We want to keep our customers informed about recent rulings made by the Public Service Commission of West Virginia (PSC) regarding Appalachian Power (APCo) and Wheeling Power.
Base Rate Case
The PSC has approved a base rate increase of $76.1 million. This is significantly lower than the initial request of $250.5 million, which was aimed at ensuring reliable electric service and meeting the growing demand in West Virginia.
Securitization Order
In a positive move for our Mountain State customers, the PSC has allowed APCo to recover approximately $2.4 billion in investments and expenses through consumer rate relief bonds. This method will ultimately save our customers money compared to traditional recovery methods. The order also includes provisions for consolidating under-recovered balances from various cases, including expanded net energy costs and deferred storm costs from significant events like Hurricane Helene.
Investment Recovery
The PSC's order permits the securitization of the company's share of undepreciated plant balances from the Amos, Mountaineer and Mitchell power plants. It also addresses costs associated with compliance with U.S. Environmental Protection Agency regulations.
Looking Ahead
Aaron Walker, APCo's president and chief operating officer, expressed satisfaction with the PSC's support for our recommendation to use securitization for customer relief. However, we are disappointed that the PSC did not fully acknowledge the complete investment made on behalf of our customers.
The securitization process will take several months, and once the bonds are issued, we will implement several rate changes that will lead to an overall decrease in rates.
More on securitization
In March 2023, West Virginia Governor Jim Justice signed into law legislation that allows the Public Service Commission to approve qualifying utilities, such as Appalachian Power, to securitize the unrecovered fuel balances, costs for Effluent Limit Guidelines (ELG) and Coal Combustion Residuals (CCR) environmental controls on power plants, unrecovered storm costs and the remaining net book value of power stations.
What Securitization Means
Securitization sells high-quality, highly-rated securities to investors, with interest and principal payments secured by a charge collected from customers. It allows Appalachian Power to recover commission-approved costs through the issuance of bonds.
- This financing mechanism is used by regulated utilities in 32 states, including West Virginia.
- West Virginia utilities have used securitization in the past with environmental plant retrofits and large unrecovered balances.
How Securitization Benefits You
- Securitizing fuel costs avoids a sharp rate increase by spreading the costs of a sizeable unrecovered balance over time.
- Securitizing an asset, like the John Amos Power Plant, can lower costs to you and your neighbors by financing repayment at a lesser rate of return.
Benefits for You
Investing in and maintaining our generation, transmission and distribution network is essential for minimizing and shortening outages, accommodating growing energy demands and integrating new energy sources.
Since our last base rate increase more than five years ago, we have invested over a billion dollars in upgrading and modernizing the grid to ensure we are supporting you and your neighbors' current and future energy needs. The investments we've made - and will continue to make - allow us to restore power more quickly and efficiently following major storms, such as Hurricane Helene.
See our progress