American Electric Power Co. (AEP:US), which delivers electricity to more than 5 million customers in 11 states, said second-quarter profit rose 2.8 percent and next quarter’s results would be lower after a storm knocked out power to its Ohio customers.
Net income rose to $362 million, or 75 cents a share, from $352 million, or 73 cents, a year earlier, Columbus, Ohio-based American Electric said in a statement today. Excluding severance costs, per-share profit was 5 cents more than the 72-cent average of 12 analysts’ estimates compiled by Bloomberg.
Warmer-than-normal weather and economic recovery in some states where the company operates increased revenue, Chief Executive Officer Nicholas Akins said in the statement. Economic growth in the western part of the company’s operations has outpaced growth in the eastern states, he said.
Akins said the company won’t give out guidance for the year and earnings for the third quarter are expected to be lower as American Electric faces a review of its rate plan by Ohio regulators and costs associated with storms that left more than 1.4 million people without power in June.
American Electric faces tough regulatory scrutiny in its home state, where the Public Utility Commission of Ohio is reviewing a proposal that will determine how much the company can charge consumers and retail marketers during its three-year transition to a competitive market, said Andrew Bischof, a Chicago-based utilities analyst with Morningstar Inc. (MORN:US)
“With AEP, it’s all about Ohio,” Bischof, said in a phone interview before results were announced. “It will continue to be about Ohio through the remainder of the year.”
The Ohio commission on Feb. 23 rescinded an American Electric rate settlement agreement tied to the market transition after some consumers complained of 30 percent price increases. Regulators are expected to complete their review this summer after on July 2 setting a new capacity price for American Electric that was greater than the charge recommended by its opponents, Bischof said.
American Electric provides power from Ohio to Texas and owns nearly nearly 39,000 megawatts of generating capacity and owns the largest U.S. electricity transmission system, the company said on its website.
The earnings were released before regular trading began on U.S. markets. American Electric, which has 10 buy and 12 hold ratings from analysts, rose 0.2 percent to $42 at the close yesterday in New York.
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