AEP Reports Lower Gross Margin from Customer Switching in Ohio

Customer switching in Ohio accounted for a reduction in gross margin of $40.9 million at AEP Ohio during the fourth quarter of 2011, AEP disclosed in reporting earnings Friday.

As has been the case for the last year or so, the majority of the reduced gross margin ($31 million) was at Columbus Southern Power, where the commercial class continues to see the most migration

Gross margin lost due to customer switching for the year 2011 was $123.9 million at AEP Ohio, with $105 million of that total lost at Columbus Southern Power.

Year-to-date lost load at AEP Ohio from customer migration is 9.6%, up from 8.3% as of the end of the third quarter.

In terms of overall ongoing earnings, gross customer migration at AEP Ohio negatively impacted fourth quarter earnings by $31 million versus the year-ago. Customer switching impacts were partially offset by off-system sales and capacity revenues.

AEP's Generation and Marketing segment reported a loss of $6 million for the quarter, versus earnings of $8 million a year ago, primarily because of the availability of units, lower trading margins and power prices, and unfavorable wind farm operating results in fourth-quarter 2011.