...Rating Derivation versus Peers Peer Comparison AEP compares favorably with other large multi-state utility holding companies given the company's improved risk profile post merchant generation exit, its stable consolidated credit metrics and limited parent level debt. AEP's 2016 adjusted leverage of 4.0x is stronger than that of Duke Energy Corporation (DUK; BBB+/Negative), Berkshire Hathaway Energy (BHE; BBB+/Stable), and Southern Company (SO; A¡/Rating Watch Negative). Only Exelon Corporate (EXC; BBB/Stable) has lower leverage. However, EXC's regulated subsidiaries are expected to account for 65%¡70% of the company's consolidated earnings, whereas AEP will derive 97% of its earnings from regulated assets, post merchant exit. AEP is unique among the large multi-state entities for its limited amount of parent-level debt. Fitch estimates parent-level debt accounts for only 9% of AEPs total debt load, against 20%¡30% at its peers. Parent/Subsidiary Linkage AEP's regulated subsidiaries have...
