American Electric Power Q4 2005 Earnings Conference Call Transcript (AEP)

American Electric Power (AEP)
Q4 2005 Earnings Conference Call
February 1st 2006, 11:00 AM.

Executives:

Michael G. Morris, Chairman, President and CEO
Susan Tomasky, Chief Financial Officer.

Analysts:

Elizabeth Parrella, Merrill Lynch
Paul Ridzon, Keybanc
Ashar Khan, SAC Capital
Craig Shere, Calyon Securities
David Frank, Piqua Capital
Greg Gordon, Citigroup
Gordon Howald, Natexis
Daniel Franks, Dahlman Rose
Michael A’Peters, Golden Sachs
Thomas Neil, Citadel Investments

Presentation

Operator

Julie Sloat, Vice President, Investor Relations

Thanks John, good morning and thank you for joining us today, to discuss AEP 2005 Fourth Quarter Earnings and earnings for the full year 2005. I expect that you have already seen the press releases issued earlier today. It is also available on our web page at aep.com. In addition to the financial schedules included in the press release package the webcast (indiscernible) visuals of charts and graphics referred to by AEP management during the call. An investor information packet will also be available at aep.com today at approximately 1PM Eastern that will include a consolidated balance sheet and statement of cash flows as well as full income statements for our utility operations, gas operations, investments and parent company. The earnings release and other matters that maybe discussed on the call today contain forward-looking statements and estimates that are subjects to various risks and uncertainties.

Please refer to the SEC filings including the most recent annual report on Form 10-K and quarterly reports on Form 10-Q for discussion of factors that may cause results to differ from management projections, forecasts, estimates and expectations. Also on the call we will discuss the measures about company performance that is on going earnings versus reported earnings, that differ from those recognized by Generally Accepted Accounting Principal or GAAP. You can find a reconciliation of these non-GAAP measures on our Investor Relations website at aep.com. I will now turn the proceedings over to Mike Morris, Chairman President and CEO of the company to lead an opening presentation and then we will have time for questions.

Michael Morris, Chairman, President Chief Executive Officer

Julie thanks a lot and as usual I will join in welcoming you all here, I know this is again a busy day for you and we are encouraged to have all of you with us. I obviously will share the speaking time with Susan, our Chief Financial Officer and will try to give you what we believe is a fair and full review not only of our 2005 performance, but some of the issues that are facing us here in 2006 as we go forward. I don’t think that there is any way to measure 2005 at American Electric Power other than saying that it was a great year. The ongoing earnings performance was well above what we originally thought that would be accomplishable in 2005 and I really need to thank all of the team here at home on how much was accomplished.

The operating companies all performing as we had hope that they would relatively comfortable rate treatment in most all jurisdictions and we will speak to the Texas issue in a moment. And overall some very solid year-over-year growth in our energy center not only for what we consider be systems sales or issues sold to our retail customers but in additional increase in the volume of energy that were able to put into the off-systems sales market as well.

A couple of other very important highlights for us and we thank ultimately all of those who own and work for this company, the fully funding of the pension at the end of calendar year 2005 as well as the dividend increase for our shareholders put in place by the Board of Directors in the fourth quarter.

We obviously were very active in a small way in the asset acquisition strategy, as you know we added a couple of very important gas fired capacity machines to our Eastern portfolio with a Waterford and Ceredo purchases and of course as I constantly please most people we were very active in the M&A activity purchasing through negotiations the 59,000 customers of Mon Power here in Ohio. Not quite as big headline wise as some of my friends but nonetheless we were able to negotiate an undertaking with that activity approved by the Ohio commission.

We continue to feel comfortable about 2006, our range for guidance remains the $2.50 to $2.70 cents a share, obviously January presents us and all utilities with quite a challenge already early in the year with incredibly warm environment that was all been experiencing. Important for us in 2006 as before and going forward will be the overall rate activity that has been teed up and filed in calendar year ‘05 and much of which will be in dealt with in ‘06. It would be anything short of honest if I didn’t say that were extremely disappointed in the Ecom discussions that had been held by the Texas commission in the TCC stranded cost “true-up