Corporate earnings calls have always been a source of great entertainment, and AEP's earnings call last Thursday was no exception. During the call, CEO Michael Morris insults PJM, threatens to dump PATH project partners, disparages FERC and demand side management, and tells a HUGE LIE... all in the answer to one simple question about the status of PATH!
However, the entire transcript of the earnings call from Seeking Alpha is worth reading to get a handle on some of AEP's financial scheming and future plans.
I keep hearing rumors that Morris is going to retire but he keeps hanging around. Pssst... hey, AEP... you really need to get rid of this guy like now, he really sounded mad as a hatter when Paul Ridzon of KeyBanc Capital Markets asked that PATH question. Was that some sort of accident that it was allowed to slip in?
Here's a quote of the PATH question:
Paul Ridzon - KeyBanc Capital Markets Inc.
And then just what's the latest thinking on PATH?
Michael Morris
The latest thinking on PATH?
Ah, the old "repeating the question to give yourself more time to think up a good lie" ruse! Or, do you think he looked more like a deer in the headlights? He couldn't really have been surprised to get a question about PATH, could he?
Paul Ridzon - KeyBanc Capital Markets Inc.
Yes.
Paul's not helping him out here... bravo!
Michael Morris
We're ready, willing and able to go forward whenever the PJM wakes up and makes a decision that makes sense.
What he's really referring to is a future point in time when PJM quits fretting over being scrutinized by FERC and gets back to carrying out its duties as Mikey's personal transmission-ordering henchmen. That's the only thing that PJM does that "makes sense" to Mikey.
Paul Ridzon - KeyBanc Capital Markets Inc.
Kind of, what's your outlook as to when PJM could do that or what's your timeline?
Michael Morris
Well as -- well, let's go back to one of the earlier questions, why do you need to replace 5,500 megawatts with about 1,000 megawatts combined cycle gas? The PATH project would allow for rationalization of facilities being built throughout the PJM to handle the impact of the potential premature offline reality that will come from the EPA rules. So clearly, things are lining up to that project being done. It has always made sense, and we believe that it will always make sense. We aren't spending a penny on it right now, however, because it's crystal clear that the way PJM sees it, they don't think they need it until 2020. We think time will demonstrate that it needs to be a little bit earlier than that. And we stand ready to move forward on that project, with or without our current partners.
Brief explanation of Mikey's "rationalization of facilities" that will create a new need for PATH -- what AEP is banking on is the retirement of old, dirty generators that can't meet new EPA rules creating a huge, new demand for Mikey's filthy, pollution spewing Igor, the John Amos facility in St. Albans, WV. It really makes no sense at all, but I guess they forgot to give him his happy pills last Thursday.
"We aren't spending a penny on it right now..."? Mikey, Mikey, Mikey... that was an outright lie! If that's the case, what the heck is PATH doing before FERC arguing that they need to continue to utilize PATH's Formula Rate for expenditures "necessary to maintain the project in its current state?" Your two PATH companies have submitted FERC filings stating an expected $9M of capital expenditures in 2011, and that is exclusive of continuing non-capital expenditures.
I'd also like to point out that PJM actually said PATH won't be needed until sometime after 2026, not 2020 or before.
Threatening to cut FirstEnergy out of the deal if they don't go along with your plan is a nice touch, but I'd really like to see you pull that off, what with the jointly owned shell companies, service territories and your current FERC incentives package. Sometimes you just can't be an autocrat, no matter how much you might wish to be.
Paul Ridzon - KeyBanc Capital Markets Inc.
Do you think PJM has thought hard enough about upcoming retirements?
Michael Morris
Well I'll tell you, we had a very interesting meeting with them a week or so ago with their leadership team. And I think they got an eye opener. And there's no question that there will be retirements from these activities. And you also see the arguments in front of the FERC that, please don't make the demand response players actually respond to demand reductions. I mean, how silly can that possibly be? If you're going to manage your demand by people saying, we'll drop offline when peaks are tough, and then they argue that they don't want to be dropped offline. You can't run a farm like that, that's PJM's shortcoming.
Oh, so now Mikey's a farmer! Well, he certainly is "fertilizing his field," isn't he? So, "we" admit to having meetings with PJM leadership where they got their eyes (blackened?) opened, do "we"? Was that meeting on the public list of meetings that FERC has been attending? Would it be possible to get a transcript of that meeting, since PJM's planning process is so "open and transparent"? Love the whining about DSM and FERC -- I'm sure Mikey has plenty of "fertilizer" for PJM's farm too!
Paul Ridzon - KeyBanc Capital Markets Inc.
Can't make that up in volume, ha?
Michael Morris
Not a chance, not a chance.
Paul Ridzon - KeyBanc Capital Markets Inc.
Okay. Thanks a lot, Mike.
Michael Morris
You bet.
