PSC sets aside APCo and WPCo bill increase request, relieving consumer advocates

The PSC order issued late Thursday approved a $76.1 million revenue increase for the American Electric Power subsidiaries in West Virginia and required that current rates stay unchanged pending future refinancing of a “significant portion� of the utilities’ investment in power plants and deferred expenses. The companies had sought a $250.5 million revenue increase and a $23.74 bill increase for the average residential customer using 1,000 kilowatt-hours per month.

That request in the base rate case sparked an outcry among thousands of customers and ratepayer allies who cited rate hike fatigue in their opposition. The request followed a 207% increase from $55.28 in 2005 to $169.69 in 2024 in the average Appalachian Power and Wheeling Power monthly residential utility cost, according to PSC data.

Base rates typically cover roughly two-thirds of an electric bill and include operation and maintenance expenses, depreciation, taxes and return on capital.

In its order, the PSC reported receiving 5,162 letters opposing the rate increase, including from the Fayette and McDowell county commissions, Marshall and Raleigh school districts, the majority of ÂÒÂ×ÄÚÉä City Council, and individual customers.

West Virginia Citizen Action Group, Solar United Neighbors and Energy Efficient West Virginia, which joined together to intervene in the rate case as one party, hailed the PSC’s decision in a news release Friday, saying they won nearly all their positions.

“Thousands of West Virginians spoke out against unaffordable rate hikes and difficulty managing the ever-growing cost of energy, and the PSC’s decision reflects the power of public input to ease the burden on families,� West Virginia Citizen Action Group Executive Director Dani Parent said.

The PSC required support for customer financial assistance beyond what the companies had proposed. It approved what solar advocates predict will be a more favorable transition than what the companies had proposed to a new status quo for net metering — an arrangement in which a residential customer owns or leases and operates an energy resource, typically solar, connected on their side of the utility meter.

The PSC embraced a revenue collection mechanism called securitization that would put ratepayers on the hook long-term, despite concerns from advocate groups that argued that securitizing the amount contemplated in the case would be more expensive for customers than the recovery method approved in a 2023 case to determine how much they pay through a fuel cost surcharge.

“We’re pleased that the PSC saw the advantages for our customers in our securitization plan,� Aaron Walker, Appalachian Power president and chief operating officer, said in a statement late Friday. “However, we are disappointed that the PSC didn’t recognize the full investment made on the system on behalf of our customers.�

PSC eliminates vegetation management surcharge  

The PSC denied the companies’ request for a new surcharge that would let them automatically increase their total revenues by up to 3% annually without seeking regulatory approval. The commission ruled the surcharge, which the companies called the Electric Rate Stabilization Surcharge, would depart too much from cost-based ratemaking at too high a price.

The PSC eliminated a surcharge for vegetation management it approved in a case filed in 2013, a move it attributed to its conclusion that program costs seem to be stabilizing. The PSC said it would add the current approved amount of the program back into base rates. The commission said the companies should keep maintaining vegetation management at their same current level.

If vegetation expenses decrease, the PSC said it would consider a show-cause proceeding designed to establish a more formal and mandatory vegetation management spending program in conjunction with targets for electric reliability metrics that contain incentives and penalties.

The utilities have attributed their high outage rates compared with most other electricity providers to the state’s heavy forestation. They have repeatedly failed in recent years to meet electric reliability targets set by the PSC, with exceptionally poor metrics measuring power outage duration.

PSC expands APCo, WPCo Dollar Energy Fund support

The PSC included in base rates a $1 million requirement to cover contributions to the Dollar Energy Fund, a Pittsburgh-based program that provides grants to customers facing service terminations or already have had their service terminated. The commission mandated the companies pitch in that amount to the fund, adding that it should be contributed before the start of the upcoming winter.

The utilities hadn’t committed to keep making a shareholder contribution to the Dollar Energy Fund after contributing $250,000 in shareholder funds per year toward that end from 2020 through 2024.

The PSC required the companies to increase their Dollar Energy Fund grant limits from $300 to $500 per customer per year and allow applications year-round instead of from only December through March. The commission noted Mon Power and Potomac Edison have a $500 grant limit and a year-round application period.

Roughly 6,600 Appalachian Power and Wheeling Power customers received assistance between 2022 and 2023 from the Dollar Energy Fund, according to company testimony.

“Expanding the Dollar Energy Fund will provide significant relief for the West Virginians who need it most,� Parent said.

Solar advocates accept net metering changes

The companies had proposed a new net metering tariff modeled after a recently approved net metering arrangement for Mon Power and Potomac Edison, with adjustments aimed at reflecting the companies’ actual cost structure. Joining West Virginia Citizen Action Group, Solar United Neighbors and Energy Efficient West Virginia in asking the PSC to reject the companies’ net metering proposal was another case intervenor, Huntington-based solar installer Solar Holler.

