Appalachian Power, along with Wheeling Power, today filed a settlement agreement with the Public Service Commission of West Virginia (PSC) that addresses the companies’ Expanded Net Energy Cost (ENEC) cases.
ENEC is the mechanism for adjusting the amount included in rates for fuel and purchased power. As coal and natural gas prices rose sharply across the country in 2021 and 2022, the companies paid more for fuel and purchased power than the amount included in rates. The ENEC cases request reimbursement of $553 million of costs incurred, but not yet recovered, to produce and provide electricity.
The proposed settlement includes a $50 million reduction in the requested fuel deferral amount. In addition to fuel costs, the settlement addresses storm recovery, environmental compliance, and other costs associated with Appalachian Power and Wheeling Power’s generation fleets. It utilizes a financial tool known as securitization, an option the West Virginia legislature passed into law with broad support in 2023 to address customer affordability.
Securitization allows certain commission-approved costs to be recovered through the issuance of bonds. This approach mitigates impact on customer bills by enabling recovery of these expenses over a much longer timeframe and recovery of other allowable costs at a lesser rate of return. Customer bill impacts will be determined following the PSC’s action on this settlement and the outcome of the securitization process. It is anticipated that any changes in customers’ bills will be minimal.
“We are confident this settlement will achieve the most stable outcome and least rate impact possible for our West Virginia customers,” said Aaron Walker, Appalachian Power president and COO. “We encourage the PSC to approve the settlement, which will keep customer bills affordable and support a reliable energy system.”
The West Virginia Energy Users Group and the West Virginia Coal Association joined Appalachian Power and Wheeling Power in signing onto the agreement. The settlement is subject to review and approval by the PSC.
Appalachian Power has 1 million customers in Virginia, West Virginia, and Tennessee (as AEP Appalachian Power). It is part of American Electric Power, which is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions. AEP’s approximately 17,000 employees operate and maintain the nation’s largest electricity transmission system and more than 225,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.6 million regulated customers in 11 states.
AEP is also one of the nation’s largest electricity producers with, approximately 29,000 megawatts of diverse generating capacity, including more than 6,100 megawatts of renewable energy.
