Appalachian Power and Wheeling Power, both subsidiaries of American Electric Power (AEP), today requested that the Public Service Commission of West Virginia implement an interim rate increase while the Commission is considering the company’s previously filed request for increased rates.
 
The motion asks the Commission to implement $180 million of the requested increase on an interim basis effective July 1, subject to refund. Last month the company filed for a $442 million increase to cover costs for fuel, purchased power and environmental compliance project expenses. The filing is a pass-through of fuel and purchased power costs.
 
“We recognize the magnitude of the original request and the need for the Commission to have adequate time to consider the case,” said Dana Waldo, president and COO of Appalachian Power. “However, right now customers are not paying the full cost of the fuel that we use to generate electricity for them. Every day, that customer debt increases by approximately three-quarters of a million dollars. Waiting to pay that debt only makes the amount owed even larger.”
 
In its filing, Appalachian Power stated that a delay in implementing revised rates from July to December, as ordered by the PSC in its March 25 ruling, is expected to add approximately $122 million to the projected shortfall. The end result of a delay in implementation could be an even larger increase for customers.
 
In its original proposal, Appalachian Power had recommended a modified cost recovery plan that would phase in the increase over three years. The $180 million interim increase is based on the amount the company had proposed as the first step of the phased-in rate increase. It includes mostly fuel and purchased power expenses that have already been incurred, plus a small amount for other expenses already incurred by the company on behalf of customers.
 
Waldo said the higher cost of coal is the major reason for the request for increased rates.
 
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.