Despite a slowing economy that reduced both wholesale energy margins and energy use by industrial customers, American Electric Power reported a 13% increase in third-quarter earnings to $1.43 per share and a 50% jump in revenues to $18 billion. Its wholesale power sales volumes soared 66%, and its gas sales rocketed 265% to 14.5 Bcf/d.

“Our third-quarter and year-to-date results show significant growth over the previous year, evidence of the continued successful implementation of our wholesale-focused growth strategy,” said CEO E. Linn Draper Jr. “We remain confident that ongoing earnings for 2001 will meet the $3.50 to $3.60 per share guidance we provided last quarter, although a continued downturn in the economy may make the upper end of the range more difficult to achieve.” AEP reaffirmed its 2002 earnings guidance of $3.80 to $3.90 per share, but noted the guidance is subject to the same cautions about the economy.

AEP’s wholesale business, which primarily consists of wholesale sales in the United States, the generation component of domestic retail sales and worldwide trading, contributed $0.98 per share in the quarter, up from $0.97 per share in the third quarter last year. “Wholesale bettered its earnings contribution from last year’s third quarter, when market conditions and the economy in general were much more favorable,” Draper said. “This demonstrates the group’s ability to remain a significant contributor to earnings regardless of market conditions, and validates our strategy.”

Earnings from trading and marketing increased 29% from the same quarter last year despite current lower market prices and reduced volatility. That helped offset a decline in earnings from energy sales, which were adversely affected by reduced demand and lower wholesale prices. Domestic wholesale electric trading volume for the quarter was 148 million MWh, a 66% increase from third-quarter 2000 volume. AEP ranks second among North American power marketers in terms of volume. Domestic wholesale natural gas volume for the quarter was 1,337 Bcf, or 14.5 Bcf/d, a 265% increase from third-quarter 2000.

“The increase in natural gas volume and earnings contribution reflects the continued execution of our growth strategy to add value at key points along the wholesale energy chain,” Draper said. “AEP has historically been strong in power and has vast experience in coal markets. The addition of gas pipeline and storage assets, through acquisitions like Houston Pipe Line, completed in June, has allowed us to rapidly grow in gas markets.”

AEP’s energy delivery business, which consists of domestic electric transmission and distribution, contributed $0.80 per share in the quarter, compared with $0.70 in third-quarter 2000. The improvement reflects both increased retail sales — with growth in sales to residential and commercial customers more than offsetting a 3% decrease in sales to industrial customers — and a reduction in operating expenses.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.