AEP Reveals Strong 1Q Results, Ups Year Estimate
Sparked by a 121% increase in revenues to $13.5 billion for the first quarter 2001, American Electric Power (AEP) announced earnings of $0.68 per share, a whopping 89% increase over the first quarter 2000's level of $0.36 per share. The company attributed the earnings run to the strong performance of its wholesale business and the impact of the return to service of its Cook Nuclear Plant.
"Our strategic emphasis is on the wholesale business and our wholesale organization continued its impressive performance," said E. Linn Draper Jr., AEP's CEO. "The earnings contribution from wholesale increased 152%, or $0.32 per share, over the same quarter last year."
AEP's wholesale business, which includes wholesale sales in the United States, the generation component of domestic retail sales, worldwide trading and other related businesses, contributed $0.53 per share for the quarter, up from the $0.21 posted for first quarter 2000. The company said its wholesale electric domestic trading volume for the quarter was 139 million MWh, up 58% from the 87.9 million MWh posted for the same time period last year.
AEP's wholesale natural gas volumes increased 7.4% on the quarter, from 297 Bcf (average of 3.3 Bcf/d) during the first quarter 2000 to 319 Bcf (average 3.5 Bcf/d) for the first quarter 2001.
Included in the company's wholesale results, the restart of the Cook Nuclear Plant attributed $0.19 per share to earnings. Cook Unit 2 returned to service in June, and Unit 1 was restarted in late December, the company said.
"The return of Cook boosts the bottom line in two ways," Draper said. "First, the costs associated with restart are behind us. Second, Cook's 2,110 megawatts of power --- enough to supply more than 2 million average homes --- gives us more energy to sell. Both Cook units have performed well since they returned to service, and we're looking forward to having both units available for summer peak energy sales for the first time since 1997."
As for AEP's energy delivery business, which consists of domestic electric transmission and distribution, the segment's contribution dropped a cent on the quarter from $0.48 per share during the first quarter 2000 to $0.47 per share. The company said that increased revenue from load growth was more than offset by timing differences associated with operating expenses.
Including one-time special items, referring to the sale of its 500 MW Frontera power plant in Texas to TECO Power Services (see NGI, March 26), and the sale of its 50% interest in Yorkshire Power Group, a United Kingdom gas and electricity supplier, AEP recorded earnings of $0.83 per share, compared to the equivalent time period last year, when including special items, the company reported earnings of $0.43 per share. The company estimated that net proceeds from the divestitures came to $265 million for the Frontera plant and $383 million from the Yorkshire sale. AEP said the proceeds were used to pay down short-term debt.
Due to the strong first quarter results, Draper said AEP is raising its earning estimates for the entire 2001 year. "We still anticipate operating and maintenance expenses will be flat for the year and expect ongoing earnings for 2001 to be between $3.50 and $3.60 per share, a 10-cent increase from earlier estimates and more than 25% above last year's ongoing results," Draper said.
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