Federal Complaint Alleges SWEPCO Overcharged Ratepayers

Staff Report

Martha Peine has filed a complaint with the Federal Energy Regulatory Commission (FERC) against American Electric Power (AEP). Peine alleges that AEP’s subsidiary SWEPCO improperly charged their customers for thousands of dollars the company spent in lobbying, advertising, charitable contributions, and other non-transmission expenditures. Affected ratepayers are in portions of Arkansas and the other eight states in the Southwest Power Pool’s nine-state region.

Peine filed the Formal Challenge to American Electric Power Service Corporation’s 2013 Formula Rate Annual Update with FERC on Wednesday, Jan. 22. Examining transmission rates, she discovered that AEP had improperly billed Arkansas ratepayers for general advertising and promotional expenses, charitable donations and related expenses, economic development expenses unrelated to transmission, lobbying expenses, and other non-transmission expenses totaling $92,511. She has asked FERC to grant the challenge and order AEP to refund expenses wrongly passed on to ratepayers.

Peine said, “I was curious about how AEP/SWEPCO recovered expenses from ratepayers. Boy, have my eyes been opened! I found AEP improperly charged ratepayers for many items, like monitoring the Turk Plant construction. It’s my understanding that Arkansas ratepayers are not supposed to pay Turk Plant construction costs.”

AEP/SWEPCO has already acknowledged over $16,000 in wrongful charges as a result of Peine’s efforts and has made provisions to credit ratepayers for this amount. However, Peine contends that an additional $95,000 was also wrongly charged to electric customers in their monthly bills and has not yet been refunded.

The total includes expenses such as a $3,230 private flight to Little Rock for SWEPCO President Venita McCellon-Allen to attend a luncheon honoring Collette Honorable, Chairman of the Arkansas Public Service Commission (APSC) and a meeting with Senator Harrelson.

Other corporate expenses incorrectly charged to AEP/SWEPCO customers include the tab for lunch with Larry Smith, mayor of Cave Springs, and others in November 2012 while presenting a large check to the Illinois River Watershed Partnership for the development of a 30-acre watershed sanctuary at Cave Springs. Mayor Smith later gave testimony before the APSC supporting SWEPCO’s application for a CECPN to construct the Shipe Rd. to Kings River 345kV transmission line.

“Martha’s work shows that investor-owned utilities like AEP/SWEPCO need stronger oversight and Arkansas ratepayers need stronger protection. Forty states have an agency designated by state law to represent the interests of utility consumers before state and federal regulators and in the courts. Why not Arkansas? Obviously the Attorney-General’s Office is too overburdened,” said Pat Costner, Director of Save the Ozarks.

SWEPCO has 30 days to produce its answer to the charges before the federal commission.

The complaint can be viewed at: elibrary.ferc.gov/idmws/file_list.asp?accession_num=20140122-5240


Categories: Commentary