7/27/2006

AEP Reports 2006 second-quarter earnings and increases ongoing guidance

  • 2006 second-quarter earnings: GAAP $0.44 per share, ongoing $0.44 per share
  • AEP increases 2006 ongoing earnings guidance range to between $2.65 and $2.80 per share from the previous range of between $2.50 and $2.70 per share

Full news release and supplemental tables (PDF: 72KB: get viewer)

AMERICAN ELECTRIC POWER
Preliminary, unaudited results
2nd quarter ended June 306 months ended June 30
20052006Variance20052006Variance
Revenue ($ in billions)2.8 2.9 0.1 5.9 6.0 0.1
Earnings ($ in millions):
GAAP221 175 (46)576 556 (20)
Ongoing237 172 (65)578 550 (28)
EPS ($):
GAAP0.58 0.44 (0.14)1.48 1.41 (0.07)
Ongoing0.62 0.44 (0.18)1.49 1.40 (0.09)
EPS based on 384mm shares in Q2 2005, 394mm in Q2 2006, 389mm in 6 mo. 2005 and 394mm in 6 mo. 2006


COLUMBUS, Ohio, July 27, 2006 – American Electric Power (NYSE: AEP) today reported 2006 second-quarter earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $175 million, or $0.44 per share, compared with $221 million, or $0.58 per share, for second-quarter 2005.

Ongoing earnings (earnings excluding special items) for second-quarter 2006 were $172 million, or $0.44 per share, compared with $237 million, or $0.62 per share, for second-quarter 2005.

GAAP earnings were greater than ongoing earnings by $3 million for the quarter, primarily because of an adjustment on the sale of a discontinued asset. A full reconciliation of GAAP earnings to ongoing earnings for the quarter and year to date is included in tables at the end of this news release.

“There are a number of positive factors that contributed to our performance in the quarter and support raising guidance for 2006,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “We’re seeing increased revenue flowing through from the recently approved rate increases for several of our utilities in the East. We’re benefiting from our success in gaining new power supply contracts with municipal and cooperative customers. And MEMCO, our barge subsidiary, is showing continued outstanding results.

“With the recent spate of extremely hot weather across the nation, it may be difficult to remember that April and May, the first two months of the second quarter, were unseasonably mild across our eastern states, where more than 60 percent of our customers live and work,” Morris said. “We were still able to record solid results for the quarter.”

Events impacting quarter-to-quarter comparisons were reduced off-system sales opportunities caused by AEP’s May 2005 sale of its 630-megawatt interest in the South Texas Project (STP), a Texas nuclear plant that provided revenue in the 2005 quarter; unplanned outages at a number of plants to address a safety concern; the cessation of the Seams Elimination Charge Adjustment, or SECA, rates that contributed to earnings in 2005; and the recording of a provision for a potential refund related to those rates.

EARNINGS GUIDANCE


AEP increased its ongoing earnings guidance range for 2006 to between $2.65 and $2.80 per share from the previous ongoing earnings guidance range of between $2.50 and $2.70 per share.

“We’ve had a number of earnings positives and earnings negatives from our utility operations in the first six months,” Morris said. “For instance, mild weather has softened earnings from retail sales, but better-than-anticipated off-system sales from our remaining generating fleet are ahead of the projections we made for the year.

“And MEMCO is having an exceptional year,” Morris said. “We expected MEMCO’s earnings contribution to be solid, but results so far have been well ahead of our most optimistic projections. MEMCO is positioned to continue to benefit from a strong freight market, as both unit prices and volumes are up substantially.

“These factors, when added to the revenue effects of a hotter-than-normal July through much of our service area, have caused us to increase our ongoing earnings guidance range,” Morris said.

In providing ongoing earnings guidance, there could be differences between ongoing earnings and GAAP earnings for matters such as, but not limited to, divestitures or changes in accounting principles. AEP management is not able to estimate the impact, if any, on GAAP earnings of these items. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.

