American Electric Power Company
Transmission Formula Rate
AEP East Companies
Annual Formula Rate Update
June 2012
1
TRUE-UP PROCESS
• Annual update for the Rate Year beginning July 1, 2012
through June 30, 2013
• True-up
–
–
–
Rates effective July 1, 2010 (billed January – June 2011) -$65.88/MW Day
Rates effective July 1, 2011 (billed July – December 2011) -$74.89/MW Day
Trued-up to Actual 2011 Cost Data with Average ending
Ratebase Balances (2010-2011) -- $70.69/MW Day
2
Regulatory Changes
•
•
July 2011 FERC issued an order approving the internal corporate
reorganization consummated on December 31, 2011 under which
Columbus Southern Power Company (“CSP”) merged into Ohio
Power Company (“Reorganization Transaction”).
March 2012 AEP submitted for filing amendments to Attachments
H-14A, H-14B of the PJM Interconnection, L.L.C. (“PJM”) Open
Access Transmission Tariff (“PJM Tariff”) to incorporate
proposed revisions to make changes necessitated by the internal
corporate reorganization.
3
Annual Update 2012
•
•
•
•
http://www.aep.com/about/codeofconduct/
OASIS/TariffFilings/
Docket No. ER08-1329-000, OATT
Formula Rate
•
•
•
•
•
•
•
•
•
•
•
•
•
Annual Update - 2012
Notice of Annual Filing (PDF)
Annual Update Customer Meeting Notice
(DOC)
Formula Rate Update AEP Operating
Companies Summary (DOC)
PJM ATRR Formula Rate Summary (XLS)
Appalachian Power Company (XLS)
Indiana Michigan Power Company (XLS)
Kentucky Power Company (XLS)
Kingsport Power Company (XLS)
Ohio Power Company (XLS)
Wheeling Power Company (XLS)
NITS Attach C True-Up (XLS)
RTEP Attach C True-Up (XLS)
Schedule 1A Attach C True-Up (XLS)
AEP Actuarial Report Non-UMWA YE 2011
(PDF)
AEP Actuarial Report UMWA YE 2011 (PDF)
ADIT Detail Historical (XLS)
4
Summary of Rates
Charge
Point-to Point Rate
$/MW Month
July 1, 2012
July 1, 2011
2011 FERC Form 1
(projected plant 2012)
2010 FERC Form 1
(projected plant 2011)
% Change
$2,194.98
$2,348.65
(7%)
Schedule 12
$5,385,840
$5,890,993
(9%)
Schedule 1A
$.0643/MWh
$.0918/MWh
(30%)
AEP East Zone
Network Service Peak
Load
24,530.8 MW
23,492.3 MW
4%
5
Primary Drivers
Decreasing Rate
• Projected 2011 investment within 2% of actual
•
•
2011 capital spend
4% increase in the East Zone Network Service
Peak Load
Decrease in O&M Expense for 2011
6
Revenue Requirement (including revenue credits) used to
calculate the Existing Zonal ATRR for PJM OATT
$ 700,000,000
$ 650,000,000
$ 600,000,000
$ 550,000,000
$ 500,000,000
$ 450,000,000
$ 400,000,000
$ 350,000,000
$ 300,000,000
$ 250,000,000
$ 200,000,000
$ 150,000,000
$ 100,000,000
$ 50,000,000
$0
2011 P r oj ected
2012 P r oj ected
A P Co
$ 198,406,997
$ 218,315,385
I&M
$ 102,001,398
$ 123,475,024
K P Co
$ 42,605,499
$ 50,947,838
K gP Co
$ 2,670,047
$ 2,904,010
OP Co
$ 317,945,680
$ 259,552,737
WP Co
$ 4,982,356
$ 11,436,644
$ 668,611,976
$ 666,631,638
A E P E ast OP Co's
7
Gross Plant Investment – 2011 Projected vs.
