FRANKLYWNOW - AEP Directs $200 Million to Shore Up Pension Plan

AEP Directs $200 Million to Shore Up Pension Plan

Story by Linda Harris American Electric Power voluntarily pumped $200 million from the sale of non-core assets into its pension plan in 2004 and is planning to be fully funded by the end of this year. Columbus-based AEP is the nation's largest electricity generator, with more than 36,000 megawatts of generating capacity in the United States. Appalachian Power, which serves more than 920,000 customers, is part of the AEP system. It serves southern West Virginia. AEP also operates the Kammer-Mitchell Plant in Marshall County. "We ended 2004 in solid cash position, and management decided it was the right time to move the pension plan back to fully funded (status)," spokesman Pat Hemlepp said. AEP's pension contributions for the year totaled $231 million, "significantly exceeding the company's minimum contribution requirements for 2004." The board also is planning to contribute roughly $100 million per quarter this year to fully fund the company's defined benefit pension plan. Hemlepp said AEP's pension plan, as with other defined benefit plans in the United States, had become underfunded "primarily because of what happened in the stock market in recent years." He said funds were invested, but the returns during that period were far less than anticipated. So after AEP's non-core assets were sold -- they included a pair of power plants in England, the company's share in a Chinese power plant and some independent power plants in the United States, as well as a gas pipeline and a storage facility in Louisiana -- the board determined that it was in AEP's best interests to pay down its pension debt. "There are a lot of things we could do with the cash," Hemlepp said. "We could pay down additional debt, we could look for potential acquisitions, any number of things. But when we weighed all of our options, this was determined to be the best place to put it -- it reduces our expenses, it improves our balance sheet and it reduces our liabilities." The $200 million contribution, which was included in AEP's 2004 earnings report, allows the company to reduce certain equity charges associated with the under-funded status of the plan by $100 million after-tax. AEP's retirement trust currently holds more than $3.5 billion in assets and covers pension obligations for more than 40,000 individuals.

  • Automation Test*Breaking NewsMore>>

  • nk


    Wednesday, February 12 2020 6:45 AM EST2020-02-12 11:45:23 GMT
    Wednesday, February 12 2020 6:47 AM EST2020-02-12 11:47:29 GMT
  • nk test 3

    nk test 3

  • nk test

    nk test

Powered by Frankly
All content &copy; Copyright 2000 - 2021. All Rights Reserved. <BR>For more information on this site, please read our <a href="//" >Privacy Policies </a>, and <A HREF="//">Terms of Service</A>.