COLUMBUS, Ohio, April 22 /PRNewswire-FirstCall/ -- American Electric
Power (NYSE: AEP) entered 2008 with a strong balance sheet, stable credit
profile and favorable dividend yield to support investment and growth in
the years ahead, Michael G. Morris, AEP chairman, president and chief
executive officer, told shareholders attending the company's annual meeting
today in Roanoke, Va.
"The more than 20,000 employees of American Electric Power delivered
outstanding results in 2007. Our earnings rose to $3 per share, at the top
of our earnings guidance for the year and up more than 8 percent from 2006.
We also were able to reward our shareholders again in 2007 with a 5.1
percent increase in the dividend, following the 5.4 percent increase in
2006 and the 5.7 percent increase in 2005," Morris said.
AEP increased the quarterly dividend paid on its common stock to 41
cents Oct. 23, 2007.
"We anticipate strong ongoing earnings in 2008 despite the anticipated
U.S. economic downturn. In January, we raised our ongoing earnings
projections and are forecasting growth of 5 percent to 9 percent annually
through the end of the decade," Morris added.
Much of the earnings growth in 2007 was the result of AEP's success
with its regulatory recovery efforts. AEP achieved rate adjustments in 2007
that added $352 million in revenue. The company already has achieved 92
percent of the additional $518 million in rate recovery sought in 2008
through successful regulatory proceedings in Oklahoma, Virginia and Ohio.
"We continue to see the benefits of the changes made in 2004 to move
decision-making authority closer to our customers, regulators and
stakeholders. I firmly believe our regulatory success to date can be traced
to this change. We plan to build on this success as we enter the next phase
of regulatory activity from now until 2012 during which time we anticipate
filing more than 40 cases to recover the capital investments we must make
to continue providing reliable, reasonably priced and environmentally
responsible electricity to our customers.
"We are focused on helping our regulators and customers understand the
benefits of the planned investments in our system, and we believe our
efforts will be reflected in regulatory decisions to increase rates to
reflect our growing costs of doing business. Even with ongoing capital
investments close to $4 billion per year planned through the end of the
decade, our customers will continue to benefit from some of the lowest
rates in the regions that we serve," Morris said.
AEP will allocate additional resources, including positions, to its
utility subsidiaries in 2008 to supplement communications and relationships
with regulatory commissions. Transmission and Generation positions also
will be added to the local leadership teams at most utility subsidiaries
and the scope of the utilities' Regulatory, Finance and Corporate
Communications areas will be expanded.
Even as the company works to complete its $5.4 billion program to
retrofit its coal-fueled generating fleet to reduce emissions of sulfur
dioxide, nitrogen oxides and mercury, AEP will focus on its strategy to
address its greenhouse gas emissions (GHG). The company will validate
carbon capture and storage technology in 2009 on its existing Mountaineer
Power Plant in New Haven, W.Va. If deemed technically and economically
feasible, AEP plans to install the technology at commercial-scale on AEP's
Northeastern Station in Oklahoma in 2012. Additionally, AEP continues to
seek regulatory approval to start construction of Integrated Gasification
Combined Cycle (IGCC) clean-coal generation.
"We were extremely pleased that the West Virginia Public Service
Commission realized the value of IGCC technology in supporting the future
of coal by granting approval for our proposed plant at New Haven," Morris
said. "We still need to spend some time addressing the potential costs for
that plant with our regulators here in Virginia. They rejected construction
and cost recovery plans for the plant last week, but we will petition for
rehearing and provide additional cost information to help address their
concerns."
The IGCC plant AEP proposed to build in Ohio is on hold until recovery
of generation investments in the state is clarified by pending electricity
legislation.
AEP also is moving forward with its goal to add 1,000 megawatts of
renewable energy to its generation fleet by 2011. Long-term power purchase
agreements were signed in 2007 to add 275 megawatts of wind capacity to
serve Appalachian Power and Indiana Michigan Power customers. AEP's
Appalachian Power and Southwestern Electric Power Co. (SWEPCO) subsidiaries
issued RFP's in April 2008 for an additional 165 megawatts of renewable
generation. These renewable capacity additions are part of AEP's overall
strategy to help reduce the growth in GHG emissions fueled by increasing
customer demand. The strategy includes investments in domestic GHG offsets,
including methane and forestry programs; power plant and consumer-based
efficiency improvements; and programs to reduce emissions from the
company's vehicle and aviation fleet. The strategy is detailed in the
company's 2008 Corporate Responsibility Report, which was provided to
shareholders attending the annual meeting.
"Continuing the success of AEP in a world where greenhouse gases are
regulated is foremost on our minds. The politics of moving forward with
U.S. climate legislation is clear even if the timetable remains fuzzy. We
are taking a proactive approach and expect to achieve early-mover
advantages as we focus on how to best address our emissions," Morris said.
AEP's investment plans for transmission and distribution will
contribute to reducing GHG emissions while supporting the company's
earnings growth strategy.
"A national interstate transmission system is critical to the
reliability of the U.S. electricity grid as well as to economic growth and
the efficiency of wholesale power markets. In nearly all cases, expanded
transmission is more cost effective than building new generation and can
help reduce the growth in emissions," Morris said.
AEP's transmission strategy calls for significant investment within its
service territory and alliances with others to invest outside of the
company's traditional footprint. AEP's joint venture with Allegheny Energy
to build a 550-mile, extra-high-voltage transmission line extending from
West Virginia into Maryland received approval and a return on investment of
14.3 percent from the Federal Energy Regulatory Commission in March 2008.
