KINGSPORT, Tenn., Dec. 18, 2008 – Kingsport Power, doing business in Tennessee as AEP Appalachian Power, has received approval to pass through to retail customers increases in purchased power costs. It plans to have new prices in place January 1.

Monday in Nashville the Tennessee Regulatory Authority (TRA) approved the company’s increase request of approximately 24 percent.

Appalachian Power Company (APCo) filed in mid-November with the Federal Energy Regulatory Commission (FERC) seeking approval of an amended Interconnection Agreement, including new rates, between APCo and Kingsport Power. That filing was approved by FERC earlier this month.
The Tennessee utility has none of its own generation and purchases all of its power from APCo at wholesale rates regulated by FERC.

The company was also required to file notice with the TRA to recover the wholesale increase through a change in the Purchased Power Adjustment Rider. Both changes will take effect January 1. 

Bill Bosta, regulatory services director for Kingsport Power, said, “We expect the TRA to issue a written order over the next week or so and we will implement these increases with the first bills going out in 2009.”

APCo’s FERC filing called for a three-stepped wholesale increase, beginning with a $24 million increase in 2009, or about 24 percent; another $3 million in 2010, or 2 percent; and another $9 million, or 7 percent, in 2011. Those costs are then passed through to retail customers without profit to Kingsport.

Using September 2008 actual fuel costs, a Kingsport residential customer using 1000 kilowatt-hours in a month will see a bill go from about $62.68 to approximately $76.62.
 
The new rates reflect the higher costs of providing generation services due, in large measure, to increased costs associated with compliance of state and federal environmental requirements, Bosta said.

Kingsport Power last increased its base rates for electric service in 1992 during a general rate case. In the 16 years since then rates have only changed due to increases or decreases in monthly fuel costs and a 1999 one-time reduction in the costs of generation services.

Following the increase, Kingsport Power rates will remain among the lowest in the region—and the U.S. The company serves approximately 47,000 customers.

Customers are urged to manage their energy use wisely and to visit the company’s Internet site ( www.WattWhyAndHow.com) for energy-saving tips and a free home energy calculator that can help explain how to conserve electricity. The site also provides information on payment options available to customers.

Customers who recognize that they may have bill problems or may be unable to pay a full amount should contact the company on-line at www.appalachianpower.com or by phone at 1-800-967-4237 as soon as possible in order to work out payment arrangements.

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.