West Virginians to see lower utility rates after PSC approves agreement

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Published: Aug. 24, 2018 at 2:17 PM EDT
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UPDATE: 8/24/2018, 12:08 p.m.

The start of September will bring lower utility bills to West Virginians due to company tax cost savings from the 2017 Tax Cuts and Jobs Acts.

On Friday, members of the state Public Service Commission approved joint stipulation agreements with a number of utility companies operating in West Virginia that were reached to address PSC inquiries about how savings would be passed along directly to customers.

Michael Albert, chair of the PSC, said total utility savings under the agreements added up to $645 million being passed along to customers with portions deferred.

Specifically, $84.8 million will be saved beginning Sept. 1.

“We never cease to be amazed about putting a reasonable group of people together,” said Michael Albert, chair of the state Public Service Commission.

“Very often you come up with and achieve settlements that are just remarkable and, quite frankly, we believe that’s what this is.”

The approved agreements were the results of negotiations involving a number of parties and several companies — West Virginia American Water, Mountaineer Gas, Appalachian Power and Wheeling Power and Mon Power and Potomac Edison.

All of the companies were represented during Friday’s hearing in Charleston.

“These are not ‘cookie-cutter’ proceedings. Each utility has a different set of circumstances,” Albert said. “Joint stipulations are crafted to reflect the unique circumstances of each utility.”

As filed, in general, West Virginia American Water Company planned to reduce water rates for customers by $4.6 million, or an average of 3.5 percent, utilizing tax savings beginning on Sept. 1 with potential future reductions applied in a base rate case.

For the average residential customer, the monthly savings will be $1.60 for water and $2.17 for wastewater, officials estimated.

The proposal from Mountaineer Gas is similar in that it includes rate reductions to start immediately along considerations with for future filings.

Initially, the reductions would be $7.20 annually or .60 less per month on average for residential customers, according to testimony from Scott Klemm, vice president of finance for Mountaineer Gas.

For Appalachian Power and Wheeling Power, a proposal submitted Thursday called for $25.5 million out of $235 million in total tax savings to be utilized for an average 3.8 percent reduction in customer rates beginning at the start of September.

With the proposal, a residential customer using 1,000 kilowatt hours (kWh) every month would save about $3.56 a month, while a customer using 2,000 kWh/month could see savings of about $7.12 a month.

The additional tax savings would be applied in many other areas for what company officials have called a “balanced approach.”

“I think this is a fair, reasonable and just stipulation,” said John Scalzo, managing director of regulatory services and finance for Appalachian Power.

“It kind of balances all the interests and passes back the dollars to customers and addresses some of long-standing issues the company’s had related to legacy deferrals.”

For Mon Power and Potomac Edison, the potential rate reduction from tax savings would be approximately two percent overall for average residential customers or $1.97 less per month for a yearly company decrease of $25 million total.

During Friday testimony, Raymond Valdes, director of rates and regulatory affairs for Mon Power and Potomac Edison, said he believed the settlement was “fair and reasonable.”

Both Bluefield Gas and Beckley Water, which had rate cases pending at the time of passage of Tax Cuts and Jobs Act, have incorporated reductions into those cases, according to information from the PSC.

On Friday, commissioners indicated negotiations continued for Hope Gas which had already proposed $1.3 million in initial savings along with Peoples Gas.

Waste Management and Allied Waste were excused from Friday’s proceedings due to questions about how rate returns could be applied for waste services.

Utilities across the U.S. have been adjusting rates since passage of the 2017 Tax Cuts and Jobs Act. Federal taxes account for one component of the rates customers pay for utilities.

In July, the West Virginia PSC heard three days of testimony on utility plans in the Mountain State.

“We’ve had a fair amount of work that’s gone into this,” Albert said at the start of Friday’s hearing.

Formal orders were expected to follow Friday’s bench ruling from the state Public Service Commission. Even without those orders, utilities were instructed to proceed with the Sept. 1 initial rate reductions.


Appalachian Power and Wheeling Power filed an agreement with the Public Service Commission regarding the money the company received from the 2017 tax cuts on Thursday.

The tax cuts were a result of the Tax Cuts and Jobs Act of 2017. Appalachian Power received a total of $235 million.

The Public Service Commission must approve the agreement before it will go into effect. The PSC will hold a hearing at 9 a.m. Friday.

Appalachian Power worked with PSC staff, the Consumer Advocate Division, West Virginia Energy Users Group and Steel of West Virginia to create the agreement. PSC Communication Director Susan Small said the process of approval is much easier when all parties have reached an agreement.

"We're pleased to be able to reach an agreement on a method to return tax dollars to customers that reduces rates and addresses a number of issues that will benefit customers in the long term," said Appalachian Power President and COO Chris Beam.

According to a news release sent by Appalachian Power, the agreement included rate reductions for all customers for six months beginning Sept. 1. Rates would decrease 3.8 percent. A residential customer using 1,000 kilowatt hours a month will see a $3.56 reduction in their monthly bill.

The company is also using $18 million to fund a temporary winter rate discount for residential customers who use more than 1,350 kilowatt hours per month in December 2018 to February 2019. Fifteen million dollars will be set aside to provide bill payment assistance for low-income customers.

The company is using $20 million to reduce subsidies currently paid by commercial and industrial customers.

As part of another settlement agreement, $110 million will be used to offset fuel and vegetation management costs, allowing those rates to remain unchanged for the next two years. The company will also hold $71 million in reserve to offset future costs and $1 million will go towards economic development in West Virginia.

Company spokesperson Jeri Matheney said, "We actually feel really good about this settlement because we're able to reach an agreement that makes sense for our customers. We believe that they'll appreciate the compromises that were made and it solves some short term problems for customers because it returns money to customers quickly."