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Customers of Appalachian Power and Wheeling Power will see an increase in their utility bills - though not as big as it could have been - after the West Virginia Public Service Commission approved a partial rate increase of $88.8 million in fuel costs.
The rest of the total $641.7 million the companies are trying to recover remains under consideration. In its decision released Wednesday, the PSC said those cases will remain open pending a final decision from the PSC. According to reports, the $88.8 million increase will lead to an average increase of $5 in customers' bills. If the PSC would ultimately grant Appalachian Power and Wheeling Power their full requests, customers would see their bills go up by about $20.
The $88.8 million increase was part of a series of requests from the two companies - subsidiaries of American Electric Power who serve 462,000 customers in 25 counties in West Virginia - to the PSC in their quest to recover $641.7 million in coal costs to operate three electric plants in the state, including the Mitchell Plant in Marshall County.
The $88.8 million represents the increased projected fuel costs for the span between Sept. 1, 2023, and August 2024. The remaining $552.9 represents accumulated under-recovery that came from the companies' relying more on expensive purchased power than they had originally projected.
According to the PSC's Wednesday release, the companies relied on the purchased power not because it would be more expensive to rely more on self-generation, but "because they were unable to obtain sufficient coal supplies to maximize economical self-generation."
The companies submitted two plans for the PSC to consider. One would increase rates by $88.8 million and spread the remaining under-recovery costs across three years at an increase of 12% for ratepayers, with the first-year rate increase set at $293.1 million.
The second option is a securitization of the ENEC under-recovery balance with an $88.8 million rate increase effective Sept. 1, resulting in a more than 3% increase in rates.
The second option was made possible by House Bill 3308 passed earlier this year. By using the second option, the companies could wipe out approximately $150 million ratepayers are currently paying for costs at the John Amos Power Plant in Putnam County and the Mountaineer Power Plant in Mason County.
During hearings about the proposed increase, the PSC staff, West Virginia Energy Users Group and Consumer Advocate Division all offered no objection to the $88.8 million projected increase. The Kanawha County Commission objected to the entire increase, while the PSC staff, WVEUG and CAD all stated that a portion of the companies' under-recovery should be disallowed.
"Commission Staff recommended a modified ENEC recovery mechanism without using the securitization option," the PSC stated in its decision. "The Staff proposed that the Commission should adjust the under recovery downward and allow a lower under recovery in customer rates, disallowing a portion of the under recovery that Staff believed was unreasonable and the result of imprudent management of fuel supplies and self-generation in lieu of more expensive purchased power."
The PSC has fielded multiple objections from around the state to the rate increases. The vast majority of speakers at a July public hearing in Charleston bashed the increases, mentioning problems for seniors and people on fixed incomes. In June, the Ohio County Commission wrote a letter to the PSC against the increase, calling the timing of the rate increase "troubling" given the economic challenges of coming out of a COVID-induced downturn, rising inflation and increased interest rates.