Austin, Texas, Nov. 7, 2005 - Higher natural gas prices have forced American Electric Power’s Southwestern Electric Power Company (SWEPCO) operating unit to request permission to increase fuel factors used to calculate the fuel portion of Texas customer bills and to implement an interim fuel surcharge to recover undercollections totaling $46.4 million.

SWEPCO serves over 167,000 customers in northeast Texas.

If the Public Utility Commission of Texas (PUCT) approves the request to change fuel factors as submitted, the fuel factors would be implemented in January 2006.  The change would increase bills for typical residential customers using 1,000 kilowatt-hours (kWh) a month by approximately $6.98 per month, or 10.43 percent overall, when averaged over the year.  SWEPCO is proposing to change from an annual fuel factor to semi-annual fuel factors. 

SWEPCO also is requesting permission to implement an interim surcharge to recover fuel cost undercollections totaling $46.4 million for the period of January 2003 through September 2005. If approved as requested, the surcharge would be collected over the 12-month period from February 2006 through January 2007.  Residential customers using 1,000 kilowatt-hours of electricity a month will see a $7.11 monthly increase, or a 10.62 percent increase.

Even with implementation of the new fuel factors and the interim surcharge, total monthly bills for SWEPCO customers will remain significantly lower than electric bills paid by customers in almost all other areas of Texas.  The average cost will be approximately 8.1 cents per kilowatt-hour.

“The projected price of natural gas used to generate electricity at SWEPCO’s power plants has increased over 50 percent since SWEPCO last adjusted its fuel factors in February 2005,” said Nick Akins, SWEPCO president and chief operating officer.  “Approximately 20 percent of the electricity supplied by SWEPCO is generated using natural gas as a boiler fuel and purchased power.”

“Fuel costs are an expense which SWEPCO must pay to fuel suppliers and also drives prices for purchased power,” Akins continued.   “It is important to remember that SWEPCO does not earn any profit on fuel costs.”

SWEPCO is required by the PUCT to use fuel factors based on cost estimates to collect the projected cost of fuel used to generate electricity at their power plants.  When fuel costs are estimated to increase or decrease for an extended period of time, SWEPCO must request permission to adjust the monthly fuel factors used to determine the fuel charge portion of customers’ bills.

SWEPCO is a operating unit of American Electric Power, an energy company based in Columbus, Ohio.  American Electric Power owns more than 36,000 megawatts of generating capacity in the United States and is the nation’s largest electricity generator.  AEP is also one of the largest electric utilities in the United States, with more than 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid.