SWEPCO Seeks Base Rate Increase for its Texas Customers

 

AEP Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP), today submitted to the Public Utility Commission of Texas (PUCT) a request to increase the company’s Texas rates by approximately $83 million. If approved, new rates could go into effect on January 2013 bills.

 

If approved, the request would result in an average increase of about $12.00 per month, or approximately 16 percent for a residential customer in Texas using 1,000 kilowatt-hours per month.

 

The filing includes $87 million for two new power plants and $6 million for vegetation management, offset by $10 million in cost-saving measures for a requested net base rate increase of $83 million.

 

SWEPCO is seeking recovery of $87 million to include its two newest power plants in rates. The John W. Turk, Jr. Power Plant in Hempstead County of Southwest Arkansas is scheduled to be operational late this year. The filing also includes recovery for the J. Lamar Stall Unit, a 507-megawatt combined cycle natural gas facility located at Arsenal Hill Power Plant in Shreveport, La. The Stall Unit became operational in June 2010 but has not been fully included in SWEPCO rates. SWEPCO also is requesting an increase of approximately $6 million in the filing for the vegetation management (tree-trimming) program in order to continue the company’s highly successful program to improve reliability. SWEPCO was able to moderate the overall rate increase request by about $10 million from ongoing cost-saving measures. 

 

“We realize that customers don’t like to see rates go up but this request is necessary to recover the significant investments we’ve had to make to ensure that we can continue to provide reliable, reasonably priced electric service,” said Venita McCellon-Allen, SWEPCO president and chief operating officer.

 

“The Stall and Turk Plants are the first non-peaking power plants that SWEPCO has built in the last 25 years. The Stall Unit has already proven its value by generating electricity for our customers during record energy demand periods in the summers of 2010 and 2011, and the Turk Plant brings fuel diversity to the region, which will support future reliability. The Turk Plant investments also include upgrades to the transmission system. Both are important additions to the area’s electric infrastructure, and allow SWEPCO to keep our rates affordable in Texas,” McCellon-Allen said.

 

SWEPCO’s current rates are 26 percent below the average for comparable Texas utilities and 40 percent below the national average. SWEPCO previously received a $25 million rate increase approval from the PUCT in April 2010, primarily to increase its tree trimming efforts in the service area, recover a portion of the Stall Unit, and to recover increased expenses since the company’s last base rate case in 1985.     

 

As a base load unit, the Turk Plant is being built using advanced coal combustion technology and is designed to run 24 hours a day to serve demand that exists all of the time in the electric system. SWEPCO’s Texas customers will pay only for their share of the plant – about one-third – of SWEPCO’s ownership of 73 percent (440 megawatts) in the plant. The PUCT approved construction of the Turk Plant in July 2008.

 

“The economic vitality of the Texas cities we serve requires a dependable supply of electric power at a reasonable cost. Our communities rely on SWEPCO’s proven track record of affordable rates, reliability and customer service. We have contributed to economic development, growth and prosperity in Texas by utilizing a diversified energy portfolio of coal, natural gas and wind to provide affordable electricity to power the economic engine of this region,” said McCellon-Allen. “Our recent power plant projects help ensure that we can continue to provide reliable power to benefit the customers and the communities we serve for decades to come.”

 

 

 

SWEPCO serves 181,000 customers in East and North Texas, along with customers in western Arkansas and central and Northwest Louisiana for a total of more than 521,000. SWEPCO’s headquarters are in Shreveport, La. News releases and other information about SWEPCO can be found at www.swepco.com.

 

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S.  AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east and north Texas). AEP’s headquarters are in Columbus, Ohio. News releases and other information about AEP can be found at www.aep.com.

 

 

 

 

 

This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity (including AEP’s ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.