What are the main risks facing AEP based on this filing?

The primary risks highlighted are ongoing legal and regulatory challenges to rate recovery and permits across various jurisdictions (e.g., Turk Plant, Ohio, Texas), potential increased costs from evolving environmental regulations (especially GHG emissions), and the risk of credit rating downgrades impacting capital access and borrowing costs. A specific asset lease dispute with Fort Wayne for I&M also presents a localized risk.

How could the Turk Plant permit issues affect AEP's financials?

If the appeals to reverse the Certificate of Environmental Compatibility and Public Need (CECPN) for the Turk Plant are upheld, or if the necessary air permit is not secured, SWEPCo would be unable to place the plant into service. This would adversely impact net income and cash flow, unless the resulting losses can be fully recovered through rates in its jurisdictions.

What is the potential impact of Greenhouse Gas (GHG) emission regulations on AEP?

Increased regulation of GHG emissions could materially increase AEP's capital expenditures and operating costs. This might make older, less-efficient units uneconomical. While AEP believes these costs should be recoverable from customers, a lack of full recovery could negatively affect net income and cash flow. Additionally, court rulings on nuisance claims related to GHG emissions could force emission reductions, potentially increasing costs.

Have there been any changes to AEP's credit ratings recently?

Yes, in 2009, Fitch changed its outlook for SWEPCo to negative and downgraded APCo's rating. Moody's downgraded SWEPCo and changed APCo's outlook, while also placing AEP on a negative outlook and downgrading OPCo.

AEP 10-Q Quarterly Report Q3 FY2009 — Revenue, Net Income, EPS

Summary

AMERICAN ELECTRIC POWER CO INC (AEP) reported on its fiscal quarter ending September 29, 2009, with a focus on significant regulatory and legal proceedings that could materially impact its financial performance. The company is navigating several appeals and rate case outcomes across its various operating jurisdictions, including challenges to permits for the Turk Plant, rate recovery approvals in Ohio, Texas, Oklahoma, and Virginia, and a dispute over leased assets in Indiana. Investor attention should be drawn to the potential financial implications if these regulatory challenges are not resolved favorably. The company is also facing evolving environmental regulations, particularly concerning greenhouse gas (GHG) emissions, which could lead to increased operating costs and capital expenditures. Additionally, credit rating downgrades could affect AEP's ability to access capital and operate its power trading business, highlighting the importance of regulatory stability and strong creditworthiness for the company's outlook.

Financial Highlights

47 data points

Beta

Revenue

$3.55B

Net Income

$443.00M

0.1% Net Margin

EPS (Diluted)

$0.93

Total Assets

$47.19B

Cash & Equivalents

$877.00M

Free Cash Flow

$955.00M

Financial Statements

Beta

Revenue	$3.55B
Operating Expenses	$2.69B
Operating Income	$858.00M
Interest Expense	$248.00M
Net Income	$443.00M
EPS (Basic)	$0.93
EPS (Diluted)	$0.93
Shares Outstanding (Basic)	476.95M
Shares Outstanding (Diluted)	477.11M

Key Highlights

1Several material legal and regulatory proceedings are ongoing across AEP's operating subsidiaries, posing potential risks to net income, cash flow, and financial condition.
2The Turk Plant in Arkansas faces permit challenges, with a potential reversal on appeal that could prevent its operation and negatively impact results.
3Rate recovery approvals in Ohio, Texas, and Oklahoma are subject to appeals that could reduce authorized revenues and impact future earnings.
4Environmental regulations, specifically concerning Greenhouse Gas (GHG) emissions, are evolving, potentially leading to increased compliance costs and capital expenditures for AEP.
5Nuisance lawsuits related to GHG emissions have been revived, with potential court orders to limit emissions, which could increase operating costs.
6Credit rating agencies have taken negative actions on some AEP subsidiaries (e.g., Fitch on APCo, Moody's on SWEPCo and OPCo), potentially increasing borrowing costs and limiting access to capital.
7A dispute with the City of Fort Wayne over leased energy delivery assets could lead to unexpected costs for I&M, although the company expects rate recovery.

AMERICAN ELECTRIC POWER CO INC Quarterly Report for Q3 Ended Sep 30, 2009

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions