EX-99.1 2 v101037_ex99-1.htm
 
MEDIA CONTACT:
ANALYSTS CONTACT:
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Managing Director, Investor Relations
614/716-1620
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FOR IMMEDIATE RELEASE


AEP EARNINGS INCREASE FOR FOURTH QUARTER, YEAR;
COMPANY HIKES 2008 ONGOING EARNINGS GUIDANCE RANGE
 
 
·
2007 fourth-quarter earnings: $0.58 per share GAAP, $0.52 per share ongoing
 
·
2007 full-year earnings: $2.73 per share GAAP, $3.00 per share ongoing
 
·
New rates for utilities in five states, favorable weather, marketing successes increase ongoing earnings for the quarter and year
 
·
Company increases ongoing earnings guidance for 2008 to between $3.10 and $3.30 per share
 
AMERICAN ELECTRIC POWER
Preliminary, unaudited results

   
 4th quarter ended Dec. 31
  
 12 months ended Dec. 31
  
   
2006
  
2007
  
Variance
  
2006
  
2007
  
Variance
  
Revenue ($ in billions)
    
3.0
   
3.3
   
0.3
   
12.6
   
13.4
   
0.8
 
Earnings ($ in millions):
                                      
GAAP
    
181
   
231
   
50
   
1,002
   
1,089
   
87
 
Ongoing
    
151
   
209
   
58
   
1,093
   
1,199
   
106
 
EPS ($):
                                      
GAAP
    
0.46
   
0.58
   
0.12
   
2.54
   
2.73
   
0.19
 
Ongoing
    
0.38
   
0.52
   
0.14
   
2.77
   
3.00
   
0.23
 
 
EPS based on 396mm shares in Q4 2006, 400mm in Q4 2007, 394mm in 12 mo. 2006 and 399mm in 12 mo. 2007
 
COLUMBUS, Ohio, Jan. 29, 2008 - American Electric Power (NYSE: AEP) today reported 2007 year-end earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $1.089 billion, or $2.73 per share, compared with $1.002 billion, or $2.54 per share, for 2006. Ongoing earnings (earnings excluding special items) for 2007 were $1.199 billion, or $3.00 per share, compared with $1.093 billion, or $2.77 per share, for 2006.
 
GAAP earnings for fourth-quarter 2007 were $231 million, or $0.58 per share, compared with $181 million, or $0.46 per share, for fourth-quarter 2006. Ongoing earnings for fourth-quarter 2007 were $209 million, or $0.52 per share, compared with $151 million, or $0.38 per share, for fourth-quarter 2006.
 
1
 
GAAP earnings for fourth-quarter 2007 were $22 million higher than ongoing earnings primarily because of the gain on the October 2007 sale of AEP’s 50-percent equity interest in the Sweeny Cogeneration plant in Texas to ConocoPhilips and favorable tax adjustments related to assets disposed of in prior years, which were somewhat offset by interest expense related to an adverse U.S. District Court decision in the Bank of America proceeding related to the Bammel natural gas storage facility.
 
For the year, GAAP earnings were $110 million less than ongoing earnings primarily because of the effect of Virginia re-regulation, enacted in April 2007, which resulted in a return to a form of cost-based regulation for the generation portion of electric utility service in Virginia, and the effect of a settlement agreement reached with the U.S. Environmental Protection Agency, the U.S.Department of Justice, eight states and 14 environmental organizations resolving all issues related to claims against AEP regarding New Source Review requirements of the Clean Air Act.
 
A full reconciliation of GAAP earnings to ongoing earnings for the quarter and year is included in tables at the end of this news release.
 
“Our ongoing earnings for the fourth quarter increased by almost 40 percent from the same period last year, which pushed our ongoing earnings for 2007 to the top of our earnings guidance range for the year,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “We had a very good quarter and year, with a number of factors contributing to the excellent earnings results.
 
