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Power Rates and the Poverty Trap

by Lewis Loflin

Update Dec. 2015: it's being reported due to EPA regulation power rates will increase by one-third by 2025.

Appalachian Electric Power calls the power outages "Unprecedented and Overwhelming." Red Onion State prison in Dickenson along with my sister's home in Dickenson County are among the 50,000 without power as of December 20. We lost power for a few hours at my Bristol home, but Bristol Virginia Utilities was "on the ball" and got most of our residents back on in a short time.

Why does big business like utilities love global warming and carbon taxes? To quote Senator Jim Webb: As we figure out government's role in moving the nation's privately owned energy infrastructure in a more sustainable direction, guarantees make more sense than direct subsidies, especially given the economics of electricity generation.

Because of our regulatory structures, utility companies are generally deep-pocketed and profitable - their payback for providing an essential service. Virginia, for example, guarantees Dominion a profit margin many businesses would sigh for...
Ref http://webb.senate.gov/newsroom/newsarticles/11-19-2009-01.cfm. They operate on a cost plus basis and the higher mandated government costs, the more profits they make.

Yet as this website has for years rejected claims of man-made global warming because the science doesn't support it. The propaganda war rages on as President Obama demands devastating new taxes to bolster environmental religion. Yes it's a religion and I will address that more below. The science is simply not there and climate change is a normal part of nature.

The Bristol Herald Courier (6/21/09) published an article on the "concern" of many of the region's poor about spiraling power bills. In fact they have had several stories similar to this in the past. Some might call them sob stories, I call it reality in Southwest Virginia that the elite, including the press, just don't understand.

The Herald Courier endorsed the construction of windmills in Wise County Virginia for no other reason than they believe in environmentalism. Never mind that if they are constructed (nobody knows the cost will be, but endorsed them anyway) it will certainly lead to higher power bills. They also endorsed the massive Cap and Trade energy tax voted for by our local congressman Rick Boucher. They report on who suffers, but are oblivious as to why.

The Poverty Trap

"It's a story of the times...Everything else is going up. We're not the only one raising prices, we're not the only one that's having our own economic problems with cost, we just tend to be visible." Whines spokesman for Appalachia Power John Shepelwich. The company is caught in a political fight over attempts to raise their rates again even while coal prices are falling. The culprit is costly environmental regulations mostly designed to force people to conserve by artificially inflating energy prices.

That is what is behind the local windmill scam. The State of Virginia (something barely covered by the press until too late) has mandated 12.5 percent of Virginia power be generated by so-called "Green" sources by 2021. This excluded reliable proven sources such as nuclear, so to comply with the mandate power companies such as Dominion (behind the windmill scam in Wise County) and AEP will be forced to come up with solar/wind something to meet the law regardless of cost. For Dominion and AEP this is pure profit. Whatever the cost the state will allow them to charge that back plus a percentage. The public is simply helpless and the press endorses the very things that will make matters worse.

The Herald Courier reports (June 21) that local officials believe the economy across the region may sort of recover, but that is not what I was told. This "rebound" will mostly be more government spending. Yes it's reported that Utility Trailer is recalling 160 workers in Washington County Virginia, but for how long? The problem was here even before the latest down-sizing across the region. Many of the local elite seem to ignore the massive poverty even in good times. It just doesn't come and go, it's constant and never-ending.

Trapped

"It's a sad situation...It's something that we do see far too often in homes that perhaps are rented and the resident cannot afford or is unable to do any kind of energy-efficiency upgrade on the property" says Mr. Shepelwich. The region suffers a severe shortage of affordable housing. Land prices are skyrocketing due to move-in retirees buying up everything at premium prices, and rent is high relative to what many jobs are willing to pay. Most rental housing in Bristol tends to be older and less energy efficient. Many are often older large houses broken into apartments. Low-income residents are stuck with older vehicles and appliances they can't afford to replace or even repair. It's as constant fear of the next breakdown or rate increase.

It gets even worse of one misses a payment or gets behind. They are often required to pay steep deposits, their ruined credit will often drive up other cost such as credit cards and auto insurance rates. To quote the Herald Courier, "more people have received cutoff warnings, been required to put down deposits and asked for payment plans to bring their bills up to date...deposits (are) calculated based on a customer's highest two consecutive months of power usage, are the only way for the company to protect itself against non-payment - and, therefore, the need to pass the unpaid cost on to all customers."

In one case when I helped a resident relocate her mobile home after Washington County Virginia displaced 50 low-income residents to make way for a strip mall, Bristol Tennessee Electric required a deposit of almost $600. Their reason was based on the highest unpaid bill of a previous tenant. Social services had to step in and come up with money. And it gets even worse. If residents do cut back on power usage, the power company simply raises rates to cover the loss. AEP suggests to call them to set up a payment plan before one starts getting notices. If one needs help with winterizing a home (they have to own it) contact People Incorporated of Southwest Virginia at (276) 623-9000

Update November 19, 2009

One 77-year-old man from Abingdon broke down crying, while another man from Rural Retreat, Virginia said, "I spent the first eight years of my life without electricity, and I may have to spend the last eight or the time I have left. I'll go back to kerosene lamps..." Another claimed, "We can't just magically grow a money tree..."

This was some of the statements from Southwest Virginia residents speaking against another rate increase by Appalachian Power before the three-member State Corporation Commission during a public hearing session. Among the speakers were state Senator Roscoe Reynolds, D-Martinsville, and Phillip Puckett, D-Tazewell, and Delegates Bill Carrico, R-Galax, Terry Kilgore, R-Gate City, and Anne B. Crockett-Stark, R-Wytheville. "With the conditions that we have now, it seems almost unconscionable that we would be facing another rate increase based on what you have seen and what we have seen already," Puckett said.

A 16 percent electric rate increase will take effect on an interim basis in December and be decided after a March public hearing. The rate increase is one of four proposed this year, on the heels of a 31 percent increase approved last year. Two of this year's proposed increases, totaling 10.6 percent, have already been approved; two others, for a combined 19 percent, are pending. Public hearings on the proposed base rate increase of 16 percent was held in Rocky Mount, VA., and will be held in Richmond on March 16, 2010.

Todd Burns, spokesman for Appalachian Power, said the power company must be allowed to cover its costs. "Output from power plants, whether it's our own or whether it's stuff that we're acquiring, is more costly than it used to be, largely driven by mandatory environmental regulations." Another Appalachian official said "the cost of electricity will continue to rise, and customers should plan now for the long term with measures to improve their energy efficiency." How about the use of kerosene lamps? Extract BHC November 19, 2009

The Herald Courier did supply a list of welfare offices to call for help. If they really cared about low-income residents they would oppose the needless inflation caused by their endorsing of Green Theology.

This page posted 20 December 2009