Here's the face AEP wants you consumers to see -- Pablo the AEP Answer Man. He's a regular guy, just like you, right? Were you all feeling as "strained" as poor Pablo, bravely "starring" in another one of his ridiculous youtube videos, after a grueling 18-hour day attempting to cover AEP's derriere over their poor post-storm performance?
Late one night, recording a video update on the restoration effort, he recalled feeling the accumulated strain of days without much sleep.“I couldn’t get complete sentences out that made any sense,” he said.
AEP is getting a bit carried away with the plain folks propaganda. We thought it would be funny to see the corporate bigwigs hurling dodge balls at each other in TV commercials when we suggested it. The ugly tie collection and experiments with different outfits and backdrops were amusing for a few minutes, but folks are over it. AEP just doesn't know when to quit, however.
The other face AEP presents to its investors can be seen in this transcript of AEP's 2Q 2012 earnings call held on July 20. There's so much bragging about how they're sticking it to consumers in order to make huge profits, I'm just going to paraphrase the highlights. Be sure to read the entire transcript yourself for even more filthy rich one percent goodness.
1. Quarterly earnings were .75 per share. Year to date earnings were $1.55 per share. Earnings were $370M for the quarter, and $759M year-to-date. It was a "pretty good" quarter for AEP.
2. Ohio has been a problem for AEP due to customer switching, low demand and their issues with rate cases.
3. "Investment" in their regulated (monopoly) subsidiaries and transmission will provide 4 - 6% growth in earnings.
4. Poor, poor, AEP CEO Nick Akins has had two "storms" to deal with since he became CEO 8 months ago. One "storm" was created by Mother Nature on June 29. The other "storm" was a regulatory one created by consumers in Ohio.
5. The June storm cost AEP $230 million. They will defer much of the cost for future recovery from consumers. As soon as the consumer anger begins to die back and you all take your eye off the ball, AEP's planning to stick it to you. $70M will be recovered through future rate cases. $130M will be deferred for future recovery from consumers. AEP has $4M budgeted for storm costs this quarter, so that only leaves $26M of cost coming out of AEP's shareholders pockets for the quarter. However, AEP's shareholders have been collecting profits from unspent budgeted O&M in other quarters, so they're still way, way ahead.
6. AEP was glad the June storm came along in order to take focus off the hot water they were in at PUCO. This is a direct quote from Akins: "...in an odd and perhaps, morbid way, it gave the management team a brief reprieve from the challenges of the other storm that occurred -- the regulated storm we call Ohio."
7. AEP is looking forward to the PUCO allowing the company to recover deferred capacity costs from consumers when their rate case is decided in August. PUCO declared both AEP and FirstEnergy winners in the dodgeball game by allowing FirstEnergy to pay a lower cost while also allowing AEP to charge a higher cost. How can this be so? Because the consumers are going to pick up the difference between what AEP is allowed to charge and what FirstEnergy has to pay. Consumers are the big losers in Ohio, once again.
8. AEP also wants PUCO to approve their rate stability rider "to ensure AEP's financial integrity," their distribution investment rider and allow recovery of deferred fuel costs and other regulatory assets totaling $800M. Of course, these are all additional costs that consumers will end up paying, and paying, and paying.
9. AEP needs a fistful of your cash to complete their corporate separation and start their competitive generation company. In order to do this, AEP is going to "sell" a bunch of their Ohio generation assets into West Virginia and Kentucky's regulated environments, where consumers in those states will end up paying for them so that AEP doesn't have that financial liability mucking up their competitive company profit margins.
10. AEP's new transmission projects will "really provide the earnings growth for the future." Transmission will provide the "critical mass" for future earnings growth and AEP has "plenty of projects" that can take the place of those that don't work out. So, AEP will just keep proposing and building new transmission projects as a way to make money, not because the transmission is truly needed. Consumers will pay for all this unneeded new transmission.
11. AEP is looking forward to getting their new pulverized coal plant on line in Indiana so they can start collecting the cost of it from ratepayers.
12. AEP is concentrating on cutting operations & maintenance spending in order to make up for customer switching in Ohio and other areas where their earnings are lagging. AEP added .13 per share this quarter by reducing O&M. How did their skimping on maintenance work out for you on June 29?
13. AEP is looking forward to $400M in "securitization opportunities" in West Virginia. That means that they are anxiously awaiting all that beautiful cash they will get by mortgaging all their old coal debt in the name of West Virginia consumers, who will end up paying for AEP's past coal-buying mistakes for the next ten years.
14. The profit AEP is making at their regulated companies in other states is propping up their big losses in Ohio. Consumers in other states are making up for any savings Ohio consumers receive. O&M cuts and transmission are really the only things propping up AEP right now.
15. Akins had an epiphany moment where he toyed with the idea that the sustained decline in residential sales could possibly be due to increased energy efficiency. Ya think, Nick, old boy? Nick gets the Captain Obvious Award!
So, while AEP cries "poor me" to the consumers with one face, their other face is laughing all the way to the bank. AEP thinks you're never going to know what they do behind your back. Oops.