2011 Actual Average Balance Gross Plant Investment
$ 6, 000, 000, 000
$ 5, 000, 000, 000
$ 4, 000, 000, 000
$ 3, 000, 000, 000
$ 2, 000, 000, 000
$ 1, 000, 000, 000
$0
2011 P r oj ect ed
2011 T r ue-Up
A P Co
$ 1, 934, 693, 178
$ 1, 883, 354, 260
I &M
$ 1, 194, 357, 912
$ 1, 176, 235, 026
K P Co
$ 460, 203, 821
$ 452, 827, 494
K gP Co
$ 21, 314, 849
$ 20, 042, 191
OP Co
$ 1, 913, 754, 301
$ 1, 875, 469, 470
WP Co
$ 38, 363, 580
$ 38, 869, 431
$ 5, 562, 687, 641
$ 5, 446, 797, 872
A E P E ast OP Co's
Includes allocated general and intangible plant investment.
8
O&M Expense Comparison
$ 140, 000, 000
$ 120, 000, 000
$ 100, 000, 000
$ 80, 000, 000
$ 60, 000, 000
$ 40, 000, 000
$ 20, 000, 000
$0
2011 P r oj ect ed
2011 T r ue-Up
$ 20, 081, 159
$ 29, 542, 106
$ 4, 992, 996
$ 22, 990, 255
K P Co
$ 582, 514
$ 7, 053, 914
K gP Co
$ 719, 637
$ 700, 357
OP Co
$ 105, 011, 557
$ 40, 353, 219
WP Co
$ 1, 031, 331
$ 990, 852
$ 132, 419, 194
$ 101, 630, 704
A P Co
I &M
A E P E ast OP Co's
2011 Projected Cost of Service includes 2010 actual expense
2011 True-up Cost of Service includes 2011 actual expense.
9
2012 Projected Plant Capital Spend
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0
2011 Projected
2012 Projected
APCo
$95,284,309
$131,598,099
I&M
$31,664,202
$43,340,071
KPCo
$12,429,281
$22,378,645
KgPCo
$2,017,427
$3,222,427
OPCo
$54,302,091
$90,052,292
WPCo
AEP East OPCo's
$8,077,323
$37,372,947
$203,774,633
$327,964,481
10
Revenue Requirement For PJM
Socialized ‘Schedule 12’ Investment
Company/
Project
Investment
$
In-Service
RTEP
Revenue
Requirement
$
I&M/
8,288,332
2009
1,319,695
580,000
2012
92,584
5,491,718
2009
1,057,666
4,486,000
2012
832,082
1,941,459
2012
374,752
13,706,017
2008
1,906,118
Twin Branch
I&M/
Rockport
Jefferson
OPC/
Hanging
Rock
OPC/
WMoulton
OPC/
East Lima
APC/
Amos
11
Summary Comparison
2011 Projected – 2011 True-up
RATE BASE
Line
1
2
3
4
5
REVENUE REQUIREMENT
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$198,406,997
$204,374,733
$5,967,736
3.01%
I&M
$102,001,398
$116,900,686
$14,899,288
14.61%
KPCo
$42,605,499
$49,044,165
$6,438,666
15.11%
KgPCo
$2,670,047
$2,490,593
($179,454)
-6.72%
OPCo
$317,945,680
$250,504,956
($67,440,724)
-21.21%
WPCo
