Skyrocketing natural gas prices have forced AEP-Central Power and Light (AEP-CPL) to file a request with the Public Utility Commission of Texas (PUCT) to recover through a surcharge of approximately $96.3 million in uncollected fuel costs and interest from retail customers. At the same time, AEP-CPL requested permission to increase fuel factors used to calculate the fuel charge portion of customer bills in order to recover a projected increase of $207.3 million in fuel costs that will be incurred to provide electric service in the future.
"The price of natural gas used to generate electricity at AEP-CPL´s power plants has increased nearly 100 percent from January through June," said David Carpenter, AEP director of Texas regulatory services. "Since over 55 percent of the electricity produced by AEP-CPL is generated using natural gas as a boiler fuel, these price increases have a tremendous impact on our cost of producing electricity.
"Fuel costs are an expense, which AEP-CPL must pay to fuel suppliers," Carpenter continued. "It´s important to remember that AEP-CPL does not earn any profit or return on fuel costs. In the past when fuel costs have declined, AEP-CPL has made refunds to customers, the most recent of which occurred in July and August 1999."
Investor-owned electric utilities in Texas, like AEP-CPL, are 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 the actual cost of fuel significantly exceeds that which customers are paying in their monthly bills, PUCT rules require the utility request permission to surcharge the additional amount. When the actual costs of fuel are significantly lower than what customers are paying in fuel charges, the electric utility is required to issue a refund. And when the fuel costs are anticipated to change from their current levels for an extended period of
time, the electric utility must request permission to adjust the monthly fuel factors used to determine the fuel charge portion of customers´ bills.
Without the increase in fixed fuel factors, AEP-CPL projects that it would under-recover fuel and purchased power costs by approximately $207.3 million for the period from September 2000 through August 2001. Consequently, AEP-CPL is requesting permission to adjust the fuel factors used to calculate the fuel charge portion of customer bills.
Since fuel under-recoveries and interest already have totaled approximately $21.3 million for the period from December 1999 to May 2000 and are expected to total an additional $71.3 million by September when the new fuel factors are proposed to go into effect, AEP-CPL also has requested permission to implement a new fuel surcharge in
October to collect the under-recovered balance through May 31, 2000. The surcharge will change again in January 2001 in order to collect the under-recovered fuel costs for June, July and August 2000.
These surcharges are designed to collect the under recoveries through August 2000 plus approximately $3.7 million in interest costs incurred over the collection.
If approved as requested, the new fuel factors would go into effect in September, and the new surcharge would go into effect in October. The new fuel factor and surcharge would increase bills for typical residential
customers using 1,000 kilowatt-hours a month by $12.41 per month for the period from October through December with the surcharge equaling $4.75 of that amount. The $12.41 amount would increase by an additional 85 cents to $13.26 per month for the period from January through September 2001 with the surcharge equaling $5.60 of that amount
AEP-CPL will publish notices of the filing in English and Spanish in selected newspapers with general circulation throughout the company´s service area. AEP-CPL also will provide individual notice to the governing bodies of all incorporated municipalities retaining original jurisdiction.
American Electric Power is a multinational energy company based in Columbus, Ohio. AEP is one of the United States´ largest generators of electricity with more than 38,000 megawatts of generating capacity. AEP is also one of the nation´s leading wholesale energy marketers and traders. AEP delivers electricity to more than 4.8 million customers in 11 states -- Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The company serves more than 4 million customers outside the U.S. through holdings in Australia, Brazil, China, Mexico and the United Kingdom. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.