Hostage Says: “We avoided a much worse outcome”

That was the quote from Byron Harris, about the latest rate increase agreement with AEP’s Appalachian Power.  Mr. Harris is the director of the WV PSC’s Consumer Advocate Division.  Here is a link to the Charleston Gazette story, which will go behind a pay wall in a week.

Byron Harris’s “it could have been worse” is what the Consumer Advocate always says when the PSC goes through the Kabuki theater of rate increases in WV.  AEP or Allegheny goes to the PSC with an increase request, the CAD and PSC staff and the WV Users Group do a bid dance, including hearings from an outrages public, and everyone comes out with a lower rate increase.  In the most recent rate increase settlements, the big businesses like Walmart in the WV Users Group, have negotiated lower rate increases than those passed on to residential customers.

Because this is AEP’s second rate increase (of three planned) in two years, Appalachian Power’s Phil Moye was even able to put a happy face on the rate increase:

Appalachian Power spokesman Phil Moye said customers’ monthly bills would actually climb 5.53 percent compared to current rates.

The 7 percent increase — noted in Tuesday’s settlement filed with the PSC — was calculated based on electric rates last May, when the utility first submitted its rate hike request with the PSC. On July 1, the power company raised residential rates by 7.6 percent as part of a separate rate case, which the PSC approved.

So, consumers, you should be happy because your actual rate increase was lower, because Appalachian had already raised your rates earlier this year.

West Virginia has a hostage mentality when it comes to electric power.  The state is entirely dependent on a highly centralized coal-fired infrastructure that is obsolete.  Power companies chant the mantra of “we keep the lights on” to keep customers thinking that electricity is magic and Big Daddies AEP and Allegheny Energy will take care of us.

The WV PSC is even allowing AEP and Allegheny to recover all the costs of their 2009 blackout from customers, even though the power companies’ neglect was the primary cause of the collapse of their distribution systems.  The PSC’s own investigation has already determined that both power companies have a worse reliability record than utilities in surrounding states.

Real reliability, and rate stability, depends on creating diversified generation sources, including coal, but moving rapidly to small, home and locally based solar and wind systems and moderate to small sized natural gas fired plants, connected and dispatched on a flexible, redundant, reliable grid.  Political and business leaders in West Virginia, by supporting the continuation of the highly centralized, obsolete coal based infrastructure, are condemning our state to a future of constantly rising rates as that very infrastructure collapses.

The Governor, the Legislature and the WV PSC need to focus on building this diversified and distributed grid in our state by encouraging the installation of home- and business-based grid-tied power generation, new smaller scale local gas-fired power plants and a distributed grid technology that insures reliable, secure service.  As we have seen in Europe, with large scale installation of locally based solar and wind generation, these innovations put downward pressure on coal-fired electricity rates.  Once installed, solar and wind systems have zero fuel costs, the source of most rate increases in West Virginia.  Once a solar or wind generating system is installed, its costs, mainly the cost of construction, financing and maintenance, are essentially the same for the life of the installation.