Akins Appears on CNBC’s ‘Mad Money’ With Jim Cramer

AEP CEO Nick Akins (right) responds to a question from stock analyst Jim Cramer on CNBC’s “Mad Money with Jim Cramer” program.

Nick Akins, AEP chairman, president and chief executive officer, appeared on CNBC’s “Mad Money with Jim Cramer” program August 16 and discussed AEP’s second-quarter financial results, the Wind Catcher renewable energy project and more with the show’s host, stock analyst Jim Cramer.

View the video.

Referring back to AEP’s second-quarter earnings report, Cramer noted that the company was on target with its 5-to-7 percent earnings growth projections following a strong second quarter.

“The investment plan our company has will continue to grow. We’re at a 5-to-7 percent growth rate, and this last quarter we extended the capital forecast to 2021 to really show the markets we were intent on that 5-to-7 percent growth rate,” Akins said. “The ability for us to invest in transmission, the ability to invest in the changing energy environment related to the way we provide our energy services is a very positive aspect of our business.”

Turning to the recently cancelled Wind Catcher renewable energy project, Akins told Cramer the company thought Wind Catcher had a number of benefits for the company and customers, but AEP has maintained its strong core business and is moving on to other projects.

“We felt like it was a great project, but from the outset we said our commissions have to approve these projects. It was a unique project, a large investment in western Oklahoma,” Akins said. “We were disappointed, but at the same time, we have a firm foundation for our company with the capital investments we can make regardless of Wind Catcher. Now we’ll focus on smaller investments of renewables to replace it. It’s just one of those aspects of our business. We’ll have projects, we’ll have opportunities, some will go, some won’t go, but it’s all built around a firm foundation and our ability to be selective on projects we can move forward.”

Cramer noted that AEP has been striving to reduce its carbon footprint over the last several years and he asked Akins if he was able to reconcile that effort with what happened with Wind Catcher.

“Wind Catcher was one of those projects where we were getting out ahead of our resource plans. We file individual resource plans in all 11 of the jurisdictions we serve and there is small capacity that you build — small wind farms and solar and so forth — that are in those plans,” Akins answered. “This was a unique opportunity to get out ahead in many of those aspects. That being said, the risk parameters around this project became such that we had to really quantify those risks. It was great for customers but we also wanted to make sure it was great for investors. So we go with the project, go through the approvals, the project doesn’t move forward but we still continue with our resource plans for smaller projects that will fill the gap.”

Switching to the economy, Cramer wanted to know where AEP is seeing the most growth.

“We have big markets in Texas and in the Midwest. In the states we serve in the south central U.S., along with the Midwest, the energy economy is certainly substantial,” Akins reported. “We’re growing higher than the GDP (growth domestic product) of the country. Our income growth continues to be there, job creation continues to be there. Residential, commercial and industrial load in particular continues to improve, so the fundamentals of the area of the country we serve are very positive.”

In today’s energy environment, Cramer wondered if anyone would take on the risk of building another nuclear plant.

“In today’s environment, where technology is going and where natural gas prices are, it’s a significant challenge to build a large, central station generation facility and take on that amount of risk,” Akins said. “Hats off to Southern (Company) for moving that process forward relative to nuclear but, at the same time, when we look at it from an investment thesis, we have the largest transmission system, multiple sets of projects, and projects that are emerging on the distribution side relative to distributed energy resources. The magnitude of the small projects add up to much less risk for investors, so when we look at the future in terms of investment, with distributed energy resources, with where technology is going, from a transmission standpoint, those are investments we can make that minimize risk not only to our customers but to our shareholders, as well.”

So how does the advent of electric vehicles factor into the whole energy equation?

“We see it as sales channel growth for the utility industry,” Akins said. “We announced today (August 16) that charging stations will be built around the Ohio area and that’s a major effort on our part to ensure that the infrastructure is there to support electric vehicles. Currently, we sell the electricity to electric vehicles but it’s also an avenue for transportation to make sure there is accessibility for everyone without having to go to a gas station, for example.”