Maybe next time they should replace him with a cardboard cutout or someone else that doesn't sound so much like a querulous kid whose lollipop has been taken away...
However, the entire transcript of the earnings call from Seeking Alpha is worth reading to get a handle on some of AEP's financial scheming and future plans.
I keep hearing rumors that Morris is going to retire but he keeps hanging around. Pssst... hey, AEP... you really need to get rid of this guy like now, he really sounded mad as a hatter when Paul Ridzon of KeyBanc Capital Markets asked that PATH question. Was that some sort of accident that it was allowed to slip in?
Here's a quote of the PATH question:
Paul Ridzon - KeyBanc Capital Markets Inc.
And then just what's the latest thinking on PATH?
Michael Morris
The latest thinking on PATH?
Ah, the old "repeating the question to give yourself more time to think up a good lie" ruse! Or, do you think he looked more like a deer in the headlights? He couldn't really have been surprised to get a question about PATH, could he?
Paul Ridzon - KeyBanc Capital Markets Inc.
Yes.
Paul's not helping him out here... bravo!
Michael Morris
We're ready, willing and able to go forward whenever the PJM wakes up and makes a decision that makes sense.
What he's really referring to is a future point in time when PJM quits fretting over being scrutinized by FERC and gets back to carrying out its duties as Mikey's personal transmission-ordering henchmen. That's the only thing that PJM does that "makes sense" to Mikey.
Paul Ridzon - KeyBanc Capital Markets Inc.
Kind of, what's your outlook as to when PJM could do that or what's your timeline?
Michael Morris
Well as -- well, let's go back to one of the earlier questions, why do you need to replace 5,500 megawatts with about 1,000 megawatts combined cycle gas? The PATH project would allow for rationalization of facilities being built throughout the PJM to handle the impact of the potential premature offline reality that will come from the EPA rules. So clearly, things are lining up to that project being done. It has always made sense, and we believe that it will always make sense. We aren't spending a penny on it right now, however, because it's crystal clear that the way PJM sees it, they don't think they need it until 2020. We think time will demonstrate that it needs to be a little bit earlier than that. And we stand ready to move forward on that project, with or without our current partners.
Brief explanation of Mikey's "rationalization of facilities" that will create a new need for PATH -- what AEP is banking on is the retirement of old, dirty generators that can't meet new EPA rules creating a huge, new demand for Mikey's filthy, pollution spewing Igor, the John Amos facility in St. Albans, WV. It really makes no sense at all, but I guess they forgot to give him his happy pills last Thursday.
"We aren't spending a penny on it right now..."? Mikey, Mikey, Mikey... that was an outright lie! If that's the case, what the heck is PATH doing before FERC arguing that they need to continue to utilize PATH's Formula Rate for expenditures "necessary to maintain the project in its current state?" Your two PATH companies have submitted FERC filings stating an expected $9M of capital expenditures in 2011, and that is exclusive of continuing non-capital expenditures.
I'd also like to point out that PJM actually said PATH won't be needed until sometime after 2026, not 2020 or before.
Threatening to cut FirstEnergy out of the deal if they don't go along with your plan is a nice touch, but I'd really like to see you pull that off, what with the jointly owned shell companies, service territories and your current FERC incentives package. Sometimes you just can't be an autocrat, no matter how much you might wish to be.
Paul Ridzon - KeyBanc Capital Markets Inc.
Do you think PJM has thought hard enough about upcoming retirements?
Michael Morris
Well I'll tell you, we had a very interesting meeting with them a week or so ago with their leadership team. And I think they got an eye opener. And there's no question that there will be retirements from these activities. And you also see the arguments in front of the FERC that, please don't make the demand response players actually respond to demand reductions. I mean, how silly can that possibly be? If you're going to manage your demand by people saying, we'll drop offline when peaks are tough, and then they argue that they don't want to be dropped offline. You can't run a farm like that, that's PJM's shortcoming.
Oh, so now Mikey's a farmer! Well, he certainly is "fertilizing his field," isn't he? So, "we" admit to having meetings with PJM leadership where they got their eyes (blackened?) opened, do "we"? Was that meeting on the public list of meetings that FERC has been attending? Would it be possible to get a transcript of that meeting, since PJM's planning process is so "open and transparent"? Love the whining about DSM and FERC -- I'm sure Mikey has plenty of "fertilizer" for PJM's farm too!
Paul Ridzon - KeyBanc Capital Markets Inc.
Can't make that up in volume, ha?
Michael Morris
Not a chance, not a chance.
Paul Ridzon - KeyBanc Capital Markets Inc.
Okay. Thanks a lot, Mike.
Michael Morris
You bet.
Maybe next time they should replace him with a cardboard cutout or someone else that doesn't sound so much like a querulous kid whose lollipop has been taken away...
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