Two AEP units in West Virginia settle annual energy cost case

The Appalachian Power Co. (APCo) and Wheeling Power Co. (WPCo) units of American Electric Power (NYSE: AEP) on June 23 filed with the West Virginia Public Service Commission a settlement of their latest annual cost recovery request under the Expanded Net Energy Cost (ENEC) program.

The deal is with the staff of the Public Service Commission, the Consumer Advocate Division of the commission and the West Virginia Energy Users Group. It is called Joint Stipulation and Agreement for Settlement. 

On March 1, the AEP companies filed a petition to initiate the annual review and to update the ENEC rates currently in effect. The companies proposed to increase ENEC rates to produce an additional $108.3 million in annual ENEC revenues, to continue and expand the Transmission Investment Charge (TIC) that was initially implemented in the companies’ 2015 ENEC proceeding, and to implement a comparable Generation Investment Charge (GIC) to recover costs associated with certain generation assets.

The companies also proposed: to allocate the Felman Fixed Costs to all customers; to recover the Amos Unit 3 Reserve Deficiency deferred carrying charges (this is a coal-fired unit); to treat Black Start Service revenues as base rate items; to add certain Felman discounts to the ENEC under-recovery balance; and to assign directly reservation fees to internal load.

The stipulating parties now agree that, effective July 1, the companies should implement revised ENEC rates and a new Construction Surcharge, which, together, are designed to produce a total increase in revenues of $55,060,000 per year (3.8%). This amount consists of $38,094,800 in ENEC revenues and $16,965,200 in Construction Surcharge revenues.


  • The parties agree that the ENEC rates effective July 1 and reflecting $38,094,800 in increased revenues, should remain in effect and frozen for a period of two years ending June 30, 2018. The parties further agree that the companies should be relieved of their obligation to file an ENEC case in 2017 and should not file an ENEC case in 2017. They agree that the companies should be permitted to file in 2017 any ENEC-related information that they deem appropriate, but they should not request any change in rates.
  • The parties agree that, during the two-year ENEC period (of July 1, 2016 through June 30, 2018), all remaining deferred costs related to Reclassified Coal payments ($7,792,949 as of December 31, 2015) should be fullly amortized as a cost in the ENEC over/under recovery calculations.
  • The parties agree that, effective July 1, 2016, the costs of wind energy purchased by the companies should be apportioned between energy-related costs and demand-related costs and that the demand-related portion should be determined based on the PJM UCAP value for intermittent wind generation and the PJM Capacity value in the RPM (based on the average BRA for the years 2016/17 and 2017/18).
  • The AEP cmpanies agree not to file a general rate case before April 1, 2018, absent a financial distress situation.
  • The companies agree, on a going-forward basis, to investigate and assess increasing the use of open competitive solicitations in their coal procurement, developing portfolio targets with respect to supplier mix, and developing contingency plans related to supplier non-performance. These results of such investigation and assessment will be documented and presented in their 2018 ENEC case.
  • The AEP companies agree to provide to  commission staff by Nov. 1 of each year, information regarding significant transmission additions and upgrades planned for the next three years within the companies’ service territories with a projected cost greater than $5 million. The information provided should reasonably permit the staff to understand the scope of, and need for, the identified projects.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.