AEP East OPCo's
$4,982,356
$668,611,976
$4,874,599
$628,189,732
($107,757)
($40,422,244)
-2.16%
-6.05%
6
7
8
9
10
REVENUE CREDITS
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$5,764,845
$5,652,699
($112,146)
-1.95%
I&M
$1,952,792
$876,831
($1,075,961)
-55.10%
KPCo
$419,718
$67,700
($352,018)
-83.87%
KgPCo
$125,083
$158,042
$32,959
26.35%
OPCo
$12,114,583
$9,441,988
($2,672,595)
-22.06%
WPCo
AEP East OPCo's
$1,344,290
$21,721,311
$1,437,263
$17,634,523
$92,973
($4,086,788)
6.92%
-18.81%
11
12
13
14
15
GROSS INVESTMENT
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
I&M
$1,934,693,178 $1,194,357,912
$1,883,354,260 $1,176,235,026
($51,338,918)
($18,122,886)
-2.65%
-1.52%
KPCo
$460,203,821
$452,827,494
($7,376,327)
-1.60%
KgPCo
$21,314,849
$20,042,191
($1,272,658)
-5.97%
OPCo
$1,913,754,301
$1,875,469,470
($38,284,831)
-2.00%
WPCo
AEP East OPCo's
$38,363,580
$5,562,687,641
$38,869,431
$5,446,797,872
$505,852
($115,889,769)
1.32%
-2.08%
16
17
18
19
20
NET PLANT INVESTMENT
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$1,313,888,154
$1,285,850,447
($28,037,707)
-2.13%
I&M
$668,663,041
$664,275,594
($4,387,447)
-0.66%
KPCo
$303,205,843
$301,486,153
($1,719,690)
-0.57%
KgPCo
$10,771,659
$9,765,804
($1,005,855)
-9.34%
OPCo
$1,115,725,826
$1,112,989,664
($2,736,162)
-0.25%
WPCo
AEP East OPCo's
$19,262,511
$3,431,517,034
$20,078,931
$3,394,446,593
$816,420
($37,070,441)
4.24%
-1.08%
21
22
23
24
25
WORKING CAPITAL
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$15,849,665
$15,032,985
($816,680)
-5.15%
I&M
$9,888,917
$8,037,979
($1,850,938)
-18.72%
KPCo
$2,848,932
$2,740,157
($108,775)
-3.82%
KgPCo
$743,207
$786,500
$43,293
5.83%
OPCo
$33,115,118
$28,208,108
($4,907,010)
-14.82%
WPCo
AEP East OPCo's
$545,508
$62,991,347
$481,060
$55,286,789
($64,448)
($7,704,558)
-11.81%
-12.23%
26
27
28
29
30
RATE BASE
APCo
$1,126,350,752
$1,081,169,162
($45,181,590)
-4.01%
I&M
$553,093,765
$539,738,275
($13,355,490)
-2.41%
KPCo
$259,755,225
$253,538,337
($6,216,888)
-2.39%
KgPCo
$9,338,032
$8,094,810
($1,243,222)
-13.31%
OPCo
$978,098,492
$953,958,684
($24,139,808)
-2.47%
WPCo
AEP East OPCo's
$19,517,349
$2,946,153,615
$16,982,968
$2,853,482,236
($2,534,381)
($92,671,379)
