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The filing is part of an agreement with the PSC in which the company periodically files to adjust rates to recover the costs of fuel and purchased power and environmental construction projects. The requested revenue increase includes $84 million for fuel-related expenses, $50 million for purchased power, $17 million for environmental investments, and $5 million for reliability improvements. Fuel and purchased power expenses are part of the ENEC (Expanded Net Energy Charge). This is simply a pass-through expense that includes no profit for the company. The cost of new coal supplies is rapidly rising, and this increase is evidence of that. The purchased power expense also reflects the increasing demand for electricity by Appalachian Power and Wheeling Power customers. Our customers are using more electricity than we produce, so we must purchase additional power. The cost of purchased power is also affected by rising coal prices and environmental requirements. The environmental expenditures are for flue gas desulfurization units – FGDs or scrubbers – at the John Amos and Mountaineer generating plants. The PSC has approved cost recovery for these projects on a gradual basis as expenses are incurred. Appalachian Power is investing more than $1.4 billion in these projects, which are needed to comply with mandated federal and state clean air laws. The projects will result in cleaner air at the lowest possible cost. Finally, the reliability improvements portion of the increase is for right of way expenditures incurred last year. Examples of the effect of the increase on residential customers:
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