AEP Announces Outcome of PJM Capacity Auctions

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Sep 10, 2015, 05:42 ET

COLUMBUS, Ohio, Sept. 10, 2015 /PRNewswire/ -- American Electric Power (NYSE: AEP) today announced that 7,209 megawatts (MW) of the company's unregulated generation fleet in the PJM Interconnection cleared the capacity auction for the 2018-2019 delivery year, representing all of the capacity that AEP Generation Resources bid into the auction. Auction results were announced Aug. 21 at a clearing price of $164.77/megawatt-day. This auction was the first held under PJM's new capacity performance system, designed to encourage investment in power plants and strengthen the reliability of the electric grid.

PJM also held two transitional auctions to incorporate capacity performance into its previous auctions for the 2016-2017 and 2017-2018 delivery years. In the 2016-2017 transitional auction completed Aug. 31, AEP Generation Resources cleared 7,169 MW at $134/megawatt-day. This replaces the original capacity auction clearing price of $59/megawatt-day for 2016-2017. AEP Generation Resources cleared 6,495 MW at $151.50/megawatt-day in the 2017-2018 transitional auction results announced Sept. 9, replacing the original auction clearing price of $120/megawatt-day.

"The improvements PJM has made to the capacity market design are a step in the right direction to help support the investments needed for reliable generator performance. These higher auction prices for the next three years better reflect the value of reliable generation to meet peak electricity demand. The auction results also illustrate the benefits of our proposed purchase power agreement in Ohio to help provide more stable electricity rates for customers in the future," said Nicholas K. Akins, AEP chairman, president and chief executive officer.

AEP is reaffirming its 2016 earnings guidance range of $3.45 to $3.85 per share, as capacity auction results are among a number of factors that are taken into consideration to determine earnings guidance.

A chart with more detailed results from the three recent PJM auctions is available at www.aep.com/webcasts.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to nearly 5.4 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning nearly 32,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a more than 40,000-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 Texas). AEP's headquarters are in Columbus, Ohio.