“Our utilities benefited from continued efficient operation, implementation of new rates in five of our 11 states and more favorable weather than we had in 2006,” Morris said. “We’ve seen continued success in our power marketing efforts, reaching new long-term power-supply agreements with municipal electric systems and rural electric cooperatives. This provides an important revenue stream and enables us to make the best use of our generation fleet. And our sale of a Louisiana power plant in late 2006 eliminated an asset that had operated at a loss, which helped to improve the year-to-year earnings comparison.”
 
EARNINGS GUIDANCE
 
AEP increased its 2008 ongoing earnings guidance range to between $3.10 and $3.30 per share from the previous range of between $3.05 and $3.25 per share.
 
“The decision to increase our guidance is driven by our forecast for continued strong results from our wholesale marketing activities as well as the earnings potential related to the implementation of our regulatory plan,” Morris said.
 
In providing ongoing earnings guidance, there could be differences between ongoing earnings and GAAP earnings for matters such as, but not limited to, divestitures or changes in accounting principles. AEP management is not able to estimate the impact, if any, on GAAP earnings of these items. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.
 
2
 
 SUMMARY ONGOING RESULTS BY SEGMENT
$ in millions except EPS
 
   
Q4 06
  
Q4 07
  
Variance
  
12 mo. 06
  
12 mo. 07
  
Variance
  
Utility Operations
    
126
   
152
   
26
   
1,028
   
1,086
   
58
 
Ongoing EPS
    
0.31
   
0.38
   
0.07
   
2.61
   
2.72
   
0.11
 
MEMCO
    
26
   
21
   
(5
)
  
80
   
61
   
(19
)
Ongoing EPS
    
0.07
   
0.05
   
(0.02
)
  
0.20
   
0.15
   
(0.05
)
Generation and Marketing
    
2
   
20
   
18
   
12
   
37
   
25
 
Ongoing EPS
    
0.01
   
0.05
   
0.04
   
0.03
   
0.09
   
0.06
 
All Other
    
(3
)
  
16
   
19
   
(27
)
  
15
   
42
 
Ongoing EPS
    
(0.01
)
  
0.04
   
0.05
   
(0.07
)
  
0.04
   
0.11
 
Ongoing Earnings
    
151
   
209
   
58
   
1,093
   
1,199
   
106
 
Ongoing EPS
    
0.38
   
0.52
   
0.14
   
2.77
   
3.00
   
0.23
 
 
EPS based on 396mm shares in Q4 2006, 400mm in Q4 2007, 394mm in 12 mo. 2006 and 399mm in 12 mo. 2007
 
Ongoing earnings from Utility Operations increased $26 million during fourth-quarter 2007 compared with fourth-quarter 2006. Higher gross margins from retail sales and off-system sales were somewhat offset by higher expenses than recorded in the prior period. A severe December ice storm in AEP’s Oklahoma service territory increased operations and maintenance expenses by approximately $70 million; the total cost of the storm, including capital, was approximately $90 million.
 
For the 12-month period, ongoing earnings from Utility Operations increased by $58 million from 2006 because of higher retail sales, reflecting higher usage, favorable rate changes and an increase in off-system sales. The improved margins were partially offset by increased expenses, primarily related to Oklahoma ice storms in January and December and higher interest expense. The year-to-year comparison also reflects the reduction in 2007 of the earnings-sharing payment from Centrica, the final payment from a multi-year earnings-sharing agreement established in 2002 when AEP sold its Texas retail electricity providers to Centrica.
 
Ongoing earnings from MEMCO barge operations were lower for the quarter and year than in prior periods because of a decrease in northbound freight demand, primarily related to steel and cement imports, and higher operating costs brought by increased fleet size, higher labor costs and increased fuel prices.
 
The increase in ongoing earnings from Generation and Marketing is primarily attributed to new contracts with municipalities and cooperatives. Generation and Marketing includes AEP’s non-regulated generating, marketing and risk management activities, primarily in the Electric Reliability Council of Texas.
 
All Other, which includes the Parent Company and other investments, improved in both the quarter and year when compared to the prior periods. The 2006 results included the losses from operations at the Plaquemine Cogeneration Facility in Louisiana that was sold to The Dow Chemical Company during fourth-quarter 2006. The favorable year-over-year results were somewhat offset by lower interest income and tax adjustments at the Parent.
 
3
 
ONGOING RESULTS FROM UTILITY OPERATIONS
$ in millions except EPS
 
   
Q4 06
  
Q4 07
 
Variance
 
12 mo. 06
  
12 mo. 07
  
Variance
  
East Regulated Integrated Utilities
    
565
   
582
   
17
   
2,111
   
2,215
   
104
 
Ohio Companies
    
525
   
582
   
57
   
2,110
   
2,452
   
342
 
West Regulated Integrated Utilities
    
230
   
230
   
0
   
1,018
   
994
   
(24
)
Texas Wires
    
114
   
133
   
19
   
476
   
529
   
53
 
Off-System Sales
    
144
   
204
   
60
   
829
   
939
   
110
 
Net Transmission Revenue
    
52
   
19
   
(33
)
  
271
   
152
   
(119
)
Other Operating Revenue
    
146
   
121
   
(25
)
  
527
   
536
   
9
 
Utility Gross Margin
    
1,776
   
1,871
   
95
   
7,342
   
7,817
   
475
 
Operations & Maintenance
    
(885
)
  
(957
)
  
(72
)
  
(3,177
)
  
(3,326
)
  
(149
)
Depreciation & Amortization
    
(375
)
  
(361
)
  
14
   
(1,435
)
  
(1,483
)
  
(48
)
Taxes Other Than Income Taxes
    
(178
)
  
(188
)
  
(10
)
  
(735
)
  
(748
)
  
(13
)
Interest Expense & Preferred Dividend
    
(195
)
  
(191
)
  
4
   
(670
)
  
(790
)
  
(120
)
Other Income & Deductions
    
75
   
31
   
(44
)
  
246
   
124
   
(122
)
Income Taxes
    
(92
)
  
(53
)
  
39
   
(543
)
  
(508
)
  
35
 
Utility Operations Ongoing Earnings
    
126
   
152
   
26
   
1,028
   
1,086
   
58
 
Ongoing EPS
    
0.31
   
0.38
   
0.07
   
2.61
   
2.72
   
0.11
 
 
EPS based on 396mm shares in Q4 2006, 400mm in Q4 2007, 394mm in 12 mo. 2006 and 399mm in 12 mo. 2007
 
Retail Sales - Results for the fourth quarter and year were higher than results in the same periods in 2006, primarily because of increased usage attributed in part to favorable weather, and the implementation of new rates in the Ohio Companies and in AEP’s utilities in Virginia, Texas, Oklahoma and Kentucky. Sales to municipal and cooperative customers continue to add to the positive results in the East. Fourth-quarter heating degree-days were 9 percent lower than normal but 8 percent higher than in the same period last year in AEP’s East service territories and 5 percent lower than normal but 11 percent higher than in last year’s fourth quarter in AEP’s western service territory. Usage increases attributable to weather in 2007, when compared to the same periods in 2006 when weather was milder, increased 2007 gross margins by $22 million for the fourth quarter and $105 million for the year.
 
Off-System Sales - Gross margins from Off-System Sales for the fourth quarter were higher than in the prior period primarily because of higher volumes and prices. Stronger realized prices led to the improvement in gross margins for the year when compared to results for 2006.
 
Net Transmission Revenues - Transmission Revenues decreased $33 million for the fourth quarter and $119 million for the year when compared to the same periods in 2006 primarily because of PJM Interconnection’s implementation of marginal-loss dispatch and settlement implemented in June 2007.
 
Other Operating Revenue - Other Operating Revenues were lower in fourth-quarter 2007 than in the prior period because of lower third-party and miscellaneous revenues. For the year, Other Operating Revenues were higher than in 2006 because of increased securitization revenue at AEP Texas Central, partially offset by fewer sales of emissions allowances.
 
4
 
Operations & Maintenance Expense - Operations & Maintenance Expenses were higher during the fourth quarter and year as compared with the same periods in 2006 primarily because of higher steam production expenses and costs for storm damage repair in Oklahoma. The full-year comparison includes storm damage repair for ice storms in Oklahoma in January 2007 as well as the large storm in December 2007.
 
Depreciation & Amortization - Depreciation & Amortization expenses were lower for fourth-quarter 2007 when compared to the same period in 2006 primarily because of lower depreciation expense in Indiana and Michigan brought by the change in depreciation rates approved in June 2007 by the Indiana Utility Regulatory Commission and in September 2007 by the Michigan Public Service Commission, lower depreciation expense in Virginia as a result of the base rate case final order in May 2007, and lower depreciation in Oklahoma because of a base rate case final order received in October 2007. For the 12-month period, Depreciation & Amortization expenses were higher in 2007 than in 2006 primarily because of increases in regulatory amortizations, primarily related to securitization at AEP Texas Central, and higher depreciable property balances, somewhat offset by the lower depreciation rates mentioned above.
 
Interest Expense & Preferred Dividends - The increase in Interest Expense for the 12-month period is primarily because of increased long-term debt, higher interest rates on variable-rate debt and the issuance of securitization bonds at AEP Texas Central.
 
Other Income & Deductions - The decrease in Other Income & Deductions in fourth-quarter 2007 from the same period in 2006 is primarily attributed to the reinstatement in fourth-quarter 2006 of environmental and reliability deferred carrying costs for Appalachian Power in Virginia. These costs had previously been written off. The decrease for the year from the same period of 2006 is because of the lower earnings-sharing payment received from Centrica and lower carrying-cost income being recorded after AEP Texas Central began recovering stranded costs during fourth-quarter 2006.
 
Income Taxes - Income taxes for 2007’s fourth quarter and 12-month period were lower than those in the same periods of 2006 primarily because of unfavorable federal income tax adjustments in 2006 and favorable amended state tax return adjustments in 2007.
 
WEBCAST
 
American Electric Power’s quarterly conference call with financial analysts will be broadcast live over the Internet at 9 a.m. EST today at http://www.aep.com/go/webcasts. The webcast will include audio of the conference call and visuals of charts and graphics referred to by AEP management during the call. The charts and graphics will be available for download at http://www.aep.com/go/webcasts .
 
5
 
The call will be archived on http://www.aep.com/go/webcasts for use by those unable to listen during the live webcast. Archived calls also are available as podcasts.
 
Minimum requirements to listen to broadcast: The Windows Media Player software, free from http://windowsmedia.com/download, and at least a 56Kbps connection to the Internet.
 
---
 
American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning more than 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.
 
---
 
AEP’s earnings are prepared in accordance with accounting principles generally accepted in the United States and represent the company’s earnings as reported to the Securities and Exchange Commission. AEP’s management believes that the company’s ongoing earnings, or GAAP earnings adjusted for certain items as described in the news release and charts, provide a more meaningful representation of the company’s performance. AEP uses ongoing earnings as the primary performance measurement when communicating with analysts and investors regarding its earnings outlook and results. The company also uses ongoing earnings data internally to measure performance against budget and to report to AEP’s board of directors.
 
6
 
This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity (including AEP’s ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.
 
7

American Electric Power
Financial Results for 4th Quarter 2007 Actual vs 4th Quarter 2006 Actual

   
2006 Actual
  
2007 Actual
  
   
($ millions)
  
EPS
  
($ millions)
  
EPS
  
                   
                   
UTILITY OPERATIONS:
                          
Gross Margin: 
                          
East Regulated Integrated Utilities
    
565
         
582
       
Ohio Companies
    
525
         
582
       
West Regulated Integrated Utilities
    
230
         
230
       
Texas Wires
    
114
         
133
       
Off-System Sales
    
144
         
204
       
Net Transmission Revenue
    
52
         
19
       
Other Operating Revenue
    
146
         
121
       
Utility Gross Margin
   
1,776
         
1,871
       
                           
Operations & Maintenance
    
(885
)
        
