This quarter will be "definitive" for AEP Corp.'s titanic wind farm project in Texas and Oklahoma.
During the second-quarter earnings call, investors repeatedly pushed the Columbus-based energy giant for more detail on where things stand with the $4.5 billion Wind Catcher Energy Connection, which is pending regulatory approvals from the two states.
AEP recently delayed the timeline for the project to give regulators a few more weeks, but the company is growing impatient.
If completed, the 2,000-megawatt, 800-turbine wind farm would be the largest in the United States, serving people in four states. Louisiana and Arkansas already have approved the project, but regulators in Texas and Oklahoma asked for more time to review it.
In the meantime, some of the early construction work has moved ahead at the site.
AEP's original schedule called for the need to order the longest-lead-time equipment by Aug. 6. Through some negotiations, it has been able to delay those orders until the end of August, but the company can't afford to delay much longer, AEP CFO Brian Tierney told investors. It needs to make its timetables in order for developer Invenergy LLC to complete the wind farm by 2020.
"We cannot afford to continue to allow this thing to languish. Construction has started. The company is incurring expenses," Tierney said in the earnings call. "In deference to commissions, ... we're saying the end of August, and that's where we're at."
Part of the delay comes from the legal navigating that forces the company to go to all four states for major adjustments to its plan. Cost recovery agreements are among the divisions, reports The Oklahoman. But Tierney also pinned delays on election season.
"There's just a lot of confusion out there and sometimes you focus so much on the margins of what could happen to this versus looking at the amazing benefits across the board that are out there – you get hung up in that kind of dialogue," Tierney said. "When you get past that and to the fact, we'll be in much better shape."
Regardless, CEO Nick Akins said the company would retain its projections to grow by 5 to 7 percent over the next few years. AEP reported a boost in earnings to $528 million, compared to $375 million this time last year. Revenue is up to $4 billion from $3.6 billion last year.
Akins attributed the higher energy use to warmer-than-normal weather and the economy in AEP's 11-state service territory, which has grown faster than the U.S. overall and led to lower unemployment. Higher energy costs play a role, too.
It's important because the company's stock has been under pressure while the wind farm uncertainty continues, but Akins said AEP would continue to look at other kinds of investments, noting green energy projects in Ohio, for instance.
"You won't see another Wind Catcher-like project," he said.
Company stock (NYSE: AEP), seesawing for several months amid larger market volatility, saw a slight boost and was trading around $69.50 a share on Wall Street by mid-day.