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SWEPCO request for rate increase OK'd

By Ken Hedler
Dec. 15, 2017 at 11:27 p.m.

The Public Utility Commission of Texas has approved a rate increase sought by AEP Southwestern Electric Power Co., but it's unclear if the company was granted the full 12.7 percent hike it requested.

Details remain to be worked out after the commission's vote this week, according to PUC spokesman Terry Hadley. He said staff is expected to report back at the Jan. 11 meeting for the three-member commission to issue its final order.

SWEPCO, based in Shreveport, applied to the PUC exactly one year ago for a rate increase averaging 12.7 percent for consumers.

"(PUC) staff will have to recalculate some of the (financial) figures of the case," Hadley said.

Hadley said figures will have to be recalculated after PUC Chairwoman DeAnn Walker issued memos before the vote in which she called for changing recommendations on the rate increase proposed by the Texas State Office of Administrative Hearings.

Commissioners Brandy Marty Marquez and Arthur D'Andrea agreed with Walker, he said.

Walker's memo from Wednesday discussed several financial factors, including SWEPCO's investments in retrofitting coal-fired power plants, rate-case expenses and a new tariff SWEPCO proposed that deals with renewable energy.

She wrote SWEPCO has the burden of proof under state law "to demonstrate the reasonableness of its rates and rate design in a rate case. However, the burden of production shifts when another party proposes a change in the application. It is then incumbent on the challenging party to produce credible evidence that its proposal is more reasonable than the applicant's."

Walker does not identify the challenging party. However, the docket for the SWEPCO case contains documents from environmental groups, major corporations and a coalition of city governments that sought a say in the rate increase.

Walker's second memo asks the commission to address possible changes to SWEPCO's corporate federal income tax costs in light of the tax overhaul legislation working its way through Congress.

The tax overhaul could lead to adjustments in the final order from the PUC, Hadley said.

If the full request is approved, residential customers using 1,000 kilowatt-hours per month would see an estimated cost increase from $99 to $109 per month, company spokesman Scott McCloud previously said. However, he added, the typical home in East Texas uses an average of 1,285 kilowatt-hours a month.

SWEPCO spokesman Peter Main said in a statement: "After an extensive review, the Public Utility Commission has determined that a change in rates is appropriate for SWEPCO to recover its investments in additional power plant environmental equipment required to meet federal mandates. New rates will also allow SWEPCO to recover other generation, transmission and distribution-related investments and operating costs."

Main said SWEPCO customers can expect to see the increase in early 2018 after the PUC issues its final order and finalizes new tariffs.

SWEPCO proposed increasing its rates by $69 million a year, stating its primary need is for new revenue to cover $34.4 million annually for additional investment in environmental controls in four coal-fired power plants to comply with new federal Environmental Protection Agency regulations.

The plants are Welsh Plant units 1 and 3 in Pittsburg, Pirkey Plant in Hallsville, Dolet Hills in Mansfield, Louisiana, and Flint Creek in Gentry, Arkansas.

SWEPCO also cited:

The need for $24.5 million for additional generation, transmission and distribution investment and changes in operating costs to continue "delivering affordable, reliable and safe energy" to homes, businesses and communities.

$8 million for a change in transmission cost recovery to align with actual incurred regional transportation costs in the Southwest Power Pool. Its intent is to help ensure reliability and access to affordable power through the regional transmission system.

And $2 million for additional vegetation management funding to clear transmission and distribution lines and to improve secure reliability, especially during storms.

The PUC granted SWEPCO a 6 percent rate increase in March 2014 that generated about an extra $16.8 million annually.

SWEPCO serves an estimated 530,00 customers, including 184,000 in East Texas and the Panhandle, 230,000 in northwestern and central Louisiana and 116,000 in western Arkansas.



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