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PSC considers $297 million rate adjustment by power companies

West Virginia’s Public Service Commission heard a full day of back-and-forth over whether two power companies need and can justify a $297 million annual rateĀ adjustment request.

The companies, Appalachian Power and Wheeling Power, say they have been running behind by millions of dollars on recouping costs while also facing the likelihood of significant additional expenses.

“The under recovery balance has continued to grow. It was approximately just south of $400 million at the end of April,” testified Randall Short, director of regulatory services for Appalachian Power. “We have kept our request at $297 million in an attempt to address the need to increase rates to match our projected cost and to help reduce the under recovery balance.”

Currently the monthly bill for a residential customer using 1,000 kilowatt-hours is $155.66, according to Appalachian Power. If approved as filed the adjustment would add $18.41 to that amount.

There have been more than 300 statements of protest to the PSC about the proposed rate increase, according to testimony today.

“Asking for this increase is not an attempt to punish or to stifle the economy of West Virginia. It’s an attempt to recover from our customers the cost we’ve incurred to serve them,” Short said in his testimony.

The three-member Public Service Commission led an evidentiary hearing that started Tuesday morning and went deep into regulation, the companies’ use of resources like coal, the trend toward greater costs for customers, economic conditions over the past couple of years and the rhythm of regular activities at power plants, like maintenance decisions that require outages. With more ahead, the hearing continues at 9 a.m. Wednesday.

Charlotte Lane

“I was really optimistic. I thought we were going to finish today. Now I’m not sure we’re going to finish tomorrow,” PSC Chairwoman Charlotte Lane commented late in today’s hearing.

Over the course of the day, Lane asked questions aimed at pinning down what capacity the plants have been running at. She also asked whether the power companies have been abiding by a standard to maintain at least 30 days of coal supply under contract.

Besides representatives of the power companies, participants include the PSC’s Consumer Advocate Division and the West Virginia Energy Users Group, which represents some of the state’s largest corporate consumers of power.

A big question was whether power companies managed their fuel supplies properly or whether they were unprepared for the spiking energy prices of the past couple of years.

Representatives of the power companies who testified Tuesday contended that they managed fuel supply as best they could under volatile economic conditions. Sometimes, they said, suppliers didn’t come through. And then high demand meant that it was hard to procure supplies on a short timeframe.

Emily Medine, an analyst who testified for the consumer advocate’s division, testified that the power companies should have been able to see what was coming with worldwide demand and to obtain fuel supplies in preparation.

“One of the ways you hedge fuel supply, even coal, is you use a mixture of physical supply agreements of various durations, and the maintenance of that portfolio is critical to reducing the volatility of fuel prices that a market might actually cause,” Medine said.

In terms of output, she said that if the companies had been able to generate more, they could have made up ground by selling into a higher-priced power market. “How much revenue did they lose because they didn’t generate and sell power into a very high-priced market?” she asked.





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