The comments that AEP CEO Nick Akins made in his most recent investor conference call have a very important lesson for anyone fighting for renewable energy and distributed generation.
Investment is a zero sum game. Every dollar spent on a power company’s really bad idea is a dollar that can’t be spent making our electrical system more reliable by moving generation closer to electrical load using clean renewable power.
So it is not enough to advocate for renewable power. And it is not about advocating around the fringes of power company or regulatory policy. We need to go right to the heart of the most important issues.
I quoted this section of CEO Akins’ investor call in a past post, but it bears repeating:
Unlike previous presentations where we were dealing with long-term-type projects, it was very difficult to project out the earnings potential of transmission. Everyone wondered, “Well, okay, when, it’s great to talk about the project, but when are the earnings going to happen?” And our transmission organization has been refocused on developing those short-term projects and real projects through the Transco development and specific joint ventures associated with smaller, less-lead-time, more — less-risky projects, going forward.
Let’s be clear. AEP did not decide to “refocus” away from PATH so that it was no longer a “real project” for them. We forced them to do it by fighting and killing PATH. AEP is moving on to other projects, many of them just as bad as PATH, but the billions of dollars that would have flowed from rate payers to AEP and FirstEnergy for decades (although some still are) are now available for us to invest more usefully.
This is not a one time thing. As we know, power company managers get paid big bucks, most coming directly from rate payers, to dream up really stupid projects that are obsolete before they are even approved. So the “refocusing” must go on if we want things to change for the better. That is one big reason why The Power Line has not gone away.
In all the happy talk that corporate Big Chiefs spout to on their investor conference calls, you will never hear them offer any honest assessments or self-criticism. Mr. Akins never thanked us for helping him “refocus” AEP’s transmission policies. There is no doubt in my mind that he should have.