SHREVEPORT, La., Aug. 31, 2011 – Southwestern Electric Power Co. (SWEPCO), a unit of American Electric Power (NYSE: AEP), today submitted to the Public Utility Commission of Texas (PUCT) a three-step rate plan to recover costs associated with the company’s John W. Turk Jr. Power Plant, located in Southwest Arkansas. The Turk plant is now more than 70 percent complete.
SWEPCO is proposing a three-step rate increase over 21 months totaling about 16 percent for an average residential customer, or around $12.91 per month.
“Based on customer feedback, we are proposing a three-step rate plan in an effort to spread smaller rate increases over a longer period of time, which will help families and businesses better manage their utility bills,” said Venita McCellon-Allen, SWEPCO president and chief operating officer. “The Turk plant is a major addition to the SWEPCO system that will provide reliable base load power to Texas customers for decades to come. We believe that phasing in the costs for such a large investment makes sense for our customers and our company.”
If approved, the request would result in an average increase of about $3.30 (four percent) per month, effective April - October 2012 in the first step of the plan, for a SWEPCO residential customer in Texas using 1,000 kilowatt-hours (kWh) per month.
The second step of the plan from November 2012 through November 2013 would add about $4.00 (five percent) per month, based on 1,000 kWh average bill, bringing the total to around $7.30 per month.
The final step of the plan would be filing a full base rate case, not limited to the Turk Plant, in May 2013. The monthly increase for the Turk plant-related costs only is expected to be about $5.61 (seven percent) for a residential customer using 1,000 kWh per month. The total overall impact of the Turk Plant rate plan is approximately $12.91 per month, beginning December 2013.
“This SWEPCO three-step plan provides an innovative approach to recovery of the Turk Plant over time, and will save money for customers in the long run,” said McCellon-Allen. “The multiple-step rate plan lessens the impact on customers and allows SWEPCO to strengthen its credit quality earlier than under a single, one-time large rate increase. It protects SWEPCO’s ability to borrow new capital as we make additional investments in the electric system to serve our customers and ensure reliability.”
SWEPCO will continue to be one of the lowest cost providers in Texas even with the requested increase. SWEPCO’s current rates are about 19 percent below the average for comparable Texas utilities and 37 percent below the national average.
The PUCT approved construction of the Turk Plant in July 2008. As a base load unit, the Turk Plant will use advanced coal combustion technology and is designed to run 24 hours a day and serve demand that exists all the time in the electric system. The Turk Plant is scheduled for completion in the fourth quarter of 2012.
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 520,400. 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.
SWEPCO Corporate Communications:
Scott McCloud, 318-673-3532
Peter Main, 479-973-2526
Kacee Kirschvink, 318-673-3394
AEP Media Relations and Policy Communications:
Melissa McHenry, 614-716-1120
Director, Investor Relations