(957
)
      
Depreciation & Amortization
    
(375
)
        
(361
)
      
Taxes Other than Income Taxes
    
(178
)
        
(188
)
      
Interest Exp & Preferred Dividend
    
(195
)
        
(191
)
      
Other Income & Deductions
    
75
         
31
       
Income Taxes
    
(92
)
        
(53
)
      
Utility Operations On-Going Earnings
    
126
   
0.31
   
152
   
0.38
 
                           
NON-UTILITY OPERATIONS:
                          
MEMCO
    
26
   
0.07
   
21
   
0.05
 
Generation & Marketing
    
2
   
0.01
   
20
   
0.05
 
                           
Parent & Other On-Going Earnings
    
(3
)
  
(0.01
)
  
16
   
0.04
 
                           
ON-GOING EARNINGS
    
151
   
0.38
   
209
   
0.52
 
 
For analysis purposes, certain financial statement amounts have been reclassified for this effect on earnings presentation.
 
8
 
American Electric Power
 
Financial Results for the 4th Quarter 2007
Reconciliation of On-going to Reported Earnings
 
   
2007
  
   
Utility
 
MEMCO
  
Generation and Marketing
 
Parent & All Other
  
Total
  
EPS
  
   
($ millions)
      
                           
On-going Earnings
    
152
   
21
   
20
   
16
   
209
 
$
0.52
  
                                       
Dispositions:
                                      
Gain on Sale of UK Operations
    
-
   
-
   
-
   
18
   
18
 
$
0.05
  
Gain on Sale of Sweeny Plant
    
-
   
-
   
30
   
-
   
30
 
$
0.08
  
Gain on Sale of Seeboard
    
-
   
-
   
-
   
4
   
4
 
$
0.01
  
Bank of America / HPL gas storage reservoir
    
-
   
-
   
-
   
(30
)
  
(30
)
$
(0.08
)
 
     -    
-
   
-
   
-
   
-
 
$
-
  
                                       
Total Special Items
    
-
   
-
   
30
   
(8
)
  
22
 
$
0.06
  
                                       
Reported Earnings
    
152
   
21
   
50
   
8
   
231
 
$
0.58
  
 
Financial Results for the 4th Quarter 2006
Reconciliation of On-going to Reported Earnings
 
   
2006
  
   
Utility
 
MEMCO
 
Generation and Marketing
 
Parent & All Other
 
Total
 
EPS
 
   
($ millions)
      
                           
On-going Earnings
    
126
   
26
   
2
   
(3
)
  
151
 
$
0.38
  
                                       
Dispositions:
                                      
Gain on Sale of UK Operations
    
-
   
-
   
-
   
(1
)
  
(1
)
$
-
  
Gain on Sale of ICE Shares
    
-
   
-
   
-
   
15
   
15
 
$
0.04
  
Gain on Sale of Seeboard
    
-
   
-
   
-
   
5
   
5
 
$
0.01
  
Gain on Sale of Pacific Hydro
    
-
   
-
   
-
   
7
   
7
 
$
0.02
  
Adjustments to Prior Dispositions
    
-
   
-
   
-
   
4
   
4
 
$
0.01
  
                                       
Total Special Items
    
-
   
-
   
-
   
30
   
30
 
$
0.08
  
                                       
Reported Earnings
    
126
   
26
   
2
   
27
   
181
 
$
0.46
  
 
9

American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
 
   
3 Months Ended December 31,
  
   
2006
  
2007
  
Change
  
               
ENERGY & DELIVERY SUMMARY
                    
Retail - Domestic Electric (in millions of kWh):
                    
Residential
    
11,212
   
11,161
   
-0.5
%
Commercial
    
9,430
   
9,795
   
3.9
%
Industrial
    
13,509
   
14,456
   
7.0
%
Miscellaneous
    
662
   
633
   
-4.4
%
Total Domestic Retail (a)
    
34,813
   
36,045
   
3.5
%
                     
Wholesale - Domestic Electric (in millions of kWh): (b)
    
