American Electric Power Co. Inc.

The stable outlook on AEP and its subsidiaries reflects the company's improving business risk profile that consists almost entirely of solid regulated utility operations. We expect AEP to generate FFO to debt of 14%-15% through 2020 after factoring in the impact of U.S. tax reform. We could lower the ratings on AEP and its subsidiaries if the company's financial performance weakens such that FFO to debt is consistently below 14%, or if its business risk increases as a result of ineffective management of regulatory risk or the pursuit of risky unregulated investments. While not likely, we could raise the ratings on AEP and its subsidiaries if the company's financial performance improves, with FFO to debt consistently above 20% while business

...Purchase of wind energy assets will support the long-term strategy of diversifying its generation portfolio.This is in line with American Electric Power Co. Inc.'s (AEP) previously announced strategy, and we expect the company to fund the transaction in a credit-supportive manner. This acquisition will help AEP lower its overall carbon dioxide emissions and the proportion of coal-based generation. Large multistate operations that have constructive regulatory frameworks bolster overall credit quality.AEP is one of the largest electric utilities in the U.S., delivering electricity to about 5.4 million customers across 11 states. This diversity helps mitigate the impact of adverse regulatory decisions or regional economic challenges. The jurisdictions generally have a constructive regulatory framework that provides for the timely recovery of approved capital expenditures, as well as pass-through fuel cost mechanisms and recovery of various operating expenses. Federal Energy Regulatory Commission...

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