Supporters of net metering say it cuts back on straining distribution systems and encourages economic and environmental benefits through customers lowering future electric bills by exporting power to the grid.

But the companies said their current net metering setup shifts cost responsibility onto nonparticipating customers. They proposed a new net metering compensation structure in which new net metering customers would no longer be credited the full retail rate for the metered energy they produce and deliver to the utility electric system.

The PSC approved a new net metering tariff calculated through PSC staff methodology that will end what solar advocates call a “one-to-one� rate crediting customers equal to how much electricity they produce and deliver.

But Leah Turgeon, West Virginia state director for Solar United Neighbors, called the PSC order “a win for West Virginia’s solar industry and residents alike,� predicting solar owners would keep benefiting from distributed solar power.

Michael Winiesdorffer Sr., a home solar owner and Sierra Club member, said in a Sierra Club statement Friday that while he was disappointed to see the PSC end one-for-one net metering that had made his home solar project affordable and accessible, the order was “a clear win for individual energy freedom and a stronger grid.�

Winiesdorffer cited an extended sign-on period and less-than-expected reductions to credits for home solar owners to keep capitalizing on credit for excess electricity sent back to the public grid.

The PSC said it would adopt a March 1, 2026, deadline for customers to file initial net metering applications to fall under the current net metering arrangement, with final dates of Sept. 1, 2026, and March 1, 2027, for residential and commercial customers, respectively, to receive completion certificates and stay eligible for the current arrangement.

PSC requires independent financial adviser on securitization

The PSC on Friday issued an interim order notifying the companies and other intervenors in a separate securitization-focused case it would approve securitization and release a final financing order.

Appalachian Power and Wheeling Power had sought PSC approval to recover approximately $2.4 billion of net investment in rate base and deferred expenses through consumer rate relief bonds rather than recovery through traditional ratemaking methods.

The proposal was in line with House Bill 3308, a 2023 state law that allows the PSC to issue financing orders to utilities to allow recovery of certain costs through securitization via consumer rate relief bonds.

HB 3308 defines eligible costs to be securitized as historical and projected costs, including financing costs, carrying charges on under-recovery balances, and costs incurred prior to any enactment of the legislation, related to environmental control, fuel or storm recovery costs or underappreciated generation utility plant balances.

In 2023, James Van Nostrand, then director of the Center for Energy and Sustainable Development at the West Virginia University College of Law, criticized HB 3308 as a way for utilities to avoid consequences of mismanaging power costs.

“It’s like getting a second mortgage on your house to buy groceries,� Van Nostrand told the Gazette-Mail in 2023. “Just a poor financial management practice.�

PSC staff, the PSC Consumer Advocate Division, an independent arm of the PSC charged with representing ratepayer interests, and the West Virginia Energy Users Group had opposed securitization of the companies’ under-recovery amount from a 2023 fuel cost rate case. The groups contended the securitization would be more expensive for customers than the recovery method approved in that case.

The PSC authorized securitization of under-recovered amounts it allowed in that rate case that were deferred and amortized over 10 years to the extent not already recovered from ratepayers.

The PSC said it will prepare a request for proposals with agency staff input for an independent financial adviser to advise on securitization. The PSC will require the companies to contract for the adviser after one is selected by the commission. Costs for the independent financial adviser will be paid by the companies and included in financing costs that the companies can securitize and recover from the proceeds of the securitization.

PSC renews controversial capacity factor emphasis

In its Thursday base rate case order, the PSC noted Appalachian Power and Wheeling Power aren’t running their coal-fired plants at a capacity factor desired by the PSC but criticized by consumer advocates as uneconomic. A capacity factor is a measure of how often a plant runs at full capacity.

The PSC has called for the utilities to run their plants at a 69% capacity factor deemed unnecessarily costly by energy experts but geared toward getting utilities’ plants to double down on coal-fired power that is self-generated.

In its base rate case order, the PSC cited House Bill 2014, signed into law by Gov. Patrick Morrisey in April, which requires the PSC to require utilities to maintain generating units to allow them to be able to self-generate and achieve at least a 69% capacity factor. The PSC said it’s gathering information on utility practices and procedures to achieve HB 2014’s goals and will soon be considering integrated resource plans describing how upkeep, upgrades and investments in those plants are consistent with those goals.

Integrated resource plans are long-term plans utilities file showing how they aim to meet forecasted electricity demand. A new Appalachian Power plan is expected this year after its most recent plan, spanning five years, was filed in December 2020.

For now, West Virginia consumer advocates will take progress where they can get it.

“Over 5,000 West Virginians agree,� Jim Kotcon, chair of the West Virginia Chapter of the Sierra Club, said in a statement, “no one in our state should have to delay purchases of daily necessities and groceries to keep the lights on.