Don’t look for American Electric Power (NYSE:AEP) to build any new power generation in Ohio until restructuring issues are resolved in the state, AEP Chairman, President and CEO Nicholas Akins stressed during a July 28 earnings call.
“I still think there is going to be some type of restructuring in Ohio because there has to be,” Akins told financial analysts during the call.
“I’ve made it very clear that we are not going to invest in any generation in this state. Period. … Until something is resolved from a restructuring standpoint that allows us to invest,” Akins said.
The AEP CEO said there is much interest in new natural gas generation within Ohio, but three or four new units will be “woefully inadequate,” for the need, Akins said.
In March, the Public Utilities Commission of Ohio (PUCO) approved a controversial plan where Ohio Power, a regulated AEP subsidiary would enter into a power purchase agreement (PPA) from now-unregulated AEP affiliate plants on behalf of its ratepayers as an energy security measure that runs into 2024.
But after appeals from various stakeholders, the Federal Energy Regulatory Commission (FERC) agreed to review the two PPA plans that PUCO had approved for baseload power plants owned by AEP as well as FirstEnergy (NYSE:FE).
Akins has said that he is disappointed by the FERC examination of the power contract arrangements. Akins has said that AEP is moving toward becoming more of a regulated utility and has no interest in being part of an extended jurisdictional battle between FERC and PUCO.
During the July 28 earnings call, Akins said that Ohio should not rely too much on markets that seem to rely too much on “virtual” generation.
In response to questions from analysts, Akins said that AEP is definitely moving ahead with plans for expanding renewable resources.
“We are probably a little more quiet about it,” than some other major generators, Akins said. “We have a huge transmission system” and this infrastructure will give AEP big potential to invest in things like renewables and energy storage, he added.
AEP is very interested in energy storage and will be active in both wind and solar power, Akins said.
AEP reported second-quarter 2016 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $502m or $1.02 per share, compared with GAAP earnings of $430m or 88 cents per share in second-quarter 2015. Operating earnings for second-quarter 2016 were $466m or 95 cents per share, compared with operating earnings of $429m or 88 cents per share in second-quarter 2015.