Fall 2022
Welcome to the Fall issue of the WV Energy Consumer Quarterly Update, as published by the West Virginia Energy Users Group (WVEUG). We aim to provide accurate, fact-based information on energy rates and issues, in part to clarify ongoing misunderstandings about energy consumption in West Virginia and its impact on the state’s economy. Our goal is to ensure that West Virginia is focused on making the changes necessary to advance West Virginia’s economy and enhance its position as a leader in the energy field.
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Electric Utilities Seek Massive Rate Increases at the PSC that Would Harm West Virginia’s Economy
FirstEnergy’s Monongahela Power Company and Potomac Edison Company have filed for a $184 million increase in rates at the Public Service Commission. This proposed increase comes on the heels of two other increases earlier this year that together totaled almost $160 million. In the case at the PSC, questions have been raised about the companies’ actions in incurring these costs and how any additional rate increase could be mitigated given the impacts of such increases on all ratepayers, including business, industry, and the West Virginia economy.
Similarly, American Electric Power, on behalf of Appalachian Power Company and Wheeling Power Company, is seeking a nearly $300 million rate increase request on top of the over $120 million in rate increases that they received earlier this year. The reasonableness and prudence of the companies’ actions are being evaluated by the parties to the case and the PSC.
For Mon Power and Potomac Edison, if their increase is granted, it would result in increased rates of over 16% for the average manufacturing and industrial consumer, and plunge that average rate from being one of the lowest in the country to middle of the pack.
For APCo and Wheeling, if the companies’ $300 million request is granted, the average tariff rate for large manufacturing and industrial users of electricity will drop to the bottom third for electric rates in the nation.
Legislative Changes Hold Promise for Manufacturing and Industry, But There is More To Do
In the 2022 Legislative Session, through Senate Bill 4, the ban on the development of nuclear power in West Virginia was repealed. This was an important step forward for competition in the electric sector; as WVEUG has consistently maintained, all facets of the electric generation of power should be, where at all feasible, subject to free market forces through competition. There should be no artificial legislative or regulatory barriers (or supports) for any electric generation resource. WVEUG is hopeful that the next step will be to ensure that development of nuclear power production in the state will be open to all potential wholesale producers, not just regulated monopoly utilities, and that large manufacturing and industrial companies will be supported in the development of small scale on-site or near-site nuclear power options with the ability to partner with third-party providers.
Similarly, in the Special Legislative Session convened in September, a bill was passed into law (Senate Bill 4001) allowing the development of large-scale renewable power on-site for the benefit of a new large manufacturer. Important features of this legislation include (1) the ability of a third-party to assist with funding and operation of the renewable resources without invoking public utility status, and (2) the potential for other new manufacturing and industrial entities within a limited area to receive service from the renewable facility. WVEUG views this legislation as a positive step, but it can be expanded to benefit existing manufacturing and industrial companies that seek to retain or expand their operations in West Virginia and as it relates to the development of on-site generation resources generally.
WV Public Service Commission Advances Three Task Forces
In response to issues recently before it, the PSC initiated three separate task forces: (1) an Electric Task Force; (2) a Coal Task Force; and (3) a Gas Task Force. The PSC initiated an Electric Task Force in response to WVEUG's request for limited access to market-based electricity pricing for large manufacturing and industrial customers. WVEUG requested an alternative pricing option in part to address the harm that increased rates have caused for large manufacturing and industrial customers in recent years. The task force is continuing to convene, although it is unclear if any agreement will be reached on concrete proposals to expand electric rate options for business and industry
The PSC also initiated a Coal Task Force to investigate ways to decrease energy costs for West Virginia utility customers. This task force is timely given AEP's and FirstEnergy's struggle, due in part to coal inventory levels, to operate their coal-fired plants at higher capacity factors when market prices were favorable for selling power into the PJM grid.  This task force is in the early stages of discussion.
After the merger of Mountaineer Gas Company and UGI Corporation, the PSC opened the Gas Task Force to investigate a potential expansion of Mountaineer's gas transportation rules to include in part expanded retail customer choice options. In the Task Force Report issued this past July, Mountaineer expressed its intention to explore the issue of customer choice further, which aligns with WVEUG’s support for the power of free market competition and less government regulation.