II CASE NO. 18-0645-E-D

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 27th day of February 2019.

CASE NO. 18-0645-E-D II APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY,

Application to Change Depreciation Rates.

and

CASE NO. 18-0646-E-42T

APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY,

Rule 42T application to increase rates and charges.

COMMISSION ORDER

The Commission approves a Joint Stipulation and Agreement for Settlement including an increase in the base rates of Appalachian Power Company and Wheeling Power Co. of $44,19 1,622, changes in depreciation rates, allocation and rate design provisions, and other matters.

This Order also extends a deadline set in G.O. 236.1. II BACKGROUND

Depreciation Case Filing, - Case No. 18-0645-E-D

On May 9, 20 18, the Appalachian Power Company (APCo) and Wheeling Power Company (WPCo) (collectively Companies) requested revised depreciation rates pursuant to Rule 20 of the Commission Rules of Practice and Procedure, 150 C.S.R. 1 (Procedural Rules). The Companies stated that the revised depreciation rates require a $67,088,3 10 increase in annual depreciation expenses for APCo and a $4,172,211 increase in annual depreciation expenses for WPCo, both on a total-company basis. The West Virginia jurisdictional portions of both increases were included in the proposed

$1 14.6 million increase in base rates requested by the Companies in Case No. 18-0646-E- 42T.

Rate Case Filing, Case No. 18-0646-E-42T

On May 9, 2018, the Companies also tendered for filing revised tariff sheets reflecting increased electric rates and charges of approximately $1 14,588,092 annually (a 7.85 percent increase) for furnishing electricity to approximately 467,295 customers in Boone, Brooke, Cabell, Clay, Fayette, Greenbrier, Jackson, Kanawha, Lincoln, Logan, Marshall, McDowell, Mercer, Mingo, Monroe, Nicholas, Ohio, Putnam, Raleigh, Roane, Summers, Wayne, and Wyoming Counties. The Companies proposed to implement the increase to all customer classes with proposed increases of 1 1.13 percent to residential customers, 1 1.5 1 percent to commercial customers, 1.06 percent to industrial customers, and 11.85 percent to other customers as noted on Tariff Form No. 8. The Companies requested an effective date of June 8, 20 18, subject to suspension.

Consolidated Cases

On June 6, 201 8, the Commission issued an Order (i) making APCo and WPCo respondents in Case No. 18-0646-E-42T, (ii) suspending the proposed depreciation rates to permit examination of those rates, (iii) suspending the proposed increased rates and charges in Case No. 18-0646-E-42T through Tuesday, March 5 , 2019, (iv) granting a waiver to allow the Companies additional time to provide individual notice to their customers, (v) granting petitions to intervene by the Consumer Advocate Division (CAD), the West Virginia Energy Users Group (WVEUG)', and The Kroger Co., (vi) consolidating the two proceedings, and (vii) setting a procedural schedule.2 The Commission also granted intervenor status to SWVA, Inc. (SWVA), Walmart, Inc. (Walmart), Kanawha County & Cities Association (KCCA), and the City of Charleston (Charleston). Cornmission Orders June 11, July 19,201 8, and August 27, 201 8.

On June 11, 201 8, the Companies filed in Case No. 18-0646-E-42T the direct testimony and exhibits of Christian T. Beam, Adrien M. McKenzie, Michael J. Adams, Renee V. Hawkins, A. Wayne Allen, Jason A. Cash, Michael N. Kelly, Kimberly Kaiser, Debra L. Osborne, Jenifer L. Fischer, Katharine I. Walsh, Alex E. Vaughan, and John J. Scalzo. They also filed on that date in the depreciation, Case No. 18-0645-E-D, the direct testimony and exhibits of Jason A. Cash and Debra L. Osborne.

WVEUG membership consists of The Chemours Company, Constellium Rolled Products Ravenswood, LLC, Covestro LLC, Marathon Petroleum Company LP, Westlake Chemical Company (Eagle-Natrium LLC), and WVA Manufacturing Company

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Amended by Commission Order on June 28,20 18. 2

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Extensive discovery was conducted and requests were submitted and responded to by the parties from whom discovery was sought.

On October 9, 2018, in Case No. 18-0646-E-42T, Commission Staff filed the direct testimony and exhibits of Terry R. Eads, Kaitlyn J. Shamblin, and Edwin L. Oxley; the CAD filed direct testimony and exhibits of Jonathan Wallach and Ralph Smith; WVEUG filed the direct testimony and exhibits of Stephen J. Baron; Walmart filed the direct testimony and exhibits of Gregory W. Tillman; Kroger filed the direct testimony and exhibits of Kevin C. Higgins; Charleston filed the direct testimony of Danny Jones; and KCCA filed the direct testimony of W. Kent Carper and William Cunningham. Also on October 9, 2018, Staff filed in Case No. 18-0645-E-D the direct testimony and exhibits of Eric F. deGruyter and David L. Pauley.

On October 24, 20 18, the Companies filed in Case No. 18-0646-E-42T the rebuttal testimony and exhibits of Christian T. Beam, Adrien M. McKenzie, Renee V. Hawkins, A. Wayne Allen, Michael N. Kelly, Kimberly Kaiser, Debra L. Osborne, Jenifer L. Fischer, Katharine I. Walsh, Alex E. Vaughan, and John J. Scalzo. They also filed on that date in Case No. 18-0645-E-D the rebuttal testimony and exhibits of Jason A. Cash and Debra L. Osborne. On October 24, 20 18, Staff filed the rebuttal testimony of Terry R. Eads; the CAD filed the rebuttal testimony of Jonathan F. Wallach; WVEUG filed the rebuttal testimony of Stephen J. Baron; SWVA filed the rebuttal testimony of Paul J. Wielgus; and Kroger filed the rebuttal testimony of Kevin C. Higgins.

On October 29, 2018, the Parties met in person and by telephone conference to discuss the possibility of reaching settlement on the issues in these proceedings. Further settlement discussion occurred thereafter, and on November 7, 20 18, the Companies, Staff, the CAD, WVEUG, Walmart, Kroger, Charleston and KCCA (collectively the Stipulating Parties) arrived at an agreement in principle for settling these cases.

On November 8,201 8, the Parties advised the Commission that they had reached a settlement in these cases and requested that out-of-town witnesses be excused. On November 13, 2018, the Parties filed a Joint Stipulation and Agreement for Settlement (Joint Stipulation). All parties, except SWVA, are signatories to the Joint Stipulation. SWVA did not join in the Joint Stipulation, but offered no objection to the Joint Stipulation.

On November 13 and 14, 2018, the Commission held an evidentiary hearing in these proceedings. At the hearing, the Commission entered into the record by agreement of the parties all of the pre-filed testimony and exhibits and received live testimony and statements of counsel in support of the Joint Stipulation. The Commission directed the Companies to prepare and file, with the approval of the other parties, two post-hearing exhibits providing a further explanation of some of the elements of the Joint Stipulation.

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On December 6, 20 18, the Companies filed Post Hearing Request Exhibits Nos. 1 and 2 with the approval of Stipulating Parties.

On January 1 1, 20 19, the Companies filed a Proposed Order, with the approval of all of the parties.

The Commission received 1,262 signatures on comments, letters of protest and petitions protesting the proposed rate increase. Public comment hearings were held in Princeton, Beckley, Wheeling, Huntington, and Charleston. Commission Order, August 27, 2018; Transcripts filed October 23 and 25, 2018, November 7, 13, and 19,2018.

DISCUSSION

Joint Stipulation

The Joint Stipulation supports an increase in the West Virginia retail jurisdictional revenue requirements for the Companies of $44,191,622, which is a reduction of $70.4 million from the amount of increase originally requested by the Companies. The adjustments that produce the recommended increase are shown on page one of Exhibit 1 attached to the Joint Stipulation and are supported by the cost of service summary on page two of the same exhibit. The agreed upon revenue requirement reflects a 9.75 percent return on equity and an overall rate of return of 7.283 percent. Tr. at 24-25 (Scalzo); Joint Stipulation at 715A. The Stipulating Parties agreed to a rate base of $4,004,980,890 that reflects the Companies’ filed rate base with the following adjustments: (1) a reduction of $22.1 million of post-test ycar investments, (2) a reduction of $28.8 million from the cash working capital component of rate base originally requested by the Companies, (3) an increase of $29.26 million to reflect appropriate base rate treatment of the amortization of the excess unprotected accumulated deferred federal income taxes (ADFIT) consistent with the terms of the settlement approved by the Commission in G.O. 236.1 (TCJA Settlement), and (4) a reduction of $92.6 million to reflect certain allocation adjustments discussed in paragraph 71 5E and below. Tr. at 25-26, 34-41 (Scalzo); Joint Stipulation at 7193.

