American Electric Power Co. Inc. said Thursday its first-quarter profit rose 3 percent as rate increases and ongoing cost-cutting efforts offset milder weather that had homes using less electricity than last winter.
AEP is one of the nation's biggest power companies, with more than 5 million customers from Michigan to Texas.
The company reported net income of $353 million, or 73 cents per share, for the three months that ended March 31. That compares with a profit of $344 million, or 72 cents share, for the same period a year ago.
AEP said ongoing earnings excluding a legal settlement and other unusual items amounted to 82 cents a share. Analysts surveyed by FactSet anticipated adjusted earnings of 79 cents per share.
Revenue rose to $3.7 billion from $3.6 billion during the first quarter of 2011. Analysts expected $3.7 billion in revenue.
Power usage by AEP's industrial customers grew by 7.1 percent in the first quarter, but residential usage declined 4.6 percent largely due to what AEP described as less favorable winter temperatures throughout much of its 11-state service area. Also, residential customers are trying to cut their electricity use in response to rising food, gasoline and other costs, said Michael Morris, chairman and CEO.
"Americans know how to conserve and they are always driven by their pocketbook, and that's what I think we're seeing," Morris told analysts on a conference call.
The power company said it continued to realize operation and maintenance savings and enjoyed favorable rate rulings from regulators in multiple jurisdictions. Morris said $200 million in rate increases have already been approved this year or will take effect automatically, and an additional $35 million in rate adjustments are expected.
AEP continued to see signs of an improving economy during the quarter, particularly in Arkansas, Oklahoma, Louisiana and Texas, but the recovery has been slower in eastern states including Ohio, where the company is based, Morris said.
"This economic recovery isn't a consistent or rapid one, but recent national data showing an improving economy should mean future good news for our service areas and customers," he said.
As with other power suppliers, AEP has struggled with lower power demand during the recession and its aftermath.
Its shares slipped 10 cents to $35.43 in morning trading.