The state of Ohio’s decision to promote electric market deregulation was the impetus for AEP’s recently completed corporate separation process, which required approval from the Federal Energy Regulatory Commission (FERC). Corporate separation is among the main drivers of change in our business and, while it will provide us with significant new opportunities, it carries significant risks as well. At the same time, the vast majority of AEP’s operations and earnings remain tied to the regulated segment of our business.
Ohio Power Co. completed the separation of its generating assets from its distribution and transmission operations on Dec. 31, 2013. A new competitive affiliate, AEP Generation Resources (AGR), now owns and/or controls more than 11,000 MW in the competitive, or merchant, generation market. Following anticipated unit retirements through 2015, it is expected that AGR will own and/or control approximately 8,700 MW of generation.
There are risks associated with participating in energy markets, and AEP Generation and Marketing – the umbrella business segment for most of our competitive businesses – has experienced commercial staff to manage these risks.
As part of corporate separation, Ohio Power’s two-thirds ownership of 1,300-MW Unit 3 of the John Amos Plant (867 MW) in West Virginia was transferred to Appalachian Power Company. A 50 percent interest (780 MW) in the Mitchell Plant in West Virginia was transferred to Kentucky Power.
In March 2014, we filed with the West Virginia Public Service Commission to propose the acquisition of the remaining 50 percent of the Mitchell Plant by Wheeling Power be approved. There are additional filings we will be making at the FERC in connection with the proposed Mitchell Plant transfer to Wheeling Power.