The Joint Stipulation includes reductions in the cost of service originally filed by the Companies to (1) remove the amortization of certain deferrals in accordance with the TCJA Settlement, (2) exclude EE/DR net lost revenues that will be recovered in future EEDR proceedings by agreement of the Stipulating Parties, (3) reduce by one-half the special contract revenue adjustment proposed by the Companies, (4) reflect adjustments to depreciation expense, and (5) reflect a variety of other expense adjustments. Tr. at 26 (Scalzo); Joint Stipulation at 715C.

The stipulated depreciation rates are set forth in Exhibit 2 to the Joint Stipulation. APCo’s West Virginia depreciation rates are based on a 2040 retirement date for the

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Clinch River Units 1 and 2. Any remaining undepreciated plant balance will be transferred to the accumulated depreciation balance of the Amos and Mountaineer Plants and will be recovered over the remaining lives of those plants through charges to depreciation expense. Tr. at 27, 68-69 (Scalzo); Joint Stipulation at 715D.

The Stipulating Parties also agreed to use APCo’s production demand allocator to allocate APCo’s embedded transmission cost of service. On the date that the new base rates go into effect, PJM Transmission Owner Revenues will be allocated in the ENEX monthly deferral calculations using APCo’s production demand calculator. PJM LSE OATT Charges will continue to be allocated using APCo’s retail demand allocator in the ENEC monthly deferral calculations. Tr. at 27, 65-67 (Scalzo); Joint Stipulation at 715E.

The Stipulating Parties recommended that the stipulated revenue requirement increase of $44,191,622 be allocated as set forth in Column 8 of Exhibit 3 to the Joint Stipulation. Certain allocated base rate revenue increases will be mitigated by crediting a further portion of excess unprotected ADFIT. The mitigation credits will be implemented through the changes in the Tax Reform Rider Credit Rates (TRR Credit Rates) as shown on page 2 of Joint Stipulation Exhibit 4. The TRR Credit Rates were previously approved in G.O. 236.1 and the modifications to those credit rates will be approved in this case. The Joint Stipulation provides for the TRR Credit Rates to go into effect on March 1, 2019. The base rates, however, will not go into effect until the end of the statutory suspension period on March 6, 2019. Recommended TRR Credit Rates are set forth in Exhibit 4 to the Joint Stipulation with base rates set forth in Exhibit 5.

Tr. at 27-29 (Scalzo); Joint Stipulation at 716.

The Stipulating Parties agreed to support the Companies’ proposed modification of the Customer’s Liability section of the Terms and Conditions section of the Companies tariffs to include a prohibition to the making of any attachment to meters or other equipment of the Companies. The Stipulating Parties did not agree to proposed tariff language authorizing the Companies to charge customers in the event of meter tampering, and therefore, the Companies’ proposed language on this issue will not be adopted. Tr. at 29-30 (Scalzo); Joint Stipulation at 718.

Pursuant to the Joint Stipulation, the Companies have agreed not to initiate another base rate proceeding prior to April 1, 2020, unless unforeseen events occur that would cause extreme economic hardship to the Companies or would threaten the Companies’ financial integrity or their ability to meet their public service obligations in the absence of base rate relief. Tr. at 30 (Scalzo); Joint Stipulation at 719.

The Companies have agreed to work with the West Virginia Department of Commerce to create economic incentive programs to provide funds to aid in industrial development in the West Virginia service territories of the Companies to be fbnded by a combination of fees and some form of matching contributions from the Companies with

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the programs to be presented to the Commission for its consideration no later than March 31, 2019. Tr. at 30-31, 42-47 (Scalzo); Joint Stipulation at 720. The Stipulating Parties also requested that the deadline of December 31, 2018, set in G.O. 236.1 regarding the sum of $1 million earmarked for economic development be extended to March 3 1, 20 19, to allow for the possibility of some or all of these funds to be used in connection with the economic incentive programs mentioned in the 720 in the Joint Stipulation in the present case. Joint Stipulation at 720; Tr. at 31 (Scalzo).

At the hearing, John Scalzo, Managing Director of Regulatory Services and Finance for Appalachian Power Company, sponsored the Joint Stipulation. Mr. Scalzo provided a detailed summary of the Joint Stipulation, explaining why the Joint Stipulation is a reasonable resolution of this proceeding. Tr. at 21-85 (Scalzo). Alex E. Vaughan, Director of Regulatory Pricing and Analysis for American Electric Power Service Corporation, also testified on behalf of the Companies in support of the Joint Stipulation. Tr. at 86-94 (Vaughan). Staff witness Terry Eads testified that he regarded the Joint Stipulation as “very balanced” and “a good settlement.” Tr. at 96-97 (Eads). Counsel for the other Stipulating Parties, the CAD, KCCA, Charleston, Walmart, Kroger, and WVEUG offered statements in support of the Joint Stipulation. Tr. at 100-108. Although SWVA did not join in the Joint Stipulation, counsel for SWVA stated that SWVA had no objection to the approval of the Joint Stipulation and no additional comments. Tr. at 109.

The Commission has reviewed the Joint Stipulation in detail. In arriving at the Joint Stipulation, the Stipulating Parties have made substantial compromises and have moved from the positions that they had taken in their direct and rebuttal testimony and exhibits in order to reach common ground. The resolution of all of the issues presented in the Joint Stipulation reflects a moderation of the Stipulating Parties’ positions and constitutes a fair, just, and reasonable resolution of the disputed issues in these proceedings.

The obligation of the Commission in rate proceedings is to balance the interests of the parties, the ratepayers, and the State based on a review of all of the evidence, not just evidence submitted in favor of the Joint Stipulation. The full record in these proceedings supports the agreed revenue requirement and resolution of the other issues. Accordingly, the Commission will adopt the Joint Stipulation attached to this Order in resolution of the issues presented in these cases. The rates and charges set forth in the Joint Stipulation are fair and reasonable and should be approved.

Protective Treatment

On October 9, 2018, the Consumer Advocate Division filed a copy of the Direct Testimony of Ralph Smith under seal with asserted confidential information pertaining to a notice from a special contract customer of its intention to reduce its load supplied by the

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Companies by 30,000kW and the Companies’ Long Term Incentive Plan and Supplemental Executive Retirement Program. On the same date, Staff filed a copy of the Direct Testimony of Edwin L. Oxley under seal with asserted confidential information pertaining to the Companies’ Supplemental Executive Retirement Program.

Rule 4.1 .f of the Cornmission Rules of Practice and Procedure (Procedural Rules) requires a Motion for Protective Treatment to be filed within one week of filing any information filed under seal. Because the information that CAD and Staff filed under seal was deemed confidential by the Companies and subject to a protective agreement, the Companies should have filed a motion for protective treatment for that information. The Companies are expected to file a motion for protective agreement, as a closed entry in this case, within fifteen days of this order. The Commission notes that Rule 13.6.c of the Procedural Rules requires a party responding to discovery to file one copy of the discovery responses with the Executive Secretary. The Companies should also comply with this Procedural Rule or explain to the Commission why they do not have to file this information with the Executive Secretary.

FINDINGS OF FACT

1. The Companies filed revised tariff sheets reflecting increases to base rates and charges of approximately $1 14,588,092. Application, May 9,2018.

2. Separately, the Companies filed a depreciation case requesting a $67,088,3 10 increase in depreciation expenses for APCo and a $4,172,2 1 1 increase in annual depreciation expenses for WPCo. These expenses were included in the rate increase request noted in Finding of Fact No. 1. May 9, 20 19 filing.

3. The Companies published proper notice of all filings and hearings in these proceedings in each of the counties where it provides service, satisfied all publication requirements, and provided evidence of proper notice to the Commission. Affidavits of Publication filed on June 25, 2018 and October 10, 2018; Tariff Form No. 6 filed on August 3,20 18.

