Back in 2012, Appalachian Power proposed legislation that would allow the company to mortgage all its old, unrecovered fuel and other debts so that it could cash out and leave its customers with a long-term monthly mortgage obligation. Appalachian Power called this amazing "no rate increase" magic trick "Consumer Rate Relief Bonds."
The legislature and the PSC embraced APCo's rate relief magic because it gave them cover to pretend they had averted a 30 - 40% rate increase for APCo customers.
The measure was approved by the legislature, and the PSC has since approved the bond sale. Appalachian Power has now been made whole for the outrageous costs it paid for coal to fuel its power plants in 2009.
However, APCo customers have finally been handed the bill, and they're not happy.
Lynn Pugh opened her AEP bill this month to see just how much the cold January had set her back, but she found something in her bill that she normally doesn’t see.
“I’ve never seen the consumer rate relief charge,” said AEP customer Lynn Pugh.
Starting in December of 2013, AEP began adding the consumer rate relief charge to customer bills. According to the company, the new charge is a way to help them account for the spike in the price of coal in 2008-2009.
“It’s actually a reflection of a settlement we had with the PSC to recover the cost of coal,” said AEP spokesman Phillip Moye.
Normally AEP pays around $50 per ton for coal, but in ’08 and ’09 they were paying over $100 per ton because of a coal shortage.
The Public Service Commission signed off on the charge and has allowed AEP to keep it on your bill for the next 15 years. Pugh was shocked to learn that the charge would be on her bill for the next 15 years.
Moye said the AEP opted to go with the additional charge rather than increasing the rate on the price of power.
“The impact on the rate would have been tremendous,” Moye said. “30 to 40 percent increase, and that obviously is more than what customers can bare.” [bear!! although maybe customers will tear off their clothes and run naked through the legislature in protest?]
Pugh said she understands why she is paying the additional charge, but doesn’t think it should be on there for the next 15 years.
“I can’t imagine that they paid that much extra for coal that every AEP customer is going to have to pay this.”
The charge is based on how much your bill costs. Pugh’s charge was almost 11 dollars.
We tried to stop this craziness in 2012, but customers like Ms. Pugh weren't paying any attention and took no interest in helping themselves. If Ms. Pugh had known then what she knows now, might she have picked up the phone and called her elected representative, or dashed off an email to the PSC? Probably.
Now APCo customers have the next 15 years to lament their lack of consumer education. When will West Virginia fund an effective consumer advocacy program that includes public education? Or does our legislature prefer us to remain barefoot, pregnant and chained to the coal-fired power station?
We have a lot of work to do, West Virginia!