Business, Energy, State Government

Mon Power, Potomac Edison respond to criticisms leveled in their rate-hike plan

MORGANTOWN – Mon Power and Potomac Edison offered some defenses against criticisms leveled against them in one of their rate-hike cases, in a recent filing with the Public Service Commission.

But they did agree to some of the suggestions offered.

In this case, they are asking for $167,465,330, which they project would add $9.19 to the average monthly residential bill, raising it from $120.20 to $129.39 — a 7.8% hike. It is an ENEC case — expended net energy cost — designed to allow utilities to cover their costs of producing power.

Earlier this month, Philip M. Hayet testified on behalf of West Virginia Energy Users Group, a group of large industrial customers of Mon Power and Potomac Edison. He said the proposed hike imposes significant increases in ratepayer bills.

WVEUG proposed that instead of approving two ENEC rate hikes in 2024 – on Jan. 1 and an adjustment on March 27 – the PSC approve a single 2024 ENEC hike coinciding with a separate base rate increase expected on March 27.

And instead of spreading ENEC hikes across two years, as the companies proposed in this case (asking this time for $167.5 million of a total $243,032,313 under-recovery), WVEUG recommends spreading it across three years. And that the companies be directed to forego filing a 2025 ENEC case, meaning they would not make an ENEC filing in August/September 2024 for new rates to be effective on January 1, 2025. They would then file their next ENEC case in August/September 2025 for new rates in 2026.

Raymond E. Valdes, representing Mon Power and Potomac Edison, said he doesn’t agree with delaying the ENEC rate change from January to March, or with the additional year proposed for recovery.

Rate hikes are supposed to be gradual, he said, to mitigate large and abrupt changes in customer bills. So, synchronizing this case with the base rate case in March would result in a large and abrupt change in customer bills. The companies want to minimize the impact by having most of their ENEC increase occur on the traditional date: Jan. 1, with the small adjustment in March,

He also disagreed with the idea of spreading the hike across three years and delaying their next (usually annual) ENEC case to September 2025.

That proposal sets up a three-year delay for the recovery of ENEC-related costs, he said. “ENEC-related costs can be volatile and difficult to forecast due to constantly changing market dynamics as well as weather-related variations that can affect customer usage levels.” It’s risky to anticipate needed cost recovery over a year away.

In a previous filing, Longview Power CEO Stephen Nelson recommended to the PSC that Mon Power and Potomac Edison retain an experienced, outside consultant, selected by the PSC, to conduct a thorough review of their next ENEC filing, alleging their filings force intervenors to “ferret out” the real issues in the case.

Valdes disagreed, saying that would result in an unnecessary cost for their customers. The current testimony has provided suitable and sufficient results to all other involved parties.

Valdes also disagreed with Brian Hoyt, Longview’s compliance and environmental manager, who said the companies purchased more NOx emission allowances than necessary because they failed to properly operate and maintain the NOx emission controls at Fort Martin. The companies waited too long before purchasing the emission allowances they needed and bought them at three times the price they should have. Longview recommended disallowing recovery of $42.2 million of excessive 2022 Ozone Season NOx Allowance costs and $18.3 million of 2023 Ozone Season NOx Allowance costs.

Valdes said the companies, “when purchasing allowances during the unprecedented 2022 Ozone NOx market spike chose to take a more measured approach to purchasing our expected shortfall for the year, versus overreacting and purchasing a large tranche of allowances all at once.” If power demand or prices had dropped significantly over 2022, then Mon Power would have incurred unnecessary costs for its customers.

The companies had previously been criticized for failure to maintain proper fuel supplies at their two coal-fired plants, which allegedly led to higher rates. Also, in a recent filing, Chelsea Hotaling testifying on behalf of a coalition of the West Virginia Citizens Action Group, Solar United Neighbors and Energy Efficient West Virginia, said the plants maintain coal inventory above their safety levels.

On that topic, Mon Power And Potomac Edison representative Mark Valach did agree with some PSC Consumer Advocate Division recommendations about managing coal inventories.

One, they agree with the proposal to develop a plan to manage off-site inventories. Storing coal off site in 2023 was driven by the idea of acquiring coal at a below-market price to use in 2024. Their 2024 plan incorporates using that off-site coal, and they will analyze the cost to customers of keeping coal on-site versus potential supply challenges.

They also agree, Valach said, with CAD’s recommendation to formalize a coal procurement procedure, and will develop a formal coal procurement manual. Their strategy of buying certain percentages of forecasted coal needs over a three-year period allows for leveling of short-term variations in the coal market. They review the strategy annually.

The companies have two other rate-hike cases pending before the PSC.

One is their base rate hike request: $207.5 million for infrastructure and for their energy assistance program. The hike would cost the average residential customer $18.07 per month — raising a bill from $120.20 to $138.27.

The other is to fund their Vegetation Management Program. It proposes an increase of $16,969,398 to take effect Jan. 1, 2024, and $16,989,110 to take effect Jan. 1, 2025 — for a total of $33,938,795.

They say this reflects an overall 1% increase aggregated against all their customer classes. For the average residential customer using 1,000 kilowatt hours per month, they project a hike of $2.47 per month, raising the bill from $120.20 to $120.67.