West Virginia utility regulators have approved a request from Appalachian Power and Wheeling Power to add a surcharge on customers’ bills that would allow them to recover costs from infrastructure investment projects between base rate cases.
The result would be an increase of 6.12% on the average residential customer’s monthly bill effective Sept. 1, according to the West Virginia Public Service Commission.
In an order issued Wednesday, the commission approved a surcharge totaling $44.1 million to cover rate base increases since its last base rate case.
In a December petition filed with the commission, the companies had requested surcharge rates producing an annual increase in revenue of $49.8 million, a proposal the utilities said would have prompted average monthly bill hikes of $5.26 for residential customers, $12.37 for commercial customers and $5,686 for industrial customers.
In a statement Thursday afternoon, Appalachian Power spokesman Phil Moye said the company is evaluating the terms of the conditional order, which would require a three-year moratorium on base rate increase filings from the petitioners.
“With this Order, the Commission is underscoring the need for utility companies to invest in their infrastructure while we stabilize rates and avoid frequent large base rate increases,” commission chairman Charlotte Lane said in a news release Wednesday evening.
“While we would have preferred that Appalachian Power’s surcharge be totally denied, we recognize and thank the Public Service Commission for imposing a three-year time out on new rates,” Kanawha County Commission President Kent Carper said in a statement released by the commission Wednesday evening.
The average monthly residential bill (as measured by the residential rate for 1,000 kilowatt-hours) for American Electric Power’s West Virginia utilities escalated from $55.28 in 2006 to $138.57 in 2021 — an increase of 150% over 15 years.
Representatives of Appalachian Power and its parent company, American Electric Power, defended the infrastructure investment surcharge proposal at an evidentiary hearing on the proposal before the commission last month, saying it would benefit the company and its customers by bringing rates into alignment with infrastructure upgrade costs more gradually than what the utilities would ask for in a base rate case.
A base rate accounts for all utility service expenses, including operating and maintenance costs, taxes and depreciation.
John Scalzo, Appalachian Power and Wheeling Power vice president of regulatory and finance, said at last month’s evidentiary hearing the companies would seek about $150 million if they were to file a base rate case.
“We need some level of rate relief,” Scalzo said. “We elected to do this as a mitigation step.”
Scalzo noted that Appalachian Power’s customer base has shrunk in recent years.
“In the company’s estimation, it is better to bleed-in small, gradual rate increases, as opposed to large, infrequent ones,” Scalzo said. “If we wouldn’t have done this, we would have had to do something else.”
Scalzo acknowledged last month that American Electric Power subsidiaries had six surcharge-related cases before the commission and potentially two more rate-related cases to come later this year.
In the order it issued Wednesday, the Public Service Commission noted that 113 individuals filed written comments opposing the companies’ proposal, and that one petition in opposition included 67 signatures.
The Consumer Advocate Division, the West Virginia Energy Users Group, the Kanawha County Commission and Huntington-based steel manufacturer Steel of West Virginia intervened in the case.
Public Service Commission utilities analyst Geoffery Cooke, who recommended the commission not approve the proposed surcharge, testified at last month’s hearing that a base rate case would allow commission staff to investigate all components of the companies’ service costs.