American Electric Power (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.
Source: American Electric Power
Date: Nov 3, 2017