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Released May 16, 2022 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--American Electric Power Company Incorporated (NASDAQ:AEP) (AEP) (Columbus, Ohio) told investors last month it plans to spend about $38 billion on capital projects over the 2022-26 period, with about two-thirds of that amount, or about $24.8 billion, going to its regulated transmission & distribution (T&D) business.
Click on the image at right to see AEP's five-year capital spending program.
Industrial Info is tracking about 282 active AEP projects valued at around $5.8 billion. AEP's operating units own about 31,000 megawatts (MW) of electric generation and serve about 5.5 million customers across 11 states. Those operating units also operate one of the nation's largest transmission & distribution (T&D) networks.
For the just-completed quarter, AEP earned $714.7 million on revenue of $4.6 billion. In the year-earlier quarter, the company earned $575 million on revenue of $4.3 billion.
Speaking with investors April 28, Nicholas Akins, AEP chairman, president and chief executive officer, provided updates to several strategic transactions, including:
AEP is focused on "making investments that enhance service for our customers, support the clean energy transition and advance new technologies continues to drive value for our customers, communities and investors," Akins said. "AEP is delivering on our strategic initiatives to transform the energy system for the future while de-risking and simplifying the company."
The "de-risking" and "simplification" to which Akins refers is an oblique reference to AEP's years-long effort to exit merchant power generation and refocus on its regulated generation and T&D assets. On the earnings call, he highlighted that 99% of AEP's planned $38 billion in capital spending over the 2022-26 period will be in regulated businesses.
AEP's operating companies also are experiencing strong economic growth, driving increased demand for electricity. Gross domestic product (GDP) in AEP's service area has exceeded national GDP growth for the last three quarters.
Akins commented: "We continue to see strong momentum with load growth across most of our territory and sectors of the economy. Our outlook remains positive as we continue building solid economic development partnerships and working to locate and expand businesses and add jobs in the communities we serve."
While Akins was highlighting the planned investments on regulated renewable energy and regulated T&D assets, he had less to say about the company's looming environmental remediation and environmental upgrade projects, which are some of the largest capital projects facing the company. At least a dozen coal ash pond closure projects and ash-handling upgrade projects collectively valued at over $1 billion are scheduled to kick off construction in the coming years, though some of that may be transferred to the new owner of the Kentucky Power unit.
"Like many other electric utilities, AEP's operating units are spending heavily to transform their generation fleet by building more renewable energy while also expanding and upgrading their T&D network," commented Brock Ramey, Industrial Info's North American power specialist.
"AEP's large geographic footprint means their spend will be higher than most," he continued. "And the company's heavy historic reliance on coal-fired power plants means they have significant legacy environmental cleanup costs, mainly centered on closing coal ash ponds and upgrading coal-ash handling facilities pursuant to the Coal Combustion Residuals (CCR) rule enacted in 2015 by the U.S. Environmental Protection Agency."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Click on the image at right to see AEP's five-year capital spending program.Industrial Info is tracking about 282 active AEP projects valued at around $5.8 billion. AEP's operating units own about 31,000 megawatts (MW) of electric generation and serve about 5.5 million customers across 11 states. Those operating units also operate one of the nation's largest transmission & distribution (T&D) networks.
For the just-completed quarter, AEP earned $714.7 million on revenue of $4.6 billion. In the year-earlier quarter, the company earned $575 million on revenue of $4.3 billion.
Speaking with investors April 28, Nicholas Akins, AEP chairman, president and chief executive officer, provided updates to several strategic transactions, including:
- The sale of AEP's Kentucky Power utility and its Kentucky transmission assets to a unit of Algonquin Power & Utilities Corporation (NYSE:AQN) (Oakville, Ontario), for about $2.9 billion. Kentucky Power (Ashland, Kentucky) serves about 165,000 customers in eastern Kentucky. That sale, announced last October, is expected to close during the second quarter.
- The sale of a solar development site in Ohio, and the planned sale of five additional renewable energy sites in the Midwest. Separate from those transactions, AEP is readying the sale of 1,600 megawatts (MW) of unregulated contracted renewables in the second half of 2022. These moves are a continuation of AEP's efforts to exit merchant power. The proceeds from these sales will be invested in AEP's regulated businesses.
- The start of commercial operations for the Traverse windfarm, which is the final part of AEP's North Central wind complex.
- Four AEP operating companies have issued requests for proposals (RFPs) for new solar and wind generation. Overall, AEP plans to add approximately 16,000 MW of new renewables in its regulated states by 2030.
AEP is focused on "making investments that enhance service for our customers, support the clean energy transition and advance new technologies continues to drive value for our customers, communities and investors," Akins said. "AEP is delivering on our strategic initiatives to transform the energy system for the future while de-risking and simplifying the company."
The "de-risking" and "simplification" to which Akins refers is an oblique reference to AEP's years-long effort to exit merchant power generation and refocus on its regulated generation and T&D assets. On the earnings call, he highlighted that 99% of AEP's planned $38 billion in capital spending over the 2022-26 period will be in regulated businesses.
AEP's operating companies also are experiencing strong economic growth, driving increased demand for electricity. Gross domestic product (GDP) in AEP's service area has exceeded national GDP growth for the last three quarters.
Akins commented: "We continue to see strong momentum with load growth across most of our territory and sectors of the economy. Our outlook remains positive as we continue building solid economic development partnerships and working to locate and expand businesses and add jobs in the communities we serve."
While Akins was highlighting the planned investments on regulated renewable energy and regulated T&D assets, he had less to say about the company's looming environmental remediation and environmental upgrade projects, which are some of the largest capital projects facing the company. At least a dozen coal ash pond closure projects and ash-handling upgrade projects collectively valued at over $1 billion are scheduled to kick off construction in the coming years, though some of that may be transferred to the new owner of the Kentucky Power unit.
"Like many other electric utilities, AEP's operating units are spending heavily to transform their generation fleet by building more renewable energy while also expanding and upgrading their T&D network," commented Brock Ramey, Industrial Info's North American power specialist.
"AEP's large geographic footprint means their spend will be higher than most," he continued. "And the company's heavy historic reliance on coal-fired power plants means they have significant legacy environmental cleanup costs, mainly centered on closing coal ash ponds and upgrading coal-ash handling facilities pursuant to the Coal Combustion Residuals (CCR) rule enacted in 2015 by the U.S. Environmental Protection Agency."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
