PSC should reject rate policy change requests

An editorial from The Exponent Telegram 

CLARKSBURG, W.Va. — As the state Public Service Commission considers a policy change request from two of the state’s largest utilities, we hope commissioners keep consumers in mind.

West Virginia American Water and Mountaineer Gas have asked the PSC to change how it calculates rates.

Currently, the PSC uses a historical test year — generally the time period just prior to when a utility requests a rate increase, to determine future rates.

What these two utilities — and we’re sure if they are successful, many others will follow suit — want is to be able to use projected costs instead of real costs in their rate case arguments.

As the Charleston Gazette reported, opponents view this request as a drastic change in policy and fear it will hurt consumers in the short- and long-term.

“Currently, we review expenditures that they already made,” Jacqueline Roberts said. She is the director of the PSC’s Consumer Advocate Division.

“Now, they want the money before they spend it.”

The companies involved say the current method of calculation means shareholders aren’t receiving full value and a “fair rate of return.”

“It never, ever gives us a chance to gain a fair rate of return,” American Water’s John Tomac said. He is the utility’s rates and regulatory support manager.

“It’s theoretically impossible to earn your rate of return with that treatment.”

While we can see the point, we also know that these utilities operate as monopolies in a controlled environment that protects them from drastic market fluctuations…

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