A vice president for Appalachian Power testified that the record is clear that coal supplies became scarce in recent years, contributing to spiking prices.
“It didn’t take that long to figure out that things are constrained,” said John Scalzo, Appalachian Power’s vice president for regulatory and finance issues.
He was testifying on the third day of a $641 cost recovery case for Appalachian Power and Wheeling Power before the West Virginia Public Service Commission.
The utilities, both subsidiaries of American Electric Power, are asking to recover millions of dollars in expenses that accelerated during a post-pandemic period of booming demand and increased costs. Russia’s war in Ukraine also disrupted global energy supplies and boosted international demand for coal.
The power companies filed in May to recover costs from recent years plus anticipated costs from the months ahead.
The big amount has piled up, consisting of an accumulated under-recovery balance of about $552.9 million plus increased projected costs of about $88.8 million for the forecast period starting Sept. 1 through August 31 , 2024.
Company representatives have been pushed repeatedly over this week’s hearings on whether they could have better anticipated supply issues, whether they kept enough coal on hand and whether they took capacity demands seriously enough.
“Yes or no, was the company aware of all these volatile, drastic factors as of May 2021?” asked Derrick Williamson, executive director of the West Virginia Energy Users Group, which consists of some of the state’s largest industrial customers.
Scalzo responded that at that time the company “had coal under contract or committed under contract that allowed us to run at historical capacity factors.”
But later that summer, the company reached out to a broader network of supply possibilities, and “we weren’t able to get any more for ’21.
“So at the time we were looking and asking, we got no responses. So it’s a matter of timing.”
Charlotte Lane, chairwoman of the Public Service Commission, asked several followup questions.
One of the underlying questions has been whether the companies worked to abide by a benchmark set by the Public Service Commission to generate their own power at a higher level, 69 percent.
“Let’s talk about our 69 percent order,” Lane said. “How did you interpret that order?”
Scalzo responded that the company’s interpretation evolved, but he said the conclusion was “we want you to run more, but we want it to make economic sense — and that’s how we’ve been interpreting it.”
He continued by citing supply issues: “As much as we tried, it’s just not there.”