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Texas Commission Approves SWEPCO Rates For Increase

SHREVEPORT, La., Nov. 20, 2013 /PRNewswire/ -- The Public Utility Commission of Texas (PUCT) has approved a base rate increase for Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP).

In Texas, the bill for a residential customer using 1,000 kilowatt-hours (kWh) will increase approximately $7.00 per month, or 8.9 percent. The PUCT approved this increase in base rates to recover costs associated with two major power plants and for vegetation management to maintain and ensure reliability.

The changes will begin with December 2013 customer bills, with the increase retroactive to January 29, 2013, which is pursuant to an agreement between the PUCT and SWEPCO in order to allow the Commission and other participating parties more time to review the case. SWEPCO filed the rate increase request in July 2012.

The difference between the amounts billed under the former rates and the new approved rates from February 2013 through November 2013 will be billed to customers through a surcharge implemented at the same time as new rates go into effect. This additional 7.8 percent surcharge (about $6.00) will continue for about 10 months through September 2014.  

SWEPCO completed construction of the 500-megawatt J. Lamar Stall Unit, a natural gas-fueled combined-cycle power plant in Shreveport, La., in 2010. Additionally, the 600-megawatt (SWEPCO owns 440 MW) John W. Turk, Jr. Power Plant, a coal-fueled ultra-supercritical power plant in Hempstead County of Southwest Arkansas, was completed in December 2012. These units are among the first built by SWEPCO in more than 25 years. In 2013, the Turk Power Plant has won several awards, including the Edison Award from Edison Electric Institute; Plant of the Year from Power Magazine; and Project of the Year by Power Engineering Magazine.

"Even with this rate increase, SWEPCO residential rates continue to be among the lowest in Texas, and compare favorably to national averages," said Venita McCellon-Allen, SWEPCO president and chief operating officer.  Residential rates will be approximately 33.6 percent below the national average and 13.7 percent below the state average for comparable investor-owned utilities.

The decision grants SWEPCO an annual increase of $39.4 million, including $5 million marked for vegetation management.  

SWEPCO's original request, filed July 27, 2012, was $83 million for two new power plants and tree trimming. The estimated impact of SWEPCO's original request was $12 per month, or 16 percent, for a residential customer in Texas using 1,000 kilowatt-hours per month.

Base rates refer to 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 the customer's bill, which covers the costs of fuel and purchased power and is a direct pass-through with no profit.

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