American Electric Power reported fourth-quarter 2012 earnings on Feb. 15 of $21 million, compared with $308 million in 2011, and full-year earnings of $1.3 billion, compared with $1.9 billion in 2011.
Earnings for the year were affected by Ohio plant impairments of $184 million, a $9 million adjustment associated with a cost cap on construction of the John W. Turk Jr. coal-fired power plant and a $30 million charge associated with cost restructuring. Nearly all of these occurred in the fourth quarter.
"In spite of considerable challenges in 2012, including extended regulatory uncertainty in Ohio, lagging demand growth and several unprecedented storms, we provided solid financial results for our shareholders and safely delivered reliable, affordable electricity for the benefit of our customers," said Nicholas K. Akins, president and chief executive officer.
Operating results for the fourth quarter and the year were in line with 2011, Akins said, despite sluggish demand growth and the negative impact of customer switching in Ohio, which is transitioning to a deregulated electricity market.
Weather played a significant role in earnings for the year. Operating earnings from utility operations were up due primarily to successful rate proceedings and cost containment, but offset some by storm restoration costs. Operating earnings for river operations were down due to drought.
"AEP shareholders received an 8.22 percent total shareholder return in 2012, including dividends — well above the total shareholder return of negative 0.55 percent for the S&P 500 Electric Utilities Index," Akins said, adding that the company replaced parent debt at more attractive rates, reduced post-employment benefit liability and increased funding of its qualified pension plan to 92 percent.
Akins made oblique reference in the Friday morning release to the company's hope to transfer some coal-fired assets from deregulated Ohio subsidiaries, where they would have to compete, to Appalachian Power in regulated West Virginia, where they would be guaranteed a return through rates approved by the Public Service Commission of West Virginia.
"We've filed for corporate separation and transfer of our Ohio generation assets to our competitive generation entity and other operating companies and expect to fully separate our Ohio generation from our Ohio utility operations at the end of 2013," he said.
He noted that the company brought to new power plants online in 2012: the 580-megawatt combined-cycle natural gas Dresden Plant and the 600-megawatt Turk Plant, the first ultra-supercritical coal plant in the United States.
The company set 2013 operating earnings guidance of $3.05 to $3.25 per share, and for 2014, $3.15 to $3.45.
AEP shares are traded on the New York Stock Exchange under the symbol AEP.
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