4. The Joint Stipulation filed on November 13, 2018 was executed on behalf of all of the parties to these proceedings except SWVA. Tr. at Joint Exhibit No. 1.

5 . Joint Stipulation.

The material terms of the settlement are outlined in Paragraphs 15-20 of the

6. The Stipulating Parties agree and recommend that the increase in base rate revenues should be $44,19 1,622 including the depreciation expense based on a return on equity of 9.75 percent. Joint Stipulation at 115.

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7. At the November 14, 2018 hearing, all parties except S W A expressed their support for the Joint Stipulation. Tr. at 21-108. SWVA stated that it did not object to the Joint Stipulation. Tr. at 109.

8. On December 6, 2018, the Commission received Post-Hearing Request ExhibitsNos. 1 and2.

9. On October 9, 20 18, CAD filed under seal the confidential direct testimony of Ralph Smith and Staff filed under seal the confidential direct testimony of Edwin L. Oxley. The infomation that these parties deemed confidential was provided to them by the Companies in response to discovery requests and deemed confidential by the Companies .

10. The companies did not file a Motion for Protective Treatment for the information filed under seal in the confidential direct testimonies of Ralph Smith and Edwin L. Oxley.

CONCLUSIONS OF LAW

1. The provisions of the Joint Stipulation reflect significant compromises of the positions of the parties to this proceeding.

2. The terms and conditions of the Joint Stipulation are just and reasonable. W.Va. Code $24-2-4a.

3. The Joint Stipulation properly balances the interests of the Companies, their customers, and the State as required under W.Va. Code §24-1-1(b).

4. The pre-filed testimony and associated exhibits filed in these cases as well as the testimony offered in sponsorship of the Joint Stipulation support the reasonableness of the Joint Stipulation.

5 . The rates set forth in the Join Stipulation will produce adequate revenue for the Companies but are not designed or intended to produce more than adequate revenue for their operations.

6. The rates set forth in the Joint Stipulation are just and reasonable.

7. The Companies should file a Motion for Protective Treatment for the information identified by the Companies as confidential and filed under seal in the direct testimonies of Ralph Smith and Edwin L. Oxley.

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8. The deadline of December 31, 2018, set in G.O. 236.1, for the Companies to develop, in cooperation with the West Virginia Department of Commerce a plan for use of the $1 million of Unprotected ADFIT funds designated to promote economic development should be extended to March 3 1, 2019, to allow the Companies to work on the economic development program in conjunction with the one discussed in 7/20 of the Joint Stipulation in the present case.

ORDER

IT IS THEREFORE ORDERED that the Joint Stipulation (attached hereto as Appendix A) and Post-Hearing Request Exhibits Nos. 1 and 2 (attached hereto as Appendix B and Appendix C, respectively) are approved and adopted in full as a reasonable resolution of these proceedings.

IT IS FURTHER ORDERED that the deadline of December 31, 2018 respecting the sum of $1 million earmarked for economic development in the G. 0. 236.1 settlement pertaining to Appalachian Power Company and Wheeling Power Company is extended to March 3 1, 20 19. The Executive Secretary should file a copy of this order in G.O. 236.1.

IT IS FURTHER ORDERED that, within thirty days of the date of this Order, Appalachian Power Company and Wheeling Power Company shall prepare and file an original and six copies of appropriately notated revised tariff sheets, to be effective for all services rendered on and after March 6,2019, reflecting the rates hereby approved.

IT IS FURTHER ORDERED that Appalachian Power Company and Wheeling Power Company shall file within fifteen days of this Order a Motion for Protective Treatment for the information filed under seal by the Consumer Advocate Division in the direct testimony of Ralph Smith and the Commission Staff in the direct testimony of Edwin L. Oxley. If the Motion for Protective Treatment is not filed within fifteen days of the date of this Order, the Commission will make public the information filed under seal. At the same time, the Companies shall also comply with Procedural Rule 13.6.c or explain to the Commission why they do not or should not have to file this information with the Executive Secretary.

IT IS FURTHER ORDERED that these cases be removed from the Commission docket of active cases on entry of this Order.

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IT IS FURTHER ORDERED that the Executive Secretary of the Commission serve a copy of this Order by electronic service on all parties of record who have filed an e-service agreement, and by United States First Class Mail on all parties of record who have not filed an e-service agreement, and on Commission Staff by hand delivery.

A True Copy, Teste,

Ingrid Ferrell Executive Secretary

SMS/tk 180645ci.sca

APPENDIX A


CHARLESTON

CASE NO. 18-0645-E-D APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY, public utilities.


CASE NO. 18-0646-3-421: APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY, public utilities.

Rule 42 application to increase rates and charges.

JOINT STIPULATION AND AGREEMENT FOR SETTLEMENT

COME NOW the following parties to Case Nos. 18-0645-E-D and 18-0646-E-42T

(“these proceedings”): Appalachian Power Company (“APCo”) and Wheeling Power Company

(“WPCo”) (collectively, “the Companies”), the Staff of the Public Service Commission of West

Virginia (“the Staff’), the Consumer Advocate Division of the Public Service Commission of

West Virginia (“the CAD”), West Virginia Energy Users Group (“WVEUG’) (its membershp . .

consists of The Chemours Company, Constellium Rolled Products Ravenswood, LLC, Covestro

LLC, Marathon Petroleum Company LP, Westlake Chemical Company, and WVA

Manufacturing Company), SWVA, Inc. (“SWVA”), Walmart Inc. (“Walmart”), The Kroger

Company (“Kroger”), the City of Charleston (“Charleston”), and The Kanawha County & Cities

Association (“KCCA”). All of the foregoing parties, except SWVA, shall be referred to

collectively as ”the Stipulating Parties.” The Stipulating Parties present herein a negotiated

resolution of all of the issues in these proceedings, and in support of that resolution they state:

{R1385924.1)

Rate Case Filing. Case No. 18-0646-E-42T

1. On May 9, 20 18, the Companies tendered for filing revised tariff sheets reflecting

increased electric rates and charges of approximately $1 14,588,092 annually (a 7.85 percent

increase) for furnishing electricity to approximately 467,295 customers in Boone, Brooke,

Cabell, Clay, Fayette, Greenbrier, Jackson, Kanawha, Lincoln, Logan, Marshall, McDowell,

Mercer. Mingo, Monroe, Nicholas, Ohio, Putnam, Raleigh, Rome, Summers, Wayne, and

Wyoming Counties. The Companies proposed to implement the increase to all customer classes

with proposed increases of 1 1.13 percent to residential customers, 1 1.5 1 percent to commercial

customers, 1.06 percent to industrial customers, and 1 1.85 percent to other customers as noted on

Tariff Form No. 8. The Companies requested an effective date of June 8, 2018, subject to

suspension.

Depreciation Case Filing. Case No. 18-0645-E-D

2. On May 9, 2018, the Companies requested revised depreciation rates pursuant to

Rule 20 of the Commission’s Rules of Practice and Procedure, 150 C.S.R., Series 1

(Procedural Rules). The Companies stated that the revised depreciation rates require a

$67,088,3 10 increase in annual depreciation expenses for APCo and a $4,172,2 1 1 increase in

annual depreciation expenses for WPCo, both on a total-company basis. Both increases were

included in the proposed $1 14.6 million ncrease in base rates requested by the Companies in

Case No. 18-0646-E-42T.

Consolidated Case

fR1385924.1) 2

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3 . On June 6, 2018, the Commission issued an Order (i) making APCo and WPCo

respondents in Case No. 1 8-0646-E-42T, (ii) suspending the proposed depreciation rates to

permit examination of those rates, (iii) suspending the proposed increased rates and charges in

Case No. 18-0646-E-42T through Tuesday, March 5 , 2019, (iv) granting a waiver to allow the

Companies additional time to provide individual notice to their customers, (v) granting petitions

to intervene by the CAD, WVEUG and Kroger, (vi) consolidating the two proceedings, and (vii)

setting a procedural schedule, subsequently amended by a June 28,2018 Order.

