The City Council approved the first reading of an ordinance Tuesday by a 3-0 vote that finds AEP Texas' existing rates unreasonable and would deny the company a projected 13 percent rate increase.

Mayor Todd Pearson and Council Members Frank Reilly and Jerry Beattie voted in favor of the ordinance during the council's regular meeting.

Mayor Pro Tem George Marriott and Councilman Leo Villa were absent.

The council will have to approve the second and final reading of the ordinance at its Feb. 27 meeting before it's official, said City Manager Tom Blazek.

AEP Texas Central filed a request with the Public Utility Commission of Texas on Nov. 9, 2006, to increase the rates charged to retail electric providers by 13 percent, an $82.7 million rate hike.

But the city of Rockport, along with more than 70 other cities, suspended that action for 180 days so the proposed increase could be studied.

Blazek said those cities have until March 15 to make a decision to deny the rate hike.
AEP Texas spokesman Larry Jones said the increase is necessary and that if any of the cities reject the request, the company will appeal to the Public Utility Commission of Texas for a final ruling.

Jones said it would be up to the retail electric companies to decide how much of an increase to charge their customers.

"Our current rate represents less than 20 percent of an average residential customer's bill," Jones said.

While other distribution companies have a return in investments of 10 percent or more, AEP Texas has about 2 percent by comparison, Jones said.
Texas Central Co. and Texas North Co. make up AEP Texas, which delivers electricity in South and West Texas for retail electric companies.

By Mary Ann Cavazos Caller-Times