High natural gas prices may lead to higher electric bills for customers of AEP-West Texas Utilities Co. if a request filed with the Public Utilities Commission of Texas (PUC) is approved.
AEP-WTU filed a request with the PUC on January 19, 2001, for permission to increase fuel factors used to calculate the fuel charge portion of customer bills. A company press release says the request is necessary in order to reflect the current expected costs of fuel.
If approved, the new fuel factor wold increase the typical WTU residential customer bills by $10.65 per month beginning in March. The requested fuel factors will recover over the period March through December 2001 an additional $43 million in expected fuel costs.
“Natural gas prices in December 2000 were three-to-four times higher than prices during December 1999,” said David Carpenter, AEP director of Texas Regulatory Services.
“Despite the fact that 43.4 percent of WTU’s generation is fueled by low-cost coal, the sheer magnitude of the continued increases in the price of natural gas since last summer forces WTU to request a fuel factor increase.”
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 PUC 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 exceeds that which customers are paying in their monthly bills, then WTU under-collects the costs of fuel used for the generation of electricity.
When fuel costs are anticipated to change from their current levels for an extended period of time, the electric utility may request permission to adjust the monthly fuel factors used to determine the fuel charge portion of customers’ bills.
Without the increase in fuel factors, WTU projects that it will under-recover fuel and purchased power costs by approximately $43 million for the period from March through December 2001. Consequently, WTU is requesting permission to adjust the fuel factors used to calculate the fuel charge portion of customer bills. At some point in the near future, WTU likely will have to request permission to recover through a surcharge fuel costs that the company has under-recovered over the last several months.
If approved as requested, the new fuel factors would go into effect in March. The new fuel factor would increase bills for typical residential customers using 1,000 kilowatt-hours a month by $10.65 a month for the period from March through December 2001.
However, the typical WTU residential customer does not use 1,000 kWh per moth. Based on the most recent twelve months of data available, a typical WTU residential customer uses, on average, 904 kWh per month, which means that the new fuel factors would result in a monthly increase of $9.19.
WTU will publish notices of the filing in selected newspapers with general circulation throughout the company’s service area. WTU also will provide individual notice to the governing bodies of all incorporated municipalities retaining original jurisdiction.
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