4. On June 1 1, 2018, the Companies filed in Case No. 18-0646-E-42T the direct

testimony and exhibits of Christian T. Beam, Adrien M. McKenzie, Michael J. Adams, Renee V.

Hawkins, A. Wayne Allen, Jason A. Cash, Michael N. Kelly, Kimberly Kaiser, Debra L.

Osborne, Jenifer L. Fischer, Katharine I. Walsh, Alex E. Vaughan, and John J. Scalzo. They also

filed on that date in Case No. 18-0645-E-D the direct testimony and exhibits of Jason A. Cash

and Debra L. Osborne.

5. The Commission granted intervenor status to SWVA and Walmart in Orders

dated June 1 1 and July 19, 20 18, respectively.

6. On July 30, 2018, the KCCA and Charleston filed a joint petition to intervene.

The Commission granted intervenor status to KCCA and Charleston by Order dated August 27,

2018.

7. During the course of these proceedings, the Commission received many

comments and protests from members of the public.

8. Numerous discovery requests were submitted and responded to by the parties of

whom discovery was sought.

{ R1385924.1}

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9. On October 9, 2018, in Case No. 18-0646-E-42T, the Staff filed the direct

testimony and exhibits of Terry R. Eads, Kaitlyn J. Shamblin, and Edwin L. Oxley; the CAD

filed direct testimony and exhibits of Jonathan Wallach and Ralph Smith; WVEUG filed the

direct testimony and exhibits of Stephen J. Baron; Walmart filed the direct testimony and

exhibits of Gregory W. Tillman; Kroger filed the direct testimony and exhibits of Kevin C.

Higgins; Charleston filed the direct testimony of Danny Jones; and KCCA filed the direct

testimony of W. Kent Carper and William Cunningham. Also on October 9, 2018, the Staff filed

in Case No. 18-0645-E-D the direct testimony and exhibits of Eric F. deGruyter and David L.

Pauley .

10. On October 24, 2018, the Companies filed in Case No. 18-0646-E-42T the

rebuttal testimony and exhibits of Christian T. Beam, Adrien M. McKenzie, Renee V. Hawkins,

A. Wayne Allen, Michael N. Kelly, Kimberly Kaiser, Debra L. Osborne, Jenifer L. Fischer,

Katharine I. Walsh, Alex E. Vaughan, and John J. Scalzo. They also filed on that date in Case

No. 18-0645-E-D the rebuttal testimony and exhibits of Jason A. Cash and Debra L. Osborne.

11. On October 24, 201 8: the Staff filed the rebuttal testimony of Terry R. Eads; the

CAD filed the rebuttal testimony of Jonathan F. Wallach: WVEUG filed the rebuttal testimony

of Stephen J. Baron; SWVA filed the rebuttal testimony of Paul J. Wielgus; and Kroger filed the

rebuttal testimony of Kevin C. Higgins.

12. On October 10, 2018, the Companies filed affidavits of publication evidencing

compliance with the notice requirements in the Commission’s Order of August 27,2018.

13. On October 29, 20 1 8, all of the parties met in person and by telephone conference

to begin discussion of the possibility of reaching settlement on the issues in these proceedings.

Further settlement exchanges occurred thereafter and on Kovember 7, 20 1 8, the Stipulating

(R1385924.1)

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Parties arrived at an agreement in principle. This agreement was reduced to writing in the form

of the instant Joint Stipulation.

14. The Stipulating Parties propose to the Commission the elements set out below as

a fair and just resolution of all of the contested issues in this proceeding; uncontested issues

raised by the Companies' filings will be implemented as proposed.

15. The Stipulating Parties respectfully recommend and request that the Commission

approve a $44,191,622 increase in the Companies' West Virginia retail jurisdictional revenue

requirement, which is the equivalent of a reduction of $70.4 million fiom the revenue

requirement increase originally sought by the Companies. The adjustments that produce the

recommended increase agreed upon by the Stipulating Parties, which are shown on page 1 of

Exhibit 1 and supported by the cost of service summary shown on page 2 of Exhibit 1, reflect the

following:

A. A return on equity for the Companies of 9.75% and an overall rate of

return of 7.283%, as shown on page 3 of Exhibit 1, the use of which

lowers the Companies' originally requested revenue requirement increase

by $12.7 million.

A rate base of $4,004,980,890. which reflects the Companies' filed rate

base adjusted to reflect the following: (1) a reduction of $22.1 million of

post-test year investments; (2) a reduction of $28.8 million fiom the cash

working capital component of rate base originally requested by the

Companies; (3) an increase of $29.26 million to reflect the appropriate rate

base treatment of the amortization of the excess unprotected accumulated

deferred federal income taxes ("ADFIT") consistent with the terms of the

B.

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settlement approved by the Commission for the Companies in G.O. 236.1

(“the TCJA Settlement”); and (4) a reduction of $92.6 million to reflect

the allocation adjustment discussed in subparagraph E.

Reductions in the cost of service originally filed by the Companies, to

remove the amortization of certain deferrals in accordance with the TCJA

Settlement; to exclude EEDR net lost revenues (which the Stipulating

Parties agree will be recovered in the Companies’ future EEDR

proceedings); to reduce by one-half the special contract revenue

adjustment proposed by the Companies; to reflect adjustments to

depreciation expense; and to reflect various miscellaneous expense

adjustments.

Adoption of the depreciation rates set forth on Exhibit 2. APCo’s West

Virginia depreciation rates are based on a 2040 retirement date for Clinch

River Units 1 and 2, with the stipulation by the parties that whenever these

units are retired, any remaining undepreciated plant balance will be

transferred to the accumulated depreciation balances of the Amos and

Mountaineer Plants and will be recovered over the remaining lives of

those plants through charges to depreciation expense.

The use of APCo’s production demand allocator to allocate APCo’s

embedded transmission cost of senice: with the following stipulations by

the parties: on the date that new base rates go into effect, PJM

Transmission Owner Revenues will be allocated in the ENEC monthly

deferral calculations using APCo‘s production demand allocator; and PJM

C.

D.

E.

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LSE OATT Charges will continue to be allocated using APCo’s retail

demand allocator in the ENEC monthly deferral calculations. I

16. The Stipulating Parties recommend and request that the stipulated base rate

revenue requirement increase of $44,19 1,622 be allocated to the Companies‘ customer classes as

set forth in Column 8 of Exhibit 3 . In order to initially moderate the customer impacts, certain

allocated base rate revenue increases will be mitigated by crediting a further portion of the

remaining class balances of excess unprotected ADFIT. The mitigation credits are to be

implemented through changes in the TRR Credit Rates, as shown on page 2 of Exhibit 4. The

Stipulating Parties also recommend and request that $14 million of the remaining class balances

of excess unprotected ADFIT be used on March 1, 201 9 to reduce class responsibility for a

portion of the Companies’ accumulated ENEC under-recovery. The agreed-upon use of current

unprotected ADFIT balances and the respective balances remaining for each class after the

agreed-upon allocation and use of such balances are set forth on Page 1 of Exhibit 4. The non-

residential C&I Subsidy Reduction portion of the TRR credits as set forth on page 2 of Exhibit 4

will remain in place for 16 months beginning on March 1,20 19 and conclude on June 30, 2020.

The residential TRR credit as set forth on page 2 of Exhibit 4 will remain in place for 24 months

beginning on March 1, 2019 and conclude on February 28, 2021. The residential credit will

decrease by one-half on March 1, 2020 from $5.5 million annually to $2.75 million annually,

17. The Stipulating Parties recommend and request that the Commission approve the

TRR rates set forth on Page 2 of Exhibit 4 and the base rates set forth on Exhibit 5. The base

rates include changes to the rate design for classes RS and GS.

18. With respect to the Companies’ proposed changes in its Terms and Conditions of

Service in the Companies’ tariffs, the Stipulating Parties recommend that the Commission

{ R1385924.1)

7

approve the formatting and wording changes to the Customer's Liability section proposed by the

Companies to include a prohibition to the making of any attachment to meters or other

equipment of the Company. The proposed language on authorization to charge customers in the

event of tampering is not supported by the Stipulating Parties.

19. The Companies agree that they will not initiate a base rate proceeding prior to

April 1, 2020, unless unforeseen events occur that would cause extreme economic hardship to

the Companies or would threaten the Companies' financial integrity or its ability to meet its

public service obligations in the absence of base rate relief.

