7/24/2018
Appalachian Power proposes method to flow back tax reform dollars to benefit customers and stabilize rates

CHARLESTON, W.Va. – Appalachian Power is participating in today’s Public Service Commission of West Virginia hearing on tax reform, laying out its proposal for using $235 million in tax reform dollars to benefit customers.

“We’re working with the parties involved to help keep customer rates as stable as possible over the long term and minimize rate increases,” said Chris Beam, Appalachian Power president and COO.

The company’s proposal, which also includes Wheeling Power, would return $30 million to customers over three years as a credit on bills. This gradual return to customers would keep rates lower and more stable over time, eliminating large rate spikes when the funding is exhausted. The proposal would have to be approved by the Commission before being implemented.

The proposal would use tax reform dollars to completely eliminate $131 million in increases for fuel (coal and natural gas) and vegetation management. Another $51 million would offset next year’s fuel costs, protecting customers from a significant fuel increase in 2019. Plus, tax reform dollars would reduce the company’s requested rate base increase by almost $18 million.

Finally, recognizing that growing the economy is the best way to keep rates stable, Appalachian Power proposes to create a pilot economic development grant program providing $1 million in grants over 2018-19.  The grants would be used to support strategic economic development investments in partnership with local chambers and economic development organizations for economic development activities.

“This proposal will benefit our customers,” Beam says. “It reduces the effect of rate increases and smooths out rates for customers.”

Appalachian Power has 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power). It is a unit of American Electric Power, one of the largest electric utilities in the United States, delivering electricity and custom energy solutions to nearly 5.4 million customers in 11 states. The company and its AEP affiliates employ approximately 1,200 people in West Virginia, making AEP one of the largest employers in the state. It is also one of the largest taxpayers in the state. AEP owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP also operates 224,000 miles of distribution lines.  AEP ranks among the nation’s largest generators of electricity, owning approximately 26,000 megawatts of generating capacity in the U.S. AEP supplies 3,200 megawatts of renewable energy to customers.

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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
jhmatheney@aep.com

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