A unit ofAmerican Necbc Power

Elizabeth O’Donnell, Executive Director Kentucky Public Service Cornmission P. 0. Box 615 21 1 Sower Boulevard Frankfort, KY 40602

February 15,2008

Dear Ms. O’Donnell:

Re:

Kentucky Power P 0 Box 5190 IOlA Enterprise Drive Frankfort, KY 40602 KentuckyPower coni

FEB 1 5 2008 PUBLIC SERVICE

coMMIssIoN

In the Matter of the Joint Application Pursuant to 1994 House Bill No. SO1 for the Approval of American Electric Power/Kentucky Power Company Collaborative Demand-Side Management Programs, and for Authority to Implement a Tariff to Recover Costs, Net Lost Revenues and Receive Incentives associated with the Implementation of the Kentucky Power Company Collaborative Demand-Side Management Programs.

Pursuant to the Cornmission’s Order dated May 22, 1996, enclosed are an original and ten copies of the Joint Applicants’ twenty-fourth six-month status report. This report describes the operation and progress of the Demand-Side Management Plan.

Specifically, the Joint Applicants seek authority for Kentucky Power Company, in conjunction with its utility services and pursuant to the 1994 House Bill No. 50 1 , to implement the enclosed revised electric tariff to recover costs associated with the implementation of demand-side management programs, which include net lost revenues and incentives related to those programs.

The revised DSM Adjustment clause factor for the residential sector has been agreed upon and is proposed by the DSM Collaborative (see Exhibit C, Column 5, Line I3), except that the Attorney General’s representative abstained. The proposed factor for the residential sector is the midpoint between the ceiling and the floor calculations as demonstrated on Exhibit C. The floor was calculated by taking the Collaborative’s projected remaining three quarters position (see Exhibit Cy Column 5 , Line 2) and dividing by the adjusted estimated sector KWH sales for the remaining three quarters (see Exhibit C, Column 5, Line 11). The ceiling was calculated by taking the Collaborative’s projected remaining three quarters position (see Exhibit Cy Colunvl 5, Line 4) and dividing by the adjusted estimated sector KWH sales for the remaining three

Elizabeth O'Donnell February 15,2007 Page 2

quarters (see Exhibit Cy Column 5 , Line 11).

The Joint Applicants request the Commission to approve the following:

(1) The Experimental DSM Electric Tariff to become effective March 3 1 , 2008. This will allow the Company to utilize the new residential factor with the first billing cycle in April 2008.

As is customary, the Company requests the Commission to return a stamped copy of the revised tariff sheet upon approval.

If you have any questions please contact me at (502) 696-7010.

Sincerely,

Director of Regulatory Services Enclosure

Kentucky Power Company 5”’ REVISED SMEETNO. 22-2 CANCELING 4“’ REVISED SNEET NO. 22-2

P.S.C. ELECTRIC NO. S

DEMAND-SIDE MANAGEMENT ADJUSTMENT CLAUSE (Cont’d.) (Tariff D.S.M.C.)

-- RATE. (Cont’d.)

5

6

7

8

The DSM adjustment shall be filed with the Commission ten (10) days before it is scheduled to go into effect, along with all the necessary supporting data to justify the amount of the adjustments, which shall include data, and information as may be required by the Commission

Copies of all documents required to be filed with the Commission under this regulation shall be open and made available for public inspection at the office of the Public Service Commission pursuant to the provisions of KRS 6 1 870 to 61 “884.

The resulting range for each customer sector per KWH during the three-year Experimental Demand-Side Management Plan is as follows:

CUSTOMER SECTOR

RESIDENTIAL ($ Per Kwh)

Floor Factor = (0.000060) Ceiling Factor = 0.000495

COMMERCIAL** ($ INDUSTRIAL* Per KWH) ($ Per KWH)

-0- -0-

- 0 - - 0 -

The DSM Adjustment Clause factor ($ Per KWH) for each customer sector which fall within the range defined in Item 7 above is as follows:

- CUSTOMER SECTOR RESIDENTIAL COMMERCIAL ** INDUSTRIAL*

DSM (c) s o

347,935 1,599,213,000

-0- -0-

- 0 - - 0 -

Adjustment Factor $ 0 000218 -0- - 0 -

*The Industrial Sector has been discontinued pursuant to the Commission’s Order dated September 28, 1999

** The Commercial Sector has been discontinued pursuant to the Commission’s Order dated November 21, 2005

NAME TITLE ADDRESS

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KENTUCKY POWER COMPANY Exhibit C DERIVATION OF 3 SECTOR SURCHARGES FOR 3 YR EXPERIMENT

TOTALYEARS YEAR 12 RESIDENTIAL SECTOR 1 thN 11 (2007)

1 st HALF

(I) (2)

P A G E l d 16

YEAR12 YEAR13 YEAR13 (2007) (2008) (2008) TOTAL

2nd 1 st 2nd. 3rd & 4th

(3) (4) (5) (6) HALF QTR QTRs

10

11

12 13 14

AMOUNT TO BE RECOVERED $791,361

903,946,000 1,599.213.000 ADJ. ESTIMATED SECTOR KWH I YEAR 13

SURCHARGE RANGE ( $ PER KWH ) FLOOR (CARRYOVER) MIDPOINT - proposed rate CEILING (TOTAL COST)

