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    PSC to hold hearings on AEP subsidiaries' requested $297 million rate hike opposed by ratepayers, county commissions


    June 8, 2022 - Mike Tony, The Charleston Gazette-Mail, W.Va.

     

      Jun. 8—A proposal from Appalachian Power and Wheeling Power to raise the monthly bill for a residential customer using 1,000 kilowatt-hours by $18.41 has prompted public outcry from West Virginia ratepayers and local officials.

      State utility regulators are providing opportunities for West Virginians to sound off directly on the proposal before the West Virginia Public Service Commission.

      The PSC has announced four public comment hearings on the $297 million rate hike plan pitched to the agency by the American Electric Power subsidiaries.

      The commission will hold public comment hearings in Ohio, Mercer and Cabell counties later this month, before taking public comment at a fourth hearing at the agency's Charleston headquarters next month.

      * The first public comment hearing will be held at 5:30 p.m. Wednesday, June 22, at the Ohio County Courthouse, 1500 Chapline St., Wheeling, in the courtroom of Judge Jason A. Cuomo.

      * The second hearing will take place at 5:30 p.m. Monday, June 27, at the Mercer County Courthouse, 1501 W. Main St., Princeton, in the courtroom of Judge William J. Sadler.

      * The third hearing will be held at 5:30 p.m. Tuesday, June 28, in the County Commission courtroom at the Cabell County Courthouse, 750 5th Ave., Huntington.

      * The PSC will host the fourth hearing at 5:30 p.m. Tuesday, July 26, at its headquarters at 201 Brooks St., Charleston.

      Appalachian Power and Wheeling Power asked the PSC in April to increase the rate the companies charge for buying power or fuel to generate electricity, known as an Expanded Net Energy Cost rate.

      Appalachian Power acknowledged that if the commission approves the proposal, the monthly bill for a residential customer using 1,000 kilowatt-hours would rise nearly 12% from the current monthly bill of $155.66.

      But the company has contended that rising energy and fuel costs require the requested rate increase, saying that projected Expanded Net Energy Cost revenue will be substantially less than the cost of energy provided to customers.

      That argument hasn't passed muster with West Virginians, with citizens and county commissions weighing in against the proposal in written comments they have filed with the PSC.

      "The proposal is to once again TAKE more money out of the pockets of West Virginians and place it in the coffers of big business," Jimmy Fitzwater of Culloden wrote in a public comment filed last week against the proposal.

      The rate hike proposal came six weeks after the commission ordered a $31.4 million Expanded Net Energy Cost rate increase to reflect a recalculation by the commission of reduced purchased power costs and additional fuel-handling costs incurred by Wheeling Power.

      The average monthly residential bill for AEP's West Virginia customers has escalated from $55.28 in 2006 to $155.66 in 2022 — a 182% climb.

      AEP's executive compensation has prompted criticism that the company's subsidiaries should accommodate ratepayers more and shareholders less.

      "I know it may hurt AEP stockholders, but they should look at dividends and executive salaries before hurting the low- and middle-income residents of our state," Kathryn Ferguson of Peterstown, Monroe County said in a comment filed with the commission last week.

      AEP's proxy statement, a document reporting proposed executive compensation and other information for shareholders, noted that AEP chairman, president and CEO Nick Akins received $15 million in total compensation in 2021, including $9.9 million in stock awards, according to the proxy statement.

      Akins' $15 million compensation as CEO and board chairman in 2021 was 135 times the 2020 total compensation of the company's median employee ($111,771), according to the proxy statement submitted to shareholders in March.

      The company increased its quarterly dividend by 4 cents, to 78 cents per share, in October 2021 for a 446th consecutive quarterly dividend.

      AEP had four executive vice presidents that averaged $3.2 million in total compensation in 2021, according to the company's proxy statement.

      Commenters from across the state have lamented having to choose between paying their electric bill and buying food or medicine.

      Susan Browning of Hanover, Wyoming County, complained in a public comment filed with the commission that she has given thousands in the past six months that could go toward feeding her family or gasoline to get to and from work.

      "[No one's] power bill should be the same price as a mortgage!!" Browning wrote. "This needs to stop!!"

      County commissions have voiced staunch opposition to the rate hike proposal.

      The McDowell County Commission asked the PSC to deny the AEP subsidiaries' request in April. The Fayette, Mercer and Mingo county commissions followed suit last month.

      The Mercer County Commission said all three of its members were approached by citizens saying their families can't take another rate increase, especially as the prices of gasoline and food also rise.

      "There's a tone of desperation in nearly every dissenting voice our commission has heard individually and collectively," the Mercer commission said.

      The Kanawha County Commission argued to the PSC last month that a "significant reduction" in the Expanded Net Energy Cost rate is the only way to give "real rate relief" to customers.

      The city councils for Huntington and Princeton have adopted resolutions opposing the proposal.

      The companies' under-recovery balance for fuel costs was $174 million at the end of 2021, according to a recent commission order.

      The companies raised concern about a recent commission order that they and renewable-energy advocates say encourages uneconomic operation of AEP's coal-fired power plants and that leave ratepayers vulnerable to higher bills.

      In September, the commission required AEP's John Amos plant in Putnam County, Mountaineer plant in Mason County and Mitchell plant in Marshall County to operate with a capacity factor of 69%, citing concern that Appalachian Power might not be maximizing use of the plants.

      Capacity factor is the ratio of electrical energy produced by a generating unit for a given time to the electrical energy that could have been produced at full power during the same span.

      Projected Expanded Net Energy Cost expenses included plant use at capacity factors of 49.6%, 57.3% and 34.7% for Amos, Mountaineer and Mitchell, respectively, the commission noted at the time.

      The commission admitted in an order earlier this year that capacity use factors remained "incredibly low" even after its September order.

      Appalachian Power's capacity use at Amos dropped from 57% in September to 3% in November, according to the commission. Mountaineer capacity use fell from 29% to zero in October and November. The capacity factor at Mitchell dropped from 49% in September to 6% in November.

      In the April filing requesting the $297 million rate increase, American Electric Power Service Corp.'s director of coal, transportation and reagent procurement, Jeffrey Dial, testified that supply shortages and elevated prices constraining the coal market have greatly limited the companies' ability to secure enough coal to achieve high capacity factors on a consistent basis.

      "The Commission's directive that the Companies should be targeting a 69% capacity factor at their coal-fired plants would appear at odds with the flexible, least-cost approach of economic dispatch," John Scalzo, vice president of regulatory services and finance for Appalachian Power and Wheeling Power, testified in the filing.

      Company executives asked the commission for clarification in the April filing as to whether the companies should run their coal-fired plants "out of merit" to achieve a 69% capacity factor — and whether the increased costs of doing so can be recovered solely from West Virginia jurisdictional customers.

      The West Virginia PSC shares jurisdiction with Kentucky utility regulators over the Mitchell plant and Virginia utility regulators over the Amos and Mountaineer plants.

      The evidentiary hearing in the case is scheduled for 9:30 a.m. Tuesday, Aug. 2, at the commission's Charleston headquarters.

      Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or mtony@hdmediallc

      .com. Follow @Mike__Tony on Twitter.

      ___

      (c)2022 The Charleston Gazette (Charleston, W.Va.)

      Visit The Charleston Gazette (Charleston, W.Va.) at www.wvgazette.com

      Distributed by Tribune Content Agency, LLC.

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