20. The Companies agree to work with the West Virginia Department of Commerce

to create economic incentive programs to provide funds to aid in industrial development in the

Companies' West Virginia service territories, comparable to economic incentive programs

currently in place in Kentucky Power Company's senice territory, to be funded by a

combination of electric service customer fees and some form of matching contributions fiom the

Companies' (which will not be included in the Companies' cost of service and which will not

exceed $1.2 million), with the programs to be presented to the Commission for its consideration

and approval as soon as practicable in 20 19, but not later than March 3 1, 201 9. The Stipulating

Parties request that the deadline of December 31, 2018 respecting the sum of $1 million

earmarked for economic development in the G.O. 236.1 settlement pertaining to the Companies

be extended to March 31, 2019, to allow for the possibilit) of some or all of these funds being

used in connection with the economic incentive programs.

2 1. The substantive terms of the settlement set forth above reflect substantial

compromises by the Stipulating Parties of their original positions and constitute a fair and

8

reasonable resolution of all of the contested issues in these proceedings, taking into consideration

the interest of the Companies and their customers and the public interest of West Virginia.

22. Negotiated settlements of multi-faceted cases before the Commission are usually

carefully balanced arrangements, with various terms predicated on the substance of other terms

and the totality embodying reciprocal give-and-take by a variety of parties on the issues of

particular importance to each party participating in the settlement. The Joint Stipulation is

perhaps even more intricate and meticulously balanced than the typical settlement. The

Stipulating Parties therefore respectfully request that the Commission approve the settlement

which they present in toto and without modification, lest a change in any individual element

unravel the complex and finely calibrated structure on which many parties of diverse interests

were able to reach agreement.

23. This Agreement is entered into subject to the acceptance and approval of the

Commission. It results from a review of any and all filings in this proceeding, the Stipulating

Parties’ prefiled testimony and exhibits, and thorough discovery and discussion. It reflects

substantial compromises by the Stipulating Parties and the 1%-ithdrawal of their respective

positions asserted in this case, and is being proposed to expedite and simpli& the resolution of

this proceeding. It is made without any admission or prejudice to any positions which any party

might adopt during subsequent litigation, except as expressly provided herein. The Stipulating

Parties adopt this Agreement as being in the public interest, without adopting any of the

compromise positions set forth herein as ratemaking principles applicable to future proceedings,

except as expressly provided herein. The Stipulating Parties acknowledge that it is the

Commission’s prerogative to accept, reject, or modify any stipulation; however, in the event that

this Agreement is rejected or modified by the Commission. it is expressly understood by the

{ R 1385924.1 }

9

APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY

Their: W C l h l S &

STAFF OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA

By: Name: Its:

CONSUMER ADVOCATE DIVISION OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA

WEST VIRGINIA ENERGY USERS GROUP

THE KROGER COMPANY

(R1385608.1) 11

APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY

By: Name: Their:

STAFF OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA

A

I , - . . - , /

CONSUMER ADVOCATE DIVISION OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA

By: Name: Its:

WEST VIRGINIA ENERGY USERS GROUP

By: Name: Its:

SWVA, INC.

By: Name: Its:

{ R 1385608.1 ) 11

THE CITY OF CHARLESTON f l

THE KANAWHA COUNTY & CITIES ASSOCIATION

12

Stipulating Parties that they are not bound to accept this Agreement as modified, and the

Stipulating Parties may avail themseives of whatever rights are available to them under law and

the Commission’s Rules of Practice and Procedure.

WHEREFORE, the Stipulating Parties respecthlly request that the Commission adopt in

toto and without modification all of the elements of the negotiated settlement arrived at by the

Stipulating Parties.

Respectfully submitted this 13th day of November, 201 8.

(R1385924.1) 10

Settlement Exhibit 1 Page 1 of 3

Adjust Depreciation for 12/31/17 CWlP Storm/lGCC/CCS Amortization Expense Staffs Depreciation Rates Net Lost Revenue 50% of SC Load Reduction SERP Rate Case Expense 50% of LTIP Payroll tax associated with LTlP Adj 50% of Aviation Savings Plan associated with LTlP Adj

As-Filed by the Companies

Settlement Rate Base I Revenue Deficiency

4,119,267,635 114,588,092

ROE and Rate Base Adjustments

Cash Working Capital (25,796,306) (2,594,216) TCJA Rate Base Adjustment 29,264,842 2,636,426 CWlP moved to EPlS (22,130,894) (1,993,739)

86,380,038 4,004,980,890

(17,827,181) (13,628,508) (4,476,215) (2,855,016)

(236,700) (35,833)

(2,134,826) (163,314) (165,463) (85,393)

1 44,191,622

I--.--- 4,004,980,890


Appalachian Power Company 4% Wheeling Power Company Case Number 18-0646-E-42T

Settlement Revenue Requi rernent

TCJA AND SETTLEMENT

AS FILED ADJUSTMENTS SETTLEMENT

Operating Revenues

Operation and Maintenance Expense Net Operating Income Before F.I.T.

Federal Income Taxes

Net Operating Income

Rate Base

Rate of Return

Proforma Revenue

Going Level Revenue

Revenue Requirement

1,589,786,074 (63,069,739) 1,526,716,335

865,841,7 1 5 (24,217,654) 841,624,061 357,223,490 (21,875,517) 335,347,973

47,497,693 (3,840,683) 43,657,009

309,725,797 ( 1 8,034,834) 291,690,964

4,119,267,635 (1 14,286,745) 4,004,980,890

7.51 9% 7.283%

1,589,786,074 (63,069,739) 1,526,716,335

1,475,197,982 7,326,731 1,482,524,713

114,588,092 (70,396,470) 44,191,622


APPALACHIAN PGWER COMPANY & WHEELING FOWER COMPANY

CAPITAL STRUCTURE AND COST OF CAPITAL WEST VIKGINIP. P . s . ~ 2010 BASE RATE CASE

ACTJALAS OF DECEMBER 31,2017

Long-term Debt

Short-term Debt

Common Stock

Overall Cost of Capital

Total Debt

Total

Amount Outstanding

($000)

$4,066,317

$ 124,738

$4 191,055

$4,277,838

$8 400,893

Weighted Return

Component percent Cost Rate % % %

4a 357% 4.909

1.183% 1.261

?GOO/;

9.75

2.374

0.019

2.393

4.891

7.203

Case No. 18-0645-E-D

Settlement Exhibit 2 APPALACHIAN POWER COMPANY

SETTLEMENT DEPRECIATION RATES BASED ON PLANT IN SERVICE AT DECEMBER 31,2017

STE.4M PRODUCTION PLANT

.A WOS UNITS I &2

311 312 312 314 315 3 I6

31 I 312 312 314 315 316

31 1 312 3 I4 315 316

311 3!2 312 314 315 316

Smicrttres Et Improvements Fv:e; Pmit Equipment 3 d e r Pimt Equip. SCR Catalyst ? ,x'cogmeratcr Units 4:.cswr) Electrical Equip. ?.:isc Pobxer Flant Equip

Tcral

-__ .A3IO5 UNIT 3

S .-w;t~-es Er Ixprovements Goi i i . ~ PIan! Equipment 2mie.: Plant Equip. SCR Caral!.st Ti&-generator Units .tcces*or) Electrical Equip Llisc h w e r Pimt Equip

it XC? x e s Et I i x provements Boiie: Plant Equipment 1 iirbo-,enerator Units .Ax:ssog Electrical Equip. Ll isc. ?oner P h t Equip

Tom!

