Power company officials say the plan, if approved, would allow them to pay off a backlog of costs without raising customer rates.

The power companies filed the joint request with the PSC late Wednesday.

Most of the bond sale would cover fuel costs the power companies racked up several years ago following a dramatic rise in coal prices.

The Legislature approved an Appalachian Power-backed bill earlier this year allowing the power companies to sell bonds with PSC approval.

Appalachian Power and sister company Wheeling Power have been trying to find a way to recover these costs since 2009.

Ratepayers pay for power company fuel and purchased power costs through a charge referred to as the Expanded Net Energy Cost, or ENEC for short. That charge is included in the overall rate on a customer's power bill.  

Those costs are reviewed each year and adjusted based on the company's ongoing fuel costs.

In 2009, Appalachian and Wheeling asked the PSC for a 43 percent rate increase to recover $442 million in fuel, purchased power and pollution control equipment costs.

Instead, the PSC opted for a plan that would spread those costs over four years. The PSC granted a 10.5 percent increase in 2009, a 7.2 percent increase in 2010 and a 7.3 percent increase in 2011.

But those increases have failed to significantly reduce the power companies' outstanding balances.

According to the latest filing, Appalachian and Wheeling still had about $311.9 million in ENEC charges outstanding on their books at the end of 2011.

Since that plan didn't work, the power companies asked that they be allowed to finance outstanding debt by selling bonds.

In addition to the fuel costs, the companies need to recover $103 million in debt incurred for plant improvements and other expenses in recent years.

With historically low rates in the bond market right now, the companies feel it's a better way to pay off the costs than traditional bank financing.

The joint filing said the companies expect to sell 10-year bonds at an average market rate of 1.77 percent. By comparison, if the companies tried to get capital loans from a bank, they could expect to pay an interest rate of 8.84 percent.

Because of that wide difference in interest costs, Appalachian Power spokeswoman Jeri Matheney said a bond sale would produce significant savings over the next decade.

"In the long term, over the life of the bonds, we expect securitization will save customers about $146 million," Matheney said.

Under the bond proposal filed Wednesday, the average residential customer would pay a $0.309 per kilowatt-hour charge, referred to as the Consumer Rate Relief Charge. Revenue from that charge would be applied to the bond payments.

But Matheney said that doesn't mean customers will pay higher rates. She said that charge would simply replace some of the current fuel costs customers are already paying.

"We believe that the current ENEC charge is enough to cover the Consumer Rate Relief Charge; that's why there would be no change in rates," she said.

Byron Harris, director of the PSC's Consumer Advocate Division, said he was still reviewing the 328-page filing Thursday afternoon.

But Harris said he was concerned about the $103 million that has been added to the $311.9 million in outstanding fuel costs.

"This was always a fear with the securitization; it becomes a very big rug under which you can sweep things," Harris said.

He said the $415 million seems well beyond what's necessary to resolve the power company's debt issues.

There remains $22.7 million still unpaid from Century Aluminum's 2006 power contract for its Ravenswood aluminum plant. That plant shut down in 2009.

Century officials are trying to negotiate a new special rate that might help them reopen the plant.

Century would like the power company to write off its outstanding balance. Harris strongly opposes that plan.

Appalachian Power has proposed that PSC commissioners determine what will be done with the outstanding balance - whether it will be paid off in Century's rate structure or through the bond sale - in the Century special rate case.

The Century case is in its final stages before the PSC.

"They're supposed to rule on that fairly soon," Matheney said. "We don't expect to have a decision on securitization until the end of December, so there will be time to deal with that."

If the PSC approves the proposal, Matheney said, Appalachian will move forward with a bond sale in February or March.

"That's the time frame if we got approval to do so," she said.

Contact writer Jared Hunt at jared.h...@dailymail.com or 304-348-5148.