CHARLESTON, WV (LOOTPRESS) – A long-term bond financing plan to ease the cost of electric rates was approved Tuesday in a financing order issued by the Public Service Commission.
The “securitization” plan resulted from a rate case involving Appalachian Power Co. (APCo) and Wheeling Power Co. (WPCo), which was filed last year.
“The Commission finds in this financing order that the securitization will result in a meaningful cost saving and rate mitigation relief to retail customers as compared to traditional financing mechanisms or traditional cost recovery methods available,” the Commission said.
The 27-page order tells APCo and WPCo to set up one or more bonding companies to issue bonds; and says the payments on the bonds will be collected as a separate charge, apart from the companies’ base rates. The plan anticipates that the payments on the debt will be less that traditional ratemaking for the securitized costs and calls for the base and other cost recovery special rates of the Companies to be reduced at the time of the bond financing.
The order said the companies would develop the securitization structure, and that the final rates that will result have not been calculated. The companies were told that before finalizing the financing they must issue an “advice letter” to the Commission that provides the “best available estimate of financing costs, calculates the initial consumer rate relief charges,” and any other relevant information. The financing cannot be finalized if the Commission disapproves of the final financing plan and costs.
The amounts involved could run to $2.5 billion. They cover a number of expenses and investments in assets incurred by the companies, including storm damage, environmental controls at power plants, fuel costs, and investments in certain generation plants.
The Commission received more than 5,000 comments in one case and 200 in a separate case in which customers asked for rate relief.
The order said the estimated up-front $16.3 million costs to the companies for setting up the bonding system could be included in the securitization plan. The Commission also said it would hire a financial adviser to provide assistance during the bond structuring process.
More information on this case can be found on the PSC website: www.psc.state.wv.us. Click on “Case Information” and access Case No. 25-0310-E-PC.
