AEP CEO: Ohio re-regulation off, but plant support bills on tap in Q3, Q4

Dive Brief:

  • American Electric Power is continuing efforts to restructure power markets in Ohio, and officials say they are in discussions with lawmakers and other utilities to develop legislation to provide "clarity for regulated recovery" of the costs of building new generation.
  • AEP Chairman, President and CEO Nick Akins made the comments this week during the company's 2017 first quarter earnings call with analysts. Legislation could be introduced later this year, he said.
  • Akins said AEP is not pushing for broad re-regulation of Ohio markets. A separate bill to support the company's share of output from plants owned by the Ohio Valley Electric Corporation (OVEC) may be introduced in the third quarter.

Dive Insight:

AEP officials say they expect lawmakers to introduce bills this year to support existing power plants and provide assured cost recovery for distribution utilities building new generation.

A bill to support the company's share of OVEC generation could come in the fall, followed by a broader bill to support the building of new plants.

"What this is not, is the total re-regulation of the Ohio generation," AEP CEO Nick Akin said during the call. "That went out the door when we sold generation and took the write-downs last year."

The aim, he said, is a bill that "provides clarity for regulated recovery of the building of new generation by an electric distribution utility, such as AEP Ohio, if the PUCO determines a need."

AEP and FirstEnergy won support for struggling coal and nuclear generation in 2016, but federal regulators subsequently blocked the deals, leading AEP to sell off plants and move toward restructuring legislation. 

​State regulators previously approved costs AEP's OVEC generation, but Akins said they company wants to "fortify" that decision through legislation.

Both bills are currently under discussion by lawmakers, Akins said, with the narrower OVEC proposal looking easier to pass. 

"There are some legislators who have indicated because OVEC is probably a cleaner issue to drive through pretty quickly," he said. "The OVEC thing may get solved third quarter, and then the other gets solved fourth quarter. And so, that way we can have a dialogue of all the parties and get a more robust solution on the second part of it."

AEP reported first-quarter 2017 earnings of $592 million or $1.20 per share, compared with $501 million in first-quarter 2016. The company recorded a $127 million gain in first-quarter 2017 from the sale of the Lawrenceburg, Waterford, Darby and Gavin power plants to Lightstone Generation LLC.

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Top image credit: AEP