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SWEPCO Seeks Base Rate Increase in Texas


SHREVEPORT, La., Dec. 16, 2016 – AEP Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP), today submitted a request to the Public Utility Commission of Texas (PUCT) to increase the company’s Texas rates by approximately $69 million annually. If approved, new rates could go into effect in mid-to-late 2017.

The primary need for new revenue is to cover $34.4 million annually for additional investment in environmental controls at four major power plants. The investments are necessary to comply with new U.S. Environmental Protection Agency (EPA) regulations.

“The goal is always to serve Texas customers with a strong electric system that provides affordable, reliable and safe energy,” said Venita McCellon-Allen, SWEPCO President, and Chief Operating Officer. “After investing nearly $700 million to fulfill new federal mandates, we believe SWEPCO has responsibly met these environmental and financial challenges to maintain a diverse energy mix with reliable 24/7 power sources serving our customers.”

The request includes four major components:
$34.4 million for new environmental controls at four power plants to comply with EPA mandates. Plant locations include Welsh Plant Units One and Three at Pittsburg, Texas; Pirkey Plant at Hallsville, Texas; Dolet Hills Plant at Mansfield, La.; and Flint Creek Plant at Gentry, Ark.

$8 million for a change in transmission cost recovery to align with actual incurred regional transmission costs in the Southwest Power Pool – to help ensure reliability and access to affordable power through the regional transmission system.

$2 million for additional vegetation management dollars to clear transmission and distribution lines and to improve service reliability, especially during storms.

$24.5 million for additional generation, transmission and distribution investment, and changes in operating costs to continue delivering affordable, reliable and safe energy to homes, businesses and communities.

If approved by the PUCT, overall rates would increase annually by approximately $69 million, an average increase of about 12.7 percent. This figure is the net amount of the proposed annual base rate increase of $105.9 million minus $36.9 million in existing transmission and distribution charges that are currently shown as line items on customers’ bills and will be moved to base rates. Base rates reflect the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines, and facilities to serve customers. Base rates do not include the fuel portion of customers’ bills, which pays for fuel and purchased power and is passed through to customers with no profit to the company.

Residential customers using 1,000 kilowatt-hours per month would see an estimated increase of $12.67 per month, or 13 percent. Increases for individual customers will vary depending on each customer’s usage characteristics.

“We work hard to provide high-quality customer service while at the same time managing our costs and continuing to make needed investments in generation, transmission and distribution infrastructure. We recognize the impact that price increases can have on individuals, families, and businesses. We believe our electric rates will continue to provide excellent value for the money,” McCellon-Allen said.

“Even with this proposed increase, SWEPCO rates will be close to the current state average for utilities serving the regulated parts of the state, and still well below the national average,” McCellon-Allen said.

SWEPCO serves 530,000 customers, including 184,000 in East Texas and the Panhandle, 230,000 in northwestern and central Louisiana and 116,000 in western Arkansas. The company’s headquarters are in Shreveport, La. More information is available at SWEPCO.com.

American Electric Power is 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 31,000 megawatts of generating capacity in the U.S. AEP also supplies 3,200 megawatts of renewable energy to customers. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, and east Texas). AEP’s headquarters are in Columbus, Ohio.