SUMMARY ONGOING RESULTS BY SEGMENT
$ in millions except EPS
Q2 05Q2 06Variance6 mo. 056 mo. 06Variance
Utility Operations262 160 (102)605 525 (80)
Ongoing EPS0.68 0.41 (0.27)1.56 1.33 (0.23)
Investments1 15 14 13 30 17
Ongoing EPS0.01 0.04 0.03 0.03 0.08 0.05
Parent Company(26)(3)23 (40)(5)35
Ongoing EPS(0.07)(0.01)0.06 (0.10)(0.01)0.09
Ongoing Earnings237 172 (65)578 550 (28)
Ongoing EPS0.62 0.44 (0.18)1.49 1.40 (0.09)
EPS based on 384mm shares in Q2 2005, 394mm in Q2 2006, 389mm in 6 mo. 2005 and 394mm in 6 mo. 2006


Ongoing earnings from Utility Operations decreased by $102 million during the second quarter of 2006 compared with the same period in 2005. Higher gross margins from retail sales, primarily from AEP’s regulated integrated utilities in the west, and the benefit of increased rates were more than offset by lost transmission revenue and the sale of AEP’s STP interest in 2005. Higher expenses were also recorded in the recently completed quarter than in the same period in 2005.

AEP’s MEMCO barge operations continue to benefit from favorable freight rates included in its 2006 contracts. MEMCO’s strong performance was the primary factor in the $14 million improvement in Investments in the quarter when compared to the same period in 2005.

Parent Company is favorable by $23 million in second-quarter 2006 when compared to the same period in 2005, primarily because of costs incurred in the prior year associated with the April 2005 $550 million bond buyback.

ONGOING RESULTS FROM UTILITY OPERATIONS
$ in millions except EPS
Q2 05Q2 06Variance6 mo. 056 mo. 06Variance
East Regulated Integrated Utilities465 471 6 989 1,035 46
Ohio Companies485 487 2 953 1,004 51
West Regulated Integrated Utilities232 272 40 410 467 57
Texas Wires113 121 8 213 227 14
Off-System Sales201 152 (49)448 375 (73)
Transmission Revenue - 3rd Party104 49 (55)205 151 (54)
Other Operating Revenue114 121 7 257 256 (1)
Utility Gross Margin1,714 1,673 (41)3,475 3,515 40
Operations & Maintenance(745)(801)(56)(1,478)(1,528)(50)
Depreciation & Amortization(317)(339)(22)(635)(672)(37)
Taxes Other Than Income Taxes(170)(186)(16)(356)(373)(17)
Interest Expense & Preferred Dividend(156)(160)(4)(300)(314)(14)
Other Income & Deductions49 43 (6)178 153 (25)
Income Taxes(113)(70)43 (279)(256)23
Utility Operations Ongoing Earnings262 160 (102)605 525 (80)
Ongoing EPS0.68 0.41 (0.27)1.56 1.33 (0.23)
EPS based on 384mm shares in Q2 2005, 394mm in Q2 2006, 389mm in 6 mo. 2005 and 394mm in 6 mo. 2006


Retail Sales – Results for second-quarter 2006 were higher than those in the same period in 2005, reflecting increased sales from the West Regulated Integrated Utilities and changes in the System Integration Agreement approved by the Federal Energy Regulatory Commission (FERC); the positive impact of the Ohio Companies’ rate stabilization plan approved last year by the Public Utilities Commission of Ohio; the purchase of approximately 29,000 Ohio customers and related transmission and distribution assets from Monongahela Power, a subsidiary of Allegheny Energy, at the end of 2005; and implementation of a recently approved rate plan for Kentucky Power in the East Regulated Integrated Utilities. The West Regulated Integrated Utilities also benefited from increased sales to municipal and cooperative customers as a result of new power supply contracts and from favorable weather. Cooling degree-days in the West were 25 percent above normal in the quarter and 20 percent above the same period last year. The revised rate plans for the Ohio Companies and Kentucky Power and the acquisition in Ohio brought improved results from the Ohio Companies and East Regulated Integrated Utilities despite higher fuel costs and mild weather. Cooling degree-days in the East were 18 percent below normal for the quarter and 21 percent below last year.

Off-System Sales – Gross margins from Off-System Sales for second-quarter 2006 were $49 million lower than in the same period in 2005 because of the sale of AEP’s STP interests and an unplanned outage at the Oklaunion generating plant as well as lower margins from optimization activities. Stronger prices on physical sales in the East partially offset the impact of this reduced generating capacity.

