American Electric Power’s (NYSE:AEP) Public Service Company of Oklahoma (PSO) and Kentucky Power recently filed applications for rate reviews with state regulators in Oklahoma and Kentucky, respectively.
PSO on June 30 said that it has filed an application with the Oklahoma Corporation Commission (OCC) to update its prices to reflect the costs of investments in its system to strengthen the electric grid, meet federal environmental requirements, and better serve customers.
PSO said that its application requests that its prices increase by $156m, or about 11%. For a typical residential customer, the increase would be about 50 cents per day, the company said.
PSO noted that the price adjustment request reflects more than $625m of new investments that it has made in the system, which are not included in current prices. Costs to comply with mandated federal environmental regulations make up about $225m, or more than one-third of PSO’s total investment, the company said.
The completion of a three-year, $111m project to install automated metering infrastructure (AMI) across the state that resulted in the installation of more than 530,000 new digital meters, makes up another significant part of the investment, the company said.
According to the direct testimony filed with the OCC on behalf of PSO of Scott Ritz, director of Customer Services & Marketing for PSO, prior to AMI, customers had to individually notify PSO of outage situations, whereas today, PSO is immediately aware of a customer’s outage and can respond more rapidly, as well as with more detail about the extent and cause of the outage.
Of new customer offerings that are available through the AMI platform, Ritz said that PSO is able to offer customers four new rate plans that aim to save customers money:
- The Direct Load Control (DLC) program, which is a peak event program designed to help reduce system peak demand
- The Time of Day (TOD) program, which is a two-tier rate plan that rewards participants annually for using electricity wisely during the peak season
- The TOD-DLC Combo, which combines the benefits of the TOD and DLC programs so that participants can take advantage of lower rates during off-peak times and earn bill credits during peak events
- Variable peak pricing, which is a three-tier rate plan in which participants will pay a lower rate for electricity used during off-peak hours and higher rates during on-peak hours
Collectively, those programs are referred to as Power Hours, he said, adding that about 12,500 customers enrolled in Power Hours in 2016, with about 10,940 customers participating.
PSO is also able to offer Power Pay, which is a voluntary payment option that allows customers to pay as they go in lieu of the traditional post-pay billing, he said, adding that PSO has about 1,500 Power Pay enrollments, with about 100 customers signing up per week.
Among other things, Ritz said that AMI is a platform for the future to incorporate more functionality for additional customer benefits, including facilitating the necessary infrastructure to support electric vehicle charging and Smart City initiatives; facilitating distributed generation and net metering; and facilitating additional demand reduction programs that include pool pumps and electric water heaters.
The company said in its statement that the remaining investments relate to costs associated with ongoing installation of new poles, wires, transformers, transmission facilities and substations that have been built or installed since 2015 to replace aging equipment and to serve new customers.
PSO noted that its current prices are based on costs from 2014 and early 2015, and do not include recent investments that strengthen the electric grid; result in cleaner air and greater use of efficient and environmentally friendly power sources; and provide new programs that make it easier for customers to do business with the company.
Kentucky Power on June 28 said that it has filed an application to the Kentucky Public Service Commission seeking a regulatory review of base rates.
If approved, new rates could go into effect in January 2018, the company said, adding that the new rates are necessary due to a decrease of about 2,000 residential and 450 industrial and commercial customers because of a struggling regional economy.
The company noted that in three years, it has experienced a 14.2% drop in kilowatt usage because of the loss. While confronted with increasing operating costs and ongoing environmental expenses, Kentucky Power seeks to close the growing gap between the decline in its customer base and operating expenses, the company said.
Kentucky Power said that it filed testimony supporting an increase of about $69.6m overall through base rates, riders and the environmental surcharge. Residential customers using an average 1,247 kWh per month would see an estimated increase of $24 per month, or about 80 cents a day, the company said. Using the industry standard of 1,000 kWh, a residential customer would see a monthly increase of about $20, or 67 cents a day, the company noted, adding that rates for commercial and industrial customers would increase 8% to 15%, based on usage.
The company said that the proposed increase would help fund, among other things:
- New investments in Kentucky Power’s transmission and distribution systems to assure safe energy delivery to homes, business and communities
- Continued focus on service reliability with efficient vegetation management programs
- Increased contributions to the Home Energy Assistance Program to assist low-income customers
- Additional investments in economic development and workforce training. Initiatives form the company will help put former coal miners back to work by transitioning them to other industries, such as aerospace and automotive manufacturing
The company said that the commission has six months to review the filing, ask questions and schedule hearings.
According to the June 28 direct testimony on behalf of Kentucky Power filed with the commission of Everett Phillips, managing director of Distribution Region Operations for Kentucky Power, the company undertakes hardening and resiliency activities in conjunction with its Vegetation Management Plan work and in connection with its normal maintenance activities.
The system hardening and resiliency activities primarily are focused on circuits that are most at risk of being affected by weather events, he said. During normal maintenance activities, Kentucky Power performs ground line inspections of poles, upgrades and replaces cross arms and poles as needed to better withstand weather events, installs additional lightning mitigation, and hardens overhead highway crossings on the distribution system.
Phillips also said that in 2016, the company spent about $2.2m in Operation and Maintenance dollars to inspect poles, circuits, reclosers, regulators, capacitors, air break switches, underground cable and substations. He noted that the company implemented an Incident Command System process as part of the Emergency Restoration Plan project during 2015. That system is a standardized, on-scene, all-hazard incident management tool that allows responders to manage small and large emergencies, such as outages related to major storms, he said.
Discussing smart grid efforts, Phillips said that the company has installed Volt/VAR Optimization technology on 24 circuits, noting that that technology is in test operation and energy reductions are being evaluated. The company has placed in service about $4.1m in capital investment in the Volt/VAR Optimization and related smart grid technology since the last base case, he said.
Smart grid technologies that are being considered include AMI; distribution-automation circuit reconfiguration; sensors for data collection and fault locating; and distributed energy resources to support isolated rural areas during major outages, he said.
The company is examining projects to extend transmission lines to remote areas and build additional substations and circuits to provide more robust and reliable service to those remote areas, he said.