By T.L. HEADLEY, MBA
West Virginians know hardship. In a state with one of the lowest median household incomes in the nation and a long history of economic reliance on coal, families already make hard choices every month. Yet electric bills continue to climb—not because of extravagant usage, but because the old, reliable system that once kept costs stable has been dismantled, and utilities are allowed to pass the consequences directly to ratepayers through fuel cost recovery mechanisms.
The difference between then and now is not that weather extremes have suddenly become more severe in some unprecedented way. Polar vortices have brought Arctic cold to the region every few winters for generations, and summer heat domes with high humidity have been part of our climate for decades. What has changed is how the grid is fueled—and how utilities are permitted to socialize the cost of fuel volatility.
In the past, coal-fired power plants—many still operating in West Virginia—relied on long-term supply contracts with coal producers. Those contracts provided price certainty and predictability for both sides. Coal companies could plan production schedules months or years in advance, knowing exactly how much coal would be needed and when. Utilities maintained large on-site stockpiles—typically 60 to 90 days or more—ready to be burned as demand rose during cold snaps or heat waves.
When a polar vortex arrived, those plants simply increased output using fuel already on site. There were no frantic spot-market purchases. No pipeline bottlenecks. No daily price spikes. Fuel costs were largely known ahead of time, and that stability helped keep household bills stable.
Natural gas changed the risk profile. As coal plants retired and gas-fired generation expanded across the PJM region that includes Appalachian Power’s service territory, utilities shifted toward shorter-term gas purchases and increased reliance on spot markets. Unlike coal, natural gas cannot be stockpiled at scale at the plant site. It arrives just in time via pipeline—subject to daily weather-driven demand, export pressures, and delivery constraints.
When a winter vortex hits and heating demand surges across the Northeast and Midwest, gas prices can spike sharply in days—sometimes overnight. The same dynamic appears in summer heat domes, when air-conditioning demand pushes gas-fired generation into overdrive. Those wholesale cost surges do not stay in the market. Under West Virginia’s Expanded Net Energy Cost (ENEC) mechanism, utilities file to recover those fuel costs from customers, passing volatility directly to ratepayers.
Appalachian Power and its parent, AEP, have used this mechanism repeatedly. In recent years, customers have seen a recurring pattern: fuel factor adjustments, ENEC filings, and deferrals tied to fuel market swings. Even in periods when fuel factors decline, the cumulative effect of earlier spikes is not erased. For households, the practical outcome is simple: bills rise during and after major weather events, and the increases become part of the new normal.
For many families, the impact is not theoretical. It is budget-breaking. West Virginia has a high share of energy-burdened households—families spending an outsized portion of income on utilities. Low-income households carry the heaviest load, often facing the impossible choice between keeping the heat on and buying groceries, filling prescriptions, or making a car payment. Disconnections for nonpayment add another layer of instability, turning an economic problem into a public health and family stability problem.
The core issue is incentive misalignment. Fuel cost recovery can shield utilities from the consequences of shifting to a more volatile fuel supply chain. When long-term coal contracts and on-site inventories were common, utilities had every reason to plan carefully, maintain buffers, and prioritize stability. Under today’s framework, when fuel costs spike, utilities can recover those costs through regulatory filings—often with limited scrutiny relative to the size of the customer impact.
That structure dulls the incentive to hedge aggressively, invest in more stable fuel arrangements, or maintain sufficient dispatchable capacity to reduce exposure during extreme demand periods. It also shifts risk away from the entities that control procurement decisions and places it on the people least able to absorb a surprise bill.
West Virginia does not need to abandon progress or pretend technology has not evolved. It does need realism. A durable reliability-and-affordability strategy requires a higher share of dispatchable generation with stable fuel economics.
That means taking a serious look at options that restore predictability: dispatchable coal generation with modern controls and credible emissions pathways, expanded nuclear development, and a planning framework that treats fuel assurance as a core reliability attribute—not an afterthought. The point is not nostalgia. The point is protecting households from being whipsawed by the weather and the commodity markets at the same time.
Renewables have a role, and in some regions they can materially reduce fuel burn. But they do not eliminate the need for firm capacity during winter nights, prolonged cold, or periods when wind output is weak. Over-relying on intermittent resources without equivalent firming capacity invites greater volatility, not less. Households do not experience “percent renewable penetration.” They experience whether the system holds and whether the bill is manageable.
The West Virginia Public Service Commission has shown it can moderate excessive base-rate requests. But fuel recoveries often receive lighter scrutiny because they are framed as pass-throughs. That must change.
Regulators should require utilities to demonstrate prudent procurement, meaningful hedging, and long-term planning before approving full pass-through of extreme fuel spikes. They should examine whether utilities are making reasonable efforts to reduce spot-market exposure, diversify supply, and maintain adequate buffers. They should also consider consumer protection guardrails—limits on the severity of fuel factor swings and stronger bill stabilization measures for vulnerable households.
State policymakers have a role as well. Efficiency upgrades, targeted low-income assistance, and weatherization programs reduce consumption and can cushion families in extreme months. But those tools cannot solve a structural fuel-volatility problem by themselves. The grid must be built and regulated to anticipate the weather we know is coming.
West Virginians deserve a system that values foresight over hindsight. Until utilities are held accountable for procurement strategy—and until regulators insist that reliability and stability are not optional—fuel cost recovery will remain a hidden tax.
And like most hidden taxes, it lands hardest on the families least able to pay it.
About the Author
Terry L. Headley, MBA, is President of The Hedley Company, an energy-sector communications, research, and policy advisory firm specializing in electricity markets, grid reliability, and fuel supply economics. He also serves as Vice President of Communications for the Seneca Center for Energy & Critical Minerals Policy, a policy research organization focused on advancing reliable, affordable, and secure domestic energy and mineral supply chains. Headley has more than 25 years of experience in energy journalism, public relations, and policy analysis and has advised utilities, trade associations, and policymakers on energy market structure, regulatory impacts, and grid reliability issues.