The testimony lasted nearly four hours. The potential ratepayer impact it scrutinized would last years.
The West Virginia Public Service Commission held an evidentiary hearing Thursday to consider a request that Appalachian Power and Wheeling Power filed in December for approval of a surcharge on customers’ bills that would allow them to recover costs from infrastructure investment projects between base rate cases.
The companies have said their proposal, filed with the commission in December, would yield an annual revenue increase of $49.8 million and average monthly bill hikes of $5.26 for residential customers, $12.37 for commercial customers and $5,686 for industrial customers — jumps of 3.71%, 3.52% and 2.92%, respectively.
Representatives of Appalachian Power and its parent company, American Electric Power, defended the proposal before the commission, 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 the companies would seek about $150 million if they were to file a base rate case.
But what the utilities are actually proposing is a rate increase of 3.5% and subsequent annual 3% increases with a 9.5% cumulative increase cap. The next base rate case would reset the recovery mechanism to zero upon reaching the cumulative cap.
“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.”
But witnesses representing the West Virginia Energy Users Group, composed of large industrial users and Public Service Commission staff, opposed the utilities’ request.
Scalzo acknowledged that American Electric Power subsidiaries have six surcharge-related cases before the commission and potentially two more rate-related cases to come later this year.
“I don’t think it’s in the public interest to have so many surcharges floating around,” said West Virginia Energy Users Group witness Stephen Baron, president of Atlanta utility rate consulting firm Kennedy and Associates.
Public Service Commission utilities analyst Geoffery Cooke, who recommended the commission not approve the proposed surcharge, testified that a base rate case would allow commission staff to investigate all components of the companies’ service costs.
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.
Public Service Commission Chairwoman Charlotte Lane said the commission would take under advisement a motion by the utilities to waive the 30-day advance notice they would have to provide prior to filing a base rate case if the commission rejects its infrastructure proposal.
The commission will hold a public comment hearing by videoconference for this case at 9:30 a.m. Tuesday. Those interested in participating should send the commission their name, email address and telephone number by email to Case20firstname.lastname@example.org with the subject line “Public Comment Hearing — Case No. 20-1012-E-P.”
Those who want to comment on the case but choose not to participate in a public comment hearing may send a letter to the Executive Secretary, Public Service Commission, P.O. Box 812, Charleston, WV 25323, or submit a comment on the commission’s website, www.psc.state.wv.us, where a hearing livestream will be accessible by clicking on “Commission Webcast,” the ninth link on the left side of the page.
Initial briefs are due June 18 and reply briefs are due June 25.