AEP Unit Signs Wind Power Contract

American Electric Power Company Inc. announced that its unit AEP Ohio has entered into a long-term contract to purchase wind energy from Paulding Wind Farm II LLC, a subsidiary of Horizon Wind Energy, a Houston-based company.

As per the 20-year contract, AEP Ohio will purchase all the power produced from the 99 megawatt (MW) wind turbines facility, which is situated in Benton Township, Paulding County, Ohio. This wind farm is expected to come on-line from mid-summer 2011.

The AEP unit has been procuring renewable power under long-term power purchase agreements. The company has a contract with Fowler Ridge II Wind Farm based in Indiana for 100 MW of wind energy and with Wyandot Solar facility in Upper Sandusky, Ohio for 10.08MW of solar energy. The company also intends to buy solar energy from Turning Point Solar’s 49.9-MW facility to be built in southeastern Ohio.

American Electric Power Company presently owns and operates 310.5 MW of wind energy in Texas. The company also has agreements to purchase 1,572 MW from wind power facilities in Illinois, Indiana, West Virginia, Oklahoma and Texas.

Electric utilities are gradually trying to procure more power from renewable energy sources. One of the company’s close peers, Edison International (EIX – Analyst Report), has recently entered into multiple contracts to procure 259 MW of renewable power.

The company posted earnings per share, in the third quarter of 2010, of $1.15 versus 93 cents in the year-ago quarter. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are 42 cents per share, $3.04 per share and $3.16 per share, respectively.

American Electric Power currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating on the stock.

Based in Columbus, Ohio, American Electric Power is engaged in the generation, transmission, and distribution of electric power. The company generates electricity using coal and lignite, natural gas, nuclear, and hydroelectric energy.

Horizon Wind Energy LLC and its subsidiaries develop, construct, own and operate wind farms throughout North America. Based in Houston, Texas with over 20 offices and over 20 wind farms across the United States, Horizon has developed more than 3,600 megawatts and operates over 3,300 MW of wind farms.

Horizon is owned by EDP Renováveis S.A. (“EDPR”), a global leader in the renewable energy sector. EDPR has undergone exceptional development in recent years. Its installed capacity increased four-fold between 2005 and 2007, becoming the third largest wind energy company in the world. EDPR is listed on the Euronext Lisbon Stock Exchange.