Roanoke, Va., June 10, 2010 – Today Appalachian Power asked the Virginia State Corporation Commission (SCC) to allow the company to lower its Virginia rates by more than $100 million annually. The requested annual fuel factor adjustment is the largest reduction since the factor began appearing on customer bills in the late 1970s.
 
Appalachian is asking to reduce the current fuel factor about 24 percent from 2.876 cents per kilowatt-hour (kWh) to 2.197 cents per kWh. If approved, when compared to today’s cost of electricity, the proposal would lower the total rate by about 8 percent across all customer classes and about 7 percent for residential customers.
 
“At a time when other costs of business are increasing we are in a position to pass along savings from decreased coal costs to our customers,” said Charles Patton, Appalachian Power president and COO. “This reduction, along with another planned later in the year, should result in customers paying a lower rate for electricity this coming winter than they did last winter.”
 
Appalachian is requesting that the reduced fuel factor take effect August 1, the same day that a change in rates will become effective from another pending case.
 
The fuel factor contains no profit for Appalachian and is a dollar-for-dollar recovery of coal and purchased power costs. The factor is adjusted annually and aims to correct any over- or under-recovery from the prior period, establish a level for the future period and flow through benefits from sales that Appalachian makes to other utilities as a credit to customers.  
 
“Our average cost of coal has come down significantly this year and is expected to remain lower through next year when the new factor will be in place,” Patton said.
           
Appalachian Power provides electricity to 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power). It is a unit of American Electric Power (NYSE: AEP), 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.         
 
 
Editor’s Note: This requested change to rates applies only to Appalachian Power’s Virginia jurisdiction, not to rates in West Virginia or Tennessee.
 
 
 
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.