AEP Ohio coal-fired plants take $2.3 billion accounting hit

• 8 years ago (2016-11-03)
• David Flin

Africa 321 Asia 893 Australasia 56 Biomass 8 Climate change 21 Coal 297 Cogeneration 1 Concentrating solar 5 Cyber security 8 Decarbonisation 1 Decentralised energy 6 Demand side management 3 Demand side response 2 Digitalisation 10 Distributed energy 10 Distribution 122 Electric vehicles EVs 4 Emissions 65 Energy management 2 Equipment 2 Europe 1089 Gas 394 Gas engine plant 64 Gas fuel 2 Horizon 2 Hydroelectric 17 Hydrogen 60 Hydropower 131 Latin America 80 Maintenance 3 Marine 1 Metering 2 microgrid 5 Middle East 327 North America 1021 Nuclear 660 Offshore wind 121 Oil 19 Operations 4 Policy 9 Regulations 3 Renewables 776 smart grid 2 Solar 273 Storage 45 substation 8 Tepco 2 Tidal 2 Toshiba 4 Transmission 191 US Senate Washington 4 Wind 257

---

American Electric Power (AEP) announced in its third-quarter earnings report that it had taken a $2.3 billion accounting hit on its deregulated coal-fired assets in Ohio, USA. The pre-tax impairment is related to AEP’s evaluation of 2684 MW in Ohio merchant generation. These sites include Cardinal, Conesville, Stuart, and Zimmer power plants currently operating under the AEP unit Ohio Power.

The AEP filing with the US Securities and Exchange Commission said: “As of September 30, 2016, the remaining net book value of these assets is $50 million. Management continues to evaluate potential alternatives for the remaining merchant generation assets. These potential alternatives may include, but are not limited to, propose restructuring of Ohio electricity regulations to allow certain of these assets to be acquired by OPCo for the benefits of its customers, transfer or sale of AEP’s ownership interests, or a wind down of merchant coal-fired generation fleet operations.”

AEP has sought several options in dealing with its money-losing coal-fired plants in the competitive generation market of Ohio. Earlier this year, the Public Utilities Commission of Ohio approved a rate agreement which could have guaranteed AEP some profit on the plants, but this was rejected by federal regulators.

Despite the writedown, AEP’s third-quarter operating earnings rose about $120 million year over year, to $640 million. The utility announced plans to invest about $17 billion through 2019 on its core regulated operations and contracted renewable generation, part of that coming from proceeds after the sale of some of its competitive generation portfolio.