The state Public Service Commission
began hearing testimony Tuesday on a request by Appalachian Power and Wheeling
Power companies to raise their customers’ rates by 17 percent. The evidentiary
hearing, being held in Charleston
There are several groups and businesses
against the increase including the state Consumer Advocates Division, Walmart,
other businesses and citizens groups. If approved, an average customer’s bill
would go up about $9 a month.
West Virginia Consumer Advocate Jackie
Roberts said the companies have benefited in other ways and should not be
allowed to raise rates by 17 percent. She asked Appalachian Power President
Charles Patton Tuesday whether any of the company’s customers had benefited
from a $28 million consolidated tax savings Appalachian Power’s parent company,
AEP, had enjoyed.
Patton said to rely on tax savings to
reduce rates can create a liability for the company.
“Should we consider the performance of
other AEP companies in regulating this company?” Patton asked. “There can be
tax benefits and there can be tax losses.”
Patton added had there been a
consolidated company tax loss the consumer advocate probably would have never
brought up the issue.
Consumer Advocate Roberts also
questioned Patton about a proposal in the rate increase package to allow
Appalachian Power to recover part of what it pays its employees in incentive
pay. The PSC rejected that in a 2010 rate case. Patton defended the incentive
pay practice during Tuesday’s testimony.
“Why would we not want to incent
performance from our employees? And you cannot demonstrate to me that our
employees are overpaid,” Patton said.
The utility president testified when it
comes down to it recovery of incentive pay would be just a small portion of the
proposed rate increase.
“It is a negligible piece of our
customers’ electric bill. In fact, I think I’ve calculated just a couple of cents
or a cent a month,” Patton said.
The rate increase proposal is split
into two parts. The first would provide $181 million for infrastructure
improvements. The remaining $44.6 million would finance a PSC-mandated
vegetation clearing program that came following the 2012 derecho and Superstorm
Sandy. Appalachian Power recently started the program that will be on a
six-year cycle.
There were some settlement discussions
before the start of Tuesday’s hearing but apparently no major decisions were
reached.
The two companies serve nearly 500,000 customers in 24 West Virginia
