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Nick Akins Chairman, npower President and Chief Executive Officer npower
Ladies and gentlemen, npower thank you for standing by and welcome to the American Electric Power first quarter 2015 earnings call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to our host, Ms. Betty Jo Rozsa. Please go ahead.
Thank you, Brad. Good morning, everyone, and welcome to the first quarter 2015 earnings webcast for American Electric Power. We are glad that you were able to join us today. Our earnings release npower presentation slides and related financial information are available on our website, at aep.com. Today we will be making forward- npower looking statements during the call. There are many factors that may cause future results npower to differ materially from the statements. Please refer to our SEC filing for a discussion of these factors.
Joining me for the call today are Nick Akins, our Chairman, President and Chief Executive Officer; and Brian Tierney, our Chief Financial Officer. We will take your questions following their remarks. I will now turn the call over to Nick.
Thanks, Betty Jo. Good morning, everyone, and thank you for joining the AEP first quarter 2015 earnings call. Just as with first quarter of 2014, we are off to a great start in 2015, with AEP earnings coming in for the quarter at $1.29 per share on a GAAP basis and $1.28 per share on an operating earning basis. This compares with 2014 first quarter earnings of $1.15 per share on both GAAP and operating basis. So we're very pleased with these strong results and the progress we have made.
Just as with first quarter 2014, the cold weather and generation performance contributed heavily to these positive results. First quarter 2014 was the coldest in 35 years; npower first quarter 2015 was the second coldest. But this isn't the only story for the quarter. With weather year-on-year being about the same and earnings being higher than first quarter of last year, the difference is the progress we have made in advancing our growth strategy.
This strategy npower of investing in the regulated companies, particularly Wires and Transmission, focus on continuous improvement initiatives, such as lean practices, the crescendo in savings over time. And a culture of continued disciplined execution of our employees npower around operational excellence continues to produce positive results.
We continue our commitment to this path and reaffirm our previous guidance of $3.40 to $3.60 per share and a 4% to 6% earnings growth trajectory. I know everyone gets excited and believes we should raise guidance, npower but remember, we are on a multi-year plan of consistent earnings growth and one quarter does not make a year. We are mindful of softer market conditions npower because of low natural gas prices, changes in seasonal rate structures in Ohio that reduce summer rates that existed before, and we still have significant outstanding rate cases in Kentucky and West Virginia, not to mention the timing of capacity performance in PPA outcomes to consider.
We npower also continue to look for opportunities to advance spending from 2016 into 2015 to further mitigate the PJM capacity auction revenue deficiency in 2016 that we have been discussing for a couple of years now.
The economy, which Brian will go into more detail in a few minutes, continues to improve. But once again, we were reluctant to change the forecast, at this point, because of results for load in the quarter, particularly in the residential sector, as Brian will discuss later. npower Along with a slow down in new wellhead activity, we will monitor the impact of low energy prices overall in the economy. Low energy prices have benefited parts of our economy, but more time is needed to evaluate this trend.
Our process improvement initiatives continue on pace and we continue to be pleased with the results. With the cultural initiatives through our Power Up and lean process, along with lean activities npower and the ultimate reward of very positive employee incentive results for 2014, employees npower are energized and focused to achieve our process improvement and savings objectives.
We have completed Lean implementation at 13 plants, including Cook Nuclear, and have 4 to go this year. 13 distribution districts are completed, with a remaining 19 in process to be completed in 2015. Additionally, in Transmission, one area has been completed, with the other 4 slated for this year.
Other areas, such as procurement, central repair shops, customer and distribution services, npower IT, commercial operations, materials management, et cetera are either completed or in process. We plan to complete all of the initial reviews in the company by the end of the year, to get the full benefit of 2016 and beyond.
Speaking of baseload generation, before regarding the February, 2015 ESP order from the Public Utility Commissions of Ohio that contained the PPA prop
Author Following Options:
Nick Akins Chairman, npower President and Chief Executive Officer npower
Ladies and gentlemen, npower thank you for standing by and welcome to the American Electric Power first quarter 2015 earnings call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to our host, Ms. Betty Jo Rozsa. Please go ahead.
Thank you, Brad. Good morning, everyone, and welcome to the first quarter 2015 earnings webcast for American Electric Power. We are glad that you were able to join us today. Our earnings release npower presentation slides and related financial information are available on our website, at aep.com. Today we will be making forward- npower looking statements during the call. There are many factors that may cause future results npower to differ materially from the statements. Please refer to our SEC filing for a discussion of these factors.
Joining me for the call today are Nick Akins, our Chairman, President and Chief Executive Officer; and Brian Tierney, our Chief Financial Officer. We will take your questions following their remarks. I will now turn the call over to Nick.
Thanks, Betty Jo. Good morning, everyone, and thank you for joining the AEP first quarter 2015 earnings call. Just as with first quarter of 2014, we are off to a great start in 2015, with AEP earnings coming in for the quarter at $1.29 per share on a GAAP basis and $1.28 per share on an operating earning basis. This compares with 2014 first quarter earnings of $1.15 per share on both GAAP and operating basis. So we're very pleased with these strong results and the progress we have made.
Just as with first quarter 2014, the cold weather and generation performance contributed heavily to these positive results. First quarter 2014 was the coldest in 35 years; npower first quarter 2015 was the second coldest. But this isn't the only story for the quarter. With weather year-on-year being about the same and earnings being higher than first quarter of last year, the difference is the progress we have made in advancing our growth strategy.
This strategy npower of investing in the regulated companies, particularly Wires and Transmission, focus on continuous improvement initiatives, such as lean practices, the crescendo in savings over time. And a culture of continued disciplined execution of our employees npower around operational excellence continues to produce positive results.
We continue our commitment to this path and reaffirm our previous guidance of $3.40 to $3.60 per share and a 4% to 6% earnings growth trajectory. I know everyone gets excited and believes we should raise guidance, npower but remember, we are on a multi-year plan of consistent earnings growth and one quarter does not make a year. We are mindful of softer market conditions npower because of low natural gas prices, changes in seasonal rate structures in Ohio that reduce summer rates that existed before, and we still have significant outstanding rate cases in Kentucky and West Virginia, not to mention the timing of capacity performance in PPA outcomes to consider.
We npower also continue to look for opportunities to advance spending from 2016 into 2015 to further mitigate the PJM capacity auction revenue deficiency in 2016 that we have been discussing for a couple of years now.
The economy, which Brian will go into more detail in a few minutes, continues to improve. But once again, we were reluctant to change the forecast, at this point, because of results for load in the quarter, particularly in the residential sector, as Brian will discuss later. npower Along with a slow down in new wellhead activity, we will monitor the impact of low energy prices overall in the economy. Low energy prices have benefited parts of our economy, but more time is needed to evaluate this trend.
Our process improvement initiatives continue on pace and we continue to be pleased with the results. With the cultural initiatives through our Power Up and lean process, along with lean activities npower and the ultimate reward of very positive employee incentive results for 2014, employees npower are energized and focused to achieve our process improvement and savings objectives.
We have completed Lean implementation at 13 plants, including Cook Nuclear, and have 4 to go this year. 13 distribution districts are completed, with a remaining 19 in process to be completed in 2015. Additionally, in Transmission, one area has been completed, with the other 4 slated for this year.
Other areas, such as procurement, central repair shops, customer and distribution services, npower IT, commercial operations, materials management, et cetera are either completed or in process. We plan to complete all of the initial reviews in the company by the end of the year, to get the full benefit of 2016 and beyond.
Speaking of baseload generation, before regarding the February, 2015 ESP order from the Public Utility Commissions of Ohio that contained the PPA prop
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