American Electric Power CEO Nick Akins says May will be “an important month” for its 1.5 GW North Central wind project, telling analysts during Wednesday’s Q1 earnings call that the company expects action soon by Louisiana and Texas regulators.
The North Central project involves the purchase of three wind facilities being developed by Invenergy in Oklahoma — 199 MW Sundance, 287 MW Maverick and 999 MW Traverse — to serve customers of AEP subsidiaries Southwestern Electric Power Company and Public Service Company of Oklahoma.
Arkansas approved a 155 MW portion of the project on Tuesday while the Federal Energy Regulatory Commission and Oklahoma regulators gave their approvals for the four-state project in Q1 of 2020, Akins noted according to a report by Utility Dive.
There hasn’t been any delay for the North Central wind project due to the novel coronavirus. But AEP expects the pandemic will lead 2020 residential sales to increase 3% over 2019 levels while commercial sales drop 5.6% and industrial sales fall 8%, leading to an overall 3.4% sales decline in 2020, CFO Brian Tierney said on Wednesday’s call.
AEP has received three of the five necessary approvals for its planned $2 billion investment — from Oklahoma, Arkansas and FERC — and expects decisions in May or June from regulators in Louisiana and Texas.
With existing approvals, “the project has what it needs to go forward at 846 MW of the [planned] 1,485 MW,” Akin said.
In early March, AEP filed a unanimous settlement among participating stakeholders in Louisiana covering 268 MW of the project. Akin said the company expects a decision by the state’s Public Service Commission “in the May or June time frame.”
In Texas, hearings concluded in February and AEP expects “a proposal for commission decision from the Texas [administrative law judges] in late May,” Akin added.
The potential approvals would come nearly two years after AEP canceled the 2 GW Wind Catcher project, following its rejection by Texas regulators.
Sierra Club voiced its support for the project and encouraged Louisiana and Texas regulators to provide the remaining approvals. The group previously approved of the Wind Catcher project.
“Sierra Club thinks the wind project should move forward so it can deliver clean, safe and affordable energy to AEP/SWEPCO customers,” Al Armendariz, the group’s deputy regional director told Utility Dive in an email.
“Oklahoma and Arkansas realize the benefits this project will provide for monthly bills and we hope regulators in Louisiana and Texas will follow their lead,” he said.
While the North Central project remains on track, AEP saw a drop in Q1 financials. Tierney reported that AEP’s Q1 operating earnings were $1.02 per share or $504 million, compared to $1.19 per share of $585 million in 2019, with the decrease driven by “warmer than normal winter weather and lower normalized retail load,” along with “lower generation sales due to lower energy prices and plant retirements,” among other factors.
To offset the expected decline in retail sales in 2020, AEP is reducing operations and maintenance expenses an additional $100 million in 2020, leaving the company “inside but in the lower half of the original operating earnings guidance range” of $4.25 to $4.45 per share, Tierney said.
While AEP still awaits decisions from Louisiana and Texas regulators on the North Central wind project, Akin said, “We already know we’re going forward with the project — that was the importance of Arkansas approval … The question is what size.”
AEP expects the Sundance facility to come online by the end of 2021 and the Maverick and Traverse facilities by the end of 2021.
Source: Utility Dive