Possible settlement in Appalachian Power coal debt case

Two West Virginia electric utilities scheduled to go before the state Public Service Commission on Tuesday in connection with a coal purchase debt hope there’s a settlement forthcoming.

Appalachian Power and its sister company Wheeling Power aim to spread out the $300 million debt over several years under a bond plan. The legislature opened the door for the possible securitization of the debt in a bill passed last year.

Appalachian Power Communications Director Jeri Matheney said a settlement is close.

“We’re very close to a settlement on all the major issues regarding this case,” Matheney said. “We believe we’ll be able to reach that settlement.”

The details will come Tuesday during what was scheduled to be the first day of an evidentiary hearing on the plan. A settlement could shorten that, though the PSC would have to sign off on it.

“This is just a way to spread out the cost of that coal that we purchased several years ago that we still owe a lot of money on,” Matheney said.

Back in 2008-2009, when the price for coal jumped, Appalachian and Wheeling couldn’t keep up with the increase. It sought a 43-percent rate hike in 2009 but the PSC opted to give a 25-percent increase over three years. The debt remains.

“With the securitization we’ll be able to spread out the cost and not increase rates for customers,” Matheney said.

It’s believed the settlement will include Appalachian and Wheeling being allowed to sell 10-year bonds at an interest rate of under 2 percent. The companies previously said such a deal would save customers about $146 million over the life of the bonds.