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AEP Restructures to Build Wholesale Business
Saying that "corporate separation is our highest priority," American Electric Power's CEO E. Linn Draper announced last week that the company is undergoing a restructuring, and will place more focus on its U.S. wholesale power generation, marketing and trading businesses. It also will scrap previously announced plans to expand its overseas markets.
"Our focus for growth moving forward, plain and simple, will be the wholesale business - generation and related energy assets, wholesale marketing and trading," said Draper. AEP is one of the largest U.S. power generators, supplying electricity to nearly 4.8 million customers in 11 states.
AEP filed last week with the Securities and Exchange Commission to form two wholly owned companies. The restructuring is scheduled to be completed by the end of 2001. One company will contain AEP's utility power generation and non-utility units whose revenues stem from market-based operations. The second company will include AEP's regulated domestic and overseas utility subsidiaries, including two utilities in the United Kingdom and one in Australia.
The company owns more than 38,000 MW of generation, and nearly 25,000 MW of it will be in deregulated U.S. markets by 2001, he said. AEP's wholesale and trading group will market the output of the plants.
"We are restructuring the company to provide us maximum flexibility to achieve value from our wires business when restructuring is completed," said the CEO. "In the short term, we will aggressively manage our costs." No expansion of the U.S. or international distribution business is planned.
Earlier this year, AEP filed business separation plans in Ohio and Texas, as required under restructuring legislation those states. Among other things, the plans separate all or most of the Texas and Ohio generation assets from the transmission and distribution assets. The company-wide plan extends those concepts for the entire operation, giving it more flexibility.
Carolyn Davis, Houston
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