November 11, 2018
AEP to Support Continued 5 to 7 Percent Operating Earnings Growth With Investments in Regulated Businesses and Renewables
COLUMBUS, Ohio, Nov. 11, 2018 – American Electric Power (NYSE: AEP) is increasing capital investment in its regulated operations over the next five years to provide more advanced, resilient and cleaner energy solutions for its customers. The company reaffirmed its 2019 operating earnings (earnings excluding special items) guidance range of $4.00 to $4.20 per share, and its projected annual operating earnings growth rate of 5 to 7 percent. AEP management will discuss the company’s financial outlook and earnings growth strategy at the annual Edison Electric Institute Financial Conference that begins Nov. 11 in San Francisco.
AEP plans to invest $33 billion in capital from 2019 through 2023, with 75 percent of that investment focused on its transmission and distribution operations to enhance service for customers. The company has $2.7 billion in new renewable generation in its capital plan during this same period, including approximately $2.2 billion for competitive, contracted renewable projects. AEP intends to work with regulators to identify additional opportunities to add renewable generation in its regulated jurisdictions.
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.
“Our long-term strategy is built on investments that will benefit our customers and position us for ongoing success and steady earnings growth as our industry transforms. AEP’s capital investments over the next five years will be focused on advanced infrastructure, innovative technologies and cleaner generation resources,” said Nicholas K. Akins, AEP chairman, president and chief executive officer.
“Our customers will benefit from a more reliable, resilient and smarter energy system as we rebuild and enhance aging infrastructure and add new, more efficient technologies to our transmission and distribution systems. We plan to invest approximately $16.6 billion in our transmission businesses and another $8.3 billion in our distribution businesses over the next five years.
“The transition of our generation mix to cleaner resources will continue. Earlier this year, we announced our plan to cut our carbon dioxide emissions 60 percent from 2000 levels by 2030. To help achieve this goal, we plan to add more than 8,300 megawatts of wind and solar generation and more than 2,600 megawatts of natural gas generation to our regulated generation fleet by 2030.
“We remain committed to dividend growth, consistent with earnings. We increased our regular quarterly cash dividend in October by 8.1 percent to 67 cents per share. AEP has paid consecutive quarterly dividends on its common stock since July 1910, more than 108 years,” 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 targeted cost discipline programs and a focus on digitalization of work.
American Electric Power, based in Columbus, Ohio, is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to our customers. AEP’s more than 18,000 employees operate and maintain the nation’s largest electricity transmission system and more than 219,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.4 million regulated customers in 11 states. AEP also is one of the nation’s largest electricity producers with approximately 32,000 megawatts of diverse generating capacity, including 4,340 megawatts of renewable energy. AEP’s family of companies includes utilities 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 also owns AEP Energy, AEP Energy Partners, AEP OnSite Partners, and AEP Renewables, which provide innovative competitive energy solutions nationwide.>
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: economic growth or contraction within and changes in market demand and demographic patterns in AEP service territories; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability or cost of capital to finance new capital projects and refinance existing debt; 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 and customer growth; weather conditions, including storms and drought conditions, and AEP’s ability to recover significant storm restoration costs; the cost of fuel and its transportation, the creditworthiness and performance of fuel suppliers and transporters and the cost of storing and disposing of used fuel, including coal ash and spent nuclear fuel; availability of necessary generating capacity, the performance of AEP’s generating plants and the availability of fuel, including processed nuclear fuel, parts and service from reliable vendors; AEP’s ability to recover fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build renewable generation, 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 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; 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, environmental compliance and excess accumulated deferred income taxes; resolution of litigation; AEP’s ability to constrain operation and maintenance costs; prices and demand for power generated and sold at wholesale; changes in technology, particularly with respect to energy storage and new, developing, alternative or distributed sources of generation; AEP’s ability to recover through rates 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; changes in utility regulation and the allocation of costs within regional transmission organizations, including ERCOT, PJM and SPP; 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; the impact of federal tax reform on customer rates, income tax expense and cash flows; 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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