Sunday, American Electric Power (AEP), said that it has set its ongoing earnings guidance range and capital expenditures budget for 2010. The company also said that it will form a transmission company as part of its strategy to pursue transmission investment opportunities in its traditional footprint.
According to the guidance issued, the company expects ongoing earnings for 2009 to reflect last week's upside adjustment, which ranges between $2.90 - $3.05 per share. For the year 2010, the company anticipates ongoing earnings to range between $2.80 - $3.20 per share. Ongoing earnings represent earnings from continuing operations, which exclude special items included in the earnings prepared in accordance with generally accepted accounting principles.
On average, thirteen analysts polled by Thomson Reuters estimate earnings of $2.93 per share for the entire year 2009. Analysts' estimates typically exclude special items. Sixteen Wall Street analysts estimate earnings of $3.06 per share for the entire year 2010.
"Our earnings projections for 2010 are driven by new rate recovery activity underway in several jurisdictions across our service territories, an expected increase in off-system sales of electricity as that market improves after a weak year in 2009, and a general increase in retail load," said Michael G. Morris, AEP's chairman, president and chief executive officer.
AEP expects capital expenditures for utility operations to decrease to $1.993 billion in 2010 from the estimated $2.466 billion in 2009, reflecting the company' conservative approach for near-term capital expenditures.
The company also said that it will from a transmission company, or Transco, to pursue new transmission opportunities within the company's existing 11-state footprint. The company has existing and planned transmission projects in the Electric Reliability Council of Texas or ERCOT through its Electric Transmission Texas joint venture with MidAmerican Energy Holdings Company.
AEP is also pursuing transmission projects outside its footprint and outside ERCOT through joint ventures with other companies, including Electric Transmission America, AEP's broader partnership with MidAmerican. AEP expects to invest $118 million in Transco activities in 2010.
"These investments will include a wide range of on-system transmission improvements, things like greenfield projects, station additions and system upgrades," Morris said. He added that pursuing these activities in a Transco, with formula rates adjusted annually by the Federal Energy Regulatory Commission benefits customers by enhancing AEP's access to capital, which enables the company to undertake substantial new investment while relieving the operating company balance sheets of
the burden of meeting those capital demands. This would allow capital for distribution and generation needs.
AEP closed Friday's last trade on the New York Stock Exchange at $30.22, down $0.56 or 1.82%.
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