I&M Parent AEP Reports Strong 2019 Earnings

Officials at American Electric Power, which is parent to Indiana Michigan Power serving Michigan’s Great Southwest and operator of the Cook Nuclear Plant at Bridgman, are hailing fourth quarter 2019 earnings this morning, calling it a “strong earnings performance.”

AEP today reported fourth-quarter 2019 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $154 million or $0.31 per share, compared with GAAP earnings of $363 million or $0.74 per share in fourth-quarter 2018. Operating earnings for fourth-quarter 2019 were $294 million or $0.60 per share, compared with operating earnings of $354 million or $0.72 per share in fourth-quarter 2018. Operating earnings is a non-GAAP measure representing GAAP earnings excluding special items.

The difference between fourth-quarter 2019 GAAP and operating earnings was largely due to the expensing of previously retired coal generation assets in Virginia, the recently filed settlement in the Texas base rate case and the Conesville Plant impairment.

Year-end 2019 GAAP earnings were $1.921 billion or $3.89 per share, compared with GAAP earnings of $1.924 billion or $3.90 per share for year-end 2018. Year-end 2019 operating earnings were $2.095 billion or $4.24 per share, compared with operating earnings of $1.945 billion or $3.95 per share for year-end 2018.

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The difference between year-end 2019 GAAP and operating earnings largely was driven by severance charges related to announced plant closures, the Conesville Plant impairment, expensing of previously retired coal generation assets in Virginia and the recently filed settlement in the Texas base rate case.

Nicholas Akins is Chairman, President & CEO at AEP. He reports, “Our long-term focus on strategic investments to enhance service for our customers and support a clean energy future continues to contribute to our strong earnings performance and allows us to deliver solid shareholder value. In 2019, AEP delivered a total shareholder return of 30.5-percent, exceeding the 27.5-percent total return for the S&P 500 Electric Utilities Index.”

Akins goes on to say, “We’ve made significant progress in expanding our portfolio of clean energy resources, and the investments we made in our contracted renewables business in 2019 already are contributing positively to earnings. We also recently signed a long-term power purchase agreement for the output from our new, 128-megawatt contracted wind project under development in Kansas.”

On another front, Akins tells us, “Support for our North Central wind projects is growing with settlement agreements filed in Oklahoma and Arkansas. We’re working diligently to obtain regulatory approvals over the next few months so that our Southwestern Electric Power Company and Public Service Company of Oklahoma customers can benefit from the clean energy and cost savings these projects will provide.”

Akins says, “More than 75-percent of our capital investments are focused on our wires businesses to enhance service for our customers, including critical transmission investments to replace aging equipment and ensure that we can maintain a reliable, resilient grid. The Transmission Holding Co. business contributed $1.05 per share to earnings in 2019, an increase of 30 cents. Net plant assets in our Transmission Holding Co. business grew $1.5 billion in 2019, an increase of 18-percent.”

In the final analysis, Akins says, “We ended 2019 at the top end of our increased operating earnings guidance range, driven by our performance across our regulated and competitive businesses. That performance was more than sufficient to offset a 0.8-percent decline in weather normalized sales year over year. We’re projecting load to improve in 2020 as several new industrial expansions are slated to come online, and we’re seeing signs of improvement overall in global economic conditions.”