Electric Transmission Texas (ETT), AEP's joint venture with MidAmerican
Energy Holdings Co. (MidAmerican) to build transmission in the Electric
Reliability Council of Texas (ERCOT), was finalized in late 2007 and is
contributing to earnings through the transfer of assets build by AEP near
Laredo, Texas. Electric Transmission America (ETA), a separate joint
venture formed with MidAmerican in 2007 to build transmission outside of
ERCOT, is evaluating investment opportunities. The Southwest Power Pool is
considering a backbone 765-kilovolt (kV) transmission system based on a
technical study by AEP and a proposal to extend 765-kV transmission
infrastructure through Michigan is being evaluated by PJM Interconnection
and the Midwest ISO.
In distribution, AEP announced plans in 2007 to pursue development,
integration and deployment of enhanced energy delivery and metering
technologies and signed a Memorandum of Understanding with General Electric
(GE) to bring advanced metering and the enhanced information technology to
support it to approximately 200,000 AEP customers by the end of 2008. With
regulatory approval, the company will extend the technology to all of its
customers by 2015. The advanced meters, combined with special rate plans,
will allow AEP's customers to better understand their energy consumption,
and through access to time-of-day pricing, reduce their electricity costs.
The company's agreement with GE will integrate the advanced meters with
enhancement to its distribution and transmission backbone, addressing the
full energy pathway from the power plant to the home.
Investments in efficiency and renewables nothwithstanding, customer
demand growth requires that AEP build additional new baseload generation.
AEP completed 340 megawatts of new simple cycle natural gas generation in
Arkansas in 2007. In 2008, AEP will complete construction of 340 MW of
natural gas generation in Oklahoma and hopes to begin work on another 508
megawatts of natural gas generation in Louisiana. AEP also will start
construction on a partially completed, 580-MW natural gas plant in Ohio
that was acquired in 2007.
The company received approval in two of three jurisdictions to build a
600-MW ultra-supercritical, advanced pulverized coal plant in Arkansas and
is moving forward with approved pre-construction activities while waiting
for approval from Texas.
Morris reaffirmed AEP's ongoing earnings guidance of $3.10 to $3.30 per
share for 2008.
"We've had significant success during the last two years, and I
appreciate the efforts of all of our employees in making that possible. I
also appreciate their continued focus on safety as we ended 2007 with no
employee fatalities. In my mind, and I hope in the minds of every one of
our employees, this is one of the most significant accomplishments for the
year," Morris said. "It is sobering that this is the first time in a
decade, and only the second time in the last 37 years, that every AEP
employee went home to his or her family every day. It is my sincere desire
and hope that our renewed focus on safety will mean that zero fatalities
and zero harm will become the norm, not the exception at AEP.
"The years ahead hold many challenges but the dedication and
performance of our employees over the last few years has demonstrated that
we are capable of turning daunting challenges into significant
accomplishments. We believe the opportunities we face and the strategy
we've put in place to address them will be very rewarding for our
customers, our employees and our investors," Morris said.
In business items, AEP shareholders re-elected 11 directors to hold
office until the next annual meeting or until the election of successors.
Directors elected to the Board are: Morris, 61, of Columbus, Ohio; E.R.
Brooks, 70, of Granbury, Texas; Donald M. Carlton, 70, of Austin, Texas;
Ralph D. Crosby Jr., 60, of McLean, Va.; John P. DesBarres, 68, of Park
City, Utah.; Linda A. Goodspeed, 46, of Nashville, Tenn.; Thomas E.
Hoaglin, 58, of Columbus, Ohio; Lester A. Hudson Jr., 68, of Charlotte,
N.C.; Lionel L. Nowell III, 53, of Purchase, N.Y.; Richard L. Sandor, 66,
of Chicago; and Kathryn D. Sullivan, 56, of Columbus, Ohio.
The Board of Directors adopted a resolution to reduce the number of
directors from 14 to 11 effective today when Robert W. Fri, William R.
Howell, and Donald G. Smith retired as directors. Morris praised their
significant contributions to AEP.
Approximately 98 percent of shares voted ratified the firm of Deloitte
& Touche LLP as AEP's independent auditors for 2008.
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 38,000 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 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 the
registrants 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: electric load
and customer growth; weather conditions, including storms; available
sources and costs of, and transportation for, fuels and the
creditworthiness and performance of fuel suppliers and transporters;
availability of generating capacity and the performance of AEP's generating
plants; AEP's ability to recover regulatory assets and stranded costs in
connection with deregulation; 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 (including the
company's ability to obtain any necessary regulatory approvals and permits)
when needed at acceptable prices and terms and to recover those costs
through applicable rate cases or competitive rates; new legislation,
litigation and government regulation including requirements for reduced
emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter
and other substances; 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 (including
disputes arising from the bankruptcy of Enron Corp. and related matters);
AEP's ability to constrain operation and maintenance costs; the economic
climate and growth in AEP's service territory and changes in market demand
and demographic patterns; inflationary and 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 refinance existing debt at attractive rates; AEP's 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 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 debt; volatility
and changes in markets for electricity, natural gas, coal, nuclear fuel and
other energy-related commodities; changes in utility regulation, including
the potential for new legislation in Ohio and the allocation of costs
within regional transmission organizations; accounting pronouncements
periodically issued by accounting standard-setting bodies; the impact of
volatility in the capital markets on the value of the investments held by
AEP's pension, other postretirement benefit plans and nuclear
decommissioning trust; prices for power that AEP generates and sells at
wholesale; changes in technology, particularly with respect to new,
developing or alternative sources of generation; other risks and unforeseen
events, including wars, the effects of terrorism (including increased
security costs), embargoes and other catastrophic events.
SOURCE American Electric Power
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CONTACT:
Media, Melissa McHenry, Manager, Corporate
Media Relations, +1-614-716-1120; Analysts, Julie Sherwood,
Director, Investor Relations, +1-614-716-2663, both of American
Electric Power
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