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American Electric Power reaffirms plans to cut coal generation, increase renewables

first_imgAmerican Electric Power reaffirms plans to cut coal generation, increase renewables FacebookTwitterLinkedInEmailPrint分享Daily Energy Insider:American Electric Power (AEP) is planning to close coal plants and increase capital investments in renewables to balance its portfolio and reduce risk, AEP Chairman, President and CEO Nicholas Akins said at the Edison Electric Institute Financial Conference held this week in San Francisco.The company plans to invest $33 billion in capital from 2019 through 2023. AEP expects to invest about $16.6 billion in its transmission businesses and another $8.3 billion in its distribution businesses over the next five years.The planned investments involve $2.7 billion for new clean energy generation, which include $2.2 billion for competitive, contracted renewable projects. In regard to contracted renewables, the company focuses on opportunities that are longer tenure, credit-worthy counterparties and mostly electric utilities, Akins said during a presentation to investors.The company plans to invest $1 billion in regulated fossil fuel and hydro generation and $500 million in nuclear generation through 2023. The company is moving from approximately 65 percent coal to 38-40 percent coal. Akins noted that the company’s portfolio will likely continue to include some coal into the future.“That’s really a focus of the de-risking that’s occurred relative primarily to fossil generation and moving toward a more balanced portfolio with the advent of not only natural gas but renewables, energy storage, other technologies that we’re primed to be able to take advantage of,” Akins said.More: AEP aims to reduce risk by increasing renewable investments, closing coal plantslast_img read more

German pension fund association demands action on discount rate

first_imgGermany’s pension fund association (aba) has warned of an “urgent need for action” by the government on the discount rate that companies apply to their pension buffers. The discount rate is set to drop from just over 4% to less than 3% by 2017 unless an amendment to the German accounting standard HGB is passed in the coming weeks.If the rate falls, companies with on-balance-sheet pension obligations will have to pay an additional €35bn-45bn in total annually over the next three years to compensate.In a statement, the aba said: “This additional funding is a burden on the companies, reduces their capital buffers and credit ratings and fails to increase the security of workers’ pensions.” It said it feared companies would stop adjusting pension payouts to inflation due to the higher costs.This summer, a proposal was made to the government that would increase the calculation period for the discount rate from seven years to approximately 15.The proposal has “still not been assessed by the government”, the aba said.According to the association’s statistics, more than 40,000 German companies – small and medium-sized enterprises for the most part – will be affected by the drop in the discount rate.The aba argued that a change in the HGB discount-rate calculation would have no effect on capital markets, as some critics have argued.All listed companies have had to apply international pension accounting standard IAS19 with a lower discount rate for some time now.The association also claimed that a 15-year period for calculation was “not too high”, as the liabilities it is applied to have much longer maturities.Lastly, the aba said it would make more sense to replace the marked-to-market approach used in setting the discount rate for pensions in the HGB with a fixed rate set against future expectations for inflation and real rates.Otherwise, companies applying HGB may be hindered in their investments because of higher contributions to their pension plans for a “discount rate that is not real but merely a calculation aid”.For a more detailed discussion on the future of the HGB discount rate, see Peter König’s article in the November issue of IPE magazinelast_img read more