AEP Sees 2010 Ongoing EPS Of $2.80-$3.20, Forms Transmission Co
DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- American Electric Power Co. (AEP) Sunday forecast
ongoing earnings of $2.80 to $3.20 a share and a 19% drop in capital spending
for 2010, and said it was forming a new transmission company.
"Our earnings projections for 2010 are driven by new rate recovery activity
underway in several jurisdictions across our service territories, an expected
increase in off-system sales of electricity as that market improves after a weak
year in 2009, and a general increase in retail load," AEP's chairman and chief
executive, Michael Morris, said in a press release.
The Columbus, Ohio-based power company, one of the nation's biggest, last week
narrowed its forecast for 2009 ongoing earnings, which exclude one-off items, to
between $2.90 and $3.05 a share. AEP also posted an 18% rise in third-quarter
earnings, to $443 million, or 93 cents a share, as higher electric rates offset
slumping demand.
AEP said it expects its 2010 capital expenditures will come to $1.933 billion,
down from $2.466 billion.
The new transmission company AEP is forming will operate in the company's
current service territory, and will be dedicated to enhancing and improving the
grid in that 11-state area, said company spokesman Pat Hemlepp. He added that
putting the new company in charge of grid work would get it off the utility
units' books and increase transparency for shareholders.
"It's a clearer transmission play in the eyes of investors," Hemlepp said,
adding the new company hasn't been named yet and is envisioned as a wholly owned
subsidiary of AEP. The company said it expects to invest $118 million in the new
company's activities next year.
The new company comes as part of AEP's broader transmission strategy, which
includes a joint venture with Warren Buffett's MidAmerican Energy Holdings Co.
in Texas and ventures with several other companies elsewhere in the country.
Revamping the transmission grid has become a priority in Washington, as
lawmakers try to figure out how to encourage development of renewable energy
sources that don't emit the heat-trapping gases blamed for climate change.
Building new transmission lines will be key for bringing wind and solar power
generated in remote areas to the distant cities that need the power.
AEP currently has a 39,000-mile transmission network in the U.S., and has
utility operations through most of the Midwest and parts of the South.
-By Mark Long, Dow Jones Newswires; (212) 416-2145; mark.long@dowjones.com
(END) Dow Jones Newswires
11-01-091628ET
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