AEP Texas wants to increase electric rates by $415 million — money the utility says it needs to cover the costs for repairing electric lines, poles and transmission facilities around the Gulf Coast after Hurricane Harvey.
The south Texas utility made the request in documents filed this month with the Texas Public Utility Commission. Regulatory observers also expect CenterPoint Electric to include Harvey-related expenses when it files a formal rate request with the PUC early next year. City groups — such as the Gulf Coast Coalition of Cities and the Steering Committee of Cities Served by Oncor — have intervened in the PUC proceedings to help safeguard consumer interests.
Hurricane Harvey swept through the Gulf Coast region one year ago this month. A Category 4 storm, Harvey split distribution poles in half, damaged or destroyed power infrastructure and knocked out electric service for 220,000 AEP customers, according to a report in the San Antonio Express-News. AEP Texas called upon 5,600 workers from across the country to help with restoration efforts.
“Hurricane Harvey created a catastrophic disruption of utility service and enormous damage to (transmission and distribution) utility infrastructure in the 13-county area impacted by the storm,” said AEP Texas president Judith Talavera, quoted in the Express News. She said the utility “expended very substantial human, material and financial resources following the storm in order to rapidly, safely and successfully restore service (and that) it is very important that we be allowed to recover the costs associated with our efforts.”
The AEP rate hike would apply to restoration costs in the utility’s Texas Central area, which spreads out south from the Houston area down into the Rio Grande Valley, and west through Laredo, Eagle Pass and Del Rio. Of the $415 million request, $220 million would apply to repairs to the utility’s distribution network there — that is, apply to the local lines that carry electricity to homes and businesses — while the remaining $195 million would apply to restoration costs for the utility’s portion of the statewide transmission network.
AEP ratepayers in the areas impacted by the hurricane would pay for the distribution portion of the rate hike. Ratepayers throughout the state’s primary power grid would share the transmission costs. Either way, however, the rate increases will not apply directly to residential and business customers but instead flow first to retail electric providers. Under the state’s retail electric deregulation law, these “REPs” serve end-use customers and have wide discretion over final billing.
Some wholesale power costs, meanwhile, already have increased because of the hurricane. According to analysts, South Zone customers within the state’s primary power grid are being hit with additional transmission-line congestion charges associated with a shortage of transmission capacity there because of the hurricane.