CHARLESTON, W.Va. — An Appalachian Power company official testified Tuesday the utility would consider folding in its latest fuel cost rate case into plans for securitization if that option is approved by the state Public Service Commission.
Appalachian Power is seeking a rate increase on customers to recover the $91.3 million more it has spent on coal and natural gas the past few years to fuel is power plants. Testimony began Tuesday in front of the PSC on the request.
Appalachian Power Director of Regulatory Services Randall Short said the company’s request is through a traditional rate increase but it would be willing to change.
“We have said that if the commission (PSC) believes that these costs can be securitized we approve of that option,” Short said. “We presented it ‘here’s what we need for a rate increase’ if the commission does not adopt that but we do support that because the statute would allow for these costs to be securitized.”
State lawmakers passed a bill a few years ago that allows for rate increases to be spread out over several years through the securitization of bonds.
In a separate case, Appalachian Power is seeking a $250.5 million increase in its base rate–a case that was argued earlier this summer. If approved, the average customer’s bill would go up more than 13 percent a month which is about $21 more a month. If approved Appalachian Power would allowed to bond out the $2.4 billion to investors will bring the monthly increase for average customers down to $6 a month.
The bonds would be paid back over 20 years.
The current fuel cost case would raise the average customer’s bill by about $5.30 if the PSC agrees to a traditional rate hike.
Several customers spoke out against any further rate increases during PSC public hearing Monday night.
Jackson County resident Franklin Hughes said that over the last three years, their water bill has tripled and their natural gas bill has increased by 25%, which they contribute to the PSC.
Hughes urged the commission to consider all of the other rate increases individuals are facing everyday.
“That since other utilities have increased so much over the past few years and salaries have not increased, that another increase is going to really hurt the citizens of West Virginia’s” Hughes said.
Customer Jacy Allen said in the last six months her electric bill has doubled and she and her spouse are struggling to pay a $422 bill despite them both working full-time.
She noted that the median income in West Virginia is $38,0000 and said that it’s unfathomable to think the companies can continue proposing rate increases.
“How is it feasible, that they are proposing another rate increase when we can’t even afford the rate now, it’s disgusting, it’s disgusting that this continues to occur,” Allen said.
Coal contracts
Short was also questioned Tuesday about the company’s coal contracts. State Consumer Advocate Robert Williams wondered if it would have been cheaper for Appalachian Power to pay for power for its system off the grid operated that it was to use expensive coal.
Short said Appalachian Power honors its coal contracts. He admitted coal contracts can be a guessing game.
“At any given point, the coal that you may have purchased in a previous period that’s being delivered is going to be higher or lower than the market on that particular day. That doesn’t mean that it was too high a price or uneconomic–it was the price you contracted for,” Short testified.
Williams wanted to ask more questions about coal contracts but PSC Chairman Charlotte Lane said the information is already available and he should move on to other questions.
Severe weather
Appalachian Power also fuels some of its plants with natural gas. Clint Stutler, Appalachian Power director of natural gas procurement, testified the market price of natural gas spikes during severe winter storms like one that hit on in mid-January 2024 because demand significantly increases but it’s more difficult to get natural gas.
“Roads become treacherous, people can’t get to the wells, there’s water used in the production process and things freeze off, equipment doesn’t work right,” Stutler said. “When we have these winter storms that come and you see that temperatures are going to be near zero you know that natural gas production is going to decrease at some extent.”
The evidentiary hearing is expected to last at least two days.