AEP Texas

Who We Are and What We Do

American Electric Power

American Electric Power owns more than 36,000 megawatts of generating capacity in the United States and is the nation's largest electricity generator. AEP is also one of the largest electric utilities in the United States, with more than 5 million customers linked to AEPs 11-state electricity transmission and distribution grid.

Continuing Confusion over Choice

Even though retail electric

choice was introduced over four years ago (January 2002), there still is confusion about who AEP Texas is and its role in the retail market.

This identity crisis is

made worse by confusion following the sale of CPL Retail Energy and WTU Retail Energy.
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Unbundling
Separation of traditional investor-owned utility into three separate functions

Generation

Wires

REP

Role of the Retail Electric Provider

Sells electricity to the end-use customers. Bills the customers Orders connection of new service Orders disconnection of service for non-

payment

Role of the Energy Delivery Company

The energy delivery company, or Wires

company delivers electricity over its powerlines to the end-use customers on behalf of Retail Electric Providers (REPs). The Wires Company also is responsible for:
Building new powerlines Restoring power following outages Reading electric meters Service connection and disconnection as ordered by the Retail Electric Provider (REP)
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Other Developments
In December 2002, AEP sold CPL Retail Energy and

WTU Retail Energy to Centrica plc.

AEP also sold to Centrica the Central Power and Light

and CPL name, as well as the West Texas Utilities and WTU name. in both South Texas and West Texas.

AEP Texas delivers the electricity over its powerlines

AEP Operations in Texas

Includes AEP Texas and SWEPCOs Texas operations
AEP Texas includes Texas Central
Texas North Company

Company, which delivers electricity throughout the service territory of the former Central Power and Light Company, and Texas North Company, which deliver electricity throughout the service territory of the former West Texas Utilities Company. affiliated with CPL Retail Energy and WTU Retail Energy. Texas Central
Company

AEP and AEP Texas are no longer

SWEPCO Texas

Questions about Fees or Services

Please call our AEP Texas Customer Solutions Center if you have a question or concern about the following issues:
Fees such as those charged for a broken meter seal, denial of access to the meter or a service call fee Power Quality Construction Meter Installation Tree Trimming Outdoor Lighting

Call the AEP Texas Toll-Free Number (1-877-373-4858) for the service issues shown above.
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When to Call Your REP*

Billing Issues Payment Arrangements Deposits Meter Checks Connecting Service with Existing Meter Final Bills and Disconnection of Service Service Reconnection after Disconnection for Non-payment of Bill

* The phone number of your REP is located on your electric bill. Note: AEP Texas is no longer affiliated with CPL Retail Energy or WTU Retail Energy.

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To Report an Outage:
To report a power outage, call AEP-Texas at 1-866-223-8508

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Power Factor Billing

January 31, 2006

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Background
The PUCT adopted Standard Terms & Conditions that set a 95% power factor (PF) benchmark for consumers (Applies to all ERCOT TDSPS). ERCOT Protocol Section 5, requires all TDSPs to maintain a 97% PF. A significant cost in AEPs annual budget has been for correcting the system PF because AEP did not have the metering in place to enforce the PF provision on

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5.5.5 Power Factor

If the Power Factor of Retail Customer's load is found to be less than 95% lagging as measured at Retail Customer's Meter, Company may require Retail Customer to arrange for the installation of appropriate equipment on Retail Customer's side of the Meter necessary to maintain a Power Factor of not less than 95% lagging as measured at Retail Customer's Meter, or, at Retail Customer's option, to reimburse Company for installing the necessary equipment on Company's Delivery System. This option applies only to customers with current leased facility agreements. Until the proper equipment has been installed to correct the Power Factor problem, the Billing Demand associated with Retail Customer's use of Delivery Service, as calculated in the appropriate Rate Schedule in Section 6.1, RATE SCHEDULES, may be adjusted according to the following formula: Adjusted Billing Demand = (Billing Demand x .95)/Power Factor
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What is Power Factor?

Power factor involves the relationship between two types of power: Working Power and Reactive Power. Most loads in electrical distribution systems are inductive, which means that they require an electromagnetic field to operate. Inductive loads require two kinds of current:

Working Power performs actual work of creating heat, light, motion, etc. Reactive Power sustains the electromagnetic field. PF measures how effectively electrical power is being used.
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Examples of Electric Equipment and Their Power Factor

Different types of electric equipment have different Power Factors and consequently different efficiencies and current requirements:

Name of Equipment
Lightly loaded induction motor Loaded induction motor Neon-lighting equipment Incandescent lamps All types of resistance heating devices (e.g. toaster, space heater)

Power Factor Percent .20 .80 .30 - .70 1 1

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Power Triangle
Working Power (kW)

a c
Apparent Power (kVA)

Reactive Power (kVAR)

1. Real Power or Working Power (kW) - Measured 2. Reactive Power (kVAR) - Measured 3. Apparent Power (kVA) - Calculated Pythagorean Theorem:
2 2

c = a+ b
2

kVA = kW + kVAR

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Calculating Power Factor kVAh = kWh2 + kVARh2

Average PF over month

Power Factor =
Metered kW x 0.95 PF

kWh kVAh
= kW billed
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Example 1: January 2006 Billing

Monthly meter readings: 1,625 kW, kWh, 846,600 kVARh 762,600

762,600 kWh2 + 846,600 kVARh2 = kVAh kVAh = 1,139,425 762,600 kWh PF = 1,139,425 kVAh 1,625 KW x 0.95 .669 = 2,308 KW billed
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66.9 %

Why Enforce Power Factor?

Places the cost burden more on those customers causing the problem rather than all rate payers.

Improves system efficiency by

reducing losses Enhances system operation and reliability. Increases system capacity capabilities.

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Why only accounts over 700 kW?

ERCOT Protocol required metering upgrade to IDR for accounts over 700 kW. AEP took advantage of the meter change-outs to install metering capable of making the measurements needed for PF.

The 700 kW and above standard provides for a uniform, non-discriminatory application of the policy. Correcting the PF on larger accounts will result in a more noticeable improvement in 21 the system PF.

AEPs Approach to Enforcement

Accounts will be assessed using monthly average PF rather than its coincidental onpeak PF. Generally, the average PF is slightly more forgiving, but the resulting adjustment to the customers billing demand still sends the proper pricing signal to motivate the customer to take corrective action. Initiate communication of AEPs intent to implement PF enforcement with affected market participants starting in July 2005. Provide interim communications between July 2005 and the initiation of the enforcement to the affected market participants. 22

Power Factor Correction

Minimize operation of idling or lightly loaded motors. Replace standard motors as they burnout with energy efficient motors sized correctly. Install capacitors in the circuit .

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Recommendations
Work with a qualified electrical contractor or engineer to study your application. Different strategies of correction, static versus bulk. Inverters, variable speed drives, and solid state soft starters will affect design. Power factor can be affected by harmonics, which can only be addressed with filters.

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Open Discussion

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