New Rate Increase Coming at Mon Power/Potomac Edison

On top of the rate increase for the Harrison power plant purchase, FirstEnergy’s customers (Mon Power/Potomac Edison) will be hit with a possible 3% rate increase in the next few months.

Remember this post from last January?  If you had clicked on the link in my post to the January final order in the WV PSC’s general investigation of the 2012 blackout in WV, you would have found this in the Conclusions of Law section of the order:

5. The responsible regulatory course of action is to require all electric utilities to file, within six months of the date of this Order, separate petitions for Commission review and approval of proposed programs for systematic and comprehensive, end-to-end, time cycle-based overhead right-of-way vegetation control with spot trimming as necessary. Each electric utility must develop and propose its programs based on the specific operational and reliability targets for that utility. Each petition should also include an explanation of how efforts will be coordinated with other entities that have facilities in the same rights-of-way.
6. Because a comprehensive cycle-based vegetation control program will be more costly than current trimming practices and result in higher costs than are presently included in rates, it is likely that the utilities and ratepayers will pay more in the future. This higher cost should, however, be offset by reduced outages, lower customer impact, and less disruption from future storms. [emphasis mine]

In other words, as I described the order in my post about the order:

Here is the summary:

  • It’s the trees.
  • Cut the trees.
  • Your rates are going up.
  • We will ignore any investment to really make WV’s electrical system more reliable.

Like I said – nothing new.

Well, as the WV PSC and I predicted, your rates are going up to pay Ohio-based FirstEnergy to do the job they were supposed to be doing already.  FirstEnergy filed its required case about it’s right-of-way clearing program back in July.  You can see the case record and what they asked for in their petition here.

FirstEnergy took the PSC’s 2012 blackout final order to heart, with its strange passive voice statement “ratepayers will pay more in the future.”  That future is now:

The proposed Program costs, budgeted to be an average $69 million per year over the first 5 years, is proposed to be recovered through a surcharge beginning with the start of the Program and continuing year after year. Both Mon Power and PE would have a separate Vegetation Management Surcharge. The Companies propose to file their reconciliation and new proposed rates by November 1 ofeach year for changes to rates to be effective the following January 1.

Hey, Mon Power and Potomac Edison customers, how does that sound?  A surcharge “continuing year after year.”  And how much would the surcharge increase electric rates?

Expected average annual revenue requirement for the surcharge would be approximately $35.8 million for the first year. Revenue requirement would be expected to increase slightly as the program ramps up during the initial implementation 5-year period. The average residential customer would experience a rate increase of $2.90 per month or approximately 3.1% as a result of the Program.

Note that this new surcharge is based only on the start up cost of $35.8 million for the first year.  FE projects that the average cost of the surcharge over the first five years will be $69 million.  This is almost double the first year’s cost alone.  To generate an average of $69 million per year over five years, costs in years 4 and 5 will likely be much higher than $69 million.  That means that the surcharge in those years will be more than double the surcharge in year one.  So not only will Mon Power and Potomac Edison’s rates rise, the rate of increase of those rises will also speed up as the years progress.  And the WV PSC has already signaled that this will be OK with them.

FirstEnergy goes on to list a lot of projected benefits from this rate increase and concludes:

It is difficult to forecast benefits, and certainly they will be different among various customers, some of whom will likely receive immediate and meaningful benefits and others who will not. Overall the benefits will be real and should increase over time. The Program will help the Companies achieve their reliability standards agreed to in Case No. 12-0015-E-P and, more importantly, reduce the impact of wind and snow storms on electric service.

There are a number of things going on here.

  1. A real right-of-way maintenance program (btw – What have we been paying Mon Power and Potomac Edison to do for the last 30 years?  I thought it was their job to maintain their systems.) should certainly reduce the severity and duration of many storm-related blackouts.
  2. The PSC’s two blackout investigations (of the 2009 winter blackout and the 2012 summer derecho blackout) failed to investigate why WV’s power companies had allowed their systems to deteriorate so severely over the past 30 years.
  3. As noted in the 2009 investigation, the WV PSC had never set performance standards for system reliability for WV power companies.  The PSC tried to remedy this situation by imposing its first standards ever in case 12-0015-E-P as noted in FE’s petition above.
  4. It is clear from FE’s surcharge petition that the company will be using the right-of-way clearing surcharge to pay for their part of their performance improvements under the new standards.  They say so right in the quote above.
  5. The WV PSC, and certainly FE, never considered broader measures to decentralize WV’s grid to provide both improved reliability and better resilience to WV’s electrical system.  Even the first steps toward local solar power generation, expanded battery storage and small scale natural gas-fired electrical generation, would have provided a real move toward real reliability in our state.

Want to see what other states are doing about real reliability?  Keryn has a nice survey of expanded microgrid technology across the US.  Keryn points out that one of the steps that our neighbor MD took in response to the same 2012 blackout was to create the first commercial microgrid, powered by solar power.

This innovative renewable energy project, which brings Maryland closer to reaching its goal of increasing Maryland’s in-state renewable generation to 20 percent by 2022, combines the strengths of Maryland’s booming solar energy market and the power of grid resiliency. In the event of a conventional power grid outage, the innovative solar PV array will stay online through the power of an advanced energy storage system. If grid power grid goes down, the system batteries will keep a critical load of 50 kW online for just over four hours at night and recharge the next day.

The MD microgrid is essentially the same as my own PV/battery system, which is now a reality for many people in WV.  There’s really nothing fancy about these systems.

What have WV policy makers done to support microgrid technology and a more stable decentralized power system?

In the 2012 legislative session, the WV Legislature eliminated the state tax credit for renewable energy investments by homeowners and businesses.

WV PSC Commissioners Albert and McKinney just voted to further centralize power generation in our state by forcing WV rate payers to buy all of the obsolete, coal-fired Harrison power station from FirstEnergy’s unregulated power generator.

Now, Mon Power/Potomac Edison rate payers will be paying more for right-of-way maintenance, on top of the Harrison purchase, while the Legislature has taken away any state assistance for creating a more reliable system.

4 thoughts on “New Rate Increase Coming at Mon Power/Potomac Edison

  1. How much are they intending to charge us? From the quote:

    “The proposed Program costs, budgeted to be an average $69 billion per year over the first 5 years,…” $69 BILLION?

    • Sorry. That was my mistake correcting the garbled text that came over from the PSC’s .pdf file. It should have been $69 million. I have made the correction and added a little more information about how the rate of increase of our rates will also increase in order to get from the first year surcharge of $35.8 million to an average of $69 million over the first five year period.

  2. So, combining this post with the one that follows it, our rate went from .08581/kwh to .07832/kwh, plus a surcharge of .00607/kwh (difference of .00142), then add in all the existing per kwh charges for a total of $.08871/kwh x 3% rate increase = .00266/kwh = total .09137/kwh final rate with all surcharges included, PLUS the $5.00 monthly customer charge. So, the average (1000 kwh/month) ratepayer will be paying $96.37. And this does not include the increase that will happen after the Pleasants credit is exhausted. Why that’s just as clear as mud, thanks FE!

    • About the right of way clearing rate increase – keep in mind that 3.1% is just what FE started out asking for. It will probably end up being less, although it might not.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s