5i?.!ct:::es Et Improvements 13~i;e: P l a ~ Equipment Soiier Plant Equip SCR Catalyst TTcrbogenrratcr Units .4cces,or) Electrical Equip I : i S C . Power Plwt Equip


APPALACHIAN POWER COMPANY SETTLEMENT DEPRECIATIOS RATES

BASED ON PL.4NT IN SERVICE AT DECEMBER 31,2017

ACCT XO ACCOLJNT TITLE GEPRECIATION RATE (1) (2) (3)

OTHER

3 I 1 Centralized Maintenence 3 16 Central Machine Shop 3 1 1 3 12 3 t 5

Little Broad Run Ash Disposal Little Broad Run Ash Disposal Little Broad Run Ash Disposal

1.95% 2.49% 3.74% 3.72% 3.86%

Total 1.41%

Total Steam Production Plant 3.19%

HYDRACLIC PRODCCTION PLAST

33 1 332 333 334 335 336

331 332 333 334 335

331 332 333 334 335 336

Structures B Improvements Resenoirs, Darns & Waterways Watemheels, Turbines & Gen Accessory Electrical Equip Misc Power Plant kquip Roads, Railroads & Bridges

Total

BYLLESBY

Structures & Improvements Reservoirs. Dams & Waterways Waterwheels. Turbines & Gen Accessory Electrical Equip Misc Pouer Plant Equip

Total

CLAYTOR

Structures & Improvements Reservoirs, Dams & Waterways Waterwheels, Turbines & Gen Accessory Electrical Equip Misc Power Plant Equip Roads, Railroads & Bndges

Total

6 35% 9.73% 5 52% ? 28%

1 2.7 I % 4 77%

X 6296

10.33% 1 1 98% 1 1 .SO% 8 65% Io 97%

1 : .44%

3.01% 2.10% 2.75% 2 5746 3.24% G.?9?’c

2 4836


APPALACHIAN POWER COMPANY SETTLEMENT DEPRECIATION RATES

BASED OK PLANT IN SERVICE AT DECEMBER 31,2017

ACCT NO ACCOUNT TITLE DEPRECIATION UTE ( 1 )

33 1 332 333 334 338 336

331 332 333 334 335 336

33 I 332 333 334 335 336

33 I 332 333 334 335

Structures & Improvements Kesen oirs. Dams & Waterways Waterwheels, Turbines & Gen Accessorq Electrical Equip ~Misc Poaer Plant Equip Roads, Railroads & Bridges

Total

LOXDOX

Str’tctures & lmprovements Reservoirs, Dams & Waterways Waterwheels, Turbines & Gen Accessory Electrical Equip Misc Power Plant Fquip. Roads. Railroads & Bridges

Total

MARMET

Structures & Improvements Resenoirs, Dams & Watenvays Waterwheels. Turbines & Gen Accessory Electrical Equip Misc Power Plant Equip Roads, Railroads & Bridges

Total

Structures & Impro\ements Reservoirs, Dams & Waterways Waterwheels. Turbines & Gen Accessory Electrical Equip Misc Poaer Plant Equip

Total

(3)

2.51% 2 07% 1.87% 3.71% 3.27% 0.80%

2 30%

3.57% 2 59% 3.97% 2.16% 3.839‘0 148%

3.49%

2 63% 3 10% 4.42% 2 82% 3.21% 140%

3 66%

14.76% 10.16% 4.48% 14.40% 6.40%

10.23%


APPALACHIAN POWER COMPAi%Y SETTLEMENT DEPRECIATIOS RATES

BASED OS PLANT IK SERVICE AT DECEMBER 31,2017

(1)

331 332 333 334 335 336

33 1 332 333 334 335 336

ACCT NO ACCOUNT TITLE DEPRECL4TIOS RATE

(2) (3) SMITH MOUNTAIN

Structures & Improvements Reservoirs, Dams & Waterways Waterwheels, Turbines & Gen. Accessory Electrical Equip. Misc. Power Plant Equip. Roads, Railroads & Bridges

Total Smith Mountain

WISFIELD

Structures & Improvements Reservoirs, Dams & Waterways Watenvheels, Turbines & Gen Accessory Electrical Equip Misc Power Plant Equip Roads. Railroads & Bridges

Total

Total Hydraulic Production

OTHER PRODUCTIOY PLANT

CERED0

341 Structures & Improvements 344 Generators 345 Accessory Electrical Equip 346 Misc PoNer Plant Equip

Total

DRESDEh

341 Structures & Improvements 342 344 Generators 345 Accessorq Electrical Equip 346 Misc Poner Plant Equip

Fuel Holders, Producers & Access

Total

Total Other Production Plant

Total Production Plant

187% 0 98% 3 20% 3 49% 3 53% 6 83%

2.64%

3.94% 2.58% 4.06% 4.12% 2.57% 2 72%

3.47%

3.73%

1.34% 134% I .40% 3.98%

136%

3.32% 2 90% 3.10% 3.07% 3 84%

3.16%

2.58%

3.15%


APPALACHIAN POWER COhIPANY SETTLEMENT DEPREClATIOU R4TES

BASED ON PLANT IN SERVICE A T DECEMBER 31,2017

ACCT NO ACCOUNT TITLE "UE%€CIAT!ON RATE ( 1 ) ( 2 ) ( 3 )

TR4SSMiSSIOS PLAST

35 I 352 353 354 355 336 357 358

Energy Storage Equipment Snuctures & Improvements Station Equipment 7 owers & Fixtures Poles & Fixtures OH Conductor & Devices Ilnderpound Conduit Underground Conductor

1 $223'0 162% 2 31% 159% 2 71% 1 5 3 % 2 ? I % 5 24%

Total Transmission Plant 2.11%

DISTRIBUTIOX PLANT - N'V

361 362 363 3 64 365 366 367 368 369 3 70 371 3 73

Structures & Improvements Station Equipment Energ$ Storage Equipment Poles, Towers, & Fixtures Olerhead Conductor & Devices Underground Conduit Underground Conductor Line Transformers Services Meters Installations on Custs Prem Street Lighting & Signal Sys

Tota! Distribution Plant - WV

1 c)ph

2 52'40 7 -38% 4 77% 3 , j 8% ! 73% 2 05% 4 65% 4 22% I2 43% W O ? b 8.17%

4 06%


APPALACHIAN POWER COMPANY SETTLEMENT DEPRECIATIOV RATES

BASED ON PLAXT IN SERVICE AT DECEMBER 31,2017

ACCT NO ACCOUNT TITLE DE'ZRECIATION RATE (1) (2) ( 3 )

GENERAL PLANT

390 391 3 92 393 394 395 3 96 3 97 39s

Structures & Improvements Ofice Furniture & Equipment Transportation Equipment Stores Equipment Tools Shop & Garage Equipment Laborator) Equipment P o w r Operated Equipment Communication Equipment Miscellaneous Equipment

1.91% 3.17% 3 40% 1.80% 2 57% 4.01% 3.90% 4.98% 2.70%

Total General Plant 2.75%

Total Depreciable Plant 3.19%


Settlement Exhibit 2 WHEELING POWER COMPANY

SETTLEMENT DEPRECIATION RATES BASED OK PLANT IS SERVICE AT DECEMBER 31,2017

ACCT NO ACCOUNT TITLE DEPRECIATION RATE (1) (2) (3 )

STEAM PRODUCTIOS PLANT

311 312 3 ( 2 3 14 315 316

Structures & improvements Bo:ier Plant Equipment Boiler Plant Equip. SCR Catalyst Turbogenerator Units Accessov Electrical Equip Misc. Power Plant Equip.

2.7994 1.94%

(: 9.27% 1.699'0 2.39% 2 539'0

Total Steam Production Plant 2.90%

TRANSMISSION PLAHT

352 Structures & Improvements 353 Station Equipment 354 Towers & Fixtures 355 Poies &Fixtures 356 OH Conduc:or & Devices 357 Underground Conduit 35s Undergiound Conductor

Total Transmission Plant

DISTRIBVTIOX PLAXT

361 3 62 364 365 366 367 365 369 370 371 3 73

Structures & Improvements Station Equipment Poles, Towers, & Fixtures Overhead Conductor & Devices 1Jnderground Conduit Underground Conductor Line Transformers Services Meters Installations on CUSS Prem Street Lighting & Signal Sys.

