American Electric Power To Face Challenges In Ohio, PT Lowered To $39

Jefferies & Company has published a research report on American Electric Power AEP and is believing that the company will face challenges with regulatory proceedings in Ohio that may inhibit the company's 4-6% growth in 2012-14. In the report, Jefferies writes "AEP filed an Electric Security Plan (ESP) with Ohio regulators to set generation rates (G Rate) beginning in January 2012. AEP-Ohio is hoping to redesign base generation rates for the three customer classes (residential, small commercial and industrial (C&I), and large industrial). The current ESP rates are set so that small C&I customers pay much larger rates (~$90/MWh) versus residential (~$66/MWh) and large industrial (~$51/MWh). Management estimates the financial impact (pre-tax) of the proposed ESP to be $54 million in 2012 and $106 million in 2013. The PUCO will issue a decision in 270 days." Jefferies maintains its Hold rating and has lowered the price target from $39.50 to $39. American Electric Power closed Friday at $35.86.