West Virginia for decades was lauded as a relatively inexpensive place to live and do business -- particularly when it came to energy prices. That has changed over the past 15 years, though, as electricity rates from the state's largest provider, Appalachian Power/Wheeling Power, have increased 160%, according to filings by the company.
That's a big hit to household budgets. Consider: a monthly residential bill of $100 in 2007 is now, with the same usage, $260.
And this year, Appalachian Power wants more.
The company has filed a $297 million rate increase request with the West Virginia Public Service Commission to recoup rising costs of the coal it uses to generate electricity. The increase would cost the average residential customer $18.41 a month.
Over the years, the PSC has approved rate increase requests without much pushback. But during hearings over the past few days, commissioners and consumer advocates have pressed company officials over how they apparently mismanaged their coal supply to the point that Appalachian Power now is paying higher prices for coal while at the same time, its coal-fired power plants are not running at optimal levels.
"… This is West Virginia. West Virginia has been a strong supporter of coal, of using coal generation, of having utilities keep their coal plants running. … How can this possibly happen? I just couldn't believe it," Ralph Smith, who was hired to investigate the power company's claims, said during testimony Wednesday.
Appalachian Power officials contend that some of its coal suppliers backed out of contracts, and that they managed their coal supplies as best they could during changing and challenging market conditions. They also said the rate increase request is nothing more than passing on their increased cost of doing business -- as utilities are permitted to do.
The PSC has a tough decision in this case -- Appalachian Power's cost of business is rising, but if it was in part due to mismanagement of coal supplies, should consumers be forced to foot the entire bill? Or should Appalachian Power be required to bear the burden?