Total Distribution Plant

GEKER4L PLAST

390 Structures Br Iifiprovements 391 Office Furniture & Equipment 393 Stores Equipment 394 397 Communication Equipment 398 Miscellaneous Equipment

Tools Shop & Garage Equipment

T o h i General Plant

Total Depreciable Plant

1 15% 2 2244 2.65OA 2.4190 1.324'2 9 94% 13 98%

2.16%

1 i 1 % 2.22% 5.28% 3.43?4 1.91% I .98% 4.67% 4.59% 6.97% 13.4 1 '/io

13.61 90

3.88%

1 08% 2.13% 178% 1.6556 5.09% 2.7 6%

2.23%

2.95%

Settlement Exhibit 3

Customer Class

Appalachian Power Company & Wheeling Power Company Revenue Allocation

Test Year 201 7

Current Proposed Increase Revenue Increase

Base Rate increase

I Base Rate Subsidy Progress I I I Net

%

Base Rate Increase TRR Net Increase

% Credits' Increase Current Subsidy

' TRR Credits are an estimated annual amount Residential class credit is $5.5 million the first year and decreases to $2.75 million the second year it is in effect CBI subsidy reduction credits will run for 16 months beginning on March 1, 2019 and concluding on June 30, 2020

Settlement Change in Subsidy Subsidy

As of T V A Scnlement APCo/WPCo West Vlrglnla jurisdictional share of generation and dirtrlbution function unprotected excess ADFIT summary J",lSalCIlDNl

18/19 Temponly M( Indunrlel In6urtrk.l RcmOhlnl WV S h n d ENECUndn- VMPUnda-

ZU17 Rata Rase Unpmtccted R.mYcyl*loms Rrmvw*!hCnrs Conetructbn brr(mnrc Emnomk W M w Rue. Subsldy SubMv lufhdl=tbn4Sh.nof AllUulor E M S A W I T M e t Off* SUlchsm~ Funding Rilewe S u p p a F w d Adlurtmmc Adlusttm.nt Reddunhn Unpmtmad t k c r s ADFlT

Base Rate Case Settlement Items N t W

lnaemsntal Rase ENEC RsmPlnkHWV Judsdktbnsl Case TRR Rete Tnnrmlshn Share of Unpmtened EI(cs

C d k s 0 f f S . S ADFIT

*-

I Start Date I September I, 2018 I December 1,2018 September 1, 2018

End Date I February 28,2019 February 28,2019 I dM30,.2820 Fcb 28,2019 ~

Settlement Exhibit 4

I I -

Startoate 1 March _.___ 1,2019 - March 1, 2019 March 1,2020 - End Date June 30.2020 February 29,2020

L

Notes: * Currentlyapproved C&l subsidy reduction rate rredits will increase on March 1,2019 per thc base rate case settlement agreement -

Settlement Exhibit 5 APCO/WPCO WV BASE RATE SZJILIMARY

Rates Residential:

Standard Rates:

First Block < 500 kWh Second Block > 500 kWh

Winter Block > 1,350 kWh

Storage Water Heating kWh Customer

Time of Dav: On-Peak kWh

Off-peak kWh

Customer

Emdovee Rates:

First Block < 500 kWh Second Block > 500 kWh

Winter Block > 1,100 kWh

Customer

ODtiOnd Residential Demand 'l'ariifi Energy Charge - All kWh

Off Peak Energy Charge On-Peak Demand Charge per kW

Customer Charge

- sws: First Block < 7,000 kWh

Second Block > 7,000 kWh

Standard Customer

kW h kWh kWh

kWh Bills

kWh

kWh

Bills

kWh

kWh kWh Bills

kWh

kWh

per kLV

Bills

kWh

kWh Bills

0.08219 0.06920 0.03980 0.02687

12.00

0.13126 0.02687

15.00

0.07194 0.07194 0.03980

12.00

0.07256 0.04407

3.64 15.00

0.07240 0.06170

15.00

- ss: Secondary Billing Demand All kWh Bills

Primary

per kW per kWh per bill

2.65 0.05 104

20.00

Billing Demand

All kWh

Bills

Primary - Athletic Fields All kWh

Bills

d SGS Standard k Wh

LM-TOD On-Peak kWh

LM-TOD Off-peak kWh

Standard Customer Unmetered Customer

LM-TOD Customer

- GS: Secondary Billing Demand Block 1 kWh

Block 2 kWh

kVAr Off-peak Excess

Maximum

Floodwalls

Alt Feed Service Bills - Standard

Primary Billing Demand

Block 1 kWh

Block 2 kWh

kVAr

Off-peak Excess Maxi mum

Floodwalls

Bills - Standard

Primary - Athletic Fields All kWh Bills

per kW

per kbVh

per bill

per kWh

per bill

kWh

kWh

kW h Bills

Bills Bills

per kW

per kWh

per kWh

per kVAr per kW

per kWh per kWh

per bill

per kW

per kWh

per kLVh

per kVAr per kW per kWh

per kWh

per bill

per kWh

per bill

1.95 0.04625

60.00

0.05206 25.00

0.04833 0.08786 0.01418

15.00 14.00 18.45

10.55 0.02534 0.00866

0.70 3.37 0.20

0.02095 3.25

$35.00

$8.63 $0.02431 $0.00830

$0.70 $1.70 $0.20

$0.01 607 100.00

0.04458 25.00

Subtransmission Billing Demand Block 1 kWh

Block 2 kWh

kVAr

Off-peak Excess Maximum

Bills

Transmission Billing Demand

Block 1 kWh Block 2 kWh

kVA r Off-peak Excess

Maximum Bills

GS-TOD: Secondary

On-Peak kWh Off-peak kWh Bills

Primary

On-Peak kWh Off-peak kWh Bills

LGS-TOD:

Secondary Demand

On-Pea k Energy

Off-peak Energy Customer

per kW per kWh

per kWh

per kVAr

per kW

per kWh

per bill

per kW per kWh

per kWh

per kVAr

per kW per kWh

per bill

per kWh

per kWh per bill

per kWh per kWh per bill

per kW per kWh per kWh per bill

6.89 0.0241 9 0.00826

0.70 0.97

0.20000 250.00

6.76 0.02374 0.0081 1

0.70 0.92

0.20000 350.00

0.08591 0.02955

35.00

0.07767 0.02360 100.00

6.29 0.05482 0.02000

35.00

Primary

Demand

On-Peak Energy

Off-peak Energy

Customer

LCP. Secondary

Billing Demand All kWh kVAr

Off-peak Excess Alternate Feed Service Bills

Primary

Billing Demand

AlJ kWh kVAr

Off-peak Excess

Alternate Feed Service Bills

Su btransmission

Billing Demand All kWh

kVAr

Off-peak Excess


Transmission

Billing Demand

All kWh kVAr

Off-peak Excess Alternate Feed Service Bills

per kW

per kWh per kWh

per bill

per kW

per kWh

per kW

per kW

per bill

per kW

per kWh

per kW

per kW

per bill

per kW per kWh

per kW per kW

per bill

per kW per kWh per kW per kW

per bill

4.47 0.05261 0.01 919 100.00

16.55 0.00738

0.70 3.47

3.25000 85.00

14.76 0.0071 8

0.70 1.96

3.25000 275.00

12.196 0.0071 3

0.70 1.59 3.25

375.00

11.692 0.00700

0.70 1.52

3.25000 475.00

- IP: Secondary

Billing Demand

Ail kWh kVAr

Off-peak Excess


Primary

Billing Demand

All kWh

kVAr

Off-peak Excess Alternate Feed Service

Bills

Subtransmission

Billing Demand

All kWh

kVAr

Off-peak Excess Alternate Feed Service

Bills

Transmission

Billing Demand All kWh

kVA r Off-peak Excess


- OL: Incandescent

090 189 Watt

High Pressure Sodium (HPS) 108 70W Overhead 94 IOOW Overhead I

97 200W Overhead

per kW

per kWh per k W

per k W

per bili

per kLV per kLVh

per kW

per k1V

per bill

per kW

per k'vV5

per k W per kW

per bill

per k W per k\Vh per k'\N

per k'f l

per bill

20.01 0.00336

0.70 4.32 3.25

85.00

17.849 0.00327

0.70 2.44 3.25

275.00

15.066 0.00325

0.70 1.82 3.25

375.00

14.432 0.00319

0.70 1.68

3.250 475.00

4.95000

7.94000 8.16000 9.55000

98 400W Overhead 106 70W Post Top 11 I 1 OOW Post Top 122 150W Post Top 101 200W Post Top 103 250W Post Top 104 400W Post Top 112 200W Flood OH 107 250W Flood OH 109 400W Flood OH 141 100W Mongoose OH 142 200W Mongoose OH 143 400W Mongoose OH 146 IOOW Mongoose PT 147 200W Mongoose PT 148 400W Mongoose PT

