SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 26, 2005
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AMERICAN ELECTRIC POWER COMPANY, INC.
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(Exact Name of Registrant as Specified in Its Charter)
New York
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(State or Other Jurisdiction of Incorporation)
1-3525 13-4922640
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(Commission File Number) (IRS Employer Identification No.)
1 Riverside Plaza, Columbus, OH 43215
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(Address of Principal Executive Offices) (Zip Code)
614-716-1000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure
On January 26, 2005, American Electric Power Company, Inc. (AEP) announced
settlement agreements with the Commodity Futures Trading Commission, the U.S.
Department of Justice and the Federal Energy Regulatory Commission regarding
investigations of gas price reporting and gas storage activities. The full text
of the press release is attached hereto as Exhibit 99.1.
On January 26, 2005, AEP announced the sale of its controlling interest in
Houston Pipe Line Co. (HPL) to Energy Transfer Partners, LP. The full text of
the press release is attached hereto as Exhibit 99.2.
On January 27, 2005, AEP announced a voluntary cash contribution and plans
to make quarterly contributions to its pension fund to help secure future plan
benefits and reduce its future pension-related expenses. The full text of the
press release is attached hereto as Exhibit 99.3.
On January 27, 2005, AEP announced that The Public Utilities Commission of
Ohio (PUCO) approved the rate stabilization plans for Ohio Power Company and
Columbus Southern Power Company. The full text of the press release is attached
hereto as Exhibit 99.4.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.1 Press Release dated January 26, 2005 regarding settlement
of regulatory investigations
Exhibit 99.2 Press Release dated January 26, 2005 regarding sale of
controlling interests in Houston Pipe Line Co.
Exhibit 99.3 Press Release dated January 27, 2005 regarding
pension fund contributions
Exhibit 99.4 Press Release dated January 27, 2005 regarding rate
stabilization plans for Ohio Power Company and Columbus
Southern Power Company
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
By: /s/ Thomas G. Berkemeyer
Name: Thomas G. Berkemeyer
Title: Assistant Secretary
February 1, 2005
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated January 26, 2005 regarding settlement of
regulatory investigations
99.2 Press Release dated January 26, 2005 regarding sale of
controlling interests in Houston Pipe Line Co.
99.3 Press Release dated January 27, 2005 regarding pension fund
contributions
99.4 Press Release dated January 27, 2005 regarding rate
stabilization plans for Ohio Power Company and Columbus
Southern Power Company
Exhibit 99.1
MEDIA CONTACT: ANALYSTS CONTACT:
Pat D. Hemlepp Julie Sloat
Director, Corporate Media Relations Vice President, Investor Relations
614/716-1620 614/716-2885
FOR IMMEDIATE RELEASE
AEP REACHES SETTLEMENTS WITH CFTC, DEPARTMENT OF JUSTICE, FERC
Company will pay total of $81 million; agencies will end investigations, dismiss
litigation
COLUMBUS, Ohio, Jan. 26, 2005 - American Electric Power (NYSE: AEP) has reached
settlement agreements with the Commodity Futures Trading Commission (CFTC), the
U.S. Department of Justice and the Federal Energy Regulatory Commission (FERC)
regarding investigations of gas price reporting and gas storage activities.
Under terms of the settlement, AEP agrees to pay $30 million to the CFTC
and $30 million to the Department of Justice to settle natural gas price
reporting issues, and $21 million to the FERC to resolve allegations related to
gas storage activities. With the settlements, all three agencies will end
investigations and the CFTC will dismiss litigation filed Sept. 30, 2003.
"We need to put these issues and the uncertainty they created behind us,"
said Michael G. Morris, AEP's chairman, president and chief executive officer.
"AEP is a very different company than it was in 2002 when we discovered
and reported these improper activities by five employees," Morris said. "We have
significantly reduced our participation in energy commodity trading and changed
our policies and controls on the reporting of natural gas trade information to
industry publications. We now view energy trading as a component of our
traditional utility business."
