COLUMBUS, Ohio, Nov. 8, 2015 /PRNewswire/ -- American
Electric Power (NYSE: AEP) narrowed its 2016 operating earnings
(earnings excluding special items) guidance range and reaffirmed
its 2015 operating earnings guidance. The company also forecast its
capital expenditure budgets for 2016 through 2018. AEP management
will discuss the company's financial outlook and earnings growth
strategy at the annual Edison Electric Institute Financial
Conference that begins today in Hollywood, Florida.
AEP narrowed its 2016 operating earnings guidance range to
$3.60 to $3.80 per share from the
previous range of $3.45 to $3.85 per
share. Operating earnings guidance for 2015 was increased and
narrowed to $3.67 to $3.77 per share
Oct. 22.
AEP plans to invest $13 billion in
capital from 2016 through 2018 with 96 percent of that investment
in its regulated businesses. AEP increased its 2016 capital
expenditure budget to $5 billion. The
company forecast its 2017 and 2018 capital investment budgets at
$4 billion annually.
In providing operating earnings guidance, there could be
differences between operating earnings and GAAP earnings for
matters such as, but not limited to, impairments or changes in
accounting principles. AEP management is not able to estimate the
impact, if any, on GAAP earnings of these items. Therefore, AEP is
not able to provide a corresponding GAAP equivalent for earnings
guidance.
"We've proven that our strategy of investing in our regulated
businesses to benefit our customers delivers solid earnings growth
and strong shareholder value. Since 2012, AEP's earnings from our
regulated businesses have increased at a compound annual growth
rate of 7.5 percent," said Nicholas K.
Akins, AEP's chairman, president and chief executive
officer.
"After completing more than a decade of investments to
dramatically cut emissions from our power plants, we've refocused
our investments on other infrastructure that will support new ways
of providing more reliable and cleaner electricity," Akins said.
"More than $9.3 billion of our
$13 billion capital plan will be
invested in our wires businesses. Transmission investment
opportunities continue to grow as we rebuild and enhance aging
infrastructure and create a grid that is more robust, resilient and
able to support current and future generation changes. Our ability
to invest in our regulated operations gives us confidence in our 4
to 6 percent earnings growth rate."
AEP will invest at least $5.7
billion in its transmission businesses over the next three
years through AEP Transmission Holding Co. and AEP's regulated
utility operating companies. AEP Transmission Holding Co.
contributed 16 cents per share to
earnings in 2013. Its earnings are on track to more than double to
40 cents per share this year and are
expected to nearly double again to 77
cents per share in 2018.
AEP's regulated business investment strategy supports the
company's commitment to dividend growth. AEP has set a targeted
dividend payout ratio of 60 to 70 percent of operating earnings.
The company increased its dividend in October by 5.7 percent on an
annual basis to $2.24 per share. AEP
has paid a cash dividend on its common stock every quarter since
July 1910.
AEP has a strong balance sheet and a stable credit outlook. The
company's capital plan is supported by cash flows and financial
discipline without an anticipated need for equity financing beyond
the company's existing dividend reinvestment plan and employee
purchases of stock through the 401K plans. AEP expects to control
operations and maintenance expenses, net of earnings offsets,
through continuation of its process improvement and cost discipline
programs, which are on track to realize $205
million in earnings improvement in 2016.
American Electric Power is one of the largest electric utilities
in the United States, delivering
electricity to nearly 5.4 million customers through 222,000 miles
of distribution lines in 11 states. AEP owns the nation's largest
electricity transmission system, a more than 40,000-mile network
that includes more 765-kilovolt extra-high voltage transmission
lines than all other U.S. transmission systems combined. AEP also
ranks among the nation's largest generators of electricity, owning
approximately 32,000 megawatts of generating capacity in
the United States. 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; the 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 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, 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.
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SOURCE American Electric Power