American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — 47th EEI Financial Conference 2012
30 slides from American Electric Power's conference presentation, Nov 13, 2012
Slide 1: 47th EEI Financial Conference Handout
Exhibit 99.1 47th EEI Financial Conference Handout Phoenix, AZ November 12-13, 2012
Slide 2: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 This presentation 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
Slide 3: Framing up the Business: Segment Assets
Framing up the Business: Segment Assets Projected YE 2014, TOTAL ASSETS $2.4B, $7.6B, 4% Vertically Integrated Utilities 14% 86% Rate Wires Only Utilities Regulated Transcos and Joint Ventures $11.7B, $33.1B, 21% 61% Competitive Segment Regulated Objectives Competitive Objectives Prudently invest ca
Slide 4: Regulated Business Growth
Regulated Business Growth Cumulative Change in Regulated Net PP&E $10 2011 Net Regulated PP&E = $32B 6.3% CAGR in Net Regulated PP&E Transcos $8.9 Transcos: Rate recovery via $9 FERC formula rates. ROEs 11.49% (PJM) / 11.20% (SPP) $8 $2.3 $6.8 $7 $6 $1.7 $1.3 Wires Companies TX Wires and Ohio Power
Slide 5: Normalized Retail Load Trends
Normalized Retail Load Trends AEP Residential Normalized GWh Sales AEP Commercial Normalized GWh Sales %Change vs. Prior Year %Change vs. Prior Year 10% 10% 5% 5% 0.6% 0.4% 0.5% 0.1% 0.0% 0.1% 0% 0% -0.4% -0.3% -1.7% -1.9% -5% -5% 2010A 2011A YTD12 2012E 2013E 2010A 2011A YTD12 2012E 2013E AEP Indus
Slide 6: O&M Discipline
O&M Discipline Organizational and process optimization evaluation, including five ‘deep dive’ areas of focus Utility Operations O&M – Finance & Accounting – Information Technology $4.0 – Procurement/Supply Chain – Generation – Organizational Effectiveness 2012/2013 O&M range $3.5 of $3.3 - 3.4B Bene
Slide 7: Pending Rate Changes
Pending Rate Changes $ in millions Company I&M - Indiana Request Intervenor Testimony Rate increase $140.4 $28 Rate base/investment $2,391.6 $2,324.5 Return on equity 11.15% 9.20% Equity component 42.67% 41.956% Status: Docket No. 44075. Case filed on September 23, 2011. Hearing on Case in Chief hel
Slide 8: Transmission Investment Opportunities
Transmission Investment Opportunities Transmission Operations 2013 Transco Capital/JV Contributions - $601M Capital/JV Equity and EPS Forecast ($ in millions) Joint $800 $0.50 Ventures, Other $58 $716 $718 $0.45 Transcos, $7 $700 $601 $0.40 $600 $0.35 $0.35 Indiana/ Michigan, $500 $0.28 $0.30 $128 $
Slide 9: Off-System Sales & Competitive Business Update
Off-System Sales & Competitive Business Update Off-System Sales Competitive Retail (included in Generation & Marketing Segment) 2012 vs. 2013 estimated decline of $(0.03) - $(0.05)/share YTD Sept 2012 Billed Load Sept 30, 2012 Customers (4,793 GWh) (148,000 customers) CRES Capacity Revenues: $50 – 7
Slide 10: 2012 vs. 2013 Earnings Drivers
