By Tom Kleckner
American Electric Power CEO Nick Akins, a Louisiana native, says he roots for the Ohio State Buckeyes “if they’re not playing” Louisiana State University.
Makes sense, given that AEP shares its Columbus, Ohio, headquarters city with the Buckeyes. However, LSU’s ride to a 15-0 season and this year’s national championship gives him reason to celebrate his home state.
“I have to use an LSU analogy given their victory in the college football national championship,” Akins said during AEP’s fourth-quarter earnings call Thursday. “The way in which the LSU office executed during the season is the way I feel about our AEP team. … The results of 2019 indicate that.”
AEP reported fourth-quarter earnings of $153.5 million ($0.31/share), down from $363.4 million ($0.74/share) the year before. When adjusted for $98 million in charges linked to the retirement of three coal plants in Virginia and the planned shutdown of another coal plant in Ohio, adjusted earnings per share met analysts’ expectations of 60 cents/share.
Year-end results of $1.921 billion ($3.89/share) were virtually unchanged from 2018’s final numbers of $1.923 billion ($3.90/share).
Operating earnings for 2019 came in at $4.24/share, which was at the top end of AEP’s revised guidance range of $4.14 to $4.24/share.
“AEP has a habit of hitting the upper half of the guidance range, if not exceeding it, and this year has been no exception,” Akins said. “As we have said repeatedly, we would be disappointed in not achieving the same track record in the future.”
AEP set its 2020 guidance at $4.25 to $4.45/share and reaffirmed its 5 to 7% operating earnings growth rate.
Renewable energy will continue to play a major role as AEP continues to shed its coal resources. The company acquired Sempra Energy’s renewables business last year and is making progress on its North Central Wind initiative, a proposed $2 billion project involving Invenergy’s construction of three wind farms in Oklahoma with 1,485 MW of nameplate capacity.
Shortly after AEP’s earnings call, Oklahoma regulators signed off on a deal that allows Public Service Company of Oklahoma, an AEP subsidiary, to recover costs for 675 MW of wind energy. Should Arkansas approve the project, AEP would have a “critical mass” of 846 MW and a $1.1 billion investment to move forward.
AEP still needs approval from the Louisiana and Texas commissions which, along with Arkansas, have the ability to “flex up” and take any wind capacity other jurisdictions turn down.
Should Arkansas approve a settlement as well, Akins said, “the project is moving forward; that’s a given. Then the question becomes, ‘OK, what scale?’ And that’ll be determined by the other two jurisdictions and the amount of flex up that’s enabled in those settlements.”
AEP shares, which hit an all-time high of $104.97 on Feb. 18, fell to $101.70 on Friday, losing $1.75 following its close before the earnings announcement.
