http://www.morningstar.com/earnings/28688913-american-electric-power-co-inc-aep-q2-2011.aspx

American Electric Power Co Inc AEP
Q2 2011 Earnings Call Transcript

Transcript Call Date 07/29/2011

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the AEP Second Quarter 2011 Earnings Conference Call. For today’s conference, all the participant are in a listen-only mode. There will be an opportunity for your questions; instructions will be given at that time. And As a reminder, today's conference call is being recorded.

Now that being said I'll turn the conference over to Mr. Chuck Zebula, please go ahead, Sir.

Charles E. Zebula - SVP and Treasurer: Thank you, John. Good morning, and welcome to the second quarter 2011 earnings webcast of American Electric Power. Our earnings release, presentation slides and related financial information are available on our website, aep.com.

Today, we will be making forward-looking statements during the call. There are many factors that cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of these factors.

Joining me this morning are Mike Morris, our Chairman and Chief Executive Officer; and Brian Tierney, our Chief Financial Officer. We will take your questions following their remarks.

I will now turn the call over to Mike.

Michael G. Morris - Chairman and CEO: Thanks, Chuck and good morning everyone, thanks for being here with us for the second quarter activities at American Electric Power Company.

I move you to Page 3, the second quarter 2011 highlights and try to give some granularity about the small statements. First, we’re really quite satisfied with where we are through the second quarter of 2011. We’ve really got off to a bit of a slow start in kilowatt hour usage as you may remember early in the year, but things have improved in our entire footprint since then, clearly stronger than in the West than in the East but acceptable in both of those of areas.

Commercial sales in the East still are lagging from what were forecasted they might be, but we are really seeing very strong industrial sales throughout our Eastern footprint. In fact, if you remove the impact of Century Aluminum still being offline, we’re at about 95% plus of the overall industrial send outs that we saw in the precession time and that really stays in line with the things that we talked to you about during 2008 and 2009.

Clearly different from the recessions that we saw in our Eastern footprint back in the 80s and 90s where plants actually were shut and shut forever. What we suggested in the 2008-2009 timeline was that people were laying their plants up for the intent to come back and clearly that has come to be the case.

We are seeing additional shopping in Ohio beyond what we had forecast for our retailer customers, but as you might imagine, American Electric Power Retail operations have been successful not in AEP Ohio’s footprint, but in the other opportunities that present themselves here in Ohio and of course any gigawatt-hour sale that doesn’t go to the retail market does go to the off-system market and I think you know from our press release that off-systems sales results have been quite solid.

So when we look at the net-net of the effect of switching in Ohio, we have always been an advocate for that. We didn’t think that would affect us quite as deeply as it has, but we are reacting to it in a very constructive way, and net-net the impact is acceptable and we are satisfied with where we are with AEP Retail and some of the things that we see. So based on all that we look at throughout these first two quarters, we feel very comfortable with our $3 to $3.20 range and reaffirm our earnings strength forecast for calendar year 2011.

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