MEDIA CONTACT: Jeri Matheney Corporate Communications Manager
EXHIBIT
99.1
MEDIA
CONTACT:
▇▇▇▇
▇▇▇▇▇▇▇▇
Corporate
Communications Manager
(▇▇▇)
▇▇▇-▇▇▇▇
Cell:
(▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
FOR
IMMEDIATE RELEASE
APPALACHIAN
POWER, WHEELING POWER REACH
SETTLEMENT AGREEMENT IN WEST VIRGINIA RATE CASE
CHARLESTON,
▇.▇▇., April 25, 2006 - Appalachian Power and Wheeling Power, together with
the
Public Service Commission of West Virginia (PSCWV) staff, the PSCWV Consumer
Advocate Division and other intervening parties, filed a settlement agreement
yesterday in the companies’ rate case seeking the commission’s approval.
The
agreement provides for an initial $44 million or 5.5 percent increase in
the
companies’ revenues, effective July 28, 2006. The initial increase consists of a
$56 million increase for fuel and purchased power expenses, and $23 million
for
recovery of the costs of the Wyoming-Jacksons Ferry 765-kilovolt (kV)
transmission line and environmental investments to date, offset by a base
rate
reduction of $18 million and a credit to customers of $17 million in previously
over-recovered fuel costs.
The
increase will vary among customer classes. For example, residential customers
using 1,000 kilowatt hours a month will see their bills rise from $55.28
to
$58.98 this year, a $3.70 increase. Appalachian Power President and COO ▇▇▇▇
▇▇▇▇▇ said that rates have remained stable for more than 20 years, and are
still
among the lowest in the nation.
“In
1984,
residential customers paid about $60 a month for 1,000 kilowatt hours of
electricity,” ▇▇▇▇▇ said. “Even with this increase, customers will still pay
less than they did then.”
The
agreement also includes a means outside of a general rate case to provide
for
additional increases in each of the next three years for timely recovery
of the
companies’ ongoing environmental investments.
Appalachian
Power is investing more than $1.4 billion to build flue gas desulfurization
units - scrubbers - at its Mountaineer and ▇▇▇▇ plants, which are needed
to
comply with mandated federal and state clean air laws. Though expensive,
the
projects will result in cleaner air at the lowest possible cost. Installing
scrubbers at existing plants is a cost effective way to maintain the economic
life of the assets.
Although
the exact amount of the future increases will not be determined until costs
are
known and reviewed by the commission, the companies estimate the increases
for
environmental expenditures will be approximately:
· $36
million or 4.5 percent effective July 1, 2007;
· $14
million or 1.8 percent effective July 1, 2008; and
· $18
million or 2.3 percent effective July 1, 2009.
The
overall impact of this year’s increase and the future annual increases will
result in an estimated overall $129 million -- or 16 percent -- increase
in
revenues phased in between the end of July 2006 and mid 2009.
“This
settlement is the result of significant give and take by the parties to the
case
and will provide revenues necessary to recover the cost of coal, the new
transmission line and environmental investments,” ▇▇▇▇▇ said. “It also provides
an efficient process that can be used to recover the costs of the future
large
investment projects.”
As
part
of the settlement, Appalachian Power and Wheeling Power will contribute $250,000
annually over the next three years toward low-income weatherization
projects.
The
agreement reinstates the Expanded Net Energy Cost (ENEC) mechanism effective
July 1, resulting in a $56 million increase for this year. This mechanism
includes provisions for annual adjustments in rates to account for fluctuating
costs for coal and purchased power. The ENEC was temporarily suspended in
2000
as part of an agreement with the PSCWV.
As
part
of the agreement, base rates are reduced by $18 million annually, due in
part to
lower depreciation rates and a reduction in the requested return on equity
from
11.5 percent to 10.5 percent. In addition, the impact on customers of the
initial rate request will be mitigated because of a return to customers over
the
next three years of a total of $51 million in over-recovered fuel expenses
that
occurred prior to 2000. The companies also have agreed to increase expenditures
for right of way maintenance to an average of $18.6 million annually between
2007 and 2009.
The
settlement agreement is subject to the commission’s approval.
Although
the agreement is comprehensive in all other respects, one issue regarding
the
rates for a special contract customer remains unresolved. The commission
has
ordered legal briefs on this issue to be filed May 4, with response briefs
to be
filed May 15.
This
regulatory outcome does not change the previously stated 2006 ongoing earnings
guidance range of $2.50 and $2.70 per share for American Electric Power,
parent
company for Appalachian Power and Wheeling Power.
Appalachian
Power provides electricity to 1 million customers in Virginia, West Virginia
and
Tennessee. It is a unit of American Electric Power.
American
Electric Power (NYSE: AEP) is one of the largest electric utilities in the
United States, delivering electricity to more than 5 million customers in
11
states. AEP is the nation’s largest generator of electricity, owning more than
36,000 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. AEP’s utility units operate as AEP Ohio, AEP
Texas, Appalachian Power (in Virginia, West Virginia and Tennessee), Indiana
Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and
Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas).
American Electric Power, based in Columbus, Ohio, is celebrating its 100th
anniversary in 2006.
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This
report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating
capacity and the performance of AEP’s generating plants; the ability to recover
regulatory assets and stranded costs in connection with deregulation; the
ability to recover increases in fuel and other energy costs through regulated
or
competitive electric rates; new legislation, litigation and government
regulation including requirements for reduced emissions of sulfur, nitrogen,
mercury, carbon and other substances; timing and resolution of pending and
future rate cases, negotiations and other regulatory decisions (including
rate
or other recovery for new investments, transmission service and environmental
compliance);resolution of litigation (including pending Clean Air Act
enforcement actions and disputes arising from the bankruptcy of Enron Corp.);
AEP's ability to constrain its operation and maintenance costs; AEP's ability
to
sell assets at acceptable prices and on other acceptable terms, including
rights
to share in earnings derived from the assets subsequent to their sale; the
economic climate and growth in AEP's service territory and changes in market
demand and demographic patterns; inflationary trends; 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 market; changes in the financial markets,
particularly those affecting the availability of capital and AEP's ability
to
refinance existing debt at attractive rates; actions of rating agencies,
including changes in the ratings of debt; volatility and changes in markets
for
electricity, natural gas, and other energy-related commodities; changes in
utility regulation, including membership in regional transmission structures;
accounting pronouncements periodically issued by accounting standard-setting
bodies; the performance of AEP's pension and other postretirement benefit
plans;
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.
###