Welcome to the Fall 2023 issue of the West Virginia Energy Consumer Update, a publication of 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 production and consumption in West Virginia and its impact on the state’s economy. Our goal is to promote changes necessary to position West Virginia as a leader in the energy field and advance West Virginia’s economy.

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The Chairman of the PSC recently issued a press release proclaiming that West Virginia’s industrial rates were the lowest in the nation and in the region (except for Kentucky) based on Energy Information Administration (“EIA”) data, and although EIA data can provide an accurate snapshot, the press release does not tell the whole story.

In fact, the most recent publication of the EIA confirms that West Virginia’s average industrial rates rank 20th in the nation – middle of the pack; yes, they are higher than prices available in Kentucky, but they are also higher than rates in the Carolinas and New York – of all places – among many other states. While West Virginia once had the lowest rates in the nation, that is no longer the case.

Further, the average AEP industrial rate for Appalachian Power and Wheeling Power in West Virginia is currently 8.13 cents per kWh hour, which standing alone would rank 29th among the 50 states and more than Ohio, Pennsylvania, and Kentucky. At the same time, both AEP and First Energy (on behalf of Mon Power and Potomac Edison) collectively have pending before the Commission nearly $1 billion in potential rate increases that, if approved in any significant measure, surely would drop West Virginia further in the objective EIA rankings compared to surrounding states.

It also is a fact that, subjectively, some large electric consumers that have facilities located in West Virginia and also in Ohio or Pennsylvania pay less – significantly less – in those states than they do in West Virginia because large industrial and manufacturing facilities in “customer choice” states like Ohio and Pennsylvania are able to negotiate prices in a competitive market rather than be captive to West Virginia’s monopoly rates.

In that regard, since 2019, AEP’s average industrial tariff rates have increased 35%, and of course a potential additional increase is pending before the PSC. Similarly, since 2021, FirstEnergy’s average large manufacturing and industrial tariff rates have increased by almost 30%, and they have two additional rate increase proposals pending before the Commission.

The bottom line is that WVEUG believes that in the arena for large consumers of electricity and natural gas, the power and efficiency of free market competition and customer choice are simply better than the outcomes provided by government regulation of for-profit “public service” monopolies beholden to shareholders.

As referenced above, AEP has pending before the Public Service Commission a claim for well over $600 million in increased fuel and power purchase costs. WVEUG has been actively litigating the case against AEP, as have other parties including the Consumer Advocate and the PSC staff. The case has been heard by the Commission and fully briefed by the parties, and a final decision from the Commission should be forthcoming in the next several weeks. At issue are potential disallowances for AEP’s arguably imprudent decision-making and potential rate increases of over 20% for ratepayers.

Similarly, FirstEnergy is seeking respective $207 million and $229 million rate increases in separate Base Rate and fuel surcharge cases. As with the AEP cases, WVEUG is actively litigating those cases in the interest of manufacturing and industry. The litigation process is continuing, but potential rate increases could take effect in January and March of 2024, with a cumulative impact in excess of 20% for business and industry.

Rebecca McPhail, the erstwhile President of the West Virginia Manufacturer’s Association (“WVMA”), will be taking on a new role with the American Chemistry Council in the next few weeks. Under Rebecca’s leadership, the WVMA has been a champion of many issues, but also a strong and well-educated supporter of energy issues for manufacturing and industry. Here are some of her parting thoughts.

Q. What do you view as your greatest accomplishments with WVMA?

A. "Elevating the political influence of the WVMA is my greatest achievement. Predominantly driven by working year-round on building strong legislative relationships and trust with legislative leaders, this influence has also been enhanced by greater WVMA member engagement in political advocacy and mobilization. Building relationships, reputation, and the WVMA brand has positioned the WVMA for significant legislative success into the future."

Q. What do you think is needed for West Virginia to take full advantage of its excellent energy resources for the benefit of manufacturing and the economy of the state?

A. "Competition and reliable transmission. West Virginia has a rich history of energy production with its roots in coal fired power generation. The state can build on this history and emerge as a leading energy powerhouse by adding natural gas fired power production, exploring nuclear energy production, and continuing to expand renewable sources as part of a diverse energy mix. With growing energy needs on the east coast, West Virginia can grow the energy production pie and look at exporting more power to support the growth of West Virginia’s energy economy. State leaders should consider policies to expand consumer energy choice including third party power generation to help move the Mountain State back to its rightful place as a top five state when it comes to energy rates. Energy sources in the state must learn to work cohesively, realizing that energy needs will only increase in a modern economy, and there is an opportunity for all sources to win. As for manufacturers, the issue is and will continue to be the need for reliable, affordable, and cleaner energy options."

Q. What will you miss the most about WVMA?

A. "Working with the WVEUG -- well, that’s one of the things I’ll miss. I think the WVMA/WVEUG partnership has started to change the landscape for manufacturing and industrial energy users in the State, and I hope that continues well beyond my tenure. Certainly, I will miss representing such a supportive and engaged group of job creators who are making a real difference in their communities and beyond. Manufacturing is a growing part of the West Virginia economy, and one that builds a strong foundation for decades to come; I’m grateful to have played a small role in that growth."