Draper added that with the pull out, there will be “significant reductions” in personnel, but he did not have any specific figures. The downsizing of merchant activity also will reduce AEP’s working capital needs, according to CFO Susan Tomasky. She said specific guidance would soon be ready, but added, “clearly, the working capital needs for 2003 [will be] reduced significantly.”

Speaking at Edison Electric Institute’s annual financial conference in Palm Desert, CA, Draper explained that the closure of merchant activities would have no effect on AEP’s solid growth, and said he still expects the company to pay its quarterly dividend. The Columbus, OH-based utility giant has paid a quarterly dividend of 60 cents a share. Earlier this month, Draper said management would recommend that the board of directors maintain the dividend, with the expectation that there would be strong earnings from AEP’s regulated businesses, as well as hedged generation from the unregulated units.

Draper said he hoped that the company had “demonstrated that we have stable and predictable earnings, and that we can support the dividend,” which has been cut at some of its peers, such as TXU Corp. and Xcel Inc. AEP’s share price has fallen about 50% in the past six months, stung by other energy companies’ problems as well as a sharp drop-off in merchant activity. AEP had been one of the largest natural gas and power traders in the United States before the market fell apart this year.

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