AEP's Investment In Core, Regulated Operations Supporting Earnings Growth, Shareholders Learn At Company's Annual Meeting

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Apr 21, 2015, 11:42 ET

COLUMBUS, Ohio, April 21, 2015 /PRNewswire/ -- American Electric Power (NYSE: AEP) continues to deliver shareholder value through a long-term growth strategy focused on investment in the company's core regulated operations, according to Nicholas K. Akins, AEP's chairman, president and chief executive officer. Akins addressed shareholders at the company's annual meeting today in Columbus, Ohio.

"By investing in our core, regulated businesses, controlling costs and making process improvements, we've achieved consistently strong financial results and provided value for our shareholders," Akins said. "AEP was one of the top five best-performing utility stocks in 2014, and our shareholders received a total return of 35 percent, exceeding the total returns for both the S&P 500 Electric Utilities Index and the S&P 500. We also rewarded shareholders in 2014 with a dividend increase of 6 percent on an annual basis."

AEP's 2014 earnings were $3.43 per share on an operating basis (excluding special items), exceeding 2013 operating earnings per share of $3.23, a 6.2 percent increase.

AEP's earnings growth strategy includes leveraging its century of transmission expertise to support the nation's changing generation mix and make the transmission grid more efficient and resilient. AEP's Transmission Holding Co. business grew by more than $1 billion in 2014 to a total of $2.7 billion in net assets and contributed 31 cents per share to earnings in 2014. The company plans capital investments of approximately $4.8 billion in its regulated transmission businesses over the next three years. AEP also started construction of its new, patented BOLD (Breakthrough Overhead Line Design) transmission line that increases the efficiency and power transport of transmission lines while also enhancing their visual appearance and reducing their physical footprint.

AEP also continues to diversify its overall generation fleet. AEP will retire nearly 6,600 megawatts of coal-fueled generating capacity in 2015 and 2016 due to environmental regulations and market conditions, and will increase its use of natural gas, renewables and energy efficiency resources. Future generation investments will be focused on natural gas and renewables. AEP is currently refueling coal-fueled generating units in Kentucky and Virginia to natural gas. AEP's Indiana Michigan Power utility added 200 megawatts of wind generation to its energy mix in 2014 and recently received approval to build 16 megawatts of utility-scale solar generation.

Akins credited AEP's nearly 18,600 employees for the company's success. "I'm most proud of the work of our employees in 2014. They successfully completed a third consecutive year without a fatality and embraced our efforts to identify and implement creative, sustainable process improvements. Their focus on improvement and financial discipline enabled us to achieve about $64 million in savings and revenue enhancements in 2014. Their commitment and dedication also contributed to our recognition as one of Fortune magazine's 2015 World's Most Admired Companies in the electric and gas utilities sector," Akins said.

In business items at the annual shareholders meeting, AEP shareholders elected 12 directors. Directors re-elected to the board are: Nicholas K. Akins, 54, of Dublin, Ohio; David J. Anderson, 65, of Greenwich, Conn.; J. Barnie Beasley Jr., 63, of Sylvania, Ga.; Ralph D. Crosby Jr., 67, of McLean, Va.; Linda A. Goodspeed, 53, of Crestview, Fla.; Thomas E. Hoaglin, 65, of Columbus, Ohio; Sandra Beach Lin, 57, of Flower Mound, Texas; Richard C. Notebaert, 68, of Chicago; Lionel L. Nowell III, 60, of Marco Island, Fla.; Stephen S. Rasmussen, 62, of Columbus, Ohio; Oliver G. Richard III, 62, of Lake Charles, La.; and Sara Martinez Tucker, 59, of Dallas.

Approximately 99 percent of shares voted ratified the firm of Deloitte & Touche LLP as AEP's independent public accounting firm for 2015.

Approximately 95 percent of shares voted indicated support for AEP's executive officer compensation program.

Approximately 95 percent of shares voted approved AEP's Long-term Incentive Plan.

Approximately 97 percent of shares voted approved amending AEP's Restated Certificate of Incorporation to eliminate Article 7, commonly referred to as the "fair price provision."

A proposal to amend AEP's bylaws to eliminate the supermajority provisions was approved by 98 percent of shares voted. Although this proposal received a majority vote, it did not pass because this proposal required the affirmative vote of two-thirds of the outstanding shares.

Approximately 67 percent of shares voted approved a shareholder proposal requesting that the AEP Board of Directors adopt and present a proxy access bylaw for shareholder approval. This is a non-binding vote. The AEP Board of Directors will take shareholders' input into consideration in determining next steps on proxy access.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a 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.

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: the economic climate, growth or contraction within and changes in market demand and demographic patterns in AEP's service territory; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing AEP's ability to finance new capital projects and refinance existing debt at attractive rates; 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, customer growth and the impact of competition, including competition for retail customers; weather conditions, including storms and drought conditions, and AEP's ability to recover significant storm restoration costs; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of necessary generating capacity and the performance of AEP's generating plants; AEP's ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP's ability to build or acquire generating capacity and 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, or additional regulation of fly ash and similar combustion products 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 other energy-related commodities; prices and demand for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing, alternative or distributed sources of generation; AEP's ability to recover through rates or market prices 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 and capacity auction returns; changes in utility regulation and the allocation of costs within regional transmission organizations, including ERCOT, PJM and SPP; the transition to market for generation in Ohio, including the implementation of ESPs and AEP's ability to recover investments in its Ohio generation assets; AEP's ability to successfully and profitably manage its separate competitive generation assets; 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