The settlement must be approved by the WV PSC before it becomes final. The PSC has scheduled a hearing on the settlement for Nov. 7 at 9:30. You can watch the webcast here.
The settlement was crafted during negotiations between the company, the staff of the PSC, the Consumer Advocate Division, WalMart and the WV Energy Users Group (a group of energy hog industrials). The PSC Commissioners (what few we have left) did not have a hand in crafting this settlement. They will have a hand (or a rubber stamp) in approving it.
So, what happened? They agreed to a rate increase effective Feb. 25, 2015. The press release yammers on about how much this will cost the "average" customer (23 cents per day, $6.90 per month, $84.40 per year). Mr. & Mrs. Average Customer use exactly 1,000 kwh of electricity every month. Your usage isn't so neat, so therefore your increase will vary.
But, it's not the rate increase the company asked for. It's less. The original proposal was going to increase Mr. & Mrs. Average Customer's bill something like $15/month, so consider the proposed settlement to be slightly less than half the amount requested.
The company had asked for a total of $151M annual increase. The settlement amount is $62.5M annually. This amount includes a $15M (1.45%) increase in base rates and a new $47.5M surcharge for vegetation management.
The vegetation management surcharge bears further examination considering the company asked for a $48.4M surcharge for increased vegetation management. The company has been receiving a separate amount for vegetation management that has been included in the base rate for years ($28M). What this settlement does is remove that amount from the rate base and combine it with an additional amount for increased vegetation management to create the new vegetation management surcharge. This new surcharge is subject to filings in the first, third and fifth year in which the company must true up actual expenditures to the amount collected. Gone are the days of FirstEnergy collecting millions for "vegetation management" that it never performs (and contributes to more severe and prolonged storm outages). Now you'll actually get the vegetation management you pay for!
Back to the base rate increase: Included is $46M of 2012 storm costs, amortized over a 5-year period, without earning a return (about $9M/year). Once the 5 years is up, this is gone forever (unless we have another storm disaster in the meantime).
The stipulation regarding the $60M FirstEnergy wanted to collect for closed power plants Albright, Rivesville and Willow Island sounds like Yoda wrote it.
For the unrecovered the companies may account, undepreciated investment.
Balances in the 2012 deactivated power plants (albright, rivesville, and willow.
Island) in any manner the companies deem appropriate, with gaap in accordance.
And regulatory accounting. Not, the parties agree that such accounting does.
To recover these costs or amortization expenses in future rate establish a right.
Proceedings, and this joint stipulation shall prevent the parties from nothing in.
To recovery of these taking whatever position they deem appropriate in relation.
Amounts in future proceedings. Herh herh herh.
The companies must increase the amount they contribute to the Dollar Energy Fund that assists low income folks with their outrageous FirstEnergy electric bills. FirstEnergy's increase is $150,000/year. In addition, the company must continue to "contribute" an additional $250,000/year that they recover from ratepayers. So, essentially, YOU are paying this extra and FirstEnergy is getting the credit for the "donation." Isn't that special? Betcha' didn't know that FirstEnergy provided charitable giving coordination services like that! Of course, how much of any of this is "giving," when all the money ends up right back in FirstEnergy's pocket?
This one is kinda confusing. Even Yoda can't help.
The proposed increase to the customer charge for residential and small commercial
customers shall remain at $5.00 per month.
The company is allowed to establish a regulatory asset for its expected EPA compliance plans at Harrison and Ft. Martin. This amount will be deferred (sit on the balance sheet uncollected and earning interest) until a future rate case.
The company will earn a 9.9% ROE, down from the requested 11%. When combined with the return on debt of 5.15%, and adjusted by the company's capital/debt ratio, the total return will be 7.36%.
The company will receive an additional $1,074,174 per year to read every meter every month going forward. This is down from FirstEnergy's requested $7.5M yearly cost to read meters monthly. Now the trick is going to be making sure the company actually DOES the required readings! No skimping now, we'll be watching!
So, what do you think? Did your advocate cut you a good deal in this rate case? You can submit comments to the PSC here.