PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON

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1 090177comf wpd PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the City of Charleston on the 2lSt day of May, CASE NO E-GI APPALACHIAN POWER COMPANY, Charleston, Kanawha County, and WHEELING POWER COMPANY, Wheeling, Ohio County, both public utilities and both operating as American Electric Power. Request for General Investigation to determine reasonable rates for Appalachian Power Company and Wheeling Power Company on and after July 9,2009. COMMISSION ORDER The Commission grants a motion to compel. BACKGROUND On April 23,2009, West Virginia Citizen Action Group (WVCAG) filed its first data request of Appalachian Power Company and Wheeling Power Company, both operating as American Electric Power (AEP), seeking the following information about Demand Side Management/Energy Efficiency (DSM/EE) practices: 1. Each instance during the past ten years when AEP discussed or reported on DSM/EE Practices in writing, recorded video or oral testimony. 2. Any other DSM/EE practice that AEP has engaged in or is engaged in, directly or indirectly, that was not disclosed by the answer to Number Any requirements imposed on AEP by law, regulation, legal authority or regulatory body regarding DSM/EE practices. 4. Future development and implementation of DSM/EE practices by AEP. 5. The same information for each other utility operated by AEP s parent entity. Charleston

2 On May 8,2009, AEP objected to all five requests, asserting they are irrelevant to the issues in this ENEC proceeding and are overbroad and burdensomeness because information was requested for the past ten years and at an inordinate level of detail. Objections pp For Request 3, AEP also asserted that it was being asked to perform legal research and analysis that WVCAG is capable of performing for itself. For Request 5, AEP asserted that other utilities are not subject to the Commission s jurisdiction and their DSM/EE practices are irrelevant to this proceeding. On May 12,2009, WVCAG moved the Commission to compel AEP to respond to the discovery requests, asserting that an ENEC proceeding is a general investigation to determine reasonable rates for the coming year and DSM/EE practices that can control or reduce AEP s costs are relevant. Motion to compel p. 2. AEP predicts that the Capacity Settlement Charge will be $63.2 million higher during the forecast period than during 2008, and WVCAG argued that DSM/EE practices that can reduce the customer peak demand will directly reduce AEP s demand costs, which customers pay through ENEC rates. Id. Similarly, WVCAG asserted that energy costs are rising, about $210 million of the $442 million increase is for coal and purchased power, and DSM/EE practices that reduce energy usage throughout the year will directly reduce AEP s energy costs. Id. WVCAG argued that AEP is willing to discuss ways for customers to pay AEP s costs, but not ways to reduce those same costs. Under W. Va. Code l(b), the Commission balances the interests of current and future utility customers, the state s economy, and public utilities. Under W. Va. Code (a)(5), the Commission is charged to [elncourage energy conservation and the effective and efficient management of regulated utility enterprises. WVCAG argued that DSM/EE practices encourage conservation, are beneficial to the current and future interests of AEP s customers, and are directly relevant to ENEC proceedings because these practices can reduce ENEC-related costs. Motion to compel p. 3. WVCAG also argued that the centrality of control and management, as well as the effectiveness (or ineffectiveness) of DSM/EE programs in other states is directly relevant to DSM/EE programs that may be proposed in this state because West Virginia customers should benefit from the experience of the affiliates with DSM/EE programs. Motion to compel pp WVCAG asserted that discovery is to be freely allowed regarding any material that may reasonably lead to relevant information. WVCAG argued that to suggest that information about energy efficiency and conservation plans and practices cannot possibly lead to information that would be helpful to the PSC is not legally supportable. Motion to compel p. 6. In the motion to compel, WVCAG modified the time period for its requests to five years. Regarding DSM/EE practices of affiliates, WVCAG limited that request to information maintained by AEP Service Company. Motion to compel p. 7. Charleston 2

3 On May 15, 2009, AEP responded to the motion to compel, continuing to argue that WVCAG seeks information that is not relevant to an ENEC proceeding. Response p. 1. AEP asserted that although the Commission has jurisdiction over the DSM/EE practices of regulated public utilities, an ENEC proceeding does not embrace everything within the Commission s jurisdiction. The Commission created the ENEC proceeding as a specialized case, limited to certain matters, and the Commission has not seen fit to make DSM/EE practices one of those subject matters. Response p. 2. In every general rate case, W. Va. Code a requires a public utility to show that it has thoroughly investigated and considered the emerging and state-of-the-art concepts in the utility management, rate design and conservation... as alternative to, or in mitigation of, any rate increase. This is not, however, a statutory requirement for ENEC proceedings. Id. AEP has not filed such reports in any stand-alone ENEC proceeding and asserted that it is unaware of any other public utility having done so. Response p. 3. AEP acknowledged that the Commission created a Task Force to consider APCo s participation in demand side management and consumer energy efficiency programs in its March 6,2008 Order in APCo, Case Number E-CN. Response p. 3. AEP asserted, though, that to date the Commission has not added DSM/EE practices to the roster of ENEC issues. Id.p. 4. AEP also argued that no legal principle authorizes the discovery of irrelevant materials on the off chance that they might somehow lead to the discovery of relevant material. The Commission s own standard of relevance is in Procedural Rule 13.6.b - Discovery requests must be pertinent to substantial issues in the proceeding. AEP asserted that WVCAG s requests about DSM/EE practices do not meet this standard. Response p. 6. Even ifaep s DSM/EE practices were relevant, AEP argued that the practices of other AEP utilities are not. AEP asserted that AEP Service Company does not administer and manage DSM/EE programs for AEP. Response p. 7. Although WVCAG has reduced the length of time to five years, AEP argued that the time period was still unreasonable in a proceeding based on an annual review period. Response p. 7. On May 18,2009, WVCAG replied to AEP, arguing that AEP conceded that DSM/EE practices are directly relevant to the energy demand and costs for which AEP seeks recovery in this case when AEP Chairman, President and CEO Michael Moms stated in the recent report, American Electric Power: 2009 Corporate Sustainability Report that Charleston 3

