3/1/2011

APPALACHIAN POWER, WHEELING POWER
SEEK THIRD YEAR PHASE-IN OF COAL COSTS;
INCREASE TO BE ABOUT 25¢ A DAY FOR RESIDENTIAL CUSTOMERS

CHARLESTON, W.Va., March 1, 2011 – Appalachian Power and Wheeling Power, both subsidiaries of American Electric Power (AEP), today submitted their annual filing with the Public Service Commission (PSC) of West Virginia seeking an adjustment in their rates for recovery of the past and ongoing costs of fuel and purchased power and environmental compliance project expenses. If approved by the Commission, rates for residential customers will increase 8.9 percent.

This is the third year of a phase-in to recover extraordinary costs incurred for coal and purchased power during 2008, when coal costs spiked to unprecedented levels. Following the dramatic increase in the cost of coal, the companies sought the PSC’s approval to adjust rates upward in a series of annual steps rather than in one single large increase. In response to that request, the PSC granted permission to phase-in the required rate increases over a period of four years. 

“These costs are for coal and energy that has already been used by customers, as well as a big ticket purchase for environmental compliance equipment, so it’s much like using a credit card for a large household purchase and paying it off over time,” said Charles Patton, Appalachian Power president and chief operating officer. He said the goal was to mitigate large rate increases and spread them out over a manageable time frame.

The Expanded Net Energy Cost (ENEC), as it is called, also includes some environmental construction costs. Appalachian Power this year completed a six-year, $2 billion program to install environmental controls on its Mountaineer and John Amos plants.

The scrubbers and selective catalytic reduction (SCR) equipment help the plants meet federal EPA clean air regulations. Scrubbers reduce sulfur dioxide emissions by 98 percent. Sulfur dioxide is a precursor to acid rain. SCRs reduce nitrogen oxide emissions by as much as 90 percent. Nitrogen oxides are a precursor to ground-level ozone.

The total revenue increase in the request is approximately $118.8 million or 9.5 percent. This increase reflects a dollar-for-dollar recovery of the expenses incurred to provide electric energy to customers. If approved, rates will be effective July 1, 2011.

Part of today’s filing is a request to include in the ENEC the net savings associated with the Dresden Plant, a plant being built in Ohio that will serve Appalachian’s customers. The net effect of adding the Dresden Plant to Appalachian’s generation fleet is a cost reduction for customers, because once the plant is complete the company will be able to provide more of its own power for customers. 

“We are continually looking to decrease our costs and ultimately our customers’ bills. The filing today reflects our decision to accelerate the completion of the Dresdenplant. This decision will result in an approximate $5 million annual savings for our West Virginiacustomers,” Patton said.

If approved by the Commission, typical residential customers will see an increase in their electric bills of about 25 cents a day. Residential customers who use 1,000 kilowatt-hours a month will see their monthly bill rise from $86.40 to $94.05. The increase for other customer classes, like commercial or industrial customers, will vary.
 
Residential Customer Usage and Costs


Usage
in KWH
Current
Rate
Proposed
Rate
Increase
1,000
$86.40
$94.05
$7.65
2,000
$162.67
$178.00
$15.33
 
Patton said energy efficiency measures can be used to offset rising prices for electricity. For example, replacing some of the incandescent bulbs in a home with just one six-pack of compact fluorescent bulbs would save enough to offset the proposed increase for a typical residential customer.
 
Rates for Appalachian’s customers are well below the national average. The national average residential price for electricity is 11.7 cents per kilowatt-hour, compared to Appalachian’s proposed 9.4 cents. Customers are urged to manage their energy use wisely and to visit the company’s website (www.AppalachianPower.com) for energy-saving tips and a free home energy calculator that can help explain how to conserve electricity. The site also provides information on payment options available to customers.

Appalachian Power provides electricity to 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power) and Wheeling Power provides electricity to customers primarily in Marshall and Ohio counties in West Virginia. Both companies are units of American Electric Power, one of the largest electric utilities in the United States, with 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. 
                                                     ###


Jeri Matheney
Corporate Communications
(304) 348-4130
jhmatheney@AEP.com


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