SHREVEPORT, La., November 20, 2013 – The Public Utility Commission of Texas (PUCT) has approved a base rate increase for Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP).
In Texas, the bill for a residential customer using 1,000 kilowatt-hours (kWh) will increase approximately $7.00 per month, or 8.9 percent. The PUCT approved this increase in base rates to recover costs associated with two major power plants and for vegetation management to maintain and ensure reliability.
The changes will begin with December 2013 customer bills, with the increase retroactive to January 29, 2013, which is pursuant to an agreement between the PUCT and SWEPCO in order to allow the Commission and other participating parties more time to review the case. SWEPCO filed the rate increase request in July 2012.
The difference between the amounts billed under the former rates and the new approved rates from February 2013 through November 2013 will be billed to customers through a surcharge implemented at the same time as new rates go into effect. This additional 7.8 percent surcharge (about $6.00) will continue for about 10 months through September 2014.
SWEPCO completed construction of the 500-megawatt J. Lamar Stall Unit, a natural gas-fueled combined-cycle power plant in Shreveport, La., in 2010. Additionally, the 600-megawatt (SWEPCO owns 440 MW) John W. Turk, Jr. Power Plant, a coal-fueled ultra-supercritical power plant in Hempstead County of Southwest Arkansas, was completed in December 2012. These units are among the first built by SWEPCO in more than 25 years. In 2013, the Turk Power Plant has won several awards, including the Edison Award from Edison Electric Institute; Plant of the Year from Power Magazine; and Project of the Year by Power Engineering Magazine.
“Even with this rate increase, SWEPCO residential rates continue to be among the lowest in Texas, and compare favorably to national averages,” said Venita McCellon-Allen, SWEPCO president and chief operating officer. Residential rates will be approximately 33.6 percent below the national average and 13.7 percent below the state average for comparable investor-owned utilities.
The decision grants SWEPCO an annual increase of $39.4 million, including $5 million marked for vegetation management.
SWEPCO’s original request, filed July 27, 2012, was $83 million for two new power plants and tree trimming. The estimated impact of SWEPCO’s original request was $12 per month, or 16 percent, for a residential customer in Texas using 1,000 kilowatt-hours per month.
Base rates refer to the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines, and facilities to serve customers. Base rates do not include the fuel portion of the customer’s bill, which covers the costs of fuel and purchased power and is a direct pass-through with no profit.
SWEPCO serves 524,000 customers, including 182,000 in Texas, 228,000 in Louisiana and 114,000 in Arkansas. 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 5.3 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 40,000-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.