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Jul 31 2012

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SWEPCO proposes rate hike

The Southwestern Electric Power Company (SWEPCO, a unit of American Electric Power) has requested permission from the Public Utility Commission of Texas (PUCT) to raise electric power rates in Texas by about $83 million. Should this hike be approved it will go into effect in January and result in approximately an additional $12 monthly (16%) for Lone Star customers using 1000 kilowatt hours per month. The filing includes $87 million to pay for two new power plants, and $6 million for vegetation management. This will be counterbalanced by $10 million in cost-saving measures, resulting in a net base rate increase of $83 million.

SWEPCO aims to recover $87 million to include its two newest power plants in rates. In southwestern Arkansas’ Hempstead County the new John W. Turk, Jr. Power Plant is slated to become operational later in the year. The filing will also include recovery of the 507-megawatt combined cycle natural gas J. Lamar Stall Unit at Shreveport, Louisiana’s Arsenal Hill Power Plant. This facility went into operation two years ago, but has not been included in SWEPCO rates. The $6 million vegetation management is part of the company’s highly successful program to boost reliability. SWEPCO moderated the overall rate increase request by about $10 million via cost-saving measures. Company President and Chief Operating Officer Venita McCellon-Allen sought to explain the cost increase.

“We realize that customers don’t like to see rates go up, but this request is necessary to recover the significant investments we’ve had to make to insure that we can continue to provide reliable, reasonably priced electric service,” she said.

She went into further detail.

“The Stall and Turk plants are the first non-peaking power plants that SWEPCO has built in the last 25 years. The Stall Unit has already proven its value by generating electricity for our customers during record energy demand periods in the summers of 2010 and 2011, and the Turk Plant brings fuel diversity to the region, which will support future reliability,” she said. “The Turk Plant investments also include upgrades to the transmission system. Both are important additions to the area’s electric infrastructure, and allow SWEPCO to keep our rates affordable in Texas.”

SWEPCO’s current rates are 26% below the average of the state’s other comparable utilities, and 40% below the national average. In April 2010 PUCT granted the company a $25 million rate increase, mainly to finance tree trimming, recover part of the Stall Unit, and recoup rising expenses since SWEPCO’s last base rate case in 1985.

The Turk Plant is a base load unit constructed around advanced coal burning technology and runs around the clock. Texas customers will be paying only for their one-third share of SWEPCO’s 73% (440 megawatts) ownership of the plant. With PUCT’s approval, construction commenced on the Turk plant in July 2008.

“The economic vitality of the Texas cities we serve requires a dependable supply of electric power at a reasonable cost. Our communities rely on SWEPCO’s proven track record of affordable rates, reliability and customer service. We have contributed to economic development, growth and prosperity in Texas by utilizing a diversified energy portfolio of coal, natural gas and wind to provide affordable electricity to power the economic engine of this region,” said McCellon-Allen. “Our recent power plant projects help insure that we can continue to provide reliable power to benefit the customers and the communities we serve for decades to come.”

Headquartered in Shreveport, SWEPCO serves more than 521,000 customers in Northeast Texas, western Arkansas and northwestern Louisiana. For more information on the company and its services please visit www.swepco.com.

With its home office in Columbus, Ohio, American Electric Power is among the nation’s largest electricity providers. It serves more than five million consumers in 11 states.

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