4 At a time when the economy is in crisis and regulators are loathe to raise customer rates, energy efficiency is an excellent tool that can hold customer bills steady, delay the need for new generation resources and help us address climate change.... Reply pp WVCAG argued that all of the utility subsidiaries of AEP are centrally managed, so there should be some commonality in the DSM/EE practices. Moreover, the success or failure of DSM/EE practices of AEP affiliates, and their cost, is directly relevant to whether such programs should be attempted by AEP. Reply p. 2. DISCUSSION WVCAG asserted that discovery is to be freely allowed regarding any material that may reasonably lead to relevant information. AEP challenged this statement, asserting that no legal principle authorizes the discovery of irrelevant materials on the off chance that they might somehow lead to the discovery of relevant material. AEP also cited the standard appearing in the state and federal Rules of Civil Procedure and the Commission s Procedural Rule 13.6.b. The Commission sometimes looks to the Rules of Civil Procedure for guidance when resolving procedural issues, and West Virginia Rule 26(b)( 1) allows discovery that is relevant to the subject matter involved in the pending action and reasonably calculated to lead to the discovery of admissible evidence. The Commission has previously assessed discovery disputes by considering whether specific data requests are reasonably calculated to lead to the discovery of admissible evidence, and the Commission will do so in this matter. WCVAG is correct that demand side management and energy efficiency practices are potentially relevant in this proceeding. AEP is simply wrong when it states that the Commission has not required DSM/EE concepts to be considered in ENEC proceedings. Although AEP quoted certain portions of the April 8,2008 Order in Case Number E- CN, AEP omitted this paragraph: The Task Force s annual report shall be filed in APCo s ENEC proceedings, not in the IGCC certificate case file, Case Number E-CS. If the Task Force chooses to file any other reports with the Commission, such reports shall be filed under their own case number and not in the IGCC certificate case file. Comm n Order p. 2, APCo, Case No E-CN (Apr. 28,2008). AEP challenged Request Number 3 by asserting that legal research is required to provide a response. The Commission agrees that AEP is not required to conduct legal research for WVCAG. To the extent, however, that AEP is in possession of any law, ~ Charleston 4

5 regulation, or order from any legal authority or regulatory body regarding DSM/EE practices, AEP shall provide those documents. This is a case of extreme significance to APCo and all of its ratepayers, and the Commission will allow discovery on these issues in this proceeding. We believe these materials to be properly discoverable. The Commission, however, reserves judgment on the admissibility of any subsequent testimony involving the issues. The Commission will make a minor adjustment in the procedural schedule to allow WVCAG a period of time to review and incorporate the information in pre-filed testimony. FINDINGS OF FACT 1. On April 8,2008, in Case Number E-CN, the Commission required that the Task Force s annual report on APCo s participation in demand side management and consumer energy efficiency programs to be filed in APCo s ENEC proceedings. Comm n Order p. 2, APCo, Case No E-CN (Apr. 28,2008). 2. On April 23, 2009, WVCAG requested information about Demand Side Management/Energy Efficiency practices from AEP On May 8, 2009, AEP objected to all of WVCAG s requests. Objections pp. 4. On May 12,2009, WVCAG moved the Commission to compel AEP to respond to the discovery requests. Motion to compel pp On May 15,2009, AEP responded to the motion to compel, continuing to argue that WVCAG seeks information that is not relevant to an ENEC proceeding. Response p. 1. CONCLUSIONS OF LAW 1. evidence. Discovery must be reasonably calculated to lead to the discovery of admissible 2. Because demand side management and energy efficiency practices are potentially relevant in this proceeding, the Commission should grant the WVCAG s motion to compel. ORDER IT IS THEREFORE ORDERED that WVCAG s motion to compel is granted. AEP shall provide its responses to WVCAG s discovery requests, with the modifications stated in WVCAG s motion to compel, by Thursday, June 28,2009. WVCAG s attorney must be in receipt of the information by this date. Charleston 5

6 IT IS FURTHER ORDERED that WVCAG may file rebuttal testimony related to the information that AEP produces in compliance with this Order by 4 p.m. Monday, June 1, AEP's attorney must be in receipt of WVCAG's rebuttal testimony by this date. For testimony on any other topic, WVCAG must comply with the schedule set forth in the April 30,2009 Order. IT IS FURTHER ORDERED that the Commission's Executive Secretary serve a copy of this Order by facsimile upon AEP and WVCAG and upon all other parties by United States First Class Mail and upon Commission Staff by hand delivery. CLWIsek cEwpd Charleston 6