photo by: Steven Allen Adams

The West Virginia Public Service Commission held an evidentiary hearing and public hearing at its headquarters in Charleston Monday regarding a request by Appalachian Power and Wheeling Power for a rate increase.

CHARLESTON — Attorneys representing environmental and consumer advocacy groups questioned Monday the decision making by subsidiaries of Columbus-based American Electric Power regarding its coal supplies while the companies are seeking a cost recovery for its expenses.

Meanwhile, the companies are seeking a new base rate increase request through the Public Service Commission for the first time in six years.

The PSC held an evidentiary hearing and a public hearing Monday regarding a $20.4 million increase in Expanded Net Energy Cost (ENEC) rates and Vegetation Management Program rates for Appalachian Power and Wheeling Power requested in April.

The companies are seeking a $1.9 million decrease in ENEC rates for residential customers while seeking a $22.3 million increase for all other customers. The companies are also seeking a $1.2 million increase, or just under a 1% increase, for its Vegetation Management Program. According to AEP, residential customers would see a decrease in monthly bills of .47 cents, or -.27% – in September if both rate increases are approved.

The $20.4 million ENEC rate request is a 1.13% increase over total revenues. The last time the companies received an ENEC rate increase was September 2023, when the companies were allowed more than $321 million in ENEC rate increases over a 10-year period beginning in September.

“We have asked for recovery for this ENEC case that reflects our position at the end of the historic period and what we think will happen during the projected period that accounts for about a $20.4 million increase,” said Randall Short, director of regulatory services for AEP, during testimony.

“Many things go into the ENEC filing. That’s why it’s called the Expanded Net Energy Cost,” Short continued. “It’s a much smaller number this year. I’m happy for that, but not making light of the fact that it’s still an increase of $20 million plus the amortization.”

But questioning Monday morning focused on issues for Appalachian Power/Wheeling Power in 2021 with procuring coal, instead purchasing power from PJM Interconnection, a wholesale energy transmission company serving a 13-state region in the Northeast.

The companies had originally sought $552.9 million in ENEC rate increases through the PSC for costs incurred but not reimbursed between March 1, 2021, through Feb. 28, 2023. The companies also sought $88.8 million to cover forecasted costs between Sept. 1, 2023, and Aug. 31.

Instead, the PSC only allowed $321.1 million in ENEC costs to be collected over a 10-year period – approximately $32.1 million per year or approximately $2.50 per month for residential customers.

In its Jan. 9 order, the PSC determined that due to the companies purchasing power from PJM instead of generating their own, that they were responsible for covering part of the $552.9 million ENEC request. Both Appalachian Power/ Wheeling Power claim they had to purchase power from PJM instead of self-generating power from its three coal-fired power plants in the state due to increased costs of coal at the time and the non-delivery of 3.8 million tons of coal in breach of contracts.

“The two contracts that were terminated had language in them that said that they needed to supply a certain percentage of the total volume (of coal) for the year. And when they did not provide that total volume for the year, that gave us the right to terminate those agreements,” said Kimberly Chilcote, director of coal and reagent procurement for AEP. “There were four agreements that we did that had that language. Two of the suppliers met their obligation, and then the two that were terminated did not.”

A previous PSC order set an expectation that coal-fired power plants need to achieve at least a 69% capacity factor in order for in-state electric companies to self-generate power and reduce reliance on purchased power.

According to a report commissioned by the PSC, Appalachian Power/Wheeling Power could have avoided seeking the $552.9 million ENEC and generate $231.7 million in cost savings had they generated their own electricity from their three coal-fired power plants in the state. According to the report, Mitchell Power Plant in Moundsville remained at 6% capacity between September and December 2021, with the John Amos Power Plant in Winfield at 3% capacity and the Mountaineer Power Plant near New Haven at 0% capacity.

“Are you satisfied now that you’ve got enough coal under contract to keep the plants running for the foreseeable future,” asked PSC Chairwoman Charlotte Lane.

“I believe we do,” answered Chilcote.

“We think we have a sound strategy to maintain safe inventory levels at our plants, to work with our suppliers,” Short said. “We think we’re taking the steps to avoid that, but we also think we’ve operated prudently, and it is measured against others within PJM and our other peer groups. We think we stack up very well.”

While Appalachian Power and Wheeling Power are seeking the $20.4 million ENEC rate increase, the companies filed a new rate review application with the PSC on Aug. 2 for commissioners to consider increases to base rates by 15.4%, or more than $265 million in new revenue. If approved, residential customers would see a monthly increase in bills by $28.72., or a 17.6% increase in monthly bills.

The recovery includes $118 million to costs incurred due to major storm damage since 2019. If approved by the PSC, the $118 million would be recovered over a three-year period. The last time the companies saw a base rate increase approved was 2018, with more than $1 billion in investment by the companies since that year. The two companies serve more than 460,000 customers in West Virginia.

According to the U.S. Energy Information Agency, the average price of electricity to residential customers over a 12-month period increased by 1.35 cents per kilowatt hour, from 14.63 cents per kilowatt hour in May 2023 to 15.98 cents per kilowatt hour in May 2024.

According to the PSC’s Consumer Advocate Division, residential Wheeling Power/ Appalachian Power customers saw their monthly electric bills increase from $120.93 per month in 2017 to $138.58 per month in 2021 – a 15% increase over five years.