-12.99%
-3.15%
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
12
Summary Comparison
2011 Projected – 2011 True-up (cont.)
EXPENSES
Line
1
2
3
4
5
TRANS. O & M EXPENSE
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$20,081,159
$29,542,106
$9,460,947
47.11%
I&M
$4,992,996
$22,990,255
$17,997,259
360.45%
KPCo
$582,514
$7,053,914
$6,471,400
1110.94%
KgPCo
$719,637
$700,357
($19,280)
-2.68%
OPCo
$105,011,557
$40,353,219
($64,658,338)
-61.57%
WPCo
AEP East OPCo's
$1,031,331
$132,419,194
$990,852
$101,630,704
($40,478)
($30,788,490)
-3.92%
-23.25%
6
7
8
9
10
DEPRECIATION
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$31,716,297
$31,039,902
($676,395)
-2.13%
I&M
$17,630,917
$17,228,352
($402,565)
-2.28%
KPCo
$7,993,115
$8,039,215
$46,100
0.58%
KgPCo
$504,518
$505,527
$1,009
0.20%
OPCo
$42,654,000
$43,413,482
$759,482
1.78%
WPCo
AEP East OPCo's
$777,128
$101,275,975
$839,450
$101,065,928
$62,322
($210,047)
8.02%
-0.21%
11
12
13
14
15
TAXES - OTHER THAN INCOME
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$19,004,965
$18,373,424
($631,541)
-3.32%
I&M
$9,475,894
$10,069,907
$594,013
6.27%
KPCo
$3,282,933
$3,701,140
$418,207
12.74%
KgPCo
$245,301
$234,531
($10,770)
-4.39%
OPCo
$52,912,648
$54,667,232
$1,754,584
3.32%
WPCo
AEP East OPCo's
$344,342
$85,266,083
$545,055
$87,591,289
$200,713
$2,325,206
58.29%
2.73%
16
17
18
19
20
INCOME TAXES
APCo
$33,798,720
$35,959,508
$2,160,788
6.39%
I&M
$19,896,046
$18,861,014
($1,035,032)
-5.20%
KPCo
$8,097,320
$8,091,582
($5,738)
-0.07%
KgPCo
$401,319
$352,702
($48,617)
-12.11%
OPCo
$33,141,765
$31,140,221
($2,001,544)
-6.04%
WPCo
AEP East OPCo's
$1,004,135
$96,339,305
$894,499
$95,299,526
($109,636)
($1,039,779)
-10.92%
-1.08%
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
13
Summary Comparison
2011 Projected – 2011 True-up (cont.)
RETURN ON RATE BASE
Line
1
2
3
4
5
RETURN ON RATE BASE
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
$93,732,841
$89,384,377
($4,348,464)
-4.64%
6
7
8
9
10
WACC ON RATE BASE
2011 Projected
2011 True-Up
True-Up Inc/(Dec)
Percentage Inc/(Dec)
APCo
8.32%
8.27%
-0.05%
-0.65%
I&M
$49,912,468
$47,664,497
($2,247,971)
-4.50%
I&M
9.02%
8.83%
-0.19%
-2.14%
KPCo
$22,641,847
$22,150,288
($491,559)
-2.17%
KgPCo
$799,273
$697,475
($101,798)
-12.74%
OPCo
$84,225,711
$80,930,802
($3,294,909)
-3.91%
WPCo
AEP East OPCo's
$1,825,421
$253,137,561
$1,604,743
$242,432,182
($220,678)
($10,705,379)
-12.09%
-4.23%
KPCo
KgPCo
8.56%
8.62%
0.06%
0.67%
OPCo
8.61%
8.48%
-0.13%
-1.48%
WPCo
AEP East OPCo's
9.35%
8.59%
9.45%
8.50%
0.10%
-0.10%
1.03%
-1.12%
8.72%
8.74%
0.02%
0.23%
14
Schedule 1A
AEP Transmission Schedule 1A Revenue Requirements
AEP Annual
Revenue
Requirement
Line
No.
A. Schedule 1A ARR
1
Total Load Dispatch & Scheduling (Account 561) (TCOS Line 14)
2
Less: Load Disptach - Scheduling, System Control and Dispatch Services (321.88.b)
3
Less: Load Disptach - Reliability, Planning & Standards Development Services (321.92.6)
4
Total 561 Internally Developed Costs
(Ln 1 - Ln 2 - Ln 3)
5
Less: PTP Service Credit
6
EXISTING ZONAL ARR
7
8
9
BILLED HISTORICAL YEAR (2011) ACTUAL ARR
BILLED PROJECTED (2011) ARR FROM PRIOR YEAR
PRIOR YEAR TRUE-UP
10
INTEREST ON PRIOR YEAR TRUE UP
11
Net Schedule 1A Revenue Requirement for Zone
$1,853,853
(Ln 4 - Ln 5)
$10,320,495
(Ln 7 - Ln 8)
$10,320,495
$11,708,162
-$1,387,667
-$69,555
$8,863,273
B. Schedule 1A Rate Calculations
12
2011 AEP East Zone Annual MWh
13
AEP Zone Rate for Schedule 1A Service.
