Opportunities For Growth
Our industry is undergoing restructuring of a magnitude that we have not seen in decades, and our business will be affected by these changes. We are repositioning our generation business to create a sustainable fuel mix for the future, in part due to environmental and economic factors. Our coal-fired generating capