8/13/2018
Appalachian Power, Wheeling Power file settlement agreement in fuel, vegetation management cases; If approved, rates for customer remain stable

Appalachian Power, along with Wheeling Power, today filed a settlement agreement seeking the Public Service Commission of West Virginia’s approval in its Expanded Net Energy Cost (ENEC) and Vegetation Management Program (VMP) cases. With the agreement, rates for customers would stay essentially the same.

If the agreement is approved by the Commission, dollars from the Tax Cuts and Jobs Act of 2017 would be used to offset $110 million in fuel and vegetation management costs, allowing those rates to remain stable for the next two years. As part of the agreement, the ENEC and vegetation management portion of rates will not change until at least June 30, 2020.

The PSC Staff, Consumer Advocate Division, WV Energy Users Group and Steel of West Virginia worked together on terms of the agreement and signed off on it as a fair and just settlement that would minimize the impact on customers.

“The parties to this case worked very hard to reach a solution that would benefit customers and still allow the company to recover its costs,” said Appalachian Power President and COO Chris Beam. “Rates in West Virginia have not changed since July 2016 and we appreciate the effort on behalf of customers in this case to continue to keep rates stable.”

The ENEC reimburses the company for fuel – coal and natural gas – and purchased power and includes no profit for the company. The VMP reimburses the company for right-of-way trimming and treating. The unrecovered costs reflect the gap between actual expenses and the revenue collected through customer rates. Both are normally adjusted up or down annually.

Without the settlement agreement, rates for residential customers could have risen as much as 11 percent. Upon approval by the PSC, rates shift very slightly between rate classes to more accurately allocate costs, and will go into effect Sept. 1.

 In a separate case, the PSC is considering how all regulated utilities in West Virginia should deal with federal tax reform. It is expected to rule in that case later this year.

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. 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.

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.

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