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
"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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