SEC seeks information from largest U.S. private two-way network operator about energy trades
American Electric Power, which operates the largest private two-way radio communications network in the United States, has received an informal data request from the Securities and Exchange Commission asking the company to voluntarily provide documents related to “round-trip” or “wash” trades. A number of other companies have previously confirmed receiving similar informal requests from the SEC.
AEP said that it would comply with the request, which it said was received Wednesday.
The SEC request relates to “round trip” or “wash” sales that have also been the subject of prior information requests from the Federal Energy Regulatory Commission and the Commodities Futures Trading Commission with which AEP said it has complied.
AEP stated that it completed a review of its trading activities from Jan. 1, 1999 through March 31, 2002, a period that included more than 1.2 million trading transactions. The company identified and subjected to further review domestic trading transactions that involved sequential trades with the same terms and counterparties, which amounted to approximately one-quarter of 1 percent of total trading transactions.
“The total contribution of these transactions to gross revenue is not material. The company believes that substantially all of these transactions involve economic substance and risk transference and do no constitute “round trip” or “wash” sales,” a statement from the company reads.
American Electric Power described itself a multinational energy company with a balanced portfolio of energy assets. AEP, the United States’ largest electricity generator, owns and operates more than 42,000 megawatts of generating capacity in the U.S. and select international markets. AEP is a wholesale energy marketer, ranking among North America’s top providers of wholesale power and natural gas with a growing wholesale presence in European markets. In addition to electricity generation, AEP owns and operates natural gas pipeline systems, natural gas storage, coal mines, and the fourth-largest inland barge company in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s wires. The company is based in Columbus, Ohio.
AEP also announced this morning that it had completed the sale of CitiPower, AEP’s retail electricity and gas supply and electricity distribution subsidiary in Australia, to Cheung Kong Infrastructure Holdings and Hongkong Electric. The CitiPower transaction is valued at about $855 million. Under terms of the agreement, AEP will receive net cash of $181 million after CitiPower debt and other obligations have been addressed. AEP will use the cash proceeds from the sale to reduce short-term debt
