Wind Catcher Prospects Look Iffy

...because it's all about the headline, right?

Seeking Alpha came out with an article yesterday headlined, Prospects for AEP's $4.5B Wind Catcher project look iffy

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Seeking Alpha provides insight into what investors may be thinking about AEP's Wind Catcher project.  And it doesn't look promising.

At the July 12 Open Meeting of the Public Utility Commission of Texas, the Commissioners said they needed more time.  AEP reminded the Commission that it had a deadline of August 6 to issue a notice to proceed to its contractors, especially the transmission line contractor.  After the notice to proceed is issued, company spending, already confirmed to be "tens of millions of dollars," will ramp up considerably.  The Chairwoman noted that and has placed the item on the Open Meeting agenda for July 26.

In response to a request from the Chairwoman on July 12 that parties get together to explore whether there could be more customer protections added, several filings were made yesterday.  Opposing parties report:

The parties had further discussions after the open meeting regarding appropriate customer protections for the proposed Wind Catcher Project, but were unable to reach an agreement.

Opponents suggest that the project be denied.  However, if the PUCT feels it must approve the project, the parties recommend it apply the conditions recommended by the Oklahoma Attorney General.

Of course, AEP won't agree to those customer protections.  Instead, AEP filed a letter and exhibit table attempting to put a new polish and spin on its same old "guarantees" that the PUCT found unconvincing last week.  AEP has essentially not budged, but it feels it is entitled to approval from these folks.

I don't think they were feeling any love for AEP's guarantees.  Looks sorta iffy.

Backed into a corner and facing a quarterly investor earnings call next week,  AEP tries to avoid a need to have a regulatory decision before the earnings call, or even to prevent further regulatory discussion that could add more "iffy-ness" to its project.  And isn't that funny... AEP has recently changed the date of its earnings call to make sure it happens before the PUCT can weigh in on the project on July 26.  The earnings call is now scheduled for July 25, the day before the PUCT Open Meeting.

In its letter to the PUCT, AEP says:

To date the Company has made a significant investment so that it is able to execute the Project in a timely manner. As noted at the July 12 open meeting, approval of the Project is necessary to ensure our ability to contain costs and deliver the benefits of the
Project to customers. Recognizing the complexity of the Project and the need for additional time for Commissioners to consider this case, the Company will work with our Project partners and is willing to place additional Company funds at risk so that the benefits to SWEPCO's customers can be realized. Because of the need to order long leadtime equipment, time for Gen-Tie right-of-way activities and Project construction
schedule critical paths, it is necessary to have an order from the Commission to proceed by the end of August. The Company will also inform the Oklahoma Corporation Commission of the additional time flexibility, and additional customer protections. These changes represent the limits of what SWEPCO and AEP can offer in order to move
forward with the Project.

So now the deadline has moved to August 31?  First Nick Akins told investors he would have approvals by the end of April.  Then at the last earnings call, he told investors he would have approvals by the end of June.  Now he's going to tell investors he will have them by the end of August?  Each time the deadline shifts, it requires AEP to put more of its money into Wind Catcher with the risk that it will never get it back if the project isn't approved.  Maybe the first shift wasn't significant in the grand scheme of things.  But the latest shift requires AEP to invest more heavily by covering project costs that will ramp up after August 6.  How much money is it, exactly, that AEP has invested in Wind Catcher without a guarantee that it will ever recover any of it?

If I was an AEP stockholder, I'd be pretty nervous.  Is this a good risk?  Seeking Alpha says it's "iffy."  I'd probably sell my AEP stock quick before the project gets denied and my investment got hit with all the costs of a failed project.  I don't think I'd join Nick Akins on his gamble that an approval will come by August 31.  If that deadline also slips into the future, like the ones before it, how much more money will AEP put into this project before the next created deadline?  When will enough be enough with this project?  How much good money will be thrown after bad in a nervous attempt to salvage something?

Fortunately, I don't own AEP stock.  But others do.  How much do the stockholders have faith in Nick Akins and his pet project at this point?  Iffy.  I guess we'll find out during the earnings call next week, when investment analysts will quiz Akins about this project.  A lot.  It's no secret that investors hire psycho-spooks to analyze earnings calls to evaluate whether or not they should believe what the company CEO is saying in response to investor questions.

Hedge fund managers and other large investors hire forensic analysts to sit in on corporate earnings calls. The first half of such calls tend to be heavily scripted, as top leaders run through the results. But in the second half, executives answer questions from equity analysts — or evade those questions — and therefore are working without a script. That’s when the Valens analyst keeps an eye glued to the firm’s proprietary electro-audiogram (EAG) system, which measures voice patterns. Think of the digital audiogram as a sophisticated lie detector test. In all, it maps a total of 15 markers that gauge whether the speaker seems to believe his or her own words based mostly on inflection — whether the voice seems stressed or hesitant, grows louder or softer, speeds up or slows down.

No pressure, Nick.  Maybe you can take a couple of doggie downers when you wake up that morning?

And a fun time will be had by all.  Except Nick.  He'll probably be puking his Wheaties and hoping not to get a migraine.

Want to listen to AEP's earnings call?  Everything you need to know can be found right here.  Be sure to check the date and time going forward, because AEP is trying to give analysts the slip by changing the date at the last minute.

Who needs a psycho-spook?