Activists to Keep Targeting ‘Schizophrenic’ Utilities, AEP Chief Says

(Bloomberg) -- NRG Energy Inc. FirstEnergy Corp. Sempra Energy. They’re all among the U.S. power companies targeted by activist investors in recent months.

And they probably won’t be the last, says Nick Akins, chief executive officer of electric utility giant American Electric Power Co.

“Oh I think you will” see activists continue to go after growth-hungry utilities that have expanded beyond the regulated electricity business in search of profits, Akins said. Investors see “the value proposition of being entirely focused on the regulated operations as opposed to, in some ways, being schizophrenic.”

For its part, AEP long ago got rid of its “unregulated” power plants -- the kind that sell their electricity directly into wholesale markets that can be volatile. The company’s now singularly focused on running a power distribution business that depends on regulated rates of return.

“Our investors are really focused on us running as an integrated, regulated utilty model,” he said. “For companies that still have operations that aren’t seen that way, you have to really reconcile, from the investor standpoint, what kind of company you’re going to be.”

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Margot Habiby

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