Transmission Revenues – The $55 million decrease in Transmission Revenues for second-quarter 2006, when compared to the same period in 2005, is the result of the cessation of SECA rates and a provision recorded in second-quarter 2006 related to potential SECA refunds pending settlement negotiations with various intervenors. The SECA rates, which ended on April 1, 2006, in various AEP jurisdictions in the East, were put into place in December 2004 by FERC to offset the loss of through-and-out rates brought by a change in the commission’s authorized tariffs.

Operations & Maintenance Expense – O&M expenses in second-quarter 2006 were $56 million higher than in the prior period, primarily because of increased expenses for plant outages, transmission and distribution, and property insurance. The plant outages expense includes an increase in planned outages when compared to the same period last year, as well as an increase in unplanned outages as detailed earlier in the news release. The increase in transmission expense is primarily because of amortization of fees for regional transmission organizations. The distribution increase reflects higher tree trimming and storm restoration costs as compared to 2005.

Depreciation & Amortization – The increase in Depreciation & Amortization in the second quarter of 2006, when compared to the prior period, is primarily attributed to an increase in amortization expense at the Ohio Companies.

Taxes, Other Than Income Taxes – The increase in second-quarter 2006, when compared with the same period in 2005, is primarily because of higher property taxes from increases in tax rates and property values.

Interest Expense & Preferred Dividends – The increase in Interest Expense from the prior period is because of higher interest rates and new debt issuances.

Other Income & Deductions – The decrease is because of lower interest income and lower carrying costs for the Ohio Companies in second-quarter 2006 as compared to the same period in 2005.

WEBCAST


American Electric Power’s quarterly conference call with financial analysts will be broadcast live over the Internet at 10 a.m. EDT today at http://www.aep.com/go/webcasts. The webcast will include audio of the conference call as well as visuals of charts and graphics referred to by AEP management during the call. The charts and graphics will be available for download at http://www.aep.com/go/webcasts .

The call will be archived on http://www.aep.com/go/webcasts for use by those unable to listen during the live webcast.

Minimum requirements to listen to broadcast: The Windows Media Player software, free from http://windowsmedia.com/download, and at least a 56Kbps connection to the Internet.




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 36,000 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 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). American Electric Power, based in Columbus, Ohio, is celebrating its 100th anniversary in 2006.




AEP’s earnings are prepared in accordance with accounting principles generally accepted in the United States and represent the company’s earnings as reported to the Securities and Exchange Commission. AEP’s management believes that the company’s ongoing earnings, or GAAP earnings adjusted for certain items as described in the news release and charts, provide a more meaningful representation of the company’s performance. AEP uses ongoing earnings as the primary performance measurement when communicating with analysts and investors regarding its earnings outlook and results. The company also uses ongoing earnings data internally to measure performance against budget and to report to AEP’s board of directors.




-Full news release and supplemental tables (PDF: 72KB: get viewer)




This report made by AEP and certain of its 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: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance);resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp.); AEP´s ability to constrain its operation and maintenance costs; AEP´s ability to sell assets at acceptable prices and on other acceptable terms, including rights to share in earnings derived from the assets subsequent to their sale; the economic climate and growth in AEP´s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; 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; changes in the financial markets, particularly those affecting the availability of capital and AEP´s ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including membership in regional transmission structures; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP´s pension and other postretirement benefit plans; prices 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.

MEDIA CONTACT:
Pat D. Hemlepp
Director, Corporate Media Relations
614/716-1620

ANALYSTS CONTACT:
Julie Sloat
Vice President, Investor Relations
614/716-2885

More From PSO

Learn More

Manage Your Electric Bill Year-Round

Sign Up Now Pay Online for Free with Paperless Billing

Pay Online for Free with Paperless Billing

Use Online Form Report Outages On Your Mobile Phone

Report Outages On Your Mobile Phone

How We Restore Power Learn more

How We Restore Power

Visit AEP.com
Use of this site constitutes acceptance of the AEP Terms and Conditions. View our Privacy Policy. © 1996-2019 American Electric Power. All Rights Reserved.

