Appalachian Power, Wheeling Power Reach Settlement Agreement In West Virginia ENEC Case

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IF APPROVED, INCREASE WOULD BE 20¢ A DAY FOR RESIDENTIAL CUSTOMERS

CHARLESTON, W.Va., June 8, 2010 – Appalachian Power and Wheeling Power, together with the Public Service Commission of West Virginia (PSC) Staff, the PSC Consumer Advocate Division and other intervening parties, filed a settlement agreement in the companies’ ENEC case seeking the Commission’s approval.

The requested increase in rates is part of the companies’ Expanded Net Energy Cost (ENEC) filing for recovery of the ongoing costs of fuel and purchased power and environmental compliance project expenses. Last year, following a dramatic increase in the cost of coal, the companies sought the PSC’s approval to adjust rates upward in a series of annual steps rather than in one single large increase. In response to that request, the PSC granted permission to phase-in the requested rate increases over a period of four years.

The parties to the case engaged in settlement discussions concerning all aspects of the filing, and reached agreement on a comprehensive series of proposals to recommend to the Commission as a fair and just settlement. The costs involved in this case are pass-through costs that provide no profit for the companies.

“This settlement reflects the compromises of all the parties to the case on their various positions. I commend them for keeping the best interests of all customers in mind,” said Charles Patton, Appalachian Power president and chief operating officer.

The total revenue increase for this year is approximately $96 million or 8.2 percent. Increases last year were projected to be about 12 percent for this year and the next two years. However, because coal costs have moderated, the annual increases are now expected to be around 8 percent each year.

If approved by the Commission, typical residential customers will see an increase in their electric bills of about 20 cents a day. Residential customers who use 1,000 kilowatt-hours a month will see their monthly bill rise from $80.47 to $86.40, an increase of 7.4 percent. The increase for other customer classes, like commercial or industrial customers, will vary.

Residential Customer Usage and Costs

Usage
in KWH

Current
Rate

Proposed
Rate

Monthly
Increase

1,000

$80.47

$86.40

$5.93

2,000

$150.83

$162.69

$11.86



As part of the proposed settlement, the companies withdrew their proposal to introduce a senior citizen discount.

Additionally, the parties to the case agreed with the companies’ proposal to introduce energy efficiency or demand response programs for residential customers, including Smart Lighting, Home Retrofit, and Low-Income Weatherization. For commercial customers, the parties agreed to the proposed C&I Prescriptive program, which focuses on increasing the energy efficiency of lighting, HVAC and motors. These programs are designed to help customers save money on their energy costs and help reduce the overall energy demand for the companies.

Although the agreement is comprehensive in almost all respects, some minor issues regarding cost recovery for the energy efficiency and demand response programs remain unresolved and are scheduled to be heard by the Commission tomorrow and Wednesday.

Upon approval by the PSC, rates will become effective July 1, 2010.

Rates for Appalachian’s customers are among the lowest in the country. The national average residential price for electricity is 11.76 cents per kilowatt-hour, compared to Appalachian’s proposed 8.6 cents. Customers are urged to manage their energy use wisely and to visit the company’s Internet site(www.WattWhyAndHow.com) for energy-saving tips and a free home energy calculator that can help explain how to conserve electricity. The site also provides information on payment options available to customers.

Appalachian Power provides electricity to 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power) and Wheeling Power provides electricity to customers primarily in Marshall and Ohio counties in West Virginia. Both companies are units of American Electric Power, one of the largest electric utilities in the United States, with 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.


This report made by American Electric Power 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 the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are canceled) 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; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including 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 or contraction in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impacting AEP’s ability to refinance existing debt at attractive rates; 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 markets; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the implementation of the recently passed utility law in Ohio and the allocation of costs within regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future funding requirements; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

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MEDIA CONTACT:
Jeri Matheney
Corporate Communications Manager
(304) 348-4130
Cell: (304) 543-1377
jhmatheney@AEP.com