4/15/2010
Texas Commission Approves SWEPCO Rate Increase

SHREVEPORT, La., April 15, 2010 – The Public Utility Commission of Texas (PUCT) today approved a base rate increase for Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP).

In East Texas, the overall bill for a residential customer using 1,000 kilowatt-hours will increase approximately $4.57 per month, or 6.2 percent. The PUCT also approved a one-year surcharge to recover costs associated with additional vegetation management and line clearance activities in SWEPCO’s Texas service territory, resulting in an increase of approximately $2.21 per month, or 3 percent, from May 2010 through April 2011. During that time, the combined impact of the base rate increase and vegetation surcharge will be approximately $6.78 per month, or 9.2 percent.

SWEPCO customers in the Texas Panhandle will transition to rates paid by SWEPCO’s other Texas customers and will see a decrease of approximately $6.33 per month, or 7.5 percent. The vegetation surcharge will increase bills $2.21, or 2.6 percent. The total net effect will be a decrease of $4.12, or 4.9 percent. The Panhandle area currently has base rates higher than SWEPCO’s other Texas customers, due to its ownership by another utility prior to being acquired by SWEPCO in 2007.  This is the first opportunity that SWEPCO has had to align the Panhandle customer rates with the East Texas customer rates.

The changes are effective with May 2010 bills. The increase is SWEPCO’s first Texas non-fuel base rate increase in 25 years.

"We are pleased to have reached an agreement with the Commission Staff and other parties in this case – now approved by the PUCT – so we can move forward immediately with recovery of increased costs to serve our Texas customers,” said Paul Chodak, SWEPCO president and chief operating officer. “However, we will still face financial challenges because our ongoing investments in the electric system will continue to exceed what we can recover under the new base rates,” Chodak said.

“Even with this rate increase in East Texas, SWEPCO residential rates will be 26 percent below the national average and 32 percent below the state average for comparable investor-owned utilities,” Chodak said. “We will continue to work with the Commission and other stakeholders to recover prudent costs necessary for us to serve our customers’ evolving needs with reliable, reasonably priced electricity in Texas.”

With its action, the PUCT approved the terms of a settlement agreement filed March 10 by SWEPCO, the PUCT Staff, Cities Advocating Reasonable Deregulation (CARD), Cities Served by SWEPCO (Cities), the Office of Public Utility Counsel (OPUC), State Agencies, Texas Cotton Ginners’ Association (TCGA) and Texas Industrial Energy Consumers (TIEC). Other parties in the case did not oppose the settlement agreement.

The decision grants SWEPCO an annual increase of $15 million plus a one-year $10 million surcharge for vegetation management to improve distribution reliability over a two-year period. The $15 million annual increase includes recovery of a portion of the financing costs during construction of the 500-megawatt J. Lamar Stall Unit, a natural gas-fueled combined-cycle power plant nearing completion in Shreveport, La.

SWEPCO’s request, filed Aug. 28, 2009, included $27.1 million for cost-of-service, $31.6 million for recovery of power plant construction financing costs and $16.3 million for vegetation management. The estimated impact of SWEPCO’s original request was $16 per month, or 21.5 percent, for a residential customer in East Texas using 1,000 kWh.

Base rates refer to the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines, and facilities to serve customers. Base rates do not include the fuel portion of the customer’s bill, which covers the costs of fuel and purchased power and is a direct pass-through with no profit. Increases in electric bills over the past 25 years have been due to fuel costs for power generation and increases in electricity usage.

SWEPCO serves 473,500 customers, including 180,000 in Texas, 180,000 in Louisiana and 113,500 in Arkansas. SWEPCO’s headquarters are in Shreveport, La.  News releases and other information about SWEPCO can be found at www.swepco.com.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to 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. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east and north Texas). AEP’s headquarters are in Columbus, Ohio. News releases and other information about AEP can be found at www.aep.com.

This report made by AEP 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 AEP’s ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs 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; 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 for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and 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 in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; 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 market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

MEDIA CONTACTS:

SWEPCO Corporate Communications:
Scott McCloud, 318-673-3532
Kacee Kirschvink, 318-780-7615

AEP Media Relations and Policy Communications:
Melissa McHenry, 614-716-1120

ANALYSTS CONTACT:
Julie Sherwood
Director, Investor Relations
614-716-2663