AEP Announces 2012 Ongoing Earnings Guidance Range of $3.05 to $3.25 Per Share, Details Plans for 4 Percent to 6 Percent Earnings Growth

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Feb 10, 2012, 07:30 ET

COLUMBUS, Ohio, Feb. 10, 2012 /PRNewswire/ -- American Electric Power (NYSE: AEP) will share 2012 to 2014 plans, including 2012 ongoing earnings guidance (earnings excluding special items) and expected capital spend, during a meeting today with investors in New York.

The company is expected to announce an ongoing earnings guidance range for 2012 of $3.05 to $3.25 per share and set its 2012 capital budget at $3.1 billion. Capital expenditures for 2013 and 2014 are estimated at $3.5 billion to $3.7 billion per year.

"We expect earnings growth between 4 and 6 percent over the next few years as we continue to invest in our regulated operations, refocus our transmission business and put capital to work on our regulated generating fleet to comply with new regulations from the U.S. Environmental Protection Agency. We've proven that we can execute very successfully within the regulated utility space, which generates a significant portion of our earnings and supports our dividend," said Nicholas K. Akins, AEP's president and chief executive officer.

"At the same time, we are creating two sustainable businesses out of our Ohio assets: a competitive generation company and a regulated wires company. The competitive generation company will be able to begin accessing the potential value of its assets in 2013 and will have an opportunity to realize the full value of those assets after mid-2015 through various hedging strategies, including retail and wholesale marketing activities," Akins said.

AEP plans to file today at the Federal Energy Regulatory Commission (FERC) to separate its Ohio businesses and to terminate and replace the Interconnection Agreement for its eastern generating assets with a new power cost sharing arrangement. The company received approval Jan. 23 from the Public Utilities Commission of Ohio to move forward with corporate separation of its Ohio generation assets. AEP expects to receive decisions from the FERC enabling implementation of corporate separation and the termination and replacement of the Interconnection Agreement in the first quarter of 2013.

During today's meeting with investors, AEP management is expected to provide an update on the company's operating subsidiaries and its generation and transmission portfolios. AEP management also is expected to tell investors that the economic outlook in the 11 states where the company operates remains modest, with slight growth year-over-year expected in industrial and commercial sectors and flat residential load. Management presenters will tell investors that AEP's balance sheet is strong, with a stable credit outlook, and that the company's capital plan is supported by cash flows and financial discipline without a near-term need for equity financing beyond the company's existing dividend reinvestment plan.

In providing ongoing earnings guidance, there could be differences between ongoing earnings and Generally Accepted Accounting Principles (GAAP) earnings for matters such as changes in accounting principles. AEP management is not able to estimate the impact, if any, on GAAP earnings of these items, and therefore is not able to provide a corresponding GAAP equivalent for earnings guidance.

The meeting with investors, which begins at 8 a.m. EST, will be webcast live at http://www.aep.com/go/webcast. The webcast also will be available after the live event.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning nearly 39,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a nearly 39,000-mile network that includes more 765- kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP's transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP's utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east and north Texas). AEP's headquarters are in Columbus, Ohio. News releases and other information about AEP can be found at www.aep.com.

This report made by American Electric Power contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP believes that its expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: Electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP's generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; the ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases; new legislation, litigation and government regulation, including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp.); AEP's ability to constrain its operation and maintenance costs; AEP's ability to sell assets at acceptable prices and on other acceptable terms, including rights to share in earnings derived from the assets subsequent to their sale; the economic climate and growth in its service territory and changes in market demand and demographic patterns; inflationary trends; its ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness and number of participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP's ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including membership and integration into regional transmission structures; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP's pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

SOURCE American Electric Power