2012 vs. 2013 Earnings Drivers (1) Preliminary EPS Range Comments Retail Gross Margin: Normalized Retail Load (0.04) (0.06) East and Ohio down 0.3%; West and Texas up 0.8% Weather (0.03) (0.03) Normal weather assumption (2) Ohio Customer Switching and Capacity (?) (?) 42% switched; 6% in queue as of
Slide 11: 2012 and 2013 Capital & Equity Contributions
2012 and 2013 Capital & Equity Contributions 2012: $3.1B 2013: $3.6B $ in millions 11
Slide 12: Dividend History and Policy
Dividend History and Policy Dividend statistics Dividend history since 2004 - Current yield - 4.5% - Current quarterly payment - $0.47/share - Current payout ratio - about 60% $2.00 - Growth of 3.8% per annum since 2004 $1.88 $1.90 $1.85 - Paid 409 consecutive quarters $1.80 $1.70 $1.64 $1.71 Recent
Slide 13: Preliminary 2013 Cash Flows
Preliminary 2013 Cash Flows $ in millions 2013E Cash from Operations 3,800 Ohio distribution deferred assets ($300M) Cash from Securitization 700 and WV ENEC balance ($400M) Capital & JV Equity Contributions (3,600) Other Investing Activities (215) Common Dividends (915) Excess (Required) Capital (2
Slide 14: Capitalization & Liquidity
Capitalization & Liquidity Total Debt / Total Capitalization 70.0% Liquidity Summary (09/30/2012) 62.5% Liquidity Summary 60.0% 57.2% 57.0% (unaudited) Actual 55.3% 54.6% ($ in millions) Amount Maturity 50.0% Revolving Credit Facility $ 1,750 Jul-16 Revolving Credit Facility 1,500 Jun-15 40.0% Total
Slide 15: Ohio Power Recapitalization
Ohio Power Recapitalization Outstanding Debt Debt Ohio Power 9/30/2012 Retirements Company Senior Notes 3,350 (1,400) (1,2) 1,950 Pollution Control Bonds 518 (222)(2,3) 296 (4) Debt Outstanding 3,868 2,246 (5) (1) Senior note retirements include the 2013 maturities of $750M, potential to call an add
Slide 16: Securitization Update
Securitization Update West Virginia Ohio Legislation was signed into law in March 2012 with both In December 2011, the governor signed a bill that allows the WV Commission and Consumer Advocate office Ohio’s electric utilities to utilize securitization as a financing support for securitization for t
Slide 17: Liability Management (parent debt)
Liability Management (parent debt) On December 14, 2012, AEP, Inc. will repay the full $242,775,000 outstanding principal balance of its 5.25% Series D Senior Notes (CUSIP: 025537AE1), issued on May 20, 2003 with a maturity of June 1, 2015 together with accrued interest and a make-whole premium. On
Slide 18: Credit Metrics
Credit Metrics Trailing Twelve Months 09/30/2012 FFO Interest GAAP Debt to Credit Coverage FFO to Debt Capitalization Ratings* American Electric Power Company 4.75 19.9% 54.6% Baa2/BBB/BBB Appalachian Power Company 3.41 12.6% 56.0% Baa2/BBB/BBB Indiana Michigan Power Company 4.79 21.7% 53.8% Baa2/BB
Slide 19: Diversification Supports System Results
Diversification Supports System Results Jurisdiction Authorized Rate Authorized ROE 9/30/12 Pro-forma Earned Base ROE AEP Ohio - Distribution $1,912MM 10.20% 10.23% * AEP Ohio - Transmission $952MM 11.49% APCo-Virginia $2,172MM 10.90% 9.49% APCo-West Virginia $2,428MM 10.00% KPCo-Kentucky $995MM 10.
