3/1/2010
APPALACHIAN POWER, WHEELING POWER
SEEK SECOND YEAR PHASE-IN OF COAL COSTS;
INCREASE TO BE ABOUT 20¢ A DAY FOR RESIDENTIAL CUSTOMERS

CHARLESTON, W.Va., March 1, 2010 – 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 ongoing costs of fuel and purchased power and environmental compliance project expenses.

Last year, following a dramatic increase in the cost of coal and purchased power, 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.

The first year’s approved increase was approximately $124 million, or about 12 percent. Additional increases over the remaining years of the phase-in were expected to be about the same each year. However, because coal and purchased power costs have moderated somewhat, this year’s increase is lower than expected.

The total revenue increase in the request is approximately $96 million or 8.2 percent. This increase reflects a dollar-for-dollar recovery of the expenses incurred to provide electric energy to customers. The Expanded Net Energy Cost, as it is called, includes no profit for the company.

“This gradual phase-in of costs helps keep rates as low as possible for our customers,” said Dana Waldo, Appalachian Power president and chief operating officer. “It’s an innovative solution that allows us to recover our legitimate costs of doing business while lessening the immediate burden on customers.”

If approved by the Commission, typical residential customers will see an increase in their electric bills of about 20 cents a day. Residential customers who use 1,000 kilowatt-hours a month will see their monthly bill rise from $80.47 to $86.44, an increase of 7.4 percent. The increase for other customer classes, like commercial or industrial customers, will vary.

With today’s filing, the company also proposed the introduction of a temporary senior citizen discount. If approved by the Commission, the discount will provide a one cent per kilowatt-hour reduction on the first 500 kilowatt hours a month for residential customers who qualify. For a customer who uses 500 kilowatt-hours or more a month, it will provide a maximum savings of $5.00 a month, or $60 dollars per year.

“We know that seniors, especially, are having a difficult time making ends meet in this economy,” Waldo said. “We hope this discount will help.”

For many seniors, the discount means they will see little or no increase in their bills, despite the overall rate increase. Some seniors will even see a decrease in their bills.

Additionally, the company submitted an Energy Efficiency/Demand Response Program Portfolio to the Commission. Appalachian is proposing to implement a comprehensive portfolio of energy efficiency or demand response programs targeting residential, commercial and industrial customers. Programs range from low-income weatherization to incentives to purchase smart lighting. For commercial and industrial customers, the focus is on increasing the efficiency of lighting, HVAC and motors. The programs help customers save money on their energy costs and help reduce the overall energy demand for the company.

Waldo 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.

Today’s filing is Appalachian Power’s regular annual Expanded Net Energy Cost (ENEC) filing to adjust for the costs of fuel and purchased power. ENEC is a pass-through mechanism for the recovery of actual costs that includes no profit for the company. The filing also adjusts rates to recover the cost of environmental compliance construction projects, specifically the flue gas desulfurization units or scrubbers at the John Amos Plant. If approved, rates will be effective July 1, 2010.

Rates for Appalachian’s customers are among the lowest in the country. The national average residential price for electricity is 11.76 cents per kilowatt-hour, compared to Appalachian’s proposed 8.6 cents.

Customers are urged to manage their energy use wisely and to visit the company’s Internet site (www.WattWhyAndHow.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.

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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Appalachian Power uses Flurry Analytics Service (provided by Yahoo) in order to improve its mobile apps. Flurry’s privacy policy governs the use of this information.

Also, Appalachian Power reserves the right to share any aggregated information (i.e., non-personally identifiable information) with any third parties for any reason, unless prohibited by law.

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This policy was last revised on December 13, 2017.

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