SHREVEPORT, La., April 23 /PRNewswire-FirstCall/ -- American Electric
Power (NYSE: AEP) subsidiary Southwestern Electric Power Company (SWEPCO)
today announced the Louisiana Public Service Commission's (LPSC) approval
of a formula rate plan for the company's 176,000 Louisiana customers. The
LPSC unanimously approved the plan in its April 16 regular session.
Commission approval follows the announcement of an agreement regarding the
plan between SWEPCO and the LPSC staff reached last month.
Under the plan, SWEPCO will implement base rates based on a formula and
have its earnings reviewed annually. The initial impact on base rates will
be determined after the Commission's review of SWEPCO's earnings filed each
April. Adjusted rates will be effective with August customer bills. A
request to recover finance charges on new generation construction will be
addressed in a future filing. Cost recovery of the John W. Turk power
plant, the Company's proposed base load generating unit, also will be
addressed through a separate filing.
Separate from base rates, the cost of fuel will continue to be handled
as it has historically with no profit to the company. Fuel costs are
adjusted regularly throughout the year, subject to regulatory review.
As part of the plan, SWEPCO agreed to a $5 million credit rider
effective with August 2008 bills. As a result of the rider, residential
customers using 1,000 kWh will see a decrease of approximately $0.37 per
month. The three-year agreement also lowers depreciation rates for some
company assets.
"We are pleased at the Commission's ruling to adopt a formula rate
structure for SWEPCO, replacing the lengthy and costly process associated
with traditional rate cases," said Venita McCellon-Allen, SWEPCO president
and chief operating officer. "While the LPSC will continue its regulation
of SWEPCO customers' rates, the new structure provides an efficient process
for timely recovery of investments in infrastructure that maintain and
improve reliability for our customers."
SWEPCO's rate of return is set at 10.565 percent under the terms of the
plan. Previously the company was allowed to earn 11.1 percent. The formula
rate plan contains a sharing provision between the company and customers,
triggering rate adjustments if the earned return is outside an established
"bandwidth" of 10.015% to 11.115%.
SWEPCO serves over 464,000 customers in three states, including 112,000
in western Arkansas, 176,000 in Northwest Louisiana, and 176,000 in East
Texas and the North Texas Panhandle. News releases and other information
about SWEPCO can be found at http://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 Texas). AEP's
headquarters are in Columbus, Ohio.
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 the
registrants 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
company'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; 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 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 impairing
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 market; 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 potential for new legislation 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; 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.
SOURCE American Electric Power
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Related links:
http://www.aep.com
http://swepco.com
http://www.prnewswire.com/comp/042050.html /
CONTACT:
Mike Young, Manager, Corporate Communications
of American Electric Power, +1-318-673-3458
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