Dive Brief:
- AEP has boosted its 2015 capital expenditure budget to $4.4 billion and now forecasts 2016 capital investment budget at $3.8 billion and its 2017 capital investment budget at $3.9 billion.
- The company is planning to invest at least $4.8 billion in its transmission businesses over the next three years through AEP Transmission Holding Co. and its regulated utilities.
- AEP also increased its operating earnings guidance for 2015 to $3.40 to $3.60/share, up from $3.30 to $3.60/share.
Dive Insight:
AEP officials say their projected 4% to 6% growth in operating earnings continues to be based on a strategy the company put in place in 2012.
"We remain focused on growing our core regulated businesses," said AEP Chairman, President and CEO Nicholas Akins, who said 96% of planned capital investments for the next three years will be in regulated operations.
"At the same time, we continue to expand our process improvement initiatives to achieve sustainable cost savings in our operations. These actions will help us manage the revenue challenges presented by lagging economic recovery and the 2016 capacity market results," Akins said.
The company said its strategy is designed to support dividend growth, with a targeted dividend payout ratio of 60% to 70% of operating earnings. AEP increased its dividend in October by 6% on an annual basis to $2.12/share.