Bulletin: American Electric Power Ratings Unchanged After Regulators Settle With Sub On Power Agreement

NEW YORK (Standard&Poor's) Dec. 15, 2015--Standard&Poor's Ratings Services said today that the announcement by American Electric Power Co. Inc. (AEP; BBB/Positive/A-2) that its subsidiary Ohio Power Co. has reached an agreement with the staff of the Public Utility Commission of Ohio and various interveners on a power purchase agreement (PPA) for about 3,100 megawatts of capacity does not immediately affect the ratings on the company. We view the PPA as favorable for credit quality because it can reduce cash flow volatility, provide revenue certainty, and reduce the company's merchant generation exposure for the next eight years while providing opportunities to invest and grow the utility's rate base. The Ohio commission is likely to rule on the

...NEW YORK (Standard & Poor's) Dec. 15, 2015--Standard & Poor's Ratings Services said today that the announcement by American Electric Power Co. Inc. (AEP; ###/Positive/A-2) that its subsidiary Ohio Power Co. has reached an agreement with the staff of the Public Utility Commission of Ohio and various interveners on a power purchase agreement (PPA) for about 3,100 megawatts of capacity does not immediately affect the ratings on the company. We view the PPA as favorable for credit quality because it can reduce cash flow volatility, provide revenue certainty, and reduce the company's merchant generation exposure for the next eight years while providing opportunities to invest and grow the utility's rate base. The Ohio commission is likely to rule on the settlement by March 2016 and we expect to incorporate the transaction's impact on AEP's credit profile once the agreement appears highly likely to be approved. We have determined, based solely on the developments described herein, that no rating...

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