From our March 15, 2001, edition.

Electric company files to raise recovery fees 

AUSTIN – American Electric Power’s (AEP) West Texas Utilities (WTU) subsidiary has filed a request with the Public Utility Commission of Texas (PUCT) for permission to recover in customer bills approximately $59.5 million in under-collected costs for fuel used to generate electricity. 

A WTU press release says the filing is the result of the continuing increase in natural gas costs throughout the entire country.  These costs have exceeded significantly the amount charged to customers.

If approved as requested, the surcharge would begin with the May billing cycle and continue through December.  Residential customers using 1,000 kilowatt hours of electricity will see an increase of $17.40 a month during this seven-month period.

WTU customers this month began seeing the impact of an interim increase in the fuel factors used to determine the fuel charge portion of the bill to more currently reflect the market price of natural gas.  However, this interim increase in fuel factors, which still must receive final approval from the PUCT, did not address the approximately $59.5 million in uncollected fuel costs for the period from July 2000 to January 2001.

Natural gas prices from July 2000 through January 2001 were up to four times higher than prices during the same period of the prior year.  Despite the fact that 43 percent of WTU’s generation is fueled by low-cost coal, the sheer magnitude of the continued increases in the price of natural gas that began last summer prompted WTU to request the fuel factor increase in January and now the surcharge.

Fuel costs are an expense of generating electricity, which WTU must pay to fuel suppliers.  WTU does not make any profit on fuel costs as the PUCT requires that these costs be passed through to customers at the price paid by WTU.

Investor-owned electric utilities in Texas, like WTU, 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 is significantly more than the amount customers paid in their monthly bills, then PUCT rules require that the utility file a request for permission to recover these amounts through a surcharge.

For more information about AEP and its subsidiaries, visit their website at http://www.AEP.com.