COL. 5. L 2 / COL. 5, L 11

ICOL. 5, L 41COL. 5. L 11

, I I

(0.000060) 0.000637 0.000218

0.000495 I

TOTALYEARS YEAR12 YEAR12 YEAR13 YEAR13 COMMERCIAL SECTOR 1 thN 11 (2007) (2007) (2007) (2007) TOTAL

1 S l 2nd 1 st Znd, 3rd & 4th HALF HALF QTR QTRs

e- l l (4) , (5) (6) I (3) I

(1) ~~

1 I I

15 16 17

18 19 20 21 22

22

I , $0 $2,899,238

18 MOS. RETROACTIVE(OVER)/UNDER ADJUSTMENT 1,520 1 0 0 0 0 1,520

0 2,900,818 0 2.888.053

0 0 0 0 0 0 EXPECTED FUTURE RECOVERIES TRANSFER PORTION OF BALANCE FROM INDUSTRIAL (3.278) 0 0 0 0 (3.278)

CURRENT PERIOD AMOUNT TO BE RECOVERED $2,899,298 I $0 $0 $0 CUMULATIVE (OVER)/UNDER COLLECTION 01 0 0 0 0 0

TOTAL TO BE RECOVERED 2,900,818 0 0 0 TOTAL AMOUNT RECOVERED 2,888,053 0 0 0

TRANSFER BALANCE TO RESIDENTIAL (9,487) 0 0 0 0 (9,487)

(0VER)IUNDER COLLECTION TO BE REFUNDED $0 $0 $0 $0 $0 $0 I

========== ========== ======a=== ========== ========== =====I====

I

25 26 27

SURCHARGE RANGE ( $ PER KWH ) FLOOR (CARRYOVER) O.ODODOO

CEILING (TOTAL COST) 0.000000 0.000000 0.000000 MIDPOINT - proposed rate

I TOTALYEARS YEAR12 1 YEAR12 YEAR13 YEAR13 I

INDUSTRIAL SECTOR ~

1 thN 11 (2007) (2007) (2007) (2007) TOTAL 2nd. 3rd & 41h 1 st 2nd 1st

HALF HALF QTR QTRs (1)

I (3) I (4) (5)

I

28 29 30

31 32 33 34

35

________ CURRENT PERIOD AMOUNT TO BE RECOVERED $79,026 $0 $0 $0 $0 $79.026 CUMULATWE (0VER)lUNDER COLLECTION 0 0 0 0 0 0 18 MOS. RETROACTIVE(OVER)/UNDER ADJUSTMENT 0 0 0 0 0 0

79,026 0 0 0 0 79,026 TOTAL TO BE RECOVERED TOTAL AMOUNT RECOVERED 92.137 0 0 0 0 92.137

TRANSFER BALANCE TO RESIDENTIAL & COMMERCIAL 13.111 0 1 0 0 0 13,111 EXPECTED FUTURE RECOVERIES 0 0 0 0 0 0

(0VER)IUNDER COLLECTION TO BE REFUNDED $0 $0 $0 $0 $0 $0 --

1 ========== ========== ========== ========== ========== ========== I I

36 AMOUNT TO BE RECOVERED I $0 I 37 ADJ ESTIMATED SECTOR KWH - YEAR 13 I 332,877,600 1,030,867.200

---- SURCHARGE RANGE ( $ PER KWH )

38 FLOOR (CARRYOVER) I 0 000000 39 MIDPOINT I I 0 000000 0 000000

0 000000 I I i i I

40 CEILING (TOTAL COST) - proposed rate

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Exhibit C 1 PAGE 16 of I 16 I

LINE NO.

1

KENTUCKY POWER COMPANY I FORECAST OF 2008 KENTUCKY RETAIL ENERGY SALES IN KWH

I I FOR RESIDENTIAL, COMMERCIAL AND INDUSTRIAL SECTORS[

PROGRAM YR 13 1,2008 RESIDENTIAL COMMERCIAL INDUSTRIAL

YEAR SECTOR SECTOR SECTOR

TOTAL ULTIMATE SALES (KWHY 2,531,000,000~ 1,459,400,000 3,443,800,000 ~

I I I I

I I

I - - --- - I I I

5

6

1 KWH BEFORE LOST REVENUE IMPACTS 251 5,814,000 1,450,643,600 1,363,448,008

LESS LOST REVENUE IMPACTS 11,420,681 1,496,550 0

LINE NO.

12

RESIDENTIAL COMMERCIAL INDUSTRIAL PROGRAM YR 13 (2nd, 3rd & 4th QTRs) SECTOR SECTOR SECTOR

TOTAL ULTIMATE SALES (KWH)* 1'61 7,000,000 1,068,600,000 2,603,200,000

*

.60% ESTIMATED TO BE NON-METERED (OL) DETERMINED FROM BILLED JURISDICTIONAL TARIFF SUMMARY FOR 12 MOS. ENDED DECEMBER 2007.

SOURCE: 2008 LOAD FORECAST COMPILED BY AEP CORPORATE PLANNING AND BUDGETING DEPT.