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AEP CEO Stresses Competitive Retail Biz's Strategic Value, Relationship With Customer
During an earnings call, AEP CEO Nicholas Akins discussed the company's view for its competitive retail business once AEP completes its exit from merchant generation, noting that while the company is open to selling the retail business, AEP may elect to continue to hold the retail business for earnings opportunities, as customer relationships will be "critical" as the industry faces a changing future which may mean new products and services
AEP's competitive retail business has about 450,000 customers
Akins stressed that the company has always been disciplined in its approach, and manages and hedges its retail exposure regardless of whether the company has generation or not
While "preferable" to have generation to hedge retail, Akins said that generation ownership is not a prerequisite for AEP's ownership of the retail business. Moreover, the strategic benefits of generation could still be achieved through various contracts with independent generating asset owners, Akins said, and the company continues to review whether such contracts with third-party generators would be appropriate for its retail business.
Akins made clear that the company would not maintain ownership of any merchant generation to support the retail business.
Akins also stressed that the retail business, and the customer relationships it has, may prove to be a strategic asset as AEP considers the future of the industry and potential new products and services
"The other side of it [the retail question] is strategic. I really believe that the retail customers we have, we have a relationship with those customers. And if you look at the future and what it holds relative to our business, that relationship is going to be critical, not only in terms of providing their energy needs, but in terms of the channel growth associated with additional earnings associated with serving those customers," Akins said
Akins also said to the extent other jurisdictions "de-regulate" (including non-traditional choices aside from LSE supplier choice), the retail business could prove beneficial
Still, Akins said that the company is open to selling the retail business if, for example, a buyer of its remaining merchant assets wanted the retail book as a hedge for the plants.
Akins also sought to clarify "confusion" about "re-regulation" efforts the company is seeking in Ohio, although we thought his comments from January were pretty clear on the "surgical" nature of the efforts
Akins said that such efforts are limited to legislation that would confirm AEP Ohio's recovery of costs related to OVEC, and legislation that would confirm the utility may build new capacity where a need is shown. AEP may pursue two separate bills (one for each issue) if such strategy will help get things through.
Akins stressed that the efforts are not for a "total re-regulation" of the market
Akins reported that AEP has given its formal consent to Dayton Power & Light, to retire its share of Stuart Units 1 through 4, 603 megawatts, by June 1, 2018.
After such retirements and prior asset sales, AEP's competitive generation in Ohio consists of its ownership in the Conesville station, 1,461 megawatts, and Cardinal Unit 1, 595 megawatts.
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Says Customer Relationship "Critical" As AEP Considers Industry Future, Channel Growth (New Products/Services)
AEP Still Open To Sale Of Retail Business, But Retail Sale Not Needed Once Merchant Plants Gone
April 28, 2017
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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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