AEP Inks a Deal with Utilidata - Analyst Blog


American Electric Power Company Inc. ( AEP ) has entered into an agreement with Utilidata Inc. to upgrade the next generation of grid side applications. Per the contract, American Electric will support Utilidata for its product development activities. This joint exercise will be held at Utilidata's newly commissioned smart grid simulation and research center in Providence at Rhode Island.

Utilidata has strong track record in terms of modernizing the delivery of electric energy. Its voltage optimization product called AdaptiVolt solution provides better Volt/VAR Optimization by using Digital Signal Processing ("DSP"), and it has already installed this product in a number of American Electric territories. Volt/VAR Optimization helps to form reliable energy savings before energy reaches to the customers.

This agreement will speed up the utilization of digital control technologies in terms of smart grid solutions and improvement of utility operations, including mixing of distributed generation, offering fault warning and electric vehicles on the distribution systems.

We know that American Electric continuously modernize its transmission related infrastructures. Last month, American Electric Power awarded a transmission contract to Quanta Services, Inc. ( PWR ) to reconstruct its 345,000 volt power line of 66 miles located in Corpus Christi at Texas.

As a result of the current grid improvement process, American Electric will be able to deliver electricity safely to its customers at a cheaper price and also in a reliable manner. This initiative will also enable the customers to consume electric energy in the future.

In addition to developing transmission services, American Electric is also working to improve its generation portfolio by gradually converting coal fired units into natural gas fired units to meet the environmental standards. The company plans to make long-term capital investment in the range of $6 billion to $7 billion to continue its green power development initiatives. We believe that American Electric's steady investment in different types of projects will act as a positive catalyst, particularly as a vital revenue provider in the long run.

However, weak economies in a number of its service states restrict opportunities for American Electric's future growth. In addition, uncertainty related to pending regulatory cases and its predominantly fossil-fuel based generation assets are also matters of concern. 

Columbus, Ohio-based American Electric Power Company Inc. engages in the generation, transmission and distribution of electric power to retail customers. It generates electricity using coal and lignite, natural gas, nuclear energy and hydroelectric energy. American Electric Power Company Inc. currently has a short-term Zacks #4 Rank (Sell rating).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AEP , PWR

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