Today, Wednesday October 29, 2008 the SCC will hold the final hearing for a requested 24% rate increase for AEP (American Electric Power). Among the many scheduled speakers testifying before the SCC will be Jeff Evans. His remarks are presented below:
Thank you for the opportunity to speak before this commission this morning. I am Jeff Evans, formerly a member of the Carroll County Board of Supervisors and now a resident of Henry County and a lifelong customer of AEP.
I’m sure we’ve all heard the old saying; "Poor planning on your part does not necessarily constitute a crisis on my part". Might I suggest that is exactly what we are facing in this hearing?
I have a friend in Henry County, Denton Boardwine. Denton operates a small restaurant in our economically distressed county. If my friend were to place a sign on his front door stating his intention of raising prices by 10% because he plans to build a new restaurant in the coming year he would be laughed out of business. As he should be. Bear in mind that Mr. Boardwine’s hypothetical price increase is less than half of what AEP is now asking.
AEP is justifiably proud of its record of many, many consecutive years of dividend payments to its stockholders. Few private companies can boast of such a record. The reason is simple. Other companies must plan and budget for future capital improvements using funds from their profits or loans against future profits. I know of no other business that can simply raise prices in order to fund future capital improvements regardless of the current economic situation.
No. All other businesses fund future expansion of facilities by saving or loans against future profits. This sometimes means there will be no dividends for stockholders in a given year. Or at best, smaller dividend payments.
No, I do not believe in a free lunch. Of course, in all cases the customer does indeed pay for capital improvements, for there is truly no other source for such funds. These payments come from the customer through any profits that may be accrued by the company. This request from AEP runs completely counter to normal business practice. Here, the customer is essentially being asked to pay twice. We have already provided AEP with a handsome operating profit, as AEP itself boasts when they repeat that they have continuously paid their owners dividends, yet AEP now expects us to provide further funds for capital improvements. Improvements that other businesses must, in one way or another, use a portion of their profits for.
It is this fact that should give us pause today. Poor economic planning by AEP, the enabling of such redistribution of wealth by past SCC rulings and regulations passed by the Virginia General Assembly, should not be used now as an excuse to create a financial crisis for the economically distressed Southwestern Virginians who are its customers. The owners, otherwise known as stockholders, of any other business would be required by economic reality to plan for such expansion through savings, loans, good budget practices, or all three. I am asking you, the State Corporation Commission, to refuse to reward poor economic planning by forcing Southwestern Virginians to bend or break their own budgets in order to mend the budget of American Electric Power.
I also challenge the upcoming General Assembly to put an end to this practice.