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Akins, Tierney provide media interviews on AEP earnings

by on February 4, 2015
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Nick Akins

Nick Akins, AEP chairman, president and chief executive officer, and Brian Tierney, executive vice president and chief financial officer, responded to questions on two separate media outlets Wednesday following AEP’s fourth-quarter and year-end 2014 earnings announcement.

Akins appeared on CNBC’s “Mad Money” with host Jim Cramer, and Tierney appeared on Bloomberg Radio’s “Taking Stock” with Carol Massar and Michael McKee.

Cramer congratulated Akins and AEP for being among the top five performers in the utility sector for 2014, and noted that AEP’s stock more than doubled the performance of the S&P for the year. “You have done a fabulous job . . . I know your reputation, and you have been doing everything right,” Cramer said.

Cramer asked about the impact of shale gas and oil markets on AEP’s sales, fuel supply, and on the overall economy within AEP’s footprint.

“The shale gas counties have been a big producer for us from a revenue perspective, and also when you think about the growth there, other parts of our business (customers), which are pretty diversified, also benefit from lower coal, oil, natural gas and gasoline prices, so other parts of the economy are starting to pick up the slack,” Akins said.

“We’re finally seeing growth in all three sectors — commercial, industrial and residential — on the order of 3.1 percent overall . . . we’re seeing construction and job creation occur, and the economy is rebalancing in many respects,” Akins said.

Fuel costs are becoming more favorable, Akins said. “Fuel costs certainly will reduce for customers because you’re starting to get into territory where coal and gas are competing . . . we have plenty of coal and plenty of gas, and we have the flexibility to take advantage of that on behalf of our customers.”

Tierney told Bloomberg that AEP is experiencing load growth in all customer classes — residential, commercial and industrial. “It was positive right up to the end of last year and we believe that’s continuing into this year,” he said.

Brian Tierney

Brian Tierney

He explained that AEP’s fourth-quarter earnings were impacted by about 5 cents per share by the disallowance of fuel costs by the Kentucky Public Service Commission, announced late last week. “That disallowance of fuel costs in Kentucky really was the difference that ended up bringing us below consensus for the quarter,” Tierney said.

AEP’s sales in the oil and gas extraction market were “the highest in December, even with crude being under pressure the way it was . . . sales to the pipeline transportation segment were up 61 percent in the fourth quarter, and our sales to oil and gas extraction were up 11 percent in the quarter,” he said.

Tierney briefly outlined AEP’s capital expenditure plan for 2015, stating the company plans to spend about $4.4 billion this year, much of it transmission and distribution. “We continue to invest in our wires business in response to EPA regulations that will come into effect in May and June of this year,” he said, adding that the regulatory action provides an opportunity to invest in the wires business.

He said AEP is strategically evaluating its merchant generating fleet “to see if it fits in with the rest of our businesses, and if it doesn’t, what’s the best way to extract the most value. We haven’t made any decision on that yet, we have hired an investment bank to help us make that decision, and we’ll be bringing those thoughts and analysis to our board later on this year.”

 

 

 

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