CHARLESTON, W.Va. — Appalachian Power Company is shifting how it proposes to use the $235 million it’s saving from the federal Tax Cuts and Jobs Act.
The largest electrical utility in West Virginia announced a settlement agreement Thursday, a day before the state Public Service Commission is set to consider the case. Wheeling Power is included in the proposed settlement.
The plan calls for $25.5 million of the tax savings to be used for a 3.8 percent reduction in customer rates for the next six months beginning Sept. 1. That’s a shift from the company’s previous plans, Communications Director Jeri Matheney told MetroNews Thursday.
“We’re returning money to customers faster than our original plan would allow for,” Matheney said. “That’s something that customers wanted. The PSC staff, the Consumer Advocate, that was important to them.”
Kanawha County Commission President Kent Carper had been particularly critical of the company’s original plan to use some of the money saved to address rate reductions at some time in the future. Appalachian Power said Thursday neither the commission nor the City of Charleston signed off on the settlement agreement but they did agree not to oppose it.
“I commend the Consumer Advocate and Public Service Commission Staff on this proposal. Bottom line: customers will see lower bills immediately, and the additional winter rate reduction will provide a real benefit to customers when the weather turns bad,” Carper said in a statement released Thursday. He also said he believes Appalachian Power President Chris Beam is acting in good faith.
The state Public Service Commission has a hearing scheduled for Friday to consider the proposed settlement and a separate tax savings settlement from West Virginia American Water Company. That utility is also calling for immediate rate reductions. The PSC still must approve each case before they become final.
According to Appalachian Power, the 3.8 percent rate reduction would save a residential customer using 1,000 kilowatt hours (kWh) a month about $3.56 a month. A customer using 2,000 kWh/month would save about $7.12 a month.
The rate decrease would stretch from September through February 2019.
Matheney said the company changed its mind on some things as a compromise that was reached through negotiations.
“We think this is something that customers will be happy to see–the way this was developed,” she said. “It does reduce rates right away for customers and that’s really important and it does address some of the long-term things that will help customers as well.”
Appalachian Power announced late last week it had reached a settlement with interested parties to use $110 million of the tax savings to hold down costs for purchased fuel and line vegetation clearing.
“That’s $110 million of this,” Matheney said. “It allows those rates to stay the same until June 30, 2020, at least. So that’s pretty good, it keeps those rates flat.”
The company has also agreed to lower by $17 million (from $115 million to $98) the amount its seeking in a rate case that’s expected to finalized by the PSC early next year.
Those agreeing to the Appalachian Power settlement include: the PSC Staff, Consumer Advocate Division, WV Energy Users Group and Steel of West Virginia.
Other provisions of the settlement announced by the company Thursday include:
· $18 million will fund a temporary winter rate discount for residential customers who use more than 1,350 kWh/month in December 2018 to February 2019.
· $15 million will be set aside to provide bill payment assistance to low-income residential customers.
· $20 million will be used reduce subsidies currently paid by commercial and industrial customers.
· As part of another settlement agreement announced last week, $110 million will be used to offset fuel and vegetation management costs, allowing those rates to remain unchanged for the next two years, or until at least June 30, 2020.
· $71 million will be held in reserve to help offset future costs as determined by the Commission in 2019.
· $1 million will be set aside to promote economic development in the state through a program to be developed with the W.Va. Department of Commerce.