American Electric Power (AEP) takes its slice of the US power pie out of Middle America. The holding company is one of the largest power generators and distributors in the US. AEP owns the nation's largest electricity transmission system, a network of almost 39,000 miles. It also has 216,000 miles of distribution lines. Its electric utilities more than 5 million customers in 11 states and have about 38,000 MW of largely coal-fired generating capacity. AEP is a top wholesale energy company; it markets electricity in the US. Other operations include coal and bulk commodities barge transportation services.
AEP's transmission system serves 10% of the electricity demand in the Eastern Interconnection (which covers 38 eastern and central US states and eastern Canada), and 11% of the power demand in ERCOT (which covers most of Texas). Seeking to run cleaner, more efficient power plants, AEP has earmarked $1.2 billion through 2020 for further upgrades of its coal-fired generating plants.
Although only a small percentage of its power generation comes from renewables (such as wind and hydro), the company is investing heavily in wind power to ramp up its clean energy sources in response to carbon reduction legislation in the states it serves. By the end of 2010, AEP was operating 310 MW of wind power facilities and had about 180 MW of long-term purchase power agreements for wind power.
The company reported a jump in revenues and net income in 2010, primarily driven by a recovering economy spurring more industrial demand, and by a cooler-than-usual winter and warmer-the-usual summer driving up retail demand, supplemented by increased rates.
AEP has scaled back its unregulated operations in order to focus on its more fiscally reliable regulated businesses. The firm has also sold its independent power production operations and its European trading operations, but it continues to participate in wholesale energy transactions in regions of the US where it owns assets.
Growing its retail business in the US, in 2012 the acquired Chicago-based Blue Star Energy and its independent retail electric supplier BlueStar Energy Solutions. The company has about 23,000 customer accounts. The deal also gives AEP the opportunity to hedge the output of its soon-to-be unregulated Ohio power generation.
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