Dive Brief:
- Still struggling with how to deal with aging generation that can't profitably meet Ohio demand, American Electric Power is pursuing a partial restructuring of the state's electricity markets, instead of a full re-regulation that has been discussed, Columbus Business First reports.
- AEP issued its quarterly results yesterday, and in a conference call, CEO Nick Akins told analysts that it would focus on restructuring because “re-regulation just has a larger connotation to it."
- AEP has put some generation up for sale after federal regulators blocked a plan to support the struggling plants, and Akins said that so far the company has seen strong interest in the assets.
Dive Insight:
AEP told journalists and analysts yesterday that it is pursuing a partial restructuring of Ohio's electricity market, as opposed to full re-regulation, because the lesser goal is simply more attainable. The utility has struggled over the last two years to win support for older, unprofitable plants in the state, and is considering selling off a portion of its fleet.
According to Columbus Business First, Akins said during an earnings conference call that “re-regulation just has a larger connotation to it and actually is a much heavier lift to put the entire genie back in the bottle." AEP is backing legislation that would allow it to transfer generation from the deregulated side to AEP Ohio, the news outlet explains, while also allowing the utility to invest in new gas and renewable energy.
AEP has moved to sell some generation after federal regulators blocked a deal approved by Ohio regulators that would have give support for older, uneconomic plants. AEP originally requested income guarantees for 3,100 MW of older coal-fired generation in four plants, but has downsized its proposal to 440 MW while it seeks to sell a portion of its fleet.
Bids are due in August for a set of plants that includes almost 8,000 MW of generation, according to Columbus Business First. Plants up for sale include gas and coal fired generation but a part of the company's income guarantee request, and separate as well.
“I can say that the response has been robust,” Akins told analysts and reporters.
AEP posted strong second quarter results, announcing earnings of $502 million or $1.02 per share, compared with $430 million in the same period a year ago.
"Our positive earnings performance this quarter once again demonstrates that strategic investment in our regulated businesses supports earnings growth," Akins said in the company's earnings release. "There are significant opportunities for us to develop advanced energy infrastructure and technologies to enhance service for our customers and support the nation's energy future."
