PSO Files Rate Proposal

TULSA, Okla., Nov. 21 /PRNewswire-FirstCall/ -- Public Service Company of Oklahoma (PSO), a unit of American Electric Power , has filed a rate proposal with the Oklahoma Corporation Commission (OCC) to facilitate significant new investments in Oklahoma's future that will support the growing economic and energy needs of the state and PSO customers.

"Over the next five years PSO plans to invest more than $2 billion in new facilities to serve our Oklahoma customers, which is an unprecedented level of investment by PSO," said Stuart Solomon, PSO president and chief operating officer. "If approved, this proposal will provide a less costly and more efficient regulatory approach to facilitate these investments, ensuring our customers have reliable, reasonably priced electric service for years to come."

The proposal also includes a formula-based rate plan that allows for annual reviews of PSO's rates and earnings and would substitute for the filing of a number of traditional rate cases over the next several years. This plan will allow PSO to include the new investments in rates on a more timely basis, while providing for ongoing oversight of PSO's rates and earnings by the OCC, said Solomon.

For a residential customer using 1,000 kWh per month, approval of the plan would result in an increase in the customer's total bill by approximately 3%, or around $2.25 per month.

The rate proposal contains three major components: 1. A $49.6 million overall increase in base rates to enable PSO to recover increased costs of providing service and to cover investments already made on behalf of customers. PSO's current rates fall short of enabling the company to recover its current cost of providing service to customers. 2. A proposal to adopt an annually adjusted rate mechanism to efficiently facilitate the significant investment PSO will be making in new facilities on behalf of its customers over the next several years. 3. A request to approve several new and restructured tariffs to allow PSO to begin to reduce the relationship between its revenues and its sales volumes, and to implement some demand side management tariffs to provide better price signals to customers.

PSO's planned investments over the next five years include new generation facilities ($1.12 billion), new and refurbished transmission substations and lines ($302.4 million) and new distribution lines and equipment ($582.4 million).

Under the formula-based rate plan, customers would pay construction financing costs for new investments as those costs are incurred, resulting in lower overall total costs to customers.

The plan also would reduce the difference between summer and winter prices and lessen the impact of this seasonal shift on residential and commercial customers. The company also has proposed to increase the Basic Service Charge in its rates from the current $6.57 per month for standard residential service to $13. These changes will result in more stable, predictable electric bills for customers throughout the year.

Other elements of the proposal include a Time Of Day pricing pilot, an easing of deposit requirements for customers with good bill payment history and the elimination of fees related to service calls and temporary disconnects.

PSO's non-fuel base rates have not been increased since 1994. Since that time PSO has actually reduced its base rates two times as a result of regulatory proceedings, and made further reductions through a series of rate credits to customers as a result of the 2000 merger between Central and South West Corp. and AEP. Those reductions have been offset slightly since the first quarter of 2005 by the inclusion of costs to support PSO's vegetation management program for increased electric service reliability.

Because PSO initiated the filing, state law allows the OCC a maximum of 180 days from the filing date of Nov. 21 to issue its final order in the case.

PSO, a unit of American Electric Power , is an electric utility company serving approximately 514,000 customers in eastern and southwestern Oklahoma. Based in Tulsa, PSO has more than 4,000 megawatts of generating capacity, and is the largest provider of wind energy in the state.

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 36,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a nearly 39,000- mile network than includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. 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 Texas). American Electric Power, based in Columbus, Ohio, is celebrating its 100th anniversary in 2006.

News releases and other information about PSO can be found on the World Wide Web at PSOklahoma.com.

This report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating capacity and the performance of AEP's generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to build or require generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon 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 its operation and maintenance costs; AEP's ability to sell assets at acceptable prices and on other acceptable terms; 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; changes in the financial markets, particularly those affecting the availability of capital and AEP's ability to refinance existing debt at attractive rates; 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 implementation of EPACT and membership in and integration into regional transmission structures; 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, and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.