After learning in September 2002 of an unrelated company discovering false
reporting of gas price information for use in indexes prepared by trade
publications, AEP immediately undertook its own internal investigation of gas
price reporting practices. AEP determined that five employees had submitted
inaccurate gas trading information to trade publications. The company
immediately terminated the five employees, self-reported the incident to the
FERC and the CFTC, publicly announced the employee terminations and put into
place procedures to prevent a recurrence of the inaccurate submission of gas
trading information.
The settlement with the FERC resolves allegations of undue preferences
provided to an AEP affiliate by two AEP affiliates engaged in gas storage and
transportation services and ends the FERC's investigations of all AEP companies.
AEP sold the two gas storage and transportation affiliates in 2004.
AEP recorded a $45-million provision in fourth-quarter 2003 in
anticipation of a potential settlement. The remaining $36 million was recorded
in fourth-quarter 2004 to reflect the final settlement, with $21 million
recorded to discontinued operations. The company maintains its previously
announced 2004 ongoing earnings guidance range of $2.20 to $2.40 per share.
American Electric Power owns more than 36,000 megawatts of generating
capacity in the United States and is the nation's largest electricity generator.
AEP is also one of the largest electric utilities in the United States, with
more than 5 million customers linked to AEP's 11-state electricity transmission
and distribution grid. The company is based in Columbus, Ohio.
---
This report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating
capacity and the performance of AEP's generating plants; the ability to recover
regulatory assets and stranded costs in connection with deregulation; the
ability to recover increases in fuel and other energy costs through regulated or
competitive electric rates; new legislation, litigation and government
regulation including requirements for reduced emissions of sulfur, nitrogen,
mercury, carbon and other substances; resolution of pending and future rate
cases, negotiations and other regulatory decisions (including rate or other
recovery for new investments and environmental compliance); oversight and/or
investigation of the energy sector or its participants; resolution of litigation
(including pending Clean Air Act enforcement actions and disputes arising from
the bankruptcy of Enron Corp.); AEP's ability to constrain its operation and
maintenance costs; the success of disposing of investments that no longer match
AEP's business model; AEP's ability to sell assets at acceptable prices and on
other acceptable terms; international and country-specific developments
affecting foreign investments including the disposition of any foreign
investments; the economic climate and growth in AEP's service territory and
changes in market demand and demographic patterns; inflationary 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 and number of participants in the energy trading market;
changes in the financial markets, particularly those affecting the availability
of capital and AEP's ability to refinance existing debt at attractive rates;
actions of rating agencies, including changes in the ratings of debt and
preferred stock; volatility and changes in markets for electricity, natural gas,
and other energy-related commodities; changes in utility regulation, including
membership and integration in a regional transmission structure; 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 and other
risks and unforeseen events, including wars, the effects of terrorism (including
increased security costs), embargoes and other catastrophic events.
Exhibit 99.2
MEDIA CONTACT: ANALYSTS CONTACT:
Pat Hemlepp Julie Sloat
Director, Corporate Media Relations Vice President, Investor Relations
614/716-1620 614/716-2885
FOR IMMEDIATE RELEASE
AEP CONTRIBUTES $200 MILLION TO PENSION FUND,
ANNOUNCES ACTIONS TO FULLY FUND PLAN BY END OF 2005
COLUMBUS, Ohio, Jan. 27, 2005 - American Electric Power (NYSE: AEP) has made a
voluntary $200-million cash contribution to its pension fund to help secure
future plan benefits and reduce the company's future pension-related expenses.
The company also announced plans to make quarterly contributions of
approximately $100 million per quarter in 2005 with the goal of fully funding
its pension liabilities by the end of 2005.
"Poor stock market performance and low interest rates have brought many
pension funds in the United States to an under-funded status. Although we are
not required to make these contributions to our fund, we determined that our
current cash position makes this the right time to invest in the future
financial well being of our employees, retirees and their dependents," said
Michael G. Morris, AEP's chairman, president and chief executive officer.
"Funding the plan also will improve our balance sheet and enhance our future
earnings potential by lowering pension costs and reducing our tax liabilities."
AEP funded the $200-million contribution using cash received through
divestiture of non-core assets earlier in 2004. This contribution is in addition
to approximately $31 million in pension plan contributions made in 2004,
bringing the total 2004 pension contribution to $231 million and significantly
exceeding the company's minimum contribution requirements for 2004.
