- Parties have agreed to terminate the transaction under which
AEP would sell its Kentucky
operations to Liberty
- AEP is committed to providing reliable service to Kentucky customers and ensuring the financial
health of the utility as part of the state's economic and energy
future; Wiseman named Kentucky Power president and chief operating
officer
- AEP's 2023 operating earnings (non-GAAP) guidance range
reaffirmed at $5.19 to $5.39 per share with long-term growth rate of 6%
to 7%; equity financing forecast remains unchanged
COLUMBUS, Ohio, April 17,
2023 /PRNewswire/ -- American Electric Power
(Nasdaq: AEP) today reaffirms its commitment to Kentucky customers and outlines its strategic
plans for Kentucky Power and AEP Kentucky Transco. AEP and Liberty,
a subsidiary of Algonquin Power & Utilities Corp., agreed to
terminate the previously announced transaction under which AEP
would sell its Kentucky operations
to Liberty.
"As a partner in Eastern
Kentucky for more than 100 years, we're renewing our focus
on bringing opportunities to the region and supporting the
communities we serve. We are working diligently to reimagine our
strategy with the goal of not just supporting Kentucky but being an essential part of its
economic and energy future," said Julie
Sloat, AEP president and chief executive officer. "We
believe there are opportunities ahead for our Kentucky operations, and we will focus our
efforts on economic development, reliability and controlling cost
impacts to customers.
"Our team is eager to get to work implementing a refreshed
long-term strategy that maximizes the full potential of our
Kentucky operations – not just for
AEP, but for the communities we serve. I am confident that we have
the right team in place to lead this effort and power the future in
Eastern Kentucky, while delivering
value for customers, employees and investors," Sloat said.
AEP is taking swift and decisive action to be best positioned in
the near-term, while continuing to develop a long-term strategy for
Kentucky that is consistent with
the goals of the Kentucky
commission. In the near-term AEP will be focused on:
- Filing a New Base Rate Case: AEP plans to file a
base rate case in Kentucky in June
with a six-month expected commission approval process, and new
rates taking effect in January
2024.
- Right-Sizing Kentucky's Rate Base: AEP will focus
on right-sizing its rate base to better meet the region's needs and
address costs while providing reliable service to customers in the
near-term. This includes securitizing retired coal assets through
the Kentucky commission's approval
to reduce rates for customers.
- Economic Development in the Region: AEP has a
legacy of bringing businesses and jobs to its communities through
economic development efforts. AEP believes that leveraging
Kentucky's manufacturing talent
will help attract onshoring and reshoring which, combined with
access to lower cost power, will strengthen the regional economy
and attract new investment.
- Right Team in Place to Oversee Efficient and Effective
Execution of the Kentucky Strategy: AEP and its
Kentucky operations leadership
teams will leverage years of industry experience and expertise to
take a new look at the business. AEP's refreshed Kentucky strategy represents an opportunity to
move forward and be a part of Kentucky's energy future. AEP also named
Cindy Wiseman as Kentucky Power
president and chief operating officer. Wiseman's experience
overseeing customer service, economic development and government
affairs positions her well to redefine the company moving
forward.
AEP's 2023 Operating Earnings Guidance Range, Long-term
Growth Rate, FFO/Debt Target, and Equity Financing Forecast Remain
Unchanged
AEP reaffirms its 2023 earnings guidance range of $5.19 to $5.39 per
share with an annual long-term growth rate of 6% to 7% and FFO/Debt
target of 14% to 15%. There is no change in AEP's equity financing
plan resulting from this change in strategy. Proceeds from AEP's
contracted renewables sale, which is expected to generate
$1.2 billion, will replace previously
forecasted proceeds from the Kentucky sale process.
American Electric Power, based in Columbus, Ohio, is powering a cleaner,
brighter energy future for its customers and communities. AEP's
approximately 17,000 employees operate and maintain the nation's
largest electricity transmission system and more than 225,000 miles
of distribution lines to safely deliver reliable and affordable
power to 5.6 million regulated customers in 11 states. AEP also is
one of the nation's largest electricity producers with
approximately 31,000 megawatts of diverse generating capacity,
including more than 6,900 megawatts of renewable energy. The
company's plans include growing its renewable generation portfolio
to approximately 50% of total capacity by 2032. AEP is on track to
reach an 80% reduction in carbon dioxide emissions from 2005 levels
by 2030 and has committed to achieving net zero by 2045. AEP is
recognized consistently for its focus on sustainability, community
engagement, and diversity, equity and inclusion. 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, east Texas and the Texas
Panhandle). AEP also owns AEP Energy, which provides
innovative competitive energy solutions nationwide. For more
information, visit aep.com.
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:
changes in economic conditions, electric market demand and
demographic patterns in AEP service territories; the impact of
pandemics and any associated disruption of AEP's business
operations due to impacts on economic or market conditions, costs
of compliance with potential government regulations, electricity
usage, supply chain issues, customers, service providers, vendors
and suppliers; the economic impact of increased global trade
tensions including the conflict between Russia and Ukraine, and the adoption or expansion of
economic sanctions or trade restrictions; inflationary or
deflationary interest rate trends; volatility and disruptions in
the financial markets precipitated by any cause, including failure
to make progress on federal budget or debt ceiling matters,
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 if expected sources of capital,
such as proceeds from the sale of assets or subsidiaries, do not
materialize, and during periods when the time lag between incurring
costs and recovery is long and the costs are material; decreased
demand for electricity; 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; the availability of fuel and necessary
generation capacity and the performance of generation plants; AEP's
ability to recover fuel and other energy costs through regulated or
competitive electric rates; the ability to transition from fossil
generation and the ability to build or acquire renewable
generation, transmission lines and facilities (including the
ability to obtain any necessary regulatory approvals and permits)
when needed at acceptable prices and terms, including favorable tax
treatment, and to recover those costs; new legislation, litigation
and government regulation, including changes to tax laws and
regulations, 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 generation plants and related
assets; the impact of federal tax legislation on results of
operations, financial condition, cash flows or credit ratings; the
risks associated with fuels used before, during and after the
generation of electricity and the byproducts and wastes of such
fuels, including coal ash and spent 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
and environmental compliance; 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 generation units that may be retired before the end
of their previously projected useful lives; volatility and changes
in markets for coal and other energy-related commodities,
particularly changes in the price of natural gas; the impact of
changing expectations and demands of customers, regulators,
investors and stakeholders, including heightened emphasis on
environmental, social and governance concerns; 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 contractual
arrangements, including participants in the energy trading market;
actions of rating agencies, including changes in the ratings of
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 standards periodically issued by
accounting standard-setting bodies; other risks and unforeseen
events, including wars and military conflicts, the effects of
terrorism (including increased security costs), embargoes,
naturally occurring and human-caused fires, cyber security threats
and other catastrophic events; and the ability to attract and
retain the requisite work force and key personnel.
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SOURCE American Electric Power