American Electric Power Co., the largest U.S. coal user, named Nicholas K. Akins its next chief executive officer, replacing Michael G. Morris.
Akins, 51, will take over when Morris retires on Nov. 11, his 65th birthday, the Columbus, Ohio-based company said in a statement today. Akins became president of American Electric on Jan. 1 and has spent his entire career at the company and Central and South West Corp., which it bought in 2000.
Akins assumes control as American Electric faces the challenge of getting its coal-fired power plants ready to comply with new federal environmental regulations and shifting Ohio assets to compete in its home state, Paul Patterson, an analyst with New York-based Glenrock Associates LLC, said in a telephone interview.
American Electric said on June 9 that complying with U.S. Environmental Protection Agency proposals would cost as much as $8 billion and force it to shut about 25 percent of its coal- fueled generating capacity. The company in September proposed merging its two Ohio utilities into a single regulated company, while splitting its power plants into a separate unregulated business.
Restructuring the Ohio businesses, which account for about 40 percent of American Electric’s revenue, will likely make it difficult for the company to recapture the cost of fitting plants with scrubbers and other pollution controls, Patterson said.
“Even if they’re able to pass those costs on, it’s not as simple as it sounds,” Patterson said. “The risk is you don’t want rates going up too much, particularly in a politically and economically sensitive time. It does not help to have a large number of environment-related requirements foisted on your ratepayers.”
American Electric has more than 5 million customers in 11 states and owns the nation’s largest transmission system, according to its website. It has almost 38,000 megawatts of generating capacity, enough to power 30 million homes, based on a U.S. Energy Department estimate.
Morris, who will continue as executive chairman of the company until the end of the year, leaves the CEO post after eight years. Shareholders who bought when he took over and reinvested company dividends in the stock have seen total returns of 79 percent, according to Bloomberg data.
Akins, who plays drums in American Electric’s corporate rock band, holds bachelor and master degrees in electrical engineering from Louisiana Tech University in Ruston. He joined the company in 1982 and his previous posts include running its power-plant business and a utility that serves customers in Louisiana, Arkansas and Texas.
Akins is warm, funny and “tremendously thoughtful,” said Tom Kuhn, president of the Edison Electric Institute, a Washington-based industry group whose members, including American Electric, generate and distribute about three-quarters of the nation’s electricity. “When he speaks, people listen.”
American Electric declined 1 percent to $38.65 at the close in New York. The shares have climbed 7.4 percent this year.
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