CHARLESTON — The three members of the West Virginia Public Service Commission listened to testimony and questioned witnesses Tuesday as two subsidiaries of American Electric Power seek another electric rate increase to cover their expenses.

Tuesday morning marked the first day of evidentiary hearings before the commission at its downtown Charleston headquarters to consider an expanded net energy cost rate increase request by Appalachian Power and Wheeling Power, subsidiaries of Columbus-based AEP.

The companies, which provide power to residential and industrial ratepayers in 25 West Virginia counties, are seeking a $71.6 million, or 3.79%, — in ENEC rates by Sept. 1. The proposed increase would result in residential power bills rising by $5.31 per month.

Morning testimony came from Clinton Stutler, director of natural gas procurement for AEP; Randall Short, director of regulatory services for Appalachian Power; and Curtis Cook, plant manager for Appalachian Power’s John Amos Power Plant in Winfield. John Amos is one of three power plants in the state owned by Appalachian Power/Wheeling Power, including the Mountaineer Power Plant near New Haven and the Mitchell Power Plant in Moundsville.

The ENEC process allows electric utilities to petition the PSC to consider rate increases to allow utilities to recoup actual costs for the previous year and prepare for projected costs. According to company testimony, $52.6 million of the $71.6 million was for the ENEC deferral balance, with $19.1 million for forecasted costs.

Opponents of the increase place the blame for the increased costs on poor decisions by the companies to run power plants at a financial loss by burning off excess coal supplies during the 2024-25 period.

During questioning by Robert Williams, director of the PSC’s Consumer Advocate Division, Short said the true under-recovery cost for the companies was $91.3 million. The companies are planning to securitize certain assets in order to reduce the effect of the rate increase request. The West Virginia Legislature passed a bill in 2023 allowing for securitization.

“We have said that if the commission believes that these costs will be securitized, we approve that option,” Short said. 

The previous securitization filing by Appalachian Power/Wheeling Power included an under-recovery balance of $321 million, representing a previously approved 10-year amortization, which is being paid down by approximately $2.8 million per month. At the end of the review period, the total under-recovery, representing the remainder of amortization plus new accumulation, was $398 million, which the company seeks to securitize.

Short said it was important for the companies to honor their contracts with coal suppliers and take deliveries of coal, but it was also important for the power plants to burn excess coal due to safety regulations that govern how much coal can be stored.

“We bid them in with a strategy to minimize the impact on our customers,” he said. “So, the price we bid them in at was a better price than we would have faced in total if we had not controlled our coal inventories or received coal shipments that we were contracted for.”

Short said the decision to burn coal, even when above prices set by PJM Interconnection — a wholesale energy transmission company serving a 13-state region in the Northeast — was driven by existing contracts. 

“We would either have to pay for the coal and find a way to store it, or we would face penalties for not taking deliveries of the coal,” Short said. “We honor our contracts, and we were contracted to purchase coal. We try to take efforts to push those deliveries out to a different period if we can do that, but if not, we would have faced damages for not taking delivery of coal.”

The PSC also took public comment Monday evening on the increase during a public hearing in Charleston.