The AEP retirement trust currently holds more than $3.5 billion in assets,
covering pension obligations for more than 40,000 individuals.
The $200 million contribution made Dec. 29 and included in AEP's 2004
earnings allows the company to reduce the Accumulated Other Comprehensive Income
(AOCI) equity charges associated with the under-funded status of the plan by
$100 million after-tax. Additional planned payments of approximately $100
million per quarter in 2005 will fully fund the AEP pension plan by the end of
that year and eliminate an additional $327 million after-tax of remaining AOCI
equity charges.
American Electric Power owns more than 36,000 megawatts of generating
capacity in the United States and is the nation's largest electricity generator.
AEP is also one of the largest electric utilities in the United States, with
more than 5 million customers linked to AEP's 11-state electricity transmission
and distribution grid. The company is based in Columbus, Ohio.
---
This report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating
capacity and the performance of AEP's generating plants; the ability to recover
regulatory assets and stranded costs in connection with deregulation; the
ability to recover increases in fuel and other energy costs through regulated or
competitive electric rates; new legislation, litigation and government
regulation including requirements for reduced emissions of sulfur, nitrogen,
mercury, carbon and other substances; resolution of pending and future rate
cases, negotiations and other regulatory decisions (including rate or other
recovery for new investments and environmental compliance); oversight and/or
investigation of the energy sector or its participants; resolution of litigation
(including pending Clean Air Act enforcement actions and disputes arising from
the bankruptcy of Enron Corp.); AEP's ability to constrain its operation and
maintenance costs; the success of disposing of investments that no longer match
AEP's business model; AEP's ability to sell assets at acceptable prices and on
other acceptable terms; international and country-specific developments
affecting foreign investments including the disposition of any foreign
investments; the economic climate and growth in AEP's service territory and
changes in market demand and demographic patterns; inflationary 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 and number of participants in the energy trading market;
changes in the financial markets, particularly those affecting the availability
of capital and AEP's ability to refinance existing debt at attractive rates;
actions of rating agencies, including changes in the ratings of debt and
preferred stock; volatility and changes in markets for electricity, natural gas,
and other energy-related commodities; changes in utility regulation, including
membership and integration in a regional transmission structure; 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 and other
risks and unforeseen events, including wars, the effects of terrorism (including
increased security costs), embargoes and other catastrophic events.
Exhibit 99.3
MEDIA CONTACT: ANALYSTS CONTACT:
Melissa McHenry Julie Sloat
Manager, Corporate Media Relations Vice President, Investor Relations
614/716-1120 614/716-2885
FOR IMMEDIATE RELEASE
AEP COMPLETES SALE OF CONTROLLING INTEREST IN HOUSTON PIPE LINE TO
ENERGY TRANSFER PARTNERS
COLUMBUS, Ohio, Jan. 26, 2005 - American Electric Power (NYSE: AEP) today closed
the sale of controlling interest in Houston Pipe Line Co. to Energy Transfer
Partners, LP (ETP). According to the terms of the transaction, ETP purchased 98
percent of the partnership interests in Houston Pipeline Co. (HPL) for $825
million and also purchased 30 billion cubic feet (Bcf) of working gas and
working capital, for a total consideration of approximately $1 billion. AEP will
retain a 2 percent ownership interest in the HPL partnership interests and will
provide certain transitional administrative services.
The transaction includes an agreement to indemnify the purchaser for
damages, if any, arising from ongoing litigation with Bank of America relating
to HPL's right to use certain natural gas contained in the Bammel storage
reservoir. The determination of the amount of the gain on the sale and the
recognition of the gain is dependent on the ultimate resolution of the
litigation.
HPL includes approximately 4,200 miles of natural gas intrastate and
gathering pipelines in Texas with capacity of approximately 2.4 Bcf per day, the
7,000-acre underground Bammel storage reservoir near Houston and related
transportation assets.
The sale of AEP's controlling interest in HPL essentially completes AEP's
divestiture of natural gas assets in the United States.