Slide 20: AEP Ohio Regulatory Update
AEP Ohio Regulatory Update Capacity order received July 2, 2012; rehearing order received October 17, 2012 ESP 1 fuel deferral (PIRR) order received August 1, 2012; rehearing order received October 3, 2012 ESP 2 order received August 8, 2012 Corporate separation order received October 17, 2012 Rehea
Slide 21: Corporate Separation Next Steps
Corporate Separation Next Steps Approximate Timeline Summary of Key Requests in FERC Filings: Six filings made at FERC on Corporate Separation of Ohio Power October 31, 2012 generation assets Three FERC Section 203 Applications Q4 Three FERC Section 205 Applications 2012 Approval of Power Supply Agr
Slide 22: Corporate Separation Transition
Corporate Separation Transition Transition: Market: Current: 2012 - 2013 1Q 2014 to May 2015 post May 2015 Ohio generation remains in four- Anticipated FERC approval of SSO for remaining Ohio company pool corporate separation effective Power customers at 1/1/2014 * auction price for Capacity Order R
Slide 23: MATS Environmental Investments & Retirements
MATS Environmental Investments & Retirements Potential Environmental Investments Operating Potential Type of Operating Potential Type of Company Plant MW retrofit Company Plant MW retrofit AEP Ohio* Conesville 5 400 ACI, DSI PSO Oklaunion 101 FGD upgrade, ACI Conesville 6 400 ACI, DSI Northeastern 3
Slide 24: Coal to Gas Switching
Coal to Gas Switching 3rd Quarter 2011 vs. 2012 Capacity Factor YTD 2011 vs. 2012 Capacity Factor East West East West 100.0% 100.0% 90.0% 87.5% 90.0% 82.7% 3Q11 3Q12 YTD11 YTD12 74.9% 78.9% 80.0% 80.0% 67.3% 62.0% 70.0% 66.9% 70.0% 61.2% 55.8% 60.0% 60.0% 49.2% 50.0% 50.0% 42.4% 40.6% 37.6% 36.5% 40
Slide 25: AEP Generation Resources
AEP Generation Resources Fleet Characteristics post 2014 Capacity Profile COAL, CONTROLLED River Served, Baseload Gavin 2,640 Cardinal 595 Zimmer 330 52% Stuart 600 OVEC 434 Rail/Truck Served, Intermediate Conesville 4 340 Conesville 5,6 (scrubber only) 800 13% NATURAL GAS Combined Cycle, Baseload L
Slide 26: Pension & OPEB Estimates
Pension & OPEB Estimates Investment returns for our pension plan are positive for the year, with gains in both the Pension Liability Funding equity and fixed income segments. OPEB funds also show positive returns year to date. 100% 88% 87% 90% AEP made a discretionary contribution of $100 million to
Slide 27: 2013 AEP System Capital
2013 AEP System Capital AEP) 2013 Total Capital & Equity Contributions $3.6B $786 27
Slide 28: East & West Normalized Retail Load Trends
East & West Normalized Retail Load Trends East System Total Normalized GWh Sales West System Total Normalized GWh Sales %Change vs. Prior Year %Change vs. Prior Year 10% 10% R: -0.3% R: 0.3% C: - 0.4% C: 0.6% 5% I: -0.4% 5% I: 1.8% 2.8% 1.7% 2.1% 0.7% 1.2% 1.0% 0.8% 0% 0% -0.3% -1.2% -1.4% -5% -5% 2
Slide 29: East Normalized Retail Load Trends
East Normalized Retail Load Trends APCo/Wheeling Normalized GWh Sales AEP Ohio Normalized GWh Sales %Change vs. Prior Year %Change vs. Prior Year 10% 10% R:R:-0.1% 0.1% C:C: 0.0% 0.1% I: I: 2.3% 7.0% 5% 5% R: 0.3% 2.8% 3.2% C: -0.6% 1.9% 1.2% I: -6.0% 0.1% 0% 0% -1.7% -0.7% -2.1% -2.4% -5% -2.7% -5%
Slide 30: West Normalized Retail Load Trends
West Normalized Retail Load Trends PSO Normalized GWh Sales SWEPCO Normalized GWh Sales %Change vs. Prior Year %Change vs. Prior Year 10% 10% R: 1.2% C: 1.7% 4.9% 5.1% I: 1.8% 5% R: -0.2% 5% C: - 0.7% 1.9% I: 0.1% 1.6% 1.2% 1.4% 0.4% 0.3% 0% 0% -0.2% -0.2% -5% -5% 2010A 2011A YTD12 2012E 2013E 2010A
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