American Electric Power CEO Nick Akins on Thursday expressed his “extreme disappointment” with FERC’s recent proposal to limit a transmission rate adder incenting utilities to join RTOs.

“Participation in RTOs has resulted in ensuring the most efficient regional solutions are advanced,” he told financial analysts during AEP’s first-quarter earnings call. “Participation should be encouraged and not discouraged.”

Akins’ ire was raised by FERC’s approval last week of a supplemental Notice of Proposed Rulemaking to limit the eligibility period for collecting the rate adder to three years after joining an RTO, rather than for as long as the utility is a member. The commission also proposed maintaining the adder at 50 basis points, reversing a proposal more than a year ago to double it. (See FERC Proposes to Narrow RTO Incentive.)

Akins said loss of the adder would cost AEP “$55 million to $70 million pre-tax.”

He said FERC’s “abrupt about-face” on incentives would certainly lead to litigation.

“It’s vital that the federal policy continues to support transmission investment, and particularly those made by companies who are participants in RTOs,” Akins said. “There is a cost to being in an RTO, and upsetting this cost-benefit equation could change the dynamic of RTO participation.”

Clean Energy Developments

“Every reputable expert” has found transmission to be an “integral part of the solution” in reaching clean energy goals, Akins said. AEP, which owns the nation’s largest transmission system, said in February that it has set an 80% reduction in carbon emissions by 2030 and net-zero emissions by 2050.

The Columbus, Ohio-based utility made progress toward that goal when its 199-MW Sundance Wind Energy Center in northern Oklahoma began commercial operations earlier this month. Sundance is the first of three wind farms that will compose the North Central Energy Facilities, which will eventually provide 1,485 MW of clean energy. (See AEP a Go with $2B North Central Wind Project.)

Akins also said AEP plans to complete a strategic review of its eastern Kentucky assets, which include the 1.56-GW coal-fired Mitchell Power Plant. Kentucky Power, with about 165,000 customers in eastern Kentucky, is easily the smallest of AEP’s seven operating companies.

Any revenue from a potential sale would go to the North Central project, CFO Julie Sloat said. “To the extent we get dollars in the door, that would be a wonderful place to put it.”

AEP reported first-quarter earnings of $575 million ($1.16/share), up from the quarter a year ago of $495 million ($1/share). Zacks Investment Research had projected earnings of $1.23/share.

The company’s share price dropped by $1.40 on Thursday, closing at $87.95.