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                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, February 12, 1992                   TAG: 9202120128
SECTION: BUSINESS                    PAGE: C7   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

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APCO RATINGS DOWNGRADED; RATE-INCREASE DENIAL CITED

Duff & Phelps Credit Rating Co. of Chicago has lowered its ratings on Appalachian Power Co.'s first-mortgage bonds, debentures and preferred stock because a West Virginia regulatory agency denied a rate increase request last fall.

Apco asked the West Virginia Public Service Commission for an 8.8 percent rate increase that would have yielded $44 million in revenues. After several moves by the commission, the net result was essentially no change in the base rate, said Apco spokesman Don Johnson.

Duff & Phelps lowered the rating of Apco's first-mortgage bonds from A+ to A; debentures from A+ to A-, and preferred stock from A to A-. It gave an A rating to Apco's shelf registration or authorization for $150 million of first-mortgage bonds.

In a separate case last year, the West Virginia agency approved a $24 million increase in Apco's fuel factor. The State Corporation Commission approved a $25.5 million rate increase for Apco's Virginia customers, less than the company's $43.3 million request.

Duff & Phelps said West Virginia's regulation "has historically been restrictive." The company said such "unresponsive treatment will add to pressure" on Apco's financial protection measures, which have weakened in recent years.

Johnson said Apco is concerned by the lower ratings, "which tend to push up the cost of capital and could have an effect on the cost of doing business."

Apco "will need to rely increasingly on reductions in capital and operating costs to maintain appropriate financial ratios," Duff & Phelps said. The Roanoke utility has had a cost-containment program for more than a year. - Staff report

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