AEP Talks Future of Unregulated Generation on Earnings Call

AEP updated investors during its Friday earnings call on its approach to its unregulated generation business.

AEP CEO Nick Akins said that AEP continues to, "review with the board the options available to us regarding the future," of its unregulated generation basis, which includes the competitive retail supply unit.

Akins said AEP is watching a number of milestones, both in terms of wholesale regulation and pricing, and Ohio state regulation, in terms of making a decision on the unregulated generation, and he would not set a timetable for a decision on the business.

Regarding AEP Ohio's sought Power Purchase Agreement rider (click here for background), Akins said that the rider, "provides a valuable hedge to customers against volatile market conditions."

Akins said that with the PPA rider, AEP is, "trying to bring some sensibility around the risk that customers are taking on in Ohio," noting Ohio for the first time will be short on generating capacity, and is set to a net purchaser from the market.

"Long-term capacity and energy needs to be there in Ohio," Akins said of the need for the PPA rider.

"[Y]ou make very different decisions about generation, unless you have long-term purchase power arrangements whether they’re FERC formula-based rate, or within the retail side that we’re talking about," Akins said of the unregulated generation, despite such generation enjoying the existence of a centralized capacity market in PJM.