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Updated: AEP Energy Discusses Decision To Initiate Strategic Review Of Its Retail Supplier, AEP Energy

October 4, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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As first reported by earlier today (original story below), AEP announced today that it, "will initiate a strategic review of its retail business as part of its ongoing strategy to de-risk and streamline the company."

During an analyst day, AEP said that its retail business contributes $0.06 EPS in the company's 2022 operating earnings guidance. That's approximately $31 million.

Julie Sloat, AEP president and chief financial officer, said in response to an analyst question that AEP Energy is not a capital-intensive business. "So it's [the retail business] really about management of asset and risk liabilities. But if I take those and put them together and net them against one another, the equity component associated with this business is about $170 million. A lot of that is working capital-related, and then we've got maybe $30 million of that related to systems, activities that support our systems, investments that support that piece of the business."

AEP noted that AEP Energy serves over 650,000 customers -- 493,709 electric customers and 179,378 natural gas customers

AEP Energy's electric customer breakdown by market is:

Ohio                    78%
Illinois                10%
Pennsylvania            10%
New Jersey               1%
Maryland                 1%
Delaware                <1%
District of Columbia    <1%

For natural gas, 100% of AEP Energy's customers are in Ohio

AEP Energy serves 24 TWh of electric load and 10 MCF of natural gas load.

AEP said that AEP Energy is the #4 ranked largest non-residential power retailer in PJM, and the #8 ranked largest residential supplier nationally

AEP did not offer a timeline for the expected conclusion of the AEP Energy strategic review

Earlier (10/4):

AEP announced today that it, "will initiate a strategic review of its retail business as part of its ongoing strategy to de-risk and streamline the company."

As previously reported, earlier this year, AEP also announced it would sell its portfolio of contracted, unregulated renewable energy assets. The sales process for those renewable resources began in August 2022 and is on track to close during the second quarter of 2023.

"The sale of our unregulated, contracted renewable assets and our [regulated] Kentucky operations will allow us to shift capital to revitalize our transmission and distribution systems and implement energy solutions to benefit our customers and communities," said Julie Sloat, AEP president and chief financial officer. "We’re beginning a strategic review of our retail business as we focus on growth in our regulated businesses and simplify the structure of the company," said Sloat

"Our strategic vision prioritizes delivering clean, reliable energy and service offerings that boost and empower the communities we serve, all while maintaining affordability for our customers and offering significant shareholder value," Sloat said

From 2023 through 2027, AEP plans to invest $9 billion in regulated renewable generation.


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