RGV cities suspending AEP Texas’ rate increase

This article originally appeared in the Friday May 31, 2019 issue of the Progress Times.

40 cities across the state, many from the Rio Grande Valley, have signed resolutions to suspend a rate increase proposed by AEP Texas that was supposed to go into effect next week.

On May 1, AEP Texas announced to its more than 1 million customers across the state of a proposed rate increase submitted to the Public Utility Commission of Texas that would affect customers starting June 5.

Since the announcement from AEP, cities such as McAllen, Edinburg, Palmview, Alton, Harlingen, San Benito and more have signed resolutions earlier this month to suspend the rate increase.

Under this rate change, residential customers in south and central Texas would see an increase of $4.75 a month per 1,000 kilowatt hours of electricity a month. However, the power company is also proposing to decrease its rates by $5.01 for customers in the northern region of the state.

“South Texas is still growing, and we may have to invest in infrastructure to support that growth,” Lee Jones, a local spokesman with AEP Texas said of the proposed rate increase. “No one likes prices going up but it’s just to keep up with the state and provide with the reliability of the grid. That costs money.”

The rate request reflects the amounts that are charged to retail electric providers for the delivery of electricity over AEP Texas’ transmission and distribution lines, a news release from the company stated. With this rate increase, the company is seeking approval of a $38.3 million increase in base rate revenues.

The cities opposing the rate increase hired the law offices of the Austin-based firm Lloyd Gosselink Rochelle & Townsend, P.C. to study the proposed rate increase and its effect on customers.

“We want to make sure customers don’t pay any costs that are unreasonable or that violate commission rules,” Thomas Brocato, an attorney at Gosselink said “[AEP] states the main driver of this increase relates to growth on their system as well as significant investments they’ve made to upgrade and maintain the existing infrastructure and expansions in the oil and gas business. Of course those factors also result in greater revenues to the utility so it balances out the need for a rate increase.”

Brocato said the “disparity” between the rates in the south and north was a cause for concern as customers in south Texas will use more 1,000-kilowatt hours per month due to the heat and air conditioners being used nonstop.

“There’s a difference in the numbers between customers in the north and in south Texas and in the costs to serve them,” Brocato said. “It’s a different impact, we want to make sure everything is done properly so customers in south Texas are not paying an inordinate share. We represent cities in both areas and are making sure it’s allocated properly.”

AEP has not gone before the Texas PUC for a proposed rate increase in 12 years, the release stated. Brocato said that a hearing on the case is set for Aug. 20 with a deadline for action to be taken by Nov. 5.

Jones said the rate increase will have to go before the PUC and said the decrease for customers in the northern region of the state reflects the number of customers there and that commercial and industrial customers are facing a rate increase there.

“We have kept our rate flat for the past 12 years but like everything else, expenses go up,” Jones said.