A decision by the Public Service Commission last May to delay part of a large rate increase for Appalachian Power and Wheeling Power could end up costing residential customers an extra $6.5 million.
The two companies, both subsidiaries of American Electric Power, filed a case with the PSC last month to recover $25 million. Commissioners approved the request during a rate case last year, but action was delayed to protect people from the "sticker shock arising from the relatively large increase."
That decision allowed residential customers to put off paying 20 percent of the $123.5 million that commissioners Mike Albert and Brooks McCabe decided the companies deserved, but now that those rates have come due, the utility companies want to be paid an additional $6.5 million for carrying those costs for another 13 months.
Instead of customers paying the initial $25 million that the two commissioners offset for a year, electric users are now being asked to cover $31.5 million - a 26 percent change.
The proposed carrying costs that would be placed only on residential customers come at a time when electricity rates throughout West Virginia have continued to climb dramatically, as the PSC has approved millions of dollars in rate increases and electric surcharges to cover fuel costs, energy purchases, damages caused during a 2012 derecho, improved tree trimming efforts, the takeover of large coal-fired power plants and large transmission projects.
The request for the extra $6.5 million also coincides with the companies' proposal to increase customer surcharges by an additional $108 million in order to pay for fuel, the remaining cost of the John Amos plant in Putnam County, the conversion of the Clinch River plant in Virginia to natural gas and several regional transmission projects.
If approved by the commission, both of those rate increase will go into effect simultaneously at the beginning of July.
The addition of the accrued costs to the $25 million by company officials is likely to be approved since the commission explicitly stated that the utilities could recover those costs in its May 2015 order.
In that order, Albert and McCabe explained that they delayed part of the large increase they were approving for the company because they didn't want the 16.1 percent jump in residential rates to result in the average customer's bill going up by more than $19 per month all at once.
But at the same time, the two commissioners noted that it was to their "dismay," but not to their "surprise," that they found that the companies deserved the $123.5 million bump in income, which they went on to describe as "heavy burden" for customers.
"We believe the revenue level we have established in this case is accurate," the commissioners wrote. "We also, however, appreciate the magnitude of that increase, and have as a result, proposed a treatment for the recovery of that revenue from the customers that may be slightly at variance with traditional utility rate recovery."
The two commissioners also noted that they were trying to consider the people of the state, many of whom had suggested during public meetings that the commission didn't care about the average West Virginian.
"Many of the public comments and protests also suggest that the commission is insensitive to the customers, but nothing could be further from the truth," they wrote. "The commission continues to be sympathetic to the plight of all customers of the companies, including the residential customers."
The commissioners continued to reiterate their concerns for customers but said it would be unfair for the companies' shareholders "to be burdened" by a shortfall in revenue that the commission decided was fair.
As a result, the commissioners explained that the best course of action would be to gradually phase in the residential rates over more than one year.
There was no estimation in the order of how much money the $25 million rate deferral would end up costing customers in the end, but the commission said the $123.5 million increase would place the company's rates within a "reasonable range."
Reach Andrew Brown at andrew.brown@wvgazettemail.com, 304-348-4814 or follow @Andy_Ed_Brown on Twitter.