COLUMBUS, Ohio, July 31, 2008 -- Though faced with the skyrocketing cost of conventional fuels and infrastructure costs to keep the system up and running, AEP Ohio, a unit of American Electric Power (NYSE: AEP), today filed its Electric Security Plan (ESP) with the Public Utility Commission of Ohio (PUCO), a comprehensive plan that invests in the future while holding rate increases to approximately 15 percent annually for the next three years.
In addition, the plan provides the framework of “AEP’s Commitment to Ohio’s Future”, a plan that exceeds State requirements in purchasing and supplying renewable power (solar, wind and other renewable fuels); contributes $75 million of shareholder money to aid struggling Ohio bill payers; and positions the company to become a strong partner in the State’s efforts to retain and attract new businesses and new jobs for Ohio.
If approved by the PUCO, AEP Ohio’s ESP will keep rates well below current market rates, as well as regional and national market rates, and will continue to keep AEP Ohio’s rates within the lowest rates in the state.
“In these troubling economic times for Ohio families, we recognize that any electric rate increase will draw frustration, anger and criticism. Fortunately, by using all the tools provided by the Governor and the Legislature, we are able to design a new energy plan that will allow us to continue providing reliable, affordable and cleaner electricity in Ohio, while at the same time allowing us to devise a critical, economic development plan that will help turnaround Ohio,” said Michael Morris, AEP chairman, president and chief executive officer.
“Our customers already struggle to meet skyrocketing spikes in health care costs, a near doubling of food costs and most significantly, dramatically escalating fuel costs of all kinds,” said Joe Hamrock, AEP Ohio president and chief operating officer. “Global demand for our primary fuel, coal, mirrors what Ohio families have seen in oil. China, alone, is building a new coal plant somewhere in the country every week. The fact is that coal has doubled in cost in the last year alone dramatically affecting AEP Ohio’s costs. The tools given to us by the State’s new energy plan allow us to phase in those fuel price increases over time so that unlike the spikes Ohioans see in so many products, AEP Ohio’s rate increases are spread out to be made more affordable.
“The AEP Ohio filing is based almost entirely on recovering increased costs and modernizing our facilities to keep them reliable,” said Hamrock. “ As we partner with the state on our “ AEP’s Commitment to Ohio’s Future” plan we expect to facilitate energy efficiency and purchase wind, solar and other renewables, thereby delaying the need for additional rate increases to build new baseload plants. That would be an enormous achievement as these new sources of electricity would reduce our carbon footprint.”
For the average Columbus Southern Power residential customer using 1,000 kilowatthours (kWh) per month, approval of the plan would result in an increase in a customer’s total monthly bill of approximately $16 in 2009. For the average Ohio Power residential customer using 1,000 kWh per month, approval of the plan would result in an increase in a customer’s total monthly bill of approximately $12 in 2009.
AEP’s Commitment to Ohio’s Future plan proposes the following planks:
Renewable Energy—A Critical Priority to Moving Ohio Forward
- By the year 2011, purchase up to 300 megawatts of wind and other alternative fuel generation with the capacity to produce 2% of AEP-Ohio´s retail energy requirements. This doubles the benchmarks established by the new Ohio energy law and will help accelerate the State’s priority of creating 20,000 new jobs in the energy manufacturing field. This contributes to meeting an AEP-wide commitment to supplying an additional 1000 megawatts of wind power (more than enough to serve the homes of the residents of a city the size of Columbus, Ohio).
- Fully develop the application of commercial-scale fuel cells in partnership with Rolls Royce at its Ohio operations.
- Work with the State school systems to implement, promote and meet a new goal of providing solar ready equipment under the jurisdiction of the Ohio School Facilities Commission.
Energy Efficiency (EE)—the Cleanest, Safest and Most Affordable Energy Source
- Launch a highly visible energy efficiency program including deployment of advanced technologies such as smart meters to help Ohio families save money.
- Establish Energy Efficiency Collaborative (EEC) involving diverse stakeholders to assist AEP Ohio in the speedy development and deployment of efficiency programs.
- Continue to integrate into its fleet US-made hybrid vehicles and introduce plug-in hybrid electric vehicles as they become available.
- AEP Ohio customers can take immediate action to help reduce the impact of electricity
price increases by reducing their electricity consumption. Tips for cutting electricity use are available on the AEP Ohio website at www.aepohio.com.
Helping Ohio Families
- Provide shareholder contributions of $75 million to help support Ohio families who need assistance in paying their electric bills.
- Develop targeted education and weatherization programs to help low income families.
AEP Ohio provides electricity to nearly 1.5 million customers of major AEP subsidiaries Columbus Southern Power Company and Ohio Power Company in Ohio, and Wheeling Power Company in the northern panhandle of West Virginia. AEP Ohio is based in Gahanna, Ohio. The company serves all or part of 61 counties in Ohio and two in West Virginia.
American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning more than 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. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. 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.
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 the registrants 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 company’s 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 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 impairing 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 market; 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; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.