$35,725,537
$19,249,473
$4,301,716
$12,174,348
137,821,586 MWh
(Line 11 / Line 12)
$0.0643
15
NITS True-Up
FERC Case No. ER08-1329
PJM AEP Formula Rate
Interest Calculation on True-Up of NITS Revenue Requirement
AEP Zone MW
Billing
Projected MW
True-Up MW Day Revenues @ TrueYear by Month
Determinant Days in Month
Day Rate
Revenues as Billed
Rate
Rate
Ended:
(A)
(B)
(C)
(D)=(A)*(B)*(C )
(E)
(F)=(A)*(B)*(E)
January-11
23,492.30
31
65.88
47,975,160
70.69
51,477,368
February-11
23,492.30
28
65.88
43,332,402
70.69
46,495,688
March-11
23,492.30
31
65.88
47,975,160
70.69
51,477,368
April-11
23,492.30
30
65.88
46,427,574
70.69
49,816,808
May-11
23,492.30
31
65.88
47,975,160
70.69
51,477,368
June-11
23,492.30
30
65.88
46,427,574
70.69
49,816,808
July-11
23,492.30
31
74.89
54,538,105
70.69
51,477,368
August-11
23,492.30
31
74.89
54,538,105
70.69
51,477,368
September-11
23,492.30
30
74.89
52,778,811
70.69
49,816,808
October-11
23,492.30
31
74.89
54,538,105
70.69
51,477,368
November-11
23,492.30
30
74.89
52,778,811
70.69
49,816,808
December-11
23,492.30
31
74.89
54,538,105
70.69
51,477,368
603,823,073
606,104,500
365
Refund Interest
Excess (Under)
Average of Excess
Prior Quarter
Rate per Part
Collections at Cumulative Excess (Under) Collections
Cumulative Refund Basis of Interest 18 FRC Sec
Quarter End
(Under) Collection During Quarter (Note 1)
(Surcharge)
Accrual
35.19a
(G)=(D)-(F)
(H)=Quaterly Total (I)=Quarterly Average (J)=Prior Quarter (N)
(K)=(I)+(J)
(L)
(3,502,209)
(3,163,285)
(3,502,209)
(10,167,702)
(3,389,234)
(3,389,234)
3.25%
(3,389,234)
(3,502,209)
(3,389,234)
(10,280,677)
(3,426,892)
(10,195,240)
(13,622,133)
3.25%
3,060,737
3,060,737
2,962,003
9,083,476
3,027,825
(20,586,597)
(17,558,772)
3.25%
3,060,737
2,962,003
3,060,737
9,083,476
3,027,825
(11,645,786)
(8,617,960)
3.25%
(2,281,427)
(2,281,427)
Quarterly
Interest
(M)=(K)*(L)
Cumulative
Refund
(Surcharge)
(N)=(H)+(J)+(M)
(27,538)
(10,195,240)
(110,680)
(20,586,597)
(142,665)
(11,645,786)
(70,021)
(2,632,331)
(350,904)
(2,632,331)
Interest Accrual From End of True-up Calendar Year Until Beginning Of Rate Year
Accrual Balance @ 12/31/2011
First Quarter Rate
Accrual For First Quarter
(2,632,331)
3.25%
Accrual Balance @ 3/31/2012
Second Quarter Rate
Accrual For Second Quarter
(2,653,719)
3.25%
Refund (Surcharge) Balance @ 6/30/2012
Interest To Accrue During Rate Year Starting 7/1/2012 (See Note 2)
Note 1: The Quarterly Average reflects in the calculation of interest the delay in recepit of cash due to timing of invoicing.
Total to be Refunded (Surcharged) During Rate Year, Including Interest
Note 2: Calculation of rate year interest assumes refund will be made ratably over rate year at the interest rate pursuant to 18
C.F.R. 35.19a in effect during quarter preceding the Rate Year.
