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American Electric Power Makes Case for New Surcharge to West Virginia Public Service Commission

Photo courtesy Appalachian Power Appalachian Power and Wheeling Power are asking the West Virginia Public Service Commission to approve a new, higher surcharge for customers to bring power plants like Marshall County’s Mitchell Plant in line with federal regulations.

CHARLESTON — Representatives for American Electric Power, the parent company of Appalachian Power and Kentucky Power, told members of the West Virginia Public Service Commission why they need a quick decision on whether state ratepayers should foot the bill for environmental improvements at three plants.

The PSC held an evidentiary hearing Friday at its offices in Charleston regarding Appalachian Power and Wheeling Power’s new surcharge request to keep the Mitchell Power Plant in Marshall County, the John Amos Power Plant in Putnam County, and the Mountaineer Power Plant in Mason County operating past 2028.

The companies are seeking a 3.3% increase for West Virginia ratepayers — up from the 1.62% approved by the PSC in August – to help subsidize environmental improvements at the three plants.

The improvements include changing how plants dispose of coal ash (CCR) and how wastewater is discharged from plants (ELG).

The cost of original investments by Appalachian Power/Wheeling Power was $317 million for the projects, with West Virginia ratepayers contributing $23.5 million. However, regulators in Kentucky rejected a similar plan proposed by Kentucky Power – the co-owners of the Mitchell Power Plant – for ELG and CCR improvements.

Regulators in Virginia approved CCR improvements for the Amos and Mountaineer plants but rejected the proposed plan and surcharge for ELG improvements. The denials by Kentucky and Virginia regulators have caused the projects to increase in cost from $317 million to $448 million.

Appalachian Power and Wheeling Power filed a petition Sept. 8 with the PSC to reopen the case approved by commissioners in August. The companies are seeking a ruling from the PSC that it wants the companies to continue with ELG projects at all three plants or specific plants, and an acknowledgment that West Virginia ratepayers will have to bear all the costs for the improvements.

If the PSC approves, West Virginia ratepayers could be on the hook for a $48 million annual surcharge. Gary Spitznogle, vice president of environmental services for AEP, said the companies need a decision by or before Wednesday, Oct. 13, when the state Department of Environmental Protection will need a decision from the companies on whether to start the retirement process for one or more plants by 2028.

“Let’s assume that the commission issues an order before Oct. 13 saying that the commission wants AEP to go full-speed ahead with ELG and CCR on all three plants and West Virginia ratepayers bear all of the costs. What does AEP have to do to comply with that?” asked Charlotte Lane, chairwoman of the PSC.

“We have to execute the plans that we’ve already filed,” Spitznogle said. “We would just continue with our project to construct these retrofits … we would be committed to doing that plan unless something changed and led to the closure of the plants.”

Earlier Friday morning, the PSC held a public comment hearing regarding the updated surcharge request. Out of 13 speakers, only three spoke in favor of the proposal. Representatives of labor spoke in favor of protecting the plants, especially the jobs the plants provide.

“Our membership works about 1 million hours at these plants every single year,” said George Capel, representing the West Virginia State Building and Construction Trades Council. “I come to you this morning respectfully asking you to consider what it might look like in terms of lost tax revenue and lost commerce if these workers were displaced and forced to relocate because of these plants closing their doors.”

“Our members mine millions of tons of West Virginia coal that are delivered to these plants annually,” said Chad Francis, representing the United Mine Workers of America. “We support keeping our current coal-fired power plants operating and running as cleanly and as efficiently as possible, so in turn West Virginia families can have a chance to live the American dream.

The surcharge request was opposed by environmental groups and consumer advocacy organizations, arguing that West Virginians shouldn’t bear the entire burden for the improvement costs. According to the National Consumer Law Center, the monthly cost to a residential customer of Appalachian Power/Wheeling Power increased by 60% since 2011.

“The ratepayers should only pay the fair costs of the utility service actually provided to those ratepayers,” said Margot Saunders, an attorney for the National Consumer Law Center. “Yet, in this case, the companies are requesting that the West Virginia ratepayers pay the cost of service provided to ratepayers in other states even after the regulatory bodies in those states determined that it was not good policy for that to happen.”

“Many of our members in the state already struggle to make ends meet,” said Gaylene Miller, state director for the AARP in West Virginia. “Many are low-income, while others live on limited or fixed incomes. They simply do not have the ability to absorb additional fees without having to make difficult trade-offs in spending for food, medicine, or transportation.”

The proposal had the support of local lawmakers, including Del. Charlie Reynolds, R-Marshall, and U.S, Rep. David McKinley, R-W.Va.

“It would be hard if utility rates went up, but I’m going to support it,” Reynolds said. “I do believe that without anything in place to take up and give us the energy that those plants provide, it’s just an attack on our energy grid. So, I’m against closing those plants.”

“The WVPSC is charged with balancing the interests of West Virginians with the general interest of the West Virginia’s economy and the interests of the utilities,” McKinley wrote in a letter to the PSC on Friday. “Making the investments needed to keep the power plants in operation through 2040 far outweigh the destruction to our state’s economy and workforce that would come with the plants’ early retirement.”

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