Parties have agreed to terminate the transaction under which AEP would sell its Kentucky operations to Liberty
AEP is committed to providing reliable service to Kentucky customers and ensuring the financial health of the utility as part of the state's economic and energy future; Wiseman named Kentucky Power president and chief operating officer
AEP's 2023 operating earnings (non-GAAP) guidance range reaffirmed at $5.19 to $5.39 per share with long-term growth rate of 6% to 7%; equity financing forecast remains unchanged
American Electric Power reaffirms its commitment to Kentucky customers and outlines its strategic plans for Kentucky Power and AEP Kentucky Transco. AEP and Liberty, a subsidiary of Algonquin Power & Utilities Corp., agreed to terminate the previously announced transaction under which AEP would sell its Kentucky operations to Liberty.
"As a partner in Eastern Kentucky for more than 100 years, we're renewing our focus on bringing opportunities to the region and supporting the communities we serve. We are working diligently to reimagine our strategy with the goal of not just supporting Kentucky but being an essential part of its economic and energy future," said Julie Sloat, AEP president and chief executive officer. "We believe there are opportunities ahead for our Kentucky operations, and we will focus our efforts on economic development, reliability and controlling cost impacts to customers.
"Our team is eager to get to work implementing a refreshed long-term strategy that maximizes the full potential of our Kentucky operations – not just for AEP, but for the communities we serve. I am confident that we have the right team in place to lead this effort and power the future in Eastern Kentucky, while delivering value for customers, employees and investors," Sloat said.
AEP is taking swift and decisive action to be best positioned in the near-term, while continuing to develop a long-term strategy for Kentucky that is consistent with the goals of the Kentucky commission. In the near-term AEP will be focused on:
Filing a New Base Rate Case: AEP plans to file a base rate case in Kentucky in June with a six-month expected commission approval process, and new rates taking effect in January 2024.
Right-Sizing Kentucky's Rate Base: AEP will focus on right-sizing its rate base to better meet the region's needs and address costs while providing reliable service to customers in the near-term. This includes securitizing retired coal assets through the Kentucky commission's approval to reduce rates for customers.
Economic Development in the Region: AEP has a legacy of bringing businesses and jobs to its communities through economic development efforts. AEP believes that leveraging Kentucky's manufacturing talent will help attract onshoring and reshoring which, combined with access to lower cost power, will strengthen the regional economy and attract new investment.
Right Team in Place to Oversee Efficient and Effective Execution of the Kentucky Strategy: AEP and its Kentucky operations leadership teams will leverage years of industry experience and expertise to take a new look at the business. AEP's refreshed Kentucky strategy represents an opportunity to move forward and be a part of Kentucky's energy future. AEP also named Cindy Wiseman as Kentucky Power president and chief operating officer. Wiseman's experience overseeing customer service, economic development and government affairs positions her well to redefine the company moving forward.
AEP's 2023 Operating Earnings Guidance Range, Long-term Growth Rate, FFO/Debt Target, and Equity Financing Forecast Remain Unchanged
AEP reaffirms its 2023 earnings guidance range of $5.19 to $5.39 per share with an annual long-term growth rate of 6% to 7% and FFO/Debt target of 14% to 15%. There is no change in AEP's equity financing plan resulting from this change in strategy. Proceeds from AEP's contracted renewables sale, which is expected to generate $1.2 billion, will replace previously forecasted proceeds from the Kentucky sale process.