One Twelfth of Refund (Surcharge) Amount During Rate Year
(21,388)
(21,561)
(2,675,280)
(47,330)
(2,722,609)
(230,898)
16
Actual Revenue compared to
True-Up Revenue
2011 Actual Revenue Collections - All AEP NITS revenue received during 2011 is allocated on ATRR share
APCo
I&M
KPCo
KgPCo
OPCo
WPCo
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
$15,964,393
$14,419,452
$15,964,393
$15,449,413
$15,964,393
$15,449,413
$17,601,286
$17,601,286
$17,033,503
$17,601,286
$17,033,503
$17,601,286
$9,306,715
$8,406,065
$9,306,715
$9,006,498
$9,306,715
$9,006,498
$10,557,179
$10,557,179
$10,216,625
$10,557,179
$10,216,625
$10,557,179
$3,848,698
$3,476,243
$3,848,698
$3,724,546
$3,848,698
$3,724,546
$4,228,609
$4,228,609
$4,092,202
$4,228,609
$4,092,202
$4,228,609
$185,811
$167,829
$185,811
$179,817
$185,811
$179,817
$212,949
$212,949
$206,080
$212,949
$206,080
$212,949
$18,507,653
$16,716,589
$18,507,653
$17,910,631
$18,507,653
$17,910,631
$21,633,668
$21,633,668
$20,935,808
$21,633,668
$20,935,808
$21,633,668
$161,891
$146,224
$161,891
$156,669
$161,891
$156,669
$304,414
$304,414
$294,595
$304,414
$294,595
$304,414
$47,975,160
$43,332,402
$47,975,160
$46,427,574
$47,975,160
$46,427,574
$54,538,105
$54,538,105
$52,778,811
$54,538,105
$52,778,811
$54,538,105
TOTAL
$197,683,608
$236,467,097
$2,752,081
$603,823,073
$117,001,170
$47,570,266
$2,348,852
2011 True-up Revenue Collections - All AEP NITS revenue received during 2011 is allocated on ATRR share
TOTAL
APCo
I&M
KPCo
KgPCo
OPCo
WPCo
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
$17,129,801
$15,472,079
$17,129,801
$16,577,227
$17,129,801
$16,577,227
$16,613,483
$16,613,483
$16,077,565
$16,613,483
$16,077,565
$16,613,483
$9,986,109
$9,019,712
$9,986,109
$9,663,977
$9,986,109
$9,663,977
$9,964,699
$9,964,699
$9,643,257
$9,964,699
$9,643,257
$9,964,699
$4,129,654
$3,730,010
$4,129,654
$3,996,440
$4,129,654
$3,996,440
$3,991,295
$3,991,295
$3,862,543
$3,991,295
$3,862,543
$3,991,295
$199,375
$180,081
$199,375
$192,943
$199,375
$192,943
$200,998
$200,998
$194,515
$200,998
$194,515
$200,998
$19,858,720
$17,936,908
$19,858,720
$19,218,116
$19,858,720
$19,218,116
$20,419,563
$20,419,563
$19,760,868
$20,419,563
$19,760,868
$20,419,563
$173,709
$156,899
$173,709
$168,106
$173,709
$168,106
$287,330
$287,330
$278,062
$287,330
$278,062
$287,330
$51,477,368
$46,495,688
$51,477,368
$49,816,808
$51,477,368
$49,816,808
$51,477,368
$51,477,368
$49,816,808
$51,477,368
$49,816,808
$51,477,368
TOTAL
$198,624,999
$117,451,301
$47,802,117
$2,357,115
$237,149,288
$2,719,681
$606,104,500
AEP
Jan-11 to Dec-11 23,492.3
TOTAL
NTS Rate
65.8763
65.8763
65.8763
65.8763
65.8763
65.8763
74.8881
74.8881
74.8881
74.8881
74.8881
74.8881
Days
31
28
31
30
31
30
31
31
30
31
30
31
NTS Rate
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
70.6853
Days
31
28
31
30
31
30
31
31
30
31
30
31
17
Questions
?
18