9,433
   
11,269
   
19.5
%
                     
Texas Wires Delivery (in millions of kWh):
    
6,043
   
6,385
   
5.7
%
                     
                     
EAST REGION WEATHER SUMMARY (in degree days):
                    
Actual - Heating (c)
    
904
   
973
   
7.6
%
- Cooling (d)
    
9
   
77
   
755.6
%
Normal - Heating (c)
          
1,068
   
-8.9
 %*
- Cooling (d)
          
15
   
413.3
 %*
                   
PSO/SWEPCo WEATHER SUMMARY (in degree days):
                    
Actual - Heating (c)
    
509
   
565
   
11.0
%
- Cooling (d)
    
105
   
160
   
52.4
%
Normal - Heating (c)
          
595
   
-5.0
 %*
- Cooling (d)
          
97
   
64.9
 %*
 
* 2007 Actual vs. Normal
 
(a)
The energy summary represents load supplied by AEP. Delivery of energy by Texas Wires supplied by others is not included.
 
(b)
Includes Off-System Sales, Texas Supply, Municipalities and Cooperatives, Unit Power, and Other Wholesale Customers.
 
(c)
Heating Degree Days temperature base is 55 degrees
 
(d)
Cooling Degree Days temperature base is 65 degrees
 
10
 
American Electric Power
Financial Results for YTD December 2007 Actual vs YTD December 2006 Actual

   
2006 Actual
 
2007 Actual
  
   
($ millions)
  
EPS
  
($ millions)
  
EPS
  
                   
UTILITY OPERATIONS:
                          
Gross Margin: 
                          
East Regulated Integrated Utilities
    
2,111
         
2,215
       
Ohio Companies
    
2,110
         
2,452
       
West Regulated Integrated Utilities
    
1,018
         
994
       
Texas Wires
    
476
         
529
       
Off-System Sales
    
829
         
939
       
Net Transmission Revenue
    
271
         
152
       
Other Operating Revenue
    
527
         
536
       
Utility Gross Margin
   
7,342
         
7,817
       
                           
Operations & Maintenance
    
(3,177
)
        
(3,326
)
      
Depreciation & Amortization
    
(1,435
)
        
(1,483
)
      
Taxes Other than Income Taxes
    
(735
)
        
(748
)
      
Interest Exp & Preferred Dividend
    
(670
)
        
(790
)
      
Other Income & Deductions
    
246
         
124
       
Income Taxes
    
(543
)
        
(508
)
      
Utility Operations On-Going Earnings
    
1,028
   
2.61
   
1,086
   
2.72
 
                           
NON-UTILITY OPERATIONS:
                          
MEMCO
    
80
   
0.20
   
61
   
0.15
 
Generation & Marketing
    
12
   
0.03
   
37
   
0.09
 
                           
Parent & Other On-Going Earnings
    
(27
)
  
(0.07
)
  
15
   
0.04
 
                           
ON-GOING EARNINGS
    
1,093
   
2.77
   
1,199
   
3.00
 
For analysis purposes, certain financial statement amounts have been reclassified for this effect on earnings presentation.
 
11

American Electric Power
 
Financial Results for Year-to-Date 2007
Reconciliation of On-going to Reported Earnings
 
   
2007
  
   
Utility
  
MEMCO
  
Generation and Marketing
  
Parent & All Other
  
Total
  
EPS
  
   
($ millions)
      
                           
On-going Earnings
    
1,086
   
61
   
37
   
15
   
1,199
 
$
3.00
  
                                       
Dispositions:
                                      
Gain on Sale of UK Operations
    
-
   
-
   
-
   
20
   
20
 
$
0.05
  
Gain on Sale of Sweeny Plant
    
-
   
-
   
30
   
-
   
30
 
$
0.08
  
Bank of America / HPL gas storage reservoir
    
-
   
-
   
-
   
(30
)
  
