The state Supreme Court affirmed a bottom-line Public Service Commission conclusion that two major power companies didn’t efficiently manage their coal supplies in a fuel-cost case.
But the court sent the upshot — denial of $231.8 million in costs that the power companies had asked to recover — back to the PSC for further review. That’s because the court determined that commissioners had used evidence in the case that attorneys for the power companies had not been able to access.
So, the court, in a 30-page opinion released Wednesday, said there was a due process problem and returned the case to commissioners for further review of the evidence. Justice John Hutchison authored the majority opinion.
The commission issued its decision on Jan. 9 in a $552.9 million rate increase request by the two companies. The commission allowed the companies $321.1 million of their request, but refused the remainder. The companies appealed that decision to the high court.
The companies failed to manage their power plant operations in a “reasonable, prudent and efficient manner” during the period under review by the commission in the case, the court agreed.
“The lack of adequate fuel, the Commission found, caused petitioners to restrict self-generation during periods when self-generation would have been less expensive than purchasing energy which, in turn, required petitioners to rely on more expensive alternative purchased power,” Hutchison wrote for the court.
But the court kicked the case back to the commission for a further review of the panel’s decision to use certain coal reports as the basis for that decision. Lawyers for the power companies argued that the Commission improperly used coal reports that had been submitted to the PSC on a monthly basis, but that were not made a part of the record in the proceedings, as support for the conclusion to deny the $231.8 million.
Lawyers for the power companies argued that the Commission used prices that were unrealistically low and without any basis in the actual evidentiary record. The power companies contended that they had no notice that the Commission would be relying on the evidence that was not in the official record and, importantly, were not given an opportunity to challenge or otherwise address how the Commission used it for the determination that the power companies had been inefficient.
The Supreme Court did not make a determination on whether the information was legitimate or applicable, but it did conclude that it wasn’t fair for the power companies to be denied a chance to know about the underpinning of the commission’s decision and argue it out.
“We agree with petitioners that it was fundamentally unfair for the Commission to consult and rely on evidence that was neither mentioned nor admitted into the record below to significantly adjust the cost-based bid prices that petitioners submitted in their exhibit to quantify the not insignificant disallowance of $231.8 million,” Hutchison wrote for the court.
So the court sent that aspect of the case back to the PSC for a chance to review.
The PSC order filed in January allows Appalachian Power and Wheeling Power to recover $371.1 million over 10 years or $37.1 million a year. The average customer’s bill will go up approximately $2.50 a month for that 10-year period.
Appalachian Power originally asked for $552.9 million in under-recovered costs as of Feb. 28, 2023, and $88.8 million from Sept. 1, 2023 through August 2024.
The PSC’s 37-page decision criticized Appalachian Power’s decision to have smaller coal stockpiles at its power plants leaving the company more vulnerable to swings in coal prices.