WTU Files with PUCT for Fuel Surcharge and Fuel Factor Change

“The price of natural gas used to generate electricity at AEP-WTU’s power plants has increased nearly 100 percent from January through August,” said David Carpenter, AEP director of Texas regulatory services. “Since 60 percent of the electricity produced by AEP-WTU is generated using natural gas as a boiler fuel, these price increases have a tremendous impact on our cost of producing electricity.

“Fuel costs are an expense that AEP-WTU must pay to fuel suppliers,” Carpenter continued. “It’s important to remember that AEP-WTU does not earn any profit or return on fuel costs. In the past when fuel costs have declined, AEP-WTU made refunds to customers."

Investor-owned electric utilities in Texas, like AEP-WTU, are required by the
PUCT to use fuel factors based on cost estimates to collect the projected cost of fuel used to generate electricity at their power plants. When actual cost of fuel significantly exceeds that which customers are paying in their monthly bills, PUCT rules require the utility request permission to surcharge the additional amount. When the actual costs of fuel are significantly lower than what customers are paying in fuel charges, the electric utility is required to issue a refund. And when the fuel costs are anticipated to change from their current levels for an extended period of time, the electric utility must request permission to adjust the monthly fuel factors used to determine the fuel charge portion of customers’ bills.

Without the increase in fixed fuel factors, AEP-WTU projects that it would under recover fuel and purchased power costs by approximately $42.6 million for the period from October 2000 through September 2001. Consequently, AEP-WTU is requesting permission to adjust the fuel factors used to calculate the fuel charge portion of customer bills.

Since fuel under-recoveries and interest already have totaled approximately $19 million for the period from August 1999 through June 2000, AEP-WTU also has requested permission to implement a new fuel surcharge in November to collect the under-recovered balance through June 30, 2000.

The surcharges are designed to collect the under recoveries as of June 30, 2000, plus approximately $600,000 in interest costs incurred over the collection period.

If approved as requested the new fuel factors would go into effect in October and the new surcharge would go into effect in November. The new fuel factor and surcharge would increase bills for typical residential customers using 1,000 kilowatt-hours a month by $20.53 per month for the period from November 2000 through April 2001 with the fuel factor equaling $8.69 and the surcharge equaling $11.84 of that amount.

AEP-WTU will publish notices of the filing in selected newspapers with general circulation throughout the company’s service area. AEP-WTU also will provide individual notice to the governing bodies of all incorporated municipalities retaining original jurisdiction.

American Electric Power is a multinational energy company based in Columbus, Ohio. AEP is one of the Untied States’ largest generators of electricity with more than 39,000 megawatts of generating capacity. AEP is also one of the nation’s leading
wholesale energy marketers and traders. AEP delivers electricity to more than 4.9 million
customers in 11 states – Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The company serves more than 4 million customers outside the U.S. through holdings in Australia, Brazil, China, Mexico and the United Kingdom. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.