According to their filing with the WV-PSC,
"The Companies propose a $31,909,406 annual increase in rates effective January 1, 2012, representing an overall increase of 2.7%. This amount is comprised of an actual $57,313,276 under-recovery balance at June 30, 2011, offset by a projected $22,903,870 over- recovery for the 2012 rate period at current rates and a $2,500,000 reduction to rates during 2012 to share synergy savings resulting from the merger of Allegheny Energy, Inc. and FirstEnergy Corp. earlier this year."
Here's a translation:
Total amount of increase: $31,909,406 -- 2.7%
They hadn't recovered enough to pay their costs of providing electricity to you when evaluated on June 30, 2011 (despite all those previous increases in the past couple of years). This is due to the high cost of fuel (coal) used to produce all their electricity. The cost of coal, and burning coal to produce electricity, is only expected to go up even higher in the future.
If they don't raise our rates on January 1, 2012, but continue with current rates, they will end up overcharging us nearly $23M for the year. However, this surplus will be used to offset that under recovered balance from prior years of $57M, still leaving us with a balance due to the power company of around $34M.
That $34M is slightly reduced by the $2.5M "synergy savings" (where do they get these stupid phrases?) that were our consolation prize for the WV-PSC approving the merger of Allegheny Energy and First Energy last year. As you can see, $2.5M sounds like a lot, but it's really just chump change to the power company in the grand scheme of things.
In addition to those "synergy savings," FirstEnergy was also required to launch an Energy Efficiency program in West Virginia. According to their filing for a proposed program, that will cost us an additional $11M in rate increases over the next 5 years. This case is running in parallel to the ENEC rate case and is expected to be combined with it to create just one increase to our bills, therefore, we need to add the cost of the EE plan to the $32M ENEC rate increase to come up with an even bigger jump in rates.
The Energy Efficiency program that FirstEnergy is proposing will provide the following benefits for low-income residential customers:
CFL lightbulbs, water saving devices like faucet aerators and shower heads, and new energy efficient refrigerators.
The program will also provide rebate incentives for commercial/industrial customers to install energy efficient lighting in their facilities.
The program will be paid for by all residential and commercial customers. Industrial customers (who use the lion's share of the electricity and pay the highest bills) are exempt from paying for the program, but they are still eligible to receive benefits under the program. However, if a lot of industrial customers take advantage of it, they may be charged for a portion of it in the future.
There are many things wrong with FirstEnergy's Energy Efficiency plan. First, they set the bar too low. This plan is much weaker than existing plans FirstEnergy runs in neighboring states. In addition, FirstEnergy will recover all the costs of this program, including administrative and marketing costs, from residential and commercial ratepayers, many of whom are not eligible for any benefits under the plan. However, FirstEnergy will offer benefits to industrial customers, who will not pay for the plan. FirstEnergy will also collect their "lost revenue" caused by the program saving customers money on their electric bills. This "lost revenue" is overestimated by around 250% in the plan by way of some really creative math. The low-income residential program is available for both homeowners and tenants in rental property. The refrigerator replacement program is ripe for abuse by shifty landlords trading used appliances for new ones, then selling the new ones, and replacing them with cheaper used ones, repeat, repeat, repeat, over and over again. It also looks like FirstEnergy will be paying a contractor to haul away the old refrigerators that are replaced. As StopPATH's Steve Smith can tell you, there's big money in recycling old metal appliances, like refrigerators. Steve made over a thousand bucks for our organization by recycling old appliances.
Fortunately, there are two grassroots citizens groups who will be working at the PSC to protect your interests in these two, parallel rate increase cases. Energy Efficient West Virginia and The Coalition for Reliable Power have teamed up to take on FirstEnergy. However, we're going to need your involvement to succeed! Visit The Coalition for Reliable Power and join the organization to receive news updates, action alerts and notification of our public forums that explain ratemaking, energy efficiency programs and how citizens can become involved to protect their interests. It's free (unlike anything FirstEnergy wants to "give" you). Also visit Energy Efficient West Virginia to read more about the issues and join their list to get updates and notices of upcoming events.
There's also one more step you can take to make sure that the rate increase that's put into effect will be the lowest one possible, and that's to effect change at the WV-PSC! The Coalition for Reliable Power is supporting the appointment of Robert Rodecker to the Commission to fill the expired seat of Jon McKinney, but they need YOUR help to get this accomplished! The Coalition asks that you contact Governor Tomblin by phone at 1-888-438-2731 and tell them, "I support the appointment of Robert Rodecker to the Public Service Commission." Alternatively, you can use the Governor's email submission form available here. It will only take you one minute! Do it right now!
Being an informed and active consumer is our only defense against continued rate hikes by out-of-state energy conglomerates!