LITTLE ROCK, Ark., Nov. 15, 2005 - Higher natural gas prices have forced American Electric Power’s operating unit, Southwestern Electric Power Company (SWEPCO), to request permission to increase fuel factors used to calculate the fuel portion of Arkansas customer bills to recover under-collections totaling about $17.3 million.

SWEPCO serves 108,000 customers in western Arkansas.

If the Arkansas Public Service Commission (APSC) approves the request to change fuel factors as submitted, the fuel factors would be implemented in December 2005 and run through March 2007.  The change would increase bills for typical residential customers using 1,000 kilowatt-hours (kWh) a month by approximately $9.41 per month, or just under 14.0 percent overall, when averaged over the year.   

Even with implementation of the new fuel factors, total monthly bills for SWEPCO customers will remain significantly lower than electric bills paid by customers in other areas of Arkansas.  

“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 Arkansas fuel factors in April 2005,” said Nick Akins, SWEPCO president and chief operating officer.  “Approximately 15-20 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 APSC to adjust fuel factors each year utilizing the previous year’s actual cost of fuel used to generate electricity at its power plants.  When fuel costs increase or decrease, the Arkansas commission can allow utilities to adjust their fuel clause when an under-recovery exceeds 10 percent of company’s annual fuel cost.

SWEPCO is an 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.