By PSC Chair Charlotte Lane
The word “securitization” is one you’re going to be hearing a lot more of if you pay attention to utility rates in West Virginia.
The word involves a method to spread the cost of an item over a period of time, rather than requiring the buyer to pay the entire price up front.
Think of it as a home mortgage. You buy a house for $100,000, but no one expects you to pay for that all at once.
Instead, you allocate those payments to be made on a monthly basis over a 20-year period. The monthly payment then is manageable. You don’t get instant sticker shock.
The Legislature in 2023 passed a law to provide for this sort of stretched-out, gradual payments in rate cases through a system known as securitization.
The Public Service Commission, using that new law, recently authorized a power company to come up with a securitization plan in a case in which the company was seeking a $250 million rate increase.
The PSC reduced the rate request in August but told the company to come back to the PSC with a securitization plan that the Commission could use to stretch out the full impact of the rate increase over a number of years. And, as a result, rates may decrease.
Generally, securitization is achieved by a company selling bonds to immediately recover its outlay.
The ratepayers then pay additional amounts on their monthly bills to pay down and eventually dispose of the bonds.
To enhance its own expertise in this area, the Commission, in an order issued August 29, 2025 (Case No. 25-0310-E-PC), said it would hire an outside professional adviser to help it with this critical issue.
The amounts involved in this case are very large. They could run to $2.5 billion. They cover a number of issues for which the company is seeking recovery, such as storm damage, environmental controls at plants, fuel costs, and other important issues involved in keeping electricity-production plants operational.
In its order, the Commission noted it received more than 5,000 comments in one case and 200 in a separate case in which the customers asked for rate relief.
We said in the order, “The Commission believes that securitization will provide the rate relief the customers seek.”
This is not going to be an easy process. There is no magic silver bullet here.
The trade-off is a smaller power bill, but a bill that will be stretched into the future to cover the life of the bonds.
We are eager to learn what we can from the adviser we will hire. We are equally interested in trying to hold the line on what our ratepayers have to pay in their monthly bills.
