Nov 1 - McClatchy-Tribune Regional News - Dan Gearino The Columbus Dispatch, Ohio

American Electric Power has totaled the cost of power failures in September caused by remnants of Hurricane Ike and has figured out who it wants to pick up the tab: you.

The Columbus-based company said yesterday that it paid $55 million for repairs across its 11-state territory, including $31 million in Ohio.

The costs "will be recovered in rate filings in the jurisdictions where the storms affected us," said Michael Morris, AEP's president, chairman and chief executive, during a conference call with analysts regarding its third-quarter earnings report.

That means AEP will ask the Public Utilities Commission of Ohio for a temporary rate increase. The last time that happened was in 2004 after an ice storm caused $25 million in damage. Customers paid about $1 a month for 12 months to cover the cost.

Before Morris' comment, AEP had said it was still deciding whether to seek a rate increase for storm damage. The company has not decided when it will make the request or how much it will seek to recover, a spokesman said.

That plan of action didn't sit well with Ohio Consumers' Counsel Janine L. Migden-Ostrander. Such a process could allow utilities to wait for big storms to make long-needed repairs rather than keep up with regular maintenance.

"This is another example of (AEP's) failure to maintain their system," she said.

AEP has contended that the storm, with hurricane-force winds that left 700,000 of its customers without power, was an exceptional event that would have overwhelmed any system.

Utility rates include money to cover "normally expected" storm damage, said Matt Butler, a PUCO spokesman. When a utility faces what it thinks is an abnormal storm, it can petition for a rate increase. After the 2004 ice storm, AEP and another utility, Dayton Power and Light, both received permission for temporary increases.

Meanwhile, the PUCO is reviewing a separate proposal by AEP to raise rates by 15 percent in each of the next three years. The request, unrelated to the storm, is part of the company's attempt to cover increases in raw-materials costs and to implement Ohio's new law requiring greater use of renewable energy.

Morris said he doesn't "expect any love letters" from the plan's critics, but he is confident that "there will be some likelihood of a reasonable outcome."

He made his comments as AEP released its third-quarter earnings, showing a profit of $374 million, down 8 percent from the same quarter last year. The company attributed the earnings decrease to a decline in power use and to the costs associated with recovering from storms.

Although profit was down, AEP's revenue for the quarter was up 11 percent to $4.2 billion compared with the year-ago period.

For the first three quarters of the year, AEP reported $11.2 billion in revenue, up 11 percent, and profit of $1.2 billion, up 40 percent from the same period last year.

Morris said the company is operating in "very difficult conditions" with a global economic downturn and tightening access to credit.

"We are taking sensible measures to assure we have sufficient cash on hand to carry us through 2009," he said.

dgearino@dispatch.com

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