American Electric Power (Nasdaq: AEP) subsidiaries Appalachian Power and Wheeling Power today filed a settlement agreement with the Public Service Commission of West Virginia (PSC) that addresses the companies' Expanded Net Energy Cost (ENEC) cases. The agreement outlines a process for recovering deferred fuel and purchased power costs, major storm restoration expenses, power plant balances and environmental compliance project expenses through securitization.
The West Virginia Energy Users Group and the West Virginia Coal Association joined Appalachian Power and Wheeling Power in signing onto the agreement. The settlement is subject to review and approval by the PSC.
"If approved by the Commission, this settlement agreement will benefit our West Virginia customers by spreading out the recovery of these necessary costs to help keep customer bills affordable and support a reliable energy system," said Peggy Simmons, AEP's executive vice president of Utilities.
As part of the settlement, Appalachian Power and Wheeling Power agreed to reduce their requested fuel deferral amount by $50 million to minimize the impact on customers. The agreement proposes to utilize West Virginia's utility securitization law to address approximately $1.9 billion in costs. This is a new option approved in the 2023 legislative session, with broad support, to address customer affordability.
Securitization enables these costs to be recovered over a much longer timeframe, mitigating the impact on customer bills. Securitization will not affect the retirement of Appalachian Power's and Wheeling Power's coal plants, and the companies intend to run those plants, which benefit West Virginia customers and support grid reliability, through the end of their useful lives. The securitization plan will be filed by Appalachian Power and Wheeling Power and will be subject to review and approval by the PSC.
AEP is reaffirming the forecasted financial data previously issued Nov. 10, 2023, relating to its 2024 operating earnings guidance, its projected 6%-7% long-term earnings growth rate and its 14%-15% FFO/Debt target.
