalachian Power and Wheeling Power filed a request with the state Public Service Commission Monday to raise electric rates by 18.5 percent, starting in July. The two companies, both subsidiaries of American Electric Power, also want to increase rates by 14.5 percent next year and 13.2 percent in 2011.

"It's a large amount," said Jeri Matheny, corporate communications director with Appalachian Power. "That's why we want to work with the PSC. The higher costs mean it's more expensive to generate electricity."

The company had predicted it would sell $248.5 million in power to other electric utilities between July 2008 and this June, but those sales have almost disappeared. Revenue generated from those sales - electricity unused by AEP customers - keeps rates down.

"It has dried up," said Appalachian Power spokesman Phil Moye. "The slowing economy reduces the opportunity for off-system sales. Any profit from those sales goes back and is credited to our customers. It has historically been a big help in keeping our costs down."

AEP said the $442 million rate hike and three-year phase-in plan is necessary to recoup what the company spends for coal - and to purchase power and comply with more restrictive environmental regulations.

The company is asking for the PSC to spread the rate hike over three years because it would require a 43 percent rate increase to recover the $442 million in one year.

If the PSC approves the request, residential customers using 1,000 kilowatt-hours a month would see their monthly bills increase from $72.28 to $83.85 after the rate hike takes effect in July.

Compounded over three years, residential customers would see their bills rise 53.6 percent - or from $72.28 to $111 by 2011 for 1,000-kilowatt hour users.

Last year, the company requested a 17 percent rate hike, and the Public Service Commission approved an 11.35 percent increase.

"Had the 17 percent been granted last year, it would have resulted in a lesser percentage this year," Moye said.

More than 95 percent of Appalachian Power's electricity is produced from coal. Last year, coal prices spiked at $135 a ton, far above the company's projections when it set rates last year, Moye said.

"Even when coal prices lowered, they stabilized at a price that was higher than our [projected] rate," he said.

Moye and Matheny said the company has taken measures to cut costs this year.

AEP slashed its capital budget for new construction by $750 million.

The power company also has instituted hiring and pay raise freezes, Matheny said, and placed restrictions on employee travel.

One cost-cutting example: Appalachian Power has delayed construction of a multimillion-dollar Patrick Street electrical substation on Charleston's West Side.

"That project will be pushed back until next year," Moye said. "It's not going to jeopardize reliability."

Moye and Matheny urged residential customers to conserve energy to save money on power bills - shutting vents to rooms that don't need to be cooled, unplugging little-used appliances, and installing insulation and weather stripping.

"Now's the time to be more energy-efficient," Matheny said. "If people conserve, it's a good thing for everybody. We'd rather not build new power plants."

Matheny said the closing of Appalachian Power's largest West Virginia customer - Century Aluminum in Ravenswood - last month had a neglible effect on the company's proposed rate hike.

"That was overblown," she said.

Appalachian Power serves customers in 23 counties in southern and central West Virginia. Wheeling Power serves Marshall and Ohio counties.

Reach Eric Eyre at erice...@wvgazette.com

 or 304-348-4869.