"We have honed our strategy to focus on our core domestic electric utility
business," said Michael G. Morris, AEP chairman, president and chief executive
officer. "Although we had not made a definitive decision to market the HPL
assets, once we resolved the Bammel storage ownership issue with Enron we found
strong market interest. We determined that moving ahead with the sale of
controlling interest in HPL was our best option."
AEP acquired HPL, including a 30-year, pre-paid lease arrangement to use
and operate the Bammel storage reservoir, June 1, 2001, from Enron for
approximately $727 million. AEP subsequently purchased the residual rights in
and to the Bammel storage reservoir, related pipeline and compressor assets and
a quantity of natural gas stored there from the Enron bankruptcy estate for $115
million Nov. 5, 2004. AEP recorded a $300 million pre-tax impairment to the HPL
assets in fourth-quarter 2003. This impairment reduced the value of the HPL
assets on AEP's books to approximately $430 million.
Lehman Brothers advised AEP on the sale of controlling interest in HPL.
American Electric Power owns more than 36,000 megawatts of generating
capacity in the United States and is the nation's largest electricity generator.
AEP is also one of the largest electric utilities in the United States, with
more than 5 million customers linked to AEP's 11-state electricity transmission
and distribution grid. The company is based in Columbus, Ohio.
---
This report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating
capacity and the performance of AEP's generating plants; the ability to recover
regulatory assets and stranded costs in connection with deregulation; the
ability to recover increases in fuel and other energy costs through regulated or
competitive electric rates; new legislation, litigation and government
regulation including requirements for reduced emissions of sulfur, nitrogen,
mercury, carbon and other substances; resolution of pending and future rate
cases, negotiations and other regulatory decisions (including rate or other
recovery for new investments and environmental compliance); oversight and/or
investigation of the energy sector or its participants; resolution of litigation
(including pending Clean Air Act enforcement actions and disputes arising from
the bankruptcy of Enron Corp.); AEP's ability to constrain its operation and
maintenance costs; the success of disposing of investments that no longer match
AEP's business model; AEP's ability to sell assets at acceptable prices and on
other acceptable terms; international and country-specific developments
affecting foreign investments including the disposition of any foreign
investments; the economic climate and growth in AEP's service territory and
changes in market demand and demographic patterns; inflationary 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 and number of participants in the energy trading market;
changes in the financial markets, particularly those affecting the availability
of capital and AEP's ability to refinance existing debt at attractive rates;
actions of rating agencies, including changes in the ratings of debt and
preferred stock; volatility and changes in markets for electricity, natural gas,
and other energy-related commodities; changes in utility regulation, including
membership and integration in a regional transmission structure; 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 and other
risks and unforeseen events, including wars, the effects of terrorism (including
increased security costs), embargoes and other catastrophic events.
Exhibit 99.4
ANALYSTS CONTACT:
Melissa McHenry Julie Sloat
Manager, Corporate Media Relations Vice President, Investor Relations
614/716-1120 614/716-2885
Terri Flora
General manager, Corporate Communications
AEP Ohio
614/883-6675
FOR IMMEDIATE RELEASE
AEP ENCOURAGED BY PUCO APPROVAL OF OHIO RATE STABILIZATION PLAN;
PLAN WILL KEEP AEP'S RATES AMONG THE LOWEST IN OHIO
COLUMBUS, Ohio, Jan. 27, 2005 - American Electric Power (NYSE: AEP) is
encouraged by the Public Utilities Commission of Ohio (PUCO) approval of the
company's rate stabilization plan for its Ohio Power and Columbus Southern Power
operating companies.
The rate plan, filed with the PUCO in February 2004, was proposed to
address rates following the end of Ohio's electric customer choice market
development period which ends Dec. 31, 2005.
"Although we are still reviewing the fine print, the PUCO appears to have
balanced their objectives of providing stability and reliability for our Ohio
electricity customers with providing a workable rate structure that will benefit
our customers, shareholders and the environment," said Michael G. Morris, AEP
chairman, president and chief executive officer.
