COLUMBUS, Ohio, March 31, 2016 – American Electric Power’s (NYSE: AEP) AEP Ohio utility unit received an order from the Public Utilities Commission of Ohio (PUCO) today supporting and modifying AEP Ohio’s expanded Power Purchase Agreement (PPA).
“Although the Public Utilities Commission of Ohio modified the settlement agreement, they did recognize the significant benefits of this plan for Ohio consumers. This plan will ensure more stable electricity prices in Ohio and promote the development of new, renewable generation to support the state’s economy,” said Nicholas K. Akins, AEP chairman, president and chief executive officer. “We worked with advocates for low-income customers, environmental organizations, industrial and commercial customers and competitive energy suppliers to develop an energy plan for Ohio that will support the state economy, preserve jobs, protect Ohio customers from electricity price volatility, and move Ohio to a greener energy future.”
The agreement approved by the PUCO today was filed Dec. 14, 2015, and supported by 11 parties, including the PUCO staff, Sierra Club, Ohio Partners for Affordable Energy, Ohio Energy Group, Ohio Hospital Association, Mid-Atlantic Renewable Energy Coalition, as well as three competitive retail energy suppliers.
The plan includes AEP Ohio entering into an eight-year power purchase agreement (ending May 31, 2024) for the capacity, energy and ancillary service output of AEP’s 2,671 megawatt (MW) ownership share of nine generating units and AEP Ohio’s 423 MW contractual share of Ohio Valley Electric Corporation (OVEC) generation. The nine generating units include Cardinal Unit 1 in Brilliant (Jefferson County); Conesville Units 4, 5 & 6 in Conesville (Coshocton County); Stuart Units 1-4 in Aberdeen (Brown County); and Zimmer Unit 1 in Moscow (Clermont County).
The company also will retire, refuel or repower to 100 percent natural gas Conesville Units 5 and 6 and Cardinal Unit 1 by the end of 2029 and 2030, respectively.
Subject to PUCO approval and cost recovery, AEP Ohio will develop at least 900 MW of wind and solar generation in Ohio over the next five years; continue its strong support of energy efficiency programs; and move forward with grid modernization efforts, including the installation of smart meters. Additionally, AEP Ohio will provide up to $100 million in customer credits during the term of the agreement.
In aggregate, the plan is expected to provide a net benefit to AEP Ohio customers over the next eight years.
AEP is reaffirming its 2016 earnings guidance range of $3.60 to $3.80 per share, as the AEP Ohio PPA is just one factor among a number of factors that are considered when determining earnings guidance.
AEP Ohio delivers electricity to nearly 1.5 million customers of AEP’s subsidiary Ohio Power Co. in Ohio. AEP Ohio is based in Gahanna, Ohio, and is a unit of American Electric Power.
American Electric Power is one of the largest electric utilities in the United States, delivering electricity and custom energy solutions to nearly 5.4 million customers 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 operates 223,000 miles of distribution lines. AEP ranks among the nation’s largest generators of electricity, owning approximately 32,000 megawatts of generating capacity in the U.S. 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.
# # #