AMERICAN ELECTRIC POWER CO INC Quarterly Report for Q3 Ended Sep 30, 2015

Summary

American Electric Power Co. Inc. (AEP) reported an increase in earnings attributable to common shareholders to $519 million for the third quarter of 2015, up from $493 million in the same period of 2014. This improvement was driven by successful rate proceedings in various jurisdictions, annual formula rate adjustments, increased weather-related usage, and a decrease in certain expenses. For the first nine months of 2015, earnings grew to $1.58 billion from $1.44 billion in the prior year period, reflecting similar positive drivers. The company is strategically evaluating alternatives for its merchant generation fleet, which could include continued ownership, a purchased power agreement, a spin-off, or a sale, with potential implications for future net income and cash flow. A significant development is the agreement to sell its commercial barge transportation subsidiary, AEP River Operations (AEPRO), for approximately $400 million in cash, expected to result in an after-tax gain of $100 million to $150 million.

Key Highlights

• 1Earnings attributable to common shareholders increased to $519 million in Q3 2015 from $493 million in Q3 2014.
• 2Nine-month earnings increased to $1.58 billion from $1.44 billion year-over-year.
• 3AEP is evaluating strategic alternatives for its merchant generation fleet.
• 4Agreement signed to sell AEP River Operations (AEPRO) for approximately $400 million, expecting a $100-$150 million gain.
• 5Vertically Integrated Utilities segment saw earnings grow to $274 million from $219 million year-over-year.
• 6Transmission and Distribution Utilities segment's earnings increased to $113 million from $92 million.
• 7AEP Transmission Holdco earnings rose to $46 million from $43 million year-over-year.

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