SWEPCO Settlement Would Raise Texas Residential Bills 7.7%

Southwestern Electric Power Company customers in Texas could see monthly electricity bills increase by 7.7% under a proposed rate settlement that critics say leaves key spending details unclear.

The agreement, reached in September, would increase SWEPCO's annual base-rate revenue by $47.5 million, down from the $95 million net increase the utility initially sought. The settlement also raised the company's authorized return on equity, the rate of return regulators allow shareholders to earn on their investment, from 9.25% to 9.53%. The Public Utility Commission of Texas has not yet approved the agreement.

An analysis by the Energy and Policy Institute said a typical residential customer using 1,000 kilowatt-hours per month would see a bill rise from $135.28 to $145.72, an increase of $10.44. The settlement would also allow SWEPCO to apply new rates retroactively to March 2026 through a surcharge, partially offset by a $28.5 million refund from a previous case.

The agreement is described as a "black box" settlement because it sets the overall financial terms without a detailed, line-by-line explanation of each adjustment. Such agreements are common in utility rate cases but can limit public visibility into how regulators and parties resolved disputed costs.

Customers would also pay $ 10.6 million in rate-case expenses over two years, including legal and expert costs for SWEPCO and intervening parties. The settlement does not clearly resolve whether customers must reimburse certain industry association dues and other disputed expenses.

SWEPCO also requested to recover some costs associated with legislative monitoring and payments to registered lobbyists. The utility has argued that certain monitoring expenses are recoverable under prior regulatory precedent, while rules prohibit utilities from passing through costs associated with legislative advocacy.

SWEPCO, a subsidiary of American Electric Power, serves more than 191,000 Texas customers and operates as a vertically integrated utility outside the ERCOT grid.