"With the approved gradual rate increases, our customers will be protected
from market rate shock and volatility and will maintain some of the lowest
electricity rates in the state. Our shareholders will receive a fair return on
their investment in our operations over the next three years. And, we will be
able to move forward with significant investments in environmental retrofits at
our generating plants to give Ohioans cleaner air while maintaining their access
to the low-cost, coal-fired generation that helps fuel Ohio's economy," Morris
said.
Under the plan approved yesterday by the PUCO, generation rates for
customers will increase each year in 2006, 2007 and 2008, by 3 percent per year
for Columbus Southern Power customers and by 7 percent per year for Ohio Power
customers. As stated by the PUCO, residential ratepayers will see an average
monthly increase to the generation rate of less than $2 for Columbus Southern
Power customers and less than $3 for Ohio Power customers.
"We understand that no one is ever happy with price increases, but this
plan provides customers with a clear understanding of what their rates will be
for the next three years. We believe these rates will continue to be
competitive, but customers also will still have the option to shop and switch to
a competitive supplier if they choose," said Kevin Walker, president and chief
operating officer, AEP Ohio.
According to the plan, AEP will be permitted to seek additional generation
increases, after a Commission proceeding, for increases in environmental costs,
security costs, taxes, new generation-related regulatory requirements or
customer-load switches that impact the company's ability to recover anticipated
generation revenues. These additional increases would be capped at an average of
no more than 4 percent per year for each company.
The PUCO did not authorize AEP's proposal to defer regional transmission
organization administrative charges and construction-work-in-progress and
in-plant carrying charges. The PUCO did authorize Provider of Last Resort (POLR)
charges recognizing AEP's POLR responsibilities during the rate stabilization
period.
The current five percent residential discount on generation rates in both
the Columbus Southern Power and Ohio Power territories will end Dec. 31, 2005
pursuant to Senate Bill 3. AEP's distribution rates in effect Dec. 31, 2005,
will remain frozen through 2008. AEP will have the opportunity to adjust those
charges, after a Commission proceeding, to reflect increases in environmental
costs, security costs, taxes or major storm damage restoration costs.
The PUCO directed AEP to allot $14 million over the three-year period for
assistance for low-income customers and economic development. AEP Ohio will work
with the PUCO staff and Ohio Department of Development to determine how to
allocate those funds.
Base rates for electricity have not increased since 1994 for Columbus
Southern Power customers and since 1995 for Ohio Power customers. Together, the
companies serve approximately 1.4 million customers in Ohio.
American Electric Power owns more than 36,000 megawatts of generating
capacity in the United States and is the nation's largest electricity generator.
AEP is also one of the largest electric utilities in the United States, with
more than 5 million customers linked to AEP's 11-state electricity transmission
and distribution grid. The company is based in Columbus, Ohio.
---
This report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating
capacity and the performance of AEP's generating plants; the ability to recover
regulatory assets and stranded costs in connection with deregulation; the
ability to recover increases in fuel and other energy costs through regulated or
competitive electric rates; new legislation, litigation and government
regulation including requirements for reduced emissions of sulfur, nitrogen,
mercury, carbon and other substances; resolution of pending and future rate
cases, negotiations and other regulatory decisions (including rate or other
recovery for new investments and environmental compliance); oversight and/or
investigation of the energy sector or its participants; resolution of litigation
(including pending Clean Air Act enforcement actions and disputes arising from
the bankruptcy of Enron Corp.); AEP's ability to constrain its operation and
maintenance costs; the success of disposing of investments that no longer match
AEP's business model; AEP's ability to sell assets at acceptable prices and on
other acceptable terms; international and country-specific developments
affecting foreign investments including the disposition of any foreign
investments; the economic climate and growth in AEP's service territory and
changes in market demand and demographic patterns; inflationary 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 and number of participants in the energy trading market;
changes in the financial markets, particularly those affecting the availability
of capital and AEP's ability to refinance existing debt at attractive rates;
actions of rating agencies, including changes in the ratings of debt and
preferred stock; volatility and changes in markets for electricity, natural gas,
and other energy-related commodities; changes in utility regulation, including
membership and integration in a regional transmission structure; 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 and other
risks and unforeseen events, including wars, the effects of terrorism (including
increased security costs), embargoes and other catastrophic events.