129 105 130 139 110 116 131 123 125

Metal Halide (MH) 175W Flood PT (13,000 Lumens) 400W Flood PT IOOOW Flood PT 175W Flood OH 250W Flood OH 400W Flood OH IOOOW Flood OH 15OW OH 15OW Flood PT

Mercury Vapor (MV) 093 175W Overhead 096 250W Overhead 095 400W Overhead 099 175W Post Top 114 400W Flood OH 119 1OOOW Flood OH

SL: - High Pressure Sodium (HPS) 70W Overhead 1 OOW Overhead 200W Overhead

5800 lumens 9500 lumens 22000 lumens

10.47000 13.05000 13.78000 23.00000 23.87000 25.41000 26.82000 10.07000 10.59000 12.60000 11.74000 12.06000 12.33000 16.44000 21.03000 22.88000

23.67000 30.37000 37.1 3000 12.69000 12.7 1 000 12.73000 21.80000 9.13000

31.40000

7.83000 8.88000 9.42000 8.59000

13.76000 20.79000

5.850 5.280 4.390

400W Overhead lOOW Mongoose OH 200W Mongoose OH 400W Mongoose OH 70W Special IOOW Special 15OW Special 200W Special 400W Special IOOW Post Top IOOW Mongoose PT 200W Mongoose PT 400W Mongoose PT

Mercury Vapor (MV) 1 OOW Overhead 175W Overhead 250W Overhead 400W Overhead 1 OOOW Overhead 175W Special 400W Special 175W PT

50000 lumens

5800 lumens 9500 lumens 16000 lumens 22000 lumens 50000 lumens 9500 lumens

3500 lumens 7000 lumens 1 1000 lumens 21 000 lumens 58000 lumens 7000 lumens 21000 lumens 7000 lumens

Metal Halide (MH) MH Overhead - 150W MH Special - 150W (cobra head) MH Special - 15OW (post-top)

9100 lumens 91 00 lumens 9100 lumens

Energy and Minor Maintenance MV - 175W 7000 lumens MV - 400W 21000 lumens HPS - IOOW 9500 lumens HPS - 150W 16000 lumens HPS - 200W 22000 lumens HPS - 250W 27000 lumens HPS -400W 50000 lumens

2.020 1 1.740 12.060 12.330 13.110 12.300 1 1.380 10.350 6.180 7.100

21.910 21.260 21.890

3.850 3.320 2.530 0.720 0.580 9.580 4.820 4.560

11 242 24.019 29.898

1.390 0.240 2.330 1.470 0.550 0.400 0.260


CHARLESTON

CASE NO. 18-0645-E-D APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY, public utilities.


CASE NO. 18-0646-E-42T APPALACHIAN POWER COMPANY and WHEELING POWER COMPANY, public utilities.

Rule 42 application to increase rates and charges.

CERTIFICATE OF SERVICE

I, William C. Porth, counsel for Appalachian Power Company and Wheeling Power Company, do hereby certifjr that true copies of the foregoing Joint Stipulation and Agreement for Settlement were served by hand delivery or US . mail on this 1 3 ~ day of November, 2018, addressed to the following:

Wendy Braswell, Esquire Linda Bouvette, Esquire Public Service Commission 201 Brooks Street Charleston, West Virginia 25301 Counsel for Staffof West Virginia Charleston, West Virginia 25301

Jacqueline Lake Roberts, Esquire Heather Osborn, Esquire Thomas White, Esquire Consumer Advocate Division 700 Union Building, 723 Kanawha Blvd. East

Course1 for Consumer Advocate Division Public Service Commission

Susan J. Riggs, Esquire Jason C. Pizatella, Esquire Spilman Thomas & Battle, PLLC 300 Kanawha Blvd., East Charleston, WV 25301 Counsel for W E U G

Derrick P. Williamson, Esquire Barry A. Naum, Esquire Spilman Thomas & Battle, PLLC 1100 Bent Creek Blvd., Suite 101 Mechanicsburg, PA 17050 Counsel for W E U G

Thomas E. Scarr, Esquire Charles K. Gould, Esquire Jenkins Fenstermaker PLLC 325 Sth Street, 2"d Floor Huntington, WV 25701 Counsel for S W A

Kurt J. Boehm, Esquire Jody Kyler Cohn, Esquire Boehm, Kurtz, and Lowry 36 E. Seventh St., Suite 1510 Cincinnati, OH 45202 Counsel for The Kroger Company

{R 1385920.1 }

Kristina Thomas Whiteaker, Esquire The Grubb Law Group 1 1 14 Kanawha Boulevard East Charleston, WV Counsel for The Kroger Company

Mandi Kay Carter, Esquire Paul D. Ellis, Esquire City of Charleston 501 Virginia Street E Charleston, WV 25301 Counsel for City of Charleston

Ralph Smith Larkin & Associates 15728 Farmington Road Livonia, MI 48154 Consultant for Consumer Advocate Division

Jonathan Wallach, Vice President Resource Insight, Inc. 5 Water Street # 10 1 Arlington, MA 02476 Consultant for Consumer Advocate Division

Andrew T. Gunnoe, Esquire Mark J. Slotnick, Esquire PO Box 3627 Charleston, WV 25336 Counsel for KCCA

Richard Gottlieb, Esquire Spencer D. Elliott, Esquire Lewis Glasser PLLC PO Box 1746 Charleston, WV 25326 Counsel for Walmart

Stephen J. Baron J. Kennedy & Associates, Inc. 570 Colonial Park Drive, Suite 305 Roswell, GA 30075 Consultant for WVEUG

Kevin Higgins Energy Strategies, LLC Parkside Towers 21 5 South State Street, Suite 200 Salt Lake City, Utah 841 11 Consultant for The Kroger Company

William C. Porth (WV State Bar ID No. 2943)

(R1385920.1)

Commission Post-Hearing Request Exhibit 1 TRR Credit Timeline

1 TCJA Tax Savings Credit

2 TCJA 2018/2019 Winter Rate Credit

3 TCJA CBI Subsidy Reduction Credit

Replacement CBI Subsidy Reduction Credit *

Residential First 500 kWh Credit

Resldential First 500 kWh Credit

40a5ecase

5Ebsecase

6BaseCase

- Notes: ' Cgd subsidy rcduaion TRR credi was originally designed in the TClA settlement to pcoduce rates credits tdallirg roughly $20 million over 22 months. Under the base case settlement Mme rate credits are increased beginning March 1, 2019 and are now designed to pmduce rate credits totalling appmximately $35.5 million over the 22 month period ending June 30,2020. Unes 3 and 4 are the same credit in the TRR, It is shown on two seperate lines to Illustrate the increase in rate credit Wels beginning March 1,2019 as a result of the base case setl!ement

2 Expanded tome SGS class beginning on March 1,2019

APPENDIX C

Commission Post-Hearing Request Exhibit No. 2

Future Ratemakine Issues Resolved By the Joint Stipulation

Subject to the Commission's approval of the Joint Stipulation, the following are the "express exceptions" noted in Paragraph 23 to the Stipulating Parties' freedom to adopt whatever positions they may wish in subsequent litigation:

- 1. Stipulation 1 11 5C. The Stipulating Parties agree that EE/DR net lost revenues (which are to be excluded from base rates) will be recovered in the Companies' future EE/DR proceedings.

- 2. Stipulation 11 15D. Whenever Clinch River Units 1 and 2 are retired, the Stipulating Parties agree that any remaining undepreciated plant balance will be transferred to the accumulated depreciation balances of' APCo's Amos and Mountaineer Plants and recovered over the remaining lives of those plants through charges to depreciation expense.

- 3. Stipulation 11 15-E. The Stipulating Parties agree that APCo's production demand allocator will be used to allocate APCo's embedded transmission cost of service; that, on the date that new base rates for the Companies go into effect, PJM Transmission Owner Revenues will be allocated in the ENEC monthly deferral calculations using APCo's production demand allocator; and that PJM LSE OATT charges will continue to be allocated in the ENEC monthly deferral calculations using APCo's retail demand allocator.

Documents

II CASE NO. 18-0645-E-D