By Tom Kleckner
American Electric Power CEO Nick Akins said last week the Columbus-based energy giant is seeking only a partial “restructuring” of Ohio’s energy market, not full reregulation.
After FERC ruled in April that it would review state actions to guarantee income for some of AEP’s Ohio power plants, Akins had said the company would lobby Ohio lawmakers for reregulation of the state’s electricity market while also considering selling off its Ohio fleet. (See All Eyes on AEP, FirstEnergy with Ohio PPAs in Doubt.)
Asked during a July 28 call with analysts whether AEP was de-emphasizing “reregulation” of the market, Akins said, “Reregulation just has a larger connotation to it and actually is a much heavier lift to put the entire genie back in the bottle.
“With FERC’s order essentially taking the Ohio [power purchase agreement] proposal approved by the Ohio commission off the table, which I discussed last quarter, AEP is addressing the situation by pursuing restructuring in Ohio,” he said. “Note this is restructuring, not reregulation.”
Akins said state lawmakers and other power generators are discussing the company’s proposed legislation that would transfer its competitive power generation to its AEP Ohio subsidiary. The legislation would also allow AEP to invest in new natural gas and renewable energy power sources.
“The proposed legislation strikes a balance between our ability to invest and maintain generation in the state and the customers’ ability to choose generation suppliers,” Akins said.
AEP has said it won’t build new gas plants in the state and would sell all its Ohio plants if the legislature is unable to come up with a solution. The Public Utilities Commission of Ohio had approved the earlier guaranteed-income proposal after almost two years of debate.
The company reported a quarterly profit of $502 million ($1.02/share), up from $430 million ($0.88/share) a year ago. It reported sales of $3.9 billion, up slightly from $3.8 billion. Akins said AEP’s focus on process improvement, cost discipline and capital allocation “gives us confidence that we can achieve operating earnings within our guidance range of $3.60 to $3.80 per share for 2016.”
AEP stock closed up at $69.30 Friday, an increase of 43 cents since the earnings announcement.
