4/1/2013
APPALACHIAN POWER, WHEELING POWER
FILE FUEL COSTS WITH PUBLIC SERVICE COMMISSION;
NO RATE CHANGE REQUESTED

CHARLESTON, W.Va., April 1, 2013 – Appalachian Power, along with Wheeling Power, today submitted its annual filing to the Public Service Commission of West Virginia (PSC) reporting fuel costs. Both companies are subsidiaries of American Electric Power (AEP). The Expanded Net Energy Cost (ENEC) is designed to reimburse the company for past and ongoing costs of fuel (primarily coal) and purchased power.

The company is requesting no rate change for the second year in a row. In its filing, Appalachian proposed considering the costs for several cases together in order to keep rates stable for customers:

  • Fuel and construction costs, which are included in the annual ENEC filing;
  • Consumer Rate Relief Charge payments; and
  • Costs associated with the transfer of certain generating assets and the merger of Appalachian and Wheeling Power.

The net effect of all these costs is that customer rates will stay the same. If the PSC rules in favor of Appalachian’s proposal for the ENEC, rates are not expected to change in 2013 and into 2014. Rates have not changed since mid-2011.

In 2012, Appalachian filed with the PSC requesting approval to issue Consumer Rate Relief Bonds designed to pay the under-recovered balance of past costs. Without the bonds, rates could have risen as much as 30 percent to pay for the coal costs, which stem from 2008 and 2009 when coal costs increased substantially. The parties to the case recently agreed to a settlement that will allow the company to finance $376 million in unrecovered cost. The settlement is currently pending before the PSC.

In another case currently before the Commission, Appalachian Power is proposing to acquire from Ohio Power 50 percent of Mitchell Plant and the remaining two-thirds of one unit at Amos Plant. This generation is needed because the company doesn’t own enough generation to meet the capacity and energy obligation to serve its customers. Appalachian has purchased power from these plants for many years to meet customer demand for electricity. The cost of purchasing power is roughly the same as the annual cost of purchasing the plants. In effect, this transfer allows the company to move from being a renter to an owner for little or no change in customer rates.

In another filing today, the company requested approval to continue its current energy efficiency programs and add two new short-term programs. After the first full year of the program in 2012, the company reached 101 percent of its annual energy savings goal. A total of 51.2 million kilowatt hours of energy savings was achieved, an amount equal to the annual usage of 4,350 average homes.

This savings goal was reached at a cost that was approximately $1 million below budget. The company proposes to use the additional budget to fund the two new year-long programs. The first would provide targeted low-income weatherization assistance for families that qualify, and the second program would provide rebates to commercial and industrial customers for custom energy efficiency projects.

Appalachian’s 9.7 cents per kilowatt-hour is still below the national average residential price for electricity of 11.5 cents/kwh. Tips for saving energy can be found on Appalachian’s website, www.AppalachianPower.com.

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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. 

Jeri Matheney
Corporate Communications
jhmatheney@AEP.com

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This policy was last revised on December 13, 2017.

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