Summary
This 8-K filing from AMERICAN ELECTRIC POWER CO INC (AEP) and its subsidiary AEP Texas Central Company (TCC) announces a significant anticipated charge to earnings due to a decision by the Public Utility Commission of Texas (Texas Commission) regarding TCC's true-up application. The Texas Commission is expected to disallow a substantial portion of TCC's requested recovery for wholesale capacity auction true-up and stranded costs associated with the sale of its interest in the South Texas Project nuclear plant. Specifically, AEP anticipates recording a charge of approximately $384 million ($250 million after-tax) in the fourth quarter of 2005. This will reduce TCC's recorded net true-up regulatory asset from roughly $1.7 billion to $1.3 billion. While the formal written order is not expected until February 2006, AEP believes the Commission's deliberations indicate this outcome. TCC may challenge the Commission's rulings, which it believes are contrary to Texas's electric industry restructuring laws.
Key Highlights
- 1AEP and AEP Texas Central Company (TCC) anticipate a significant charge to earnings due to a Texas Commission ruling.
- 2The anticipated charge is approximately $384 million ($250 million after-tax) for the fourth quarter of 2005.
- 3The charge stems from the Texas Commission's disallowance of a large portion of TCC's wholesale capacity auction true-up request.
- 4Recovery of stranded costs related to the sale of TCC's interest in the South Texas Project nuclear plant is also expected to be reduced.
- 5TCC's net true-up regulatory asset will be reduced from approximately $1.7 billion to $1.3 billion.
- 6TCC believes the Texas Commission's decisions may be contrary to existing statutes and regulations and may pursue rehearing or appeals.
- 7The formal written order from the Texas Commission is expected in February 2006.