CHARLESTON, W.Va. — Testimony during the second day of Appalachian Power’s rate hike case before the state Public Service Commission continued to leak into another case the PSC is considering from the utility.
The two are tied together.
Appalachian Power is seeking a $250.5 million increase in its base rate. If approved, the average customer’s bill would go up more than 13 percent a month which is about $24 more.
The utility is asking in a separate case, which will go before the PSC next month, to be allowed to securitize much of the increase. A 2023 state law allows utilities to sell bonds to investors to get the cash they need and then pay the financial backers back their money over a long period of time.
PSC Chairman Charlotte Lane asked expert witness Stephen Baron Wednesday what he thought about the securitization proposal.
“From an economic standpoint securitization makes sense, it saves customers money,” he said.
Appalachian Power spokesperson Karen Wissing said the proposed rate hike would be reduced by 75 percent if the PSC approves the bond selling option.
“If that proposal is accepted then the average residential customer is not paying that $20 to $24 more but about $6 (more per month),” Wissing said during an appearance Wednesday on MetroNews Midday.
The bonds would be paid off over 20 years.
Wissing said the utility has seen costs go up in a post-pandemic world including being hit by nearly double-digit inflation. She said they’ve also been required to spend more on pollution controls for their coal-fired power plants and have had to spend millions in getting the lights back on following severe storms.
Wissing said securitization would create a sharing of that cost.
“So we would basically bundle several of our assets and sell 20-year bonds to investors and by doing that we are allowing that cost to the investor to decrease the cost to the customer,” Wissing said.
Baron told Lane not every asset that Appalachian Power wants to securitize should be. He said power plants and storm costs would benefit customers but allowing the fuel costs to be stretched out over 20 years would actually cost customers more than an annual adjustment.
Opponents have told the PSC that even without a base rate increase in the last six years, the utility has been allowed to charge customers more through a number of surcharges and other allowable rate adjustments. Testimony Tuesday said the company has asked for $623 million more from its customers to pay for things like fuel, environmental requirements for its power plants and vegetation removal.
Customers spoke out against the rate increase at a Tuesday evening public hearing. The Sierra Club of West Virginia released a statement against the increase Wednesday.
“Given inflation, rising prices, and other everyday financial worries, a 13.5% increase would hit customers hard. People shouldn’t be forced to choose between electricity and groceries or medications,” said Lisa Di Bartolomeo, Sierra Club Beyond Coal Campaign Organizer for WV. “At last night’s hearing, testimony after testimony told the PSC enough is enough.”
The PSC is expected to make a decision on both cases later this year.