(30
)
$
(0.07
)
Gain on Sale of Seeboard
    
-
   
-
   
-
   
4
   
4
 
$
0.01
  
                                       
Other
                                      
Virginia Re-Regulation SFAS 71
    
(79
)
  
-
   
-
   
-
   
(79
)
$
(0.20
)
New Source Review
    
(55
)
  
-
   
-
   
-
   
(55
)
$
(0.14
)
 
                                      
Total Special Items
    
(134
)
  
-
   
30
   
(6
)
  
(110
)
$
(0.27
)
 
                                      
Reported Earnings
    
952
   
61
   
67
   
9
   
1,089
 
$
2.73
  
 
Financial Results for Year-to-Date 2006
Reconciliation of On-going to Reported Earnings
 
   
2006
  
   
Utility
  
MEMCO
  
Generation and Marketing
  
Parent & All Other
  
Total
  
EPS
  
   
($ millions)
      
                           
On-going Earnings
    
1,028
   
80
   
12
   
(27
)
  
1,093
 
$
2.77
  
                                       
Dispositions:
                                      
Gain on Sale of UK Operations
    
-
   
-
   
-
   
5
   
5
 
$
0.01
  
Gain on Sale of ICE Shares
    
-
   
-
   
-
   
24
   
24
 
$
0.06
  
Impairment of Plaquemine Plant
    
-
   
-
   
-
   
(136
)
  
(136
)
$
(0.34
)
Gain on Sale of Seeboard
    
-
   
-
   
-
   
5
   
5
 
$
0.01
  
Gain on Sale of Pacific Hydro
    
-
   
-
   
-
   
7
   
7
 
$
0.02
  
Adjustments to Prior Dispositions
    
-
   
-
   
-
   
4
   
4
 
$
0.01
  
                                       
Total Special Items
    
-
   
-
   
-
   
(91
)
  
(91
)
$
(0.23
)
                                       
Reported Earnings
    
1,028
   
80
   
12
   
(118
)
  
1,002
 
$
2.54
  
 
12

American Electric Power
Summary of Selected Sales Data
For Domestic Operations
(Data based on preliminary, unaudited results)
 
   
12 Months Ended December 31,
  
   
2006
  
2007
  
Change
  
               
ENERGY & DELIVERY SUMMARY
                    
Retail - Domestic Electric (in millions of kWh):
                    
Residential
    
47,222
   
49,176
   
4.1
%
Commercial
    
38,579
   
40,545
   
5.1
%
Industrial
    
53,914
   
57,566
   
6.8
%
Miscellaneous
    
2,653
   
2,565
   
-3.3
%
Total Domestic Retail (a)
    
142,368
   
149,852
   
5.3
%
                     
Wholesale - Domestic Electric (in millions of kWh): (b)
    
44,564
   
42,917
   
-3.7
%
                     
Texas Wires Delivery (in millions of kWh):
    
26,382
   
26,682
   
1.1
%
                     
                     
EAST REGION WEATHER SUMMARY (in degree days):
                    
Actual - Heating (c)
    
2,477
   
3,014
   
21.7
%
- Cooling (d)
    
923
   
1,266
   
37.2
%
Normal - Heating (c)
          
3,042
   
-0.9
 %*
- Cooling (d)
          
978
   
29.4
 %*
                   
PSO/SWEPCo WEATHER SUMMARY (in degree days):
                    
Actual - Heating (c)
    
1,172
   
1,559
   
33.0
%
- Cooling (d)
    
2,430
   
2,244
   
-7.7
%
Normal - Heating (c)
          
1,588
   
-1.8
 %*
- Cooling (d)
          
2,181
   
2.9
 %*

* 2007 Actual vs. Normal
 
(a)
The energy summary represents load supplied by AEP. Delivery of energy by Texas Wires supplied by others is not included.
 
(b)
Includes Off-System Sales, Texas Supply, Municipalities and Cooperatives, Unit Power, and Other Wholesale Customers.
 
(c)
Heating Degree Days temperature base is 55 degrees
 
(d)
Cooling Degree Days temperature base is 65 degrees

13