AEP To Fuel 5 To 7 Percent Earnings Growth With Investments In Regulated Business And Renewables; Raises CapEx

News provided by

Nov 03, 2017, 17:30 ET

COLUMBUS, Ohio, Nov. 3, 2017 /PRNewswire/ -- American Electric Power (NYSE: AEP) is increasing capital investment in its regulated operations and new, renewable generation over the next three years to provide more advanced, cleaner energy solutions for its customers. The company reaffirmed its 2018 operating earnings (earnings excluding special items) guidance range of $3.75 to $3.95 per share and its projected operating earnings growth rate of 5 to 7 percent. The company also reaffirmed its narrowed 2017 operating earnings guidance of $3.55 to $3.68 per share. AEP management will discuss the company's financial outlook and earnings growth strategy at the annual Edison Electric Institute Financial Conference that begins Sunday in Lake Buena Vista, Florida.

Operating earnings could differ from those prepared in accordance with Generally Accepted Accounting Principles (GAAP) for matters such as impairments, divestitures or changes in accounting principles. AEP is unable to forecast if any of these items will occur or any amounts that may be recorded for future periods. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.

AEP plans to invest $18.2 billion in capital from 2018 through 2020 with 72 percent of that investment focused on its transmission and distribution operations. The company expects to invest $1.8 billion in new renewable generation during this period, including approximately $1.3 billion for competitive, contracted renewable projects. These planned investments do not include the $4.5 billion Wind Catcher project in Oklahoma, which is dependent on regulatory approvals in 2018.

"Today, we are solely focused on making the right investments to be the energy company of the future including modern, smarter infrastructure; advanced technologies; and cleaner generation," said Nicholas K. Akins, AEP chairman, president and chief executive officer.

"Investments in our distribution and transmission systems will provide significant benefits to customers as we rebuild and enhance aging infrastructure; add advanced, more efficient technologies; and create a more robust and resilient system. We are investing approximately $4.4 billion in the distribution systems at our regulated utility operating companies over the next three years and another $9 billion in our transmission businesses in the same period. These investments support our earnings growth strategy. By 2020, the contribution of our Transmission Holding Co. business to earnings will grow to a projected 96 to 99 cents per share, up from 16 cents per share in 2013," Akins said.

"We are moving forward with the 2,000 megawatt Wind Catcher project, which will be the largest single wind farm in the nation when completed in 2020. Wind Catcher demonstrates the significant change in future generation opportunities. This $4.5 billion investment will deliver both cost savings and clean energy to our customers in Oklahoma, Louisiana, Arkansas and Texas. We have a pipeline of an additional 3,570 megawatts of wind and solar generation proposed to benefit customers across our system over the next seven years.

"Our targeted, solid investment strategy will continue to support our commitment to dividend growth, consistent with earnings. We increased our regular quarterly cash dividend in October by 5.1 percent to 62 cents per share. AEP's regular quarterly dividend now is at its highest level ever, since the company began paying dividends to our shareholders in 1910," Akins said.

AEP has a strong balance sheet and a stable credit outlook. AEP expects to control operations and maintenance expenses, net of earnings offsets, through continuation of its targeted process improvement and cost discipline programs.

American Electric Power, based in Columbus, Ohio, is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to our customers. AEP's more than 17,000 employees operate and maintain the nation's largest electricity transmission system and more than 224,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.4 million regulated customers in 11 states. AEP also is one of the nation's largest electricity producers with approximately 33,000 megawatts of diverse generating capacity, including 4,200 megawatts of renewable energy. AEP's family of companies includes utilities 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 also owns AEP Energy, AEP Energy Partners, AEP OnSite Partners and AEP Renewables, which provide innovative competitive energy solutions nationwide.

This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their 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: economic growth or contraction within and changes in market demand and demographic patterns in AEP service territories; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability or cost of capital to finance new capital projects and refinance existing debt; the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material; electric load and customer growth; weather conditions, including storms and drought conditions, and AEP's ability to recover significant storm restoration costs; the cost of fuel and its transportation, the creditworthiness and performance of fuel suppliers and transporters and the cost of storing and disposing of used fuel, including coal ash and spent nuclear fuel; availability of necessary generating capacity, the performance of AEP's generating plants and the availability of fuel, including processed nuclear fuel, parts and service from reliable vendors; AEP's ability to recover fuel and other energy costs through regulated or competitive electric rates; AEP's ability to build transmission lines and facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs; new legislation, litigation and government regulation, including oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances that could impact the continued operation, cost recovery, and/or profitability of AEP's generation plants and related assets; evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel; a reduction in the federal statutory tax rate that could result in an accelerated return of deferred federal income taxes to customers; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions, including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance; resolution of litigation; AEP's ability to constrain operation and maintenance costs; AEP's ability to develop and execute a strategy based on a view regarding prices of electricity and gas; prices and demand for power generated and sold at wholesale; changes in technology, particularly with respect to energy storage and new, developing, alternative or distributed sources of generation; AEP's ability to recover through rates any remaining unrecovered investment in generating units that may be retired before the end of their previously projected useful lives; volatility and changes in markets for capacity and electricity, coal, and other energy-related commodities, particularly changes in the price of natural gas; changes in utility regulation and the allocation of costs within regional transmission organizations, including ERCOT, PJM and SPP; AEP's ability to successfully and profitably manage competitive generation assets, including the evaluation and execution of strategic alternatives for these assets as some of the alternatives could result in a loss; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of AEP debt; the impact of volatility in the capital markets on the value of the investments held by AEP's pension, other postretirement benefit plans, captive insurance entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements; accounting pronouncements periodically issued by accounting standard-setting bodies; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.

SOURCE American Electric Power