MSR 2002-2 - Public Service Commission of West Virginia

Public Service Commission — Management Summary Report
customers in West Virginia. The requested rates equate to an increase of approximately $99.8
million annually or 12.8 percent. The companies also seek to reinstate the expanded net energy
cost (ENEC) review process, which would result in periodic rate increases or decreases to
reflect changes in the cost of purchased power and of coal consumed at the generating plants
and in related revenue credits. Pending investigation and decision, these requested rate increases
have been suspended until May 23, 2007.
Appalachian Power Company and Wheeling Power Company, both wholly owned subsidiaries
of American Electric Power Company, Inc., jointly filed a general rate increase with the
Commission on August 26, 2005. Combined the companies provide electric service to
approximately 475,000 customers in West Virginia. The initial requested rates equated to an
increase of approximately $82.2 million annually or 10 percent and with the four stages of
further rate increases requested, the total increase requested equated to approximately 23
percent phased in over four years. The companies stated three primary drivers of the rate
increases sought. The first was to recover investment in the Wyoming-Jacksons Ferry 765 kV
transmission line which went into service in mid-2006. The second was to phase in rate increases
to recover the cost of four Flue Gas Desulfurization facilities (scrubbers) which are being
installed at the Amos and Mountaineer Plants in order to meet environmental standards. Finally,
the companies sought to reinstate the expanded net energy cost review (ENEC) process, which
would result in periodic rate increases or decreases to reflect changes in the cost of purchased
power and of coal consumed at the generating plants and in related revenue credits.
On July 26, 2006, the Commission adopted a Joint Stipulation and Agreement for Settlement
of the Appalachian Power Company and Wheeling Power Company joint rate case which
provided for an increase of $43.7 million annually, of which $60.8 million represented an
increase in annual revenue to be partially offset by refunding rates of $17.1 million annually
to reflect amortization of an accumulated over-recovery balance of a prior ENEC in the amount
of $51.2 million being held by the companies. The increase included $23.2 million annually
from construction surcharges related to the Wyoming-Jacksons Ferry 765 kV line and scrubbers
which are subject to annual adjustments in the reinstated annual ENEC proceedings. Also, to
be reviewed by the Commission in a 2009 ENEC proceeding is the special rate mechanism
for Century Aluminum approved by the Commission as an experimental rate program.
In a separate proceeding, Appalachian Power Company filed an application for a certificate
of convenience and necessity to construct a 600 MW integrated Gasification Combined Cycle
Generating Station in Mason County, WV. The matter is pending investigation under an
established procedural schedule which provides for an evidentiary hearing beginning March
13, 2007 and an Order from the Commission on or prior to June 5, 2007.
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