Companies Seeking Power Rate Increase
WHEELING – Citing an increased cost of doing business and also additional costs related to the cleanup of two major storms in 2012, Appalachian Power and Wheeling Power, both subsidiaries of American Electric Power, on Monday filed a request with the Public Service Commission of West Virginia for a $226 million revenue increase.
If approved, the request would raise rates in West Virginia by approximately 17 percent, the company said. The exact amount of the increase will vary by customer class and usage.
For example, a residential customer using 1,000 kilowatt-hours per month would see a 23 percent rate increase, while a residential customer using 2,000 kilowatt-hours per month would yield a more than 25 percent increase.
Appalachian Power spokeswoman Carmen Prati-Miller said historically, commercial and industrial customers have subsidized residential rates. The new rate structure more closely reflects the cost of service for each customer class, she said.
“This is a base rate case the commission required us to file in which we present our costs of doing business,” said Charles Patton, Appalachian Power president and chief operating officer. “It includes things like storm restoration costs from the Derecho and Sandy, implementation of a right-of-way maintenance program to improve reliability, and a return that is sufficient to attract capital. Ultimately, the commission will determine the outcome of the request.”
The utility said the revenue bump is needed to recover the increased cost of maintaining and improving distribution and transmission lines as well as generating plants.
Electricity rates in West Virginia have remained steady since 2011.
“Keeping the lights on is our customers’ number one requirement,” Patton said. “It’s up to us to balance that requirement with the need to keep prices as low as possible. To ensure that service remains reliable, we need to make investments to maintain our infrastructure.”
The requested increase includes costs for major storm restoration efforts and a new vegetation management program. The company is seeking recovery of restoration costs from the two major storms that struck West Virginia in 2012, the Derecho on June 29 and Superstorm Sandy on Oct. 29. The company proposes to spread those costs over a five-year period to reduce the impact on rates.
The filing also includes costs for the recently-approved cycle-trimming vegetation management program.
While cycle trimming won’t eliminate outages from major events like the Derecho and Sandy, it will help improve reliability, reduce power restoration times and minimize some restoration and ongoing maintenance costs.
Appalachian Power also is seeking to be more efficient as a company. The utility utilizes an efficiency program called “Lean” throughout its service territory, which is designed to engage employees in finding ways to eliminate waste and add value to customers. Plus, the company has implemented two major budget-cutting initiatives and reduced its workforce by more than 10 percent in the last five years.
The filing with the PSC also requests a 10.62 percent return on equity.
“The rates the commission approves for our company are established to allow us to provide safe, clean, reliable electric service while keeping prices as affordable as possible and earning a fair return on investment,” Patton said.