8/23/2018
Appalachian Power, Wheeling Power rates to drop in agreement filed today

Customers of Appalachian Power, as well as Wheeling Power, will see rate reductions beginning Sept. 1 as the result of the Tax Cuts and Jobs Act of 2017 in a settlement agreement filed today with the Public Service Commission of West Virginia. The PSC must approve the agreement before it will go into effect.

In a major provision of the settlement, the company will credit back to customers $25.5 million over a six-month period from September 2018 through February 2019, a 3.8 percent reduction in customer rates. A residential customer using 1,000 kilowatt hours (kWh) a month will see a $3.56 reduction in their monthly bill; for a customer using 2,000 kWh/month, the reduction would be $7.12.

The PSC Staff, Consumer Advocate Division, WV Energy Users Group and Steel of West Virginia worked with the company to reach the settlement agreement. Kanawha County and the City of Charleston did not sign the agreement but are not opposing it.

“We’re pleased to be able to reach agreement on a method to return tax dollars to customers that reduces rates now and addresses a number of issues that will benefit customers in the long term,” said Appalachian Power President and COO Chris Beam.

In addition to the six-month bill reduction, tax benefits will be used to pay off costs related to 2012 storms and certain power generation projects that would otherwise be paid by customers. This will reduce the company’s previously requested rate increase from $115 million to $98 million. A decision by the PSC in that case is expected in the first quarter of 2019.

The settlement lays out how the one-time tax benefit of $235 million as the result of the TCJA will be returned to customers. Other provisions include:

  • $18 million will fund a temporary winter rate discount for residential customers who use more than 1,350 kWh/month in December 2018 to February 2019.
  • $15 million will be set aside to provide bill payment assistance to low-income residential customers.
  • $20 million will be used reduce subsidies currently paid by commercial and industrial customers.
  • As part of another settlement agreement announced last week, $110 million will be used to offset fuel and vegetation management costs, allowing those rates to remain unchanged for the next two years, or until at least June 30, 2020.
  • $71 million will be held in reserve to help offset future costs as determined by the Commission in 2019.
  • $1 million will be set aside to promote economic development in the state through a program to be developed with the W.Va. Department of Commerce.

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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This policy was last revised on December 13, 2017.

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