Privacy Policy

Privacy Policy for Public Service Company of Oklahoma (PSO), a unit of American Electric Power (AEP)

Scope

This Privacy Policy applies only to PSOklahoma.com and the Public Service Company of Oklahoma customer mobile app (com.aep.customerapp.pso). Other AEP websites and apps may be governed by their own privacy policies, appropriate to the uses and needs of each. Throughout the site or app, we may provide links to resources and sites that are not part of PSOklahoma.com or the Public Service Company of Oklahoma customer mobile app. This Privacy Policy does not apply to those resources and sites.

Consent

By using this site or app, you consent to the terms of this Privacy Policy. Whenever you submit information via this site or app, you agree to the collection, use, and disclosure of that information in accordance with this Privacy Policy.

Information Collected

  1. Passively collected information

    During your use of this site or app, we may collect anonymous information about your visit here through the use of server logs, cookies, scripts, tracking pixels and other Web traffic tracking systems. This information is aggregated and used to improve user experience through analysis of user activities. This information is never combined with any of the personally identifiable information you may provide in your use of the features of this site or app.
  2. Personally identifiable information

    On certain forms of this site or app, you may be asked to provide information about yourself or your account with us, either to identify yourself to us or to request a service from us. In each case, we will inform you what information is provided at your option and what information is required to complete the transaction or activity you are engaged in. If you are unwilling to provide this required information, you will be unable to complete the requested transaction.

Use and disclosure of information

The information you provide to us will be used to respond to requests you may make for services. Some or all of this information may be added to your permanent account record and may be used for research purposes.

In addition, we may use elements of this information in the following situations:

  1. We may transfer the information to PSO’s affiliates and subsidiaries, unless such transfer is prohibited by law;
  2. We may transfer the information as part of a merger, consolidation, acquisition, divestiture or other corporate restructuring (including bankruptcy);
  3. We may make the information available to third parties who are providing the product, service or information that you have requested (but not your password);
  4. We may make such information available to third parties who are providing services to PSO (for example, providing the information to third parties performing computer-related services for PSO);
  5. We may use the information to communicate with you about products and services that may be of interest to you.
  6. We may disclose the information if we form a good-faith belief that disclosure of such information is necessary to investigate, prevent, or take action regarding any illegal activities or regarding interference with the operation of our site or violation of its terms of use; or
  7. We may disclose the information if we believe that disclosure is required by law or regulation or in response to a subpoena or other order of a court or other governmental agency.

PSO uses Flurry Analytics Service (provided by Yahoo) in order to improve its mobile apps. Flurry’s privacy policy governs the use of this information.

Also, PSO reserves the right to share any aggregated information (i.e., non-personally identifiable information) with any third parties for any reason, unless prohibited by law.

We will not sell, rent or otherwise disclose the information we gather about you or your account to any third party, except as outlined in this Privacy Policy.

Security

PSO takes reasonable steps to protect your personally identifiable information as it is transferred to us, through the use of Web technologies such as the Secure Sockets Layer and others. However, no Internet transmission of information is ever completely secure or error-free. In particular, e-mail sent to or from PSO may not be secure.

How to Reach Us

If you would like to update your personally identifiable information or if you have questions about this privacy policy, please contact us.

Changes to This Policy

PSO reserves the right to change this Privacy Policy at any time. If this Privacy Policy changes, the revised policy will be posted to this site. Please review this Privacy Policy before you provide any personally identifiable information through this site. Use of our web site after the posting of a revised privacy policy constitutes your consent to the revised policy.

This policy was last revised on December 13, 2017.

Close ×

Sign Up For Alerts

Subscribing to PSO alerts gives you instant notification for:

  • Billing & Payments - avoid late payments and disconnection
  • Outage Updates - find out if there's an outage at your address and when power will be back on

Win an Xbox One with Alerts!

Enroll in alerts to be eligible to win. Subscribing to I&M alerts gives you instant notification for:

  • Billing & Payments - avoid late payments and disconnection
  • Outage Updates - find out if there's an outage at your address and when power will be back on

Loading video...

×