COLUMBUS, Ohio, April 26, 2011 /PRNewswire/ -- American Electric Power (NYSE: AEP) continues to perform above expectations and enhance shareholder value, despite still lagging economic recovery in parts of its service area, according to Michael G. Morris, AEP's chairman and chief executive officer. Morris addressed shareholders at the company's annual meeting today in Columbus, Ohio.
"We've continued to achieve solid financial results and reward our shareholders due to our diligence in controlling costs, our ongoing ability to successfully manage the rate-recovery process in 11 states and some favorable weather. We increased our quarterly dividend payments by 12 percent in 2010 and paid our 403rd consecutive dividend to our shareholders March 10," Morris said.
AEP's 2010 earnings were $3.03 per share on an ongoing basis (earnings excluding special items) and exceeded 2009 ongoing earnings per share of $2.97. First quarter 2011 earnings were $0.82 per share ongoing, compared with $0.76 per share ongoing in first-quarter 2010. The company reaffirmed its 2011 ongoing earnings guidance of between $3.00 and $3.20 per share.
"Our strong performance in 2010 and in the first quarter of 2011 is particularly noteworthy considering that the economies in many of the states that we serve are still struggling. We continue to see consistent economic recovery in Arkansas, Oklahoma, Louisiana and Texas, but only flashes of recovery in the seven eastern states we serve. We are seeing growth in industrial demand, and based on the most recent national data, the economic indicators for our eastern states should continue to improve," Morris said.
Morris highlighted AEP's strong, long-term performance for shareholders. Over the past five years, total return for holders of AEP stock was 21 percent. During the same period, total return for the S&P 500 was 12 percent.
"During the last two very challenging years, we've remained focused on operating in a financially responsible way and managing our costs to ensure that we could continue to reward our shareholders and our employees, while providing reliable, reasonably priced electricity for our customers. We had to take some difficult steps in 2010, including reducing our work force by more than 2,400 employees. We also reduced capital spending, cutting it to $2.23 billion last year," Morris said. "These actions have put us in a good position to continue to improve earnings this year and in 2012."
AEP will increase its capital investments to approximately $2.6 billion in 2011, including continuing construction of the John W. Turk Jr. Plant, a 600-megawatt ultra-supercritical coal-fueled plant in Arkansas scheduled for completion in late 2012. The company also resumed construction of its Dresden Plant, a 580-megawatt, combined cycle natural gas plant in Dresden, Ohio. Dresden is scheduled to go on line in the first quarter of 2012. AEP will invest approximately $707 million in new transmission projects in 2011, including $160 million within the company's service area through its new transmission company, AEP Transmission Co., and another $113 million on projects being developing through the company's transmission joint ventures in Texas and other states.
"As the economic recovery expands more uniformly throughout our service area, we see our earnings growing at a faster pace in the 2012 and 2014 time frame, in the range of 4 percent to 6 percent. We will continue our growth strategy as we expand our transmission business and begin transitioning our generating fleet to meet new environmental requirements, including retiring some older coal-fueled generating stations, retrofitting others to further reduce emissions, and building some new generation. That transition will continue after 2014 when we project earnings growth in the 5 percent to 7 percent range as additional transmission and generation investments are made," Morris said.
In business items at the annual shareholders meeting, AEP shareholders elected 13 directors. Directors re-elected to the board are: Morris, 64, of Columbus; James F. Cordes, 70, of The Woodlands, Texas; Ralph D. Crosby Jr., 63, of McLean, Va.; Linda A. Goodspeed, 49, of Franklin, Tenn.; Thomas E. Hoaglin, 61, of Columbus; Lester A. Hudson Jr., 71, of Charlotte, N.C.; Lionel L. Nowell III, 56, of Cos Cob, Conn.; Richard L. Sandor, 69, of Chicago; Kathryn D. Sullivan, 59, of Columbus; Sara Martinez Tucker, 55, of San Francisco; and John F. Turner, 69, of Moose, Wyo.
Morris announced that Kathryn Sullivan would be leaving AEP's Board of Directors because she has been appointed Assistant Secretary of Commerce for Environmental Observation and Prediction. Morris commended her service to the AEP Board of Directors.
David J. Anderson, 61, of Morristown, N.J., and Richard C. Notebaert, 64, of Chicago, were newly elected to the board to replace retiring board members E.R. Brooks and Donald Carlton.
Anderson is senior vice president and chief financial officer of Honeywell International. He has held that position since 2003. He was senior vice president and chief financial officer of ITT Industries Inc. from 1999 to 2003 and also served in equivalent positions at Newport News Shipbuilding and RJF Nabisco Holding Corp.
Notebaert retired as chairman and chief executive officer of Qwest Communications International Inc. in 2007. He was chairman and chief executive officer at Qwest from 2002 to 2007. Notebaert headed Tellabs as chairman, president and chief executive officer from 2000 to 2002 and was chief executive officer and chairman of Ameritech Corporation from 1994 to 1999. Notebaert also is a director of Aon Corp. and Cardinal Health Inc.
Approximately 98 percent of shares voted ratified the firm of Deloitte & Touche LLP as AEP's independent public accounting firm for 2011.
Approximately 96 percent of shares voted indicated their support for AEP's named executive officer compensation.
Approximately 85 percent of shares voted supported an annual advisory vote on the company's named executive officer compensation.
American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a nearly 39,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP's transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP's utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP's headquarters are in Columbus, Ohio.
This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: the economic climate and growth in, or contraction within, AEP's service territory and changes in market demand and demographic patterns; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing AEP's ability to finance new capital projects and refinance existing debt at attractive rates; the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material; electric load and customer growth; weather conditions, including storms, and AEP's ability to recover significant storm restoration costs through applicable rate mechanisms; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of necessary generating capacity and the performance of AEP's generating plants; AEP's ability to recover Indiana Michigan Power's Donald C. Cook Nuclear Plant Unit 1 restoration costs through warranty, insurance and the regulatory process; AEP's ability to recover regulatory assets and stranded costs in connection with deregulation; AEP's ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP's ability to build or acquire generating capacity, including the Turk Plant, and transmission line facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through applicable rate cases or competitive rates; new legislation, litigation and government regulation, including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of fly ash and similar combustion products that could impact the continued operation and cost recovery of AEP's plants; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including AEP's dispute with Bank of America); AEP's ability to constrain operation and maintenance costs; AEP's ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the implementation of electric security plans and related regulation in Ohio and the allocation of costs within regional transmission organizations, including PJM and SPP; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP's pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future funding requirements; prices and demand for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.
SOURCE American Electric Power