AEP’s CEO reiterates commitment to ‘indigenous’ transmission

American Electric Power (NYSE:AEP) President and CEO Nick Akins said transmission investment within the company’s service territory continued to present solid opportunities.

“When we refocus our staff on the indigenous projects within [AEP’s] service territory and things that need to get done to benefit reliability for our customers, there’s a lot of work to get done,” he said during the company’s 3Q12 earnings call Oct. 24.

AEP Transmission recently completed a fully subscribed $350m debt offering in which Akins said there was a “high degree of interest.”

“It shows that we’re moving in the right direction from an investment profile, and we continue to work on our capital allocation to further encourage the growth of our transmission businesses,” the CEO said. “We continue to grow the transmission business. We continue to work for ways to allocate more capital in the transmission because there’s a lot of projects out there.”

The company recently was awarded $500m of projects in its service territory as a result of generation retirements in the PJM Interconnection.

After PJM in August removed the Potomac-Appalachian Transmission Highline (PATH) project – jointly proposed by AEP and Allegheny Energy – from its regional transmission expansion plan, Lisa Barton, executive vice president for AEP Transmission, told TransmissionHub in September that the company in the short-term would refocus on projects within the company’s service territory.

Chasing investments in transmission is among AEP’s key growth strategies. Akins in March told TransmissionHub that AEP was looking for “critical mass” around transmission, and in April announced a joint venture with Great Plains Energy (NYSE:GXP), Transource, to help achieve that goal. Transource is to be AEP’s vehicle for pursuing competitive transmission projects, Barton said, and was a direct result of FERC Order 1000, which requires that right of first refusal (ROFR) language be removed from transmission tariffs. 

A benefit to focusing on investments in its own service territory is the ability to wait out the fluctuations in the industry caused by compliance with FERC Order 1000, Barton said.

AEP has other transmission joint ventures, including Pioneer Transmission, a JV with Duke Energy (NYSE:DUK); and two JVs with MidAmerican Energy Holdings, Electric Transmission America and Electric Transmission Texas.

“We are meeting our investment commitments in the transmission segment of our business, primarily through Electric Transmission Texas and our state transmission companies, and we are beginning to see earnings improvement each quarter from transmission,” Akins said in the company’s 8-K.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.