CHARLESTON, W.Va. — Appalachian Power wants to create a surcharge to recover costs associated with infrastructure improvements. The application for the change was recently made to the West Virginia Public Service Commission. According to company spokesman Phil Moye, it’s a charge they would be allowed to collect anyway every three years in base rate cases, but he said making this change would lessen the impact on those base rate increase.
“Those are costs we’ve always recovered, but historically those have built up over a three year span and we’d recover them in a base rate case. But when you let those costs build up over time, it adds up,” he said.
Company officials hoped the creation of the surcharge would reduce the impact. The company called the mechanism an “infrastructure tracker” which is already used for other regulated utilities.
“This proposal is to seek the recovery annually, so the amount would be smaller and the effect on rates would be lower and more gradual,” Moye said.
The initial filing seeks an increase of $49.8 million, which represents recovery of costs associated with infrastructure investments made over a nearly three-year period since the companies’ last base rate case filing in 2018. If approved as proposed, residential customer rates would rise approximately 3.5 percent effective June 1, 2021, a monthly increase of $4.94 for a customer using 1,000 kilowatt-hours or $8.86 for a customer using 2,000 kilowatt-hours.
The proposal calls for capping the amount of any annual increase through the tracker to a percentage of the companies’ total retail revenue, subjecting the tracker to an annual true up for over or under recovery, and resetting the recovery mechanism to zero when new rates from a base rate filing become effective.
“That’s really what this is all about, making any of the recovery of those costs we’ve historically made to keep our system up to speed are looked at annually and it would be a smaller case than if it’s allowed to build up over three, four, or five years,” Moye said.