June 30,2014. Change of Rates on Notice with Proposed Efective Dates for Appalachian Power Company and Wheeling Power Company

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1 ROBINSON &McELWEE attorneys at law BY HAND DELIVERY Ms. Ingrid Ferrell Executive Secretary West Virginia Public Service Commission 201 Brooks Street Charleston, WV June 30,2014 WILLIAM C. PORTH ATTORNEY AT LAW P.O. BOX 1791 CHARLESTON, WV CHARLESTON OFFICE: (304) DIRECT DIAL: (304) FACSIMILE: (304) wctx&amlaw.com Re: Change of Rates on Notice with Proposed Efective Dates for Appalachian Power Company and Wheeling Power Company Dear Ms. Ferrell: I submit herewith, on behalf of Appalachian Power Company and Wheeling Power Company, the original and twelve (12) copies of a Joint Application for increases in their rates and changes in their Tariff provisions. Each copy of the Joint Application is supported by seven (7) bound volumes (the contents of which are identified in Paragraph 6 of the Joint Application). I also enclose the original and twelve (12) copies of a Report on Tariff Change for the Companies. Pursuant to RuIe 4.1.g of the Commission s Rules of Practice and Procedure, electronic copies of the above referenced documents are provided on compact disk in PDF or Excel file format. I file thirteen copies of three separate compact disks. Disk 1 contains electronic versions of the above-referenced seven volumes. Disk 2 contains files in Excel format. Disk 3 contains the Joint Application itself and this filing letter. Please include all of the undersigned attorneys on the service list for this case. Very truly yours, &.2&C. Gi-Zk- William C. Porth (W.Va. State Bar #2943) wcp@ramlaw.com Brian E. Calabrese (W.Va. State Bar #12028) bec@ramlaw.com WCP:tlw Enclosures Counsel for Appalachian Power Company and Wheeling Power Company (R ) Charleston, WV Clarksburg, WV Wheeling, WV I Alliance, OH AFLA International Member

2 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON CASE NO. APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY, public utilities. Joint Application for Rate Increases on Notice with Proposed Effective Dates and Changes in Tariff Provisions, Pursuant to W.Va. Code, $$24-2-4a JOINT APPLICATION COME NOW Appalachian Power Company ( APCo ) and Wheeling Power Company ( WPCo ) (collectively, the Companies ), public utilities, and respectfully file this Joint Application to the Public Service Commission of West Virginia ( the Commission ), pursuant to the statutes of West Virginia and the rules and regulations of the Commission, including but not limited to, W.Va. Code, a and Rules 22 and 42 of the Commission s Rules for the Construction and Filing of Tariffs (CSR $ and ), to increase their rates, upon notice with proposed effective date, and to make changes in their classifications, charges, rules and regulations, and other tariff provisions. 1. The Applicants are wholly-owned subsidiaries of American Electric Power Company, Inc. ( AEP ), and operating companies of the AEP System. APCo is incorporated in the Commonwealth of Virginia and authorized to do business in West Virginia. WPCo is incorporated in West Virginia. The Companies provide electric

3 service as public utilities in West Virginia, subject to regulation by the Commission. Their principal address in West Virginia is 707 Virginia Street, East, Charleston, WV By the terms of the Commission s August 30,2013 Order in Case No E-GIY the Companies are obligated to make a base rate filing by not later than June 30, The Companies provided the notice of their intent to make that filing, as required by W.Va. Code, $24-2-3a7 on May 27,2014, more than thirty (30) days prior to the filing of this Joint Application. 3. The historical test year on which this Joint Application is based is the twelve months ended December 3 1, The noticed effective date of the rate increases encompassed by this filing is July 30,2014, thirty (30) days from the date of filing, subject to such suspension as the Commission may order pursuant to its statutory authority. These rate increases amount to a net increase in current rates of $226,109,498. This net increase includes a $181,495,635 increase in base rates and a new Vegetation Management Program Surcharge of $44,613,863. It also includes the reduction to $0.00 of the existing Construction Surcharge and the Base Rate Surcharge associated with Unit 3 of the John E. Amos Plant. Assuming the maximum suspension permitted by statute, the Companies project that these increases, to the extent they are approved by the Commission, will go into effect on or about April 26, The rates, classifications, charges, rules and regulations, and other provisions being filed by the Companies are set forth in a Tariff Book embodying P.S.C. W.Va. Tariff No. 14, in the case of APCo, and P.S.C. W.Va. Tariff No. 19, in the case of 2

4 WCo, which is included as a part of this filing. Since the terms and conditions and rate schedules are identical for both Companies (albeit local B&O tax charges and local utility taxes are unique to specific municipalities, which municipalities are located in the service territories of one or the other of the Companies), the Companies have created a combined Tariff Book for both Companies, with separate Tariff designations appropriate to each of the Companies. This approach was reviewed with, and deemed acceptable by, the legal and tariff personnel of the Commission s Staff prior of the Companies 2005 base rate case. The Tariff Book constitutes Volume 5 of this filing. 6. The following is a list of all of the volumes being filed today in support of this Joint Application, including the data required by Rule 42 of the Commission s Rules for the Construction and Filing of Tariffs: Volume 1 & 2 Vol. 1 Rule 42 Data containing: Statement A - Statement of Increase Statement B - Average Rate Base Statement C - Detail of Equity and Debt Capital Statement D - Bill Analysis Statement E - Apportionment of Cost of Service Statement F - Balance Sheet Volume 3 Volume 4 Vol. 2 Statement G - Detail of Adjustments (which is augmented by Statement G- 1 providing specific information on the basis and derivation of the Statement G adjustments) Workpapers Supporting Statements A through F Workpapers Supporting Statement G 3

5 Volume 5 Volume 6 Volume 7 7. Proposed Tariffs Class Cost of Service Study Report on Emerging and State-of-the-& Concepts Volume 7 contains the written report required by W.Va. Code, $24-2-4a, to establish that the Companies have thoroughly investigated and considered emerging and state-of-the-art concepts in utility management, rate design, and conservation as alternatives to or in mitigation of rate increases. The rate increases reflected in this Joint Application are at the levels indicated notwithstanding a variety of measures adopted by the Companies to control costs and enhance revenues. 8. Pursuant to Rule 20 of the Commission s Rules of Practice and Procedure and contemporaneously with the filing of this Joint Application, the Companies are filing a petition to change their depreciation rates. The rates set forth in this Joint Application incorporate the new depreciation rates proposed in that petition. Since the Companies proposed depreciation rates have a direct effect on the base rates set forth in this Joint Application, the Companies respectfblly request that the instant proceeding and their depreciation proceeding be consolidated or adjudicated on coordinated procedural schedules. 9. In the Commission s final Order in Case No E-P, among other things, the Commission approved a Vegetation Management Program ( VMP ) for the Companies. The Commission noted that, in the Companies then-upcoming base rate case, it would develop a cost recovery mechanism to address both the prudently incurred deferred VMP O&M expenses and the ongoing VMP costs. 4

6 The Companies propose a surcharge as this recovery mechanism (the VMP Surcharge ). The VMP Surcharge is designed to collect the incremental annual revenue necessary to implement and maintain the VMP. The Companies hrther propose to move the vegetation management costs currently imbedded in base rates into the VMP Surcharge. This will ensure the availability of adequate funding for the VMP and also ensure that customers pay for the exact level of vegetation management that is performed. 10. In the Commission s final Order in Case No E-P, the Commission concluded that: It is reasonable to allow the Companies the opportunity to request recovery of lost revenues associated with EEDR programs by permitting them to include in the 2014 base rate filing post-test year going-level adjustments in the Rule 42 schedules to reflect expected changes to billing revenues that should result from the EEDR programs. Conclusion of Law No. 7, Commission Order, Case No E-P (December 21, 20 13). Accordingly, in this Joint Application, the Companies request recovery of lost revenues associated with EEDR programs and have included post-test year going-level adjustments in the Rule 42 schedules to reflect expected changes to billing revenues resulting from the EEDR programs. 11. In Case No E-PCY pending before the Commission is the Companies request for consent and approval of the transfer to WPCo of the fifty percent interest in the Mitchell Plant and associated facilities currently owned by AEP Generation Resources Inc. (the WPCo Mitchell Transfer ). In the event that the Commission grants its consent to and approval of the WPCo Mitchell Transfer, certain adjustments will need to be made to the Companies rates. The Companies proposal for such adjustments is set forth in this filing. 5

7 12. As stated in the direct testimony of Company witness Gary in Case No, E-G1, the Companies propose that transmission-related revenue accounts be moved out of the ENEC and into base rates. The Companies note that adoption of their proposal will have effects on base rates and ENEC rates. 13. The Companies also propose certain changes to their terms and conditions of service. Implementing some of these changes will require waiver of provisions of the Commission s Rules for the Government of Electric Utilities ( Electric Rules ). The Companies, therefore, respectfully request waiver of the Electric Rules to the extent necessary to implement these changes. 14. As set forth in the Schedules to this Joint Application, the Companies base rate proposal includes, among other things, certain modifications to the return on common equity and overall rate of return included in the Companies rates, the use of statutory income tax rates, a proposed design of the Companies rates, and amendments to the rate schedules and the terms and conditions of the Companies tariffs. The Companies also propose two new riders, a cyber-security rider and an economic development rider. WHEREFORE, the Companies respectfully request the Commission s prompt and deliberate attention to and action upon their Joint Application. Respectfully submitted, APPALACHIAN POWER COMPANY WHEELING POWER COMPANY By Counsel 6

8 Lo& c. P& &K William C. Porth (WV State ~ ai.d. r No. 2943) Brian E. Calabrese (WV State Bar I.D. No ) Robinson & McElwee PLLC P.O. Box 1791 Charleston, West Virginia James R. Bacha Hector Garcia Yazen Alami American Electric Power Service Corp. 1 Riverside Plaza Post Office Box Columbus, Ohio Counsel for Appalachian Power Company and Wheeling Power Company Dated this 30fh day of June,

9 VERIFICATION STATE OF WEST VIRGINIA COUNTY OF KANAWHA 1 to- wit : Before me, a Notary Public in and for the aforesaid jurisdiction, personally appeared Steven H. Ferguson, who, being by me first duly sworn, did depose and say that he is Vice President - Regulatory and Finance for Appalachian Power Company, that he has reviewed the foregoing Application and exhibits and knows the contents thereof, and that the facts therein stated are true to the best of his information and belief. Subscribed and sworn to before me thieday - of June, OFFICIAL SEAL Netaty Public, State of West Virginia DEBORA L. TAYLOR Church Drive Charleston, WV My commirrlon rapirer March 14,2021 (SEAL) { R }