The people responsible for the Cook Nuclear Plant at Bridgman and the delivery of electrical service to businesses and homes all across Michigan’s Great Southwest is reporting solid earnings for the first quarter of 2019. Indiana Michigan Power Company’s parent, American Electric Power today reports first-quarter 2019 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $573 million or $1.16 per share, compared with $454 million or $0.92 per share in first-quarter 2018.
Operating earnings for first-quarter 2019 were $585 million or $1.19 per share, compared with first-quarter 2018 operating earnings of $473 million or $0.96 per share. Operating earnings is a non-GAAP measure representing GAAP earnings excluding special items. The difference between first-quarter 2019 GAAP earnings and operating earnings was due to the mark-to-market impact of economic hedging activities and severance charges.
AEP’s Chairman, President & CEO Nicholas Akins says, “Our solid performance in the first quarter was driven by our continued focus on needed strategic investments to enhance service for our customers and to maintain a robust, resilient energy grid. Our Transmission Holding Co. business also continues to grow, contributing 25-cents per share for the quarter, an increase of 4-cents from the same period last year. Net plant for AEP Transmission Holding Co. increased $1.4 billion, or 19-percent, since March 2018.”
Regarding the future, Akins points out, “We’ve also made significant progress on our strategy to grow our renewable energy business and diversify our generation fuel mix. We completed the purchase of 724 megawatts of contracted wind and battery generation April 22. This $1.05 billion acquisition accelerated our plan to invest $2.2 billion in competitive, contracted renewables by 2023. The attractive returns associated with these wind farms will be immediately accretive to earnings and solidify our projected 5-to-7-percent earnings growth rate.”
Looking back over the first quarter, Akins says, “Weather for the quarter was normal but below the same period last year. Our overall load growth declined slightly in the first quarter; however, we are seeing positive economic signals. Residential sales increased nearly 1-percent in the quarter reflecting both higher customer counts and usage. Industrial sales were lower year-over-year as the impact of a strong U.S. dollar and more restrictive trade policies challenged export manufacturers in the states we serve. There was growth in the oil and gas sector this quarter as oil prices recovered, and we expect that to continue throughout 2019 as new oil and gas projects come online. We also saw job increases across our service territory. The unemployment rate in the states we serve is the lowest it has been in the last 30 years.”
AEP management reaffirmed its 2019 operating earnings guidance range of $4.00 to $4.20 per share, with Akins suggesting, “The positive results this quarter reflect timing of lower operations and maintenance spending and some income tax benefits that will net out over the remainder of 2019. Our earnings performance was aligned with our expectations, and we remain confident reaffirming our 2019 operating earnings guidance of $4.00 to $4.20 per share.”
Operating earnings could differ from GAAP earnings for matters such as impairments, divestitures or changes in accounting principles. AEP management is not able to forecast if any of these items will occur or any amounts that may be reported for future periods. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.
Reflecting special items recorded through the first quarter, the estimated earnings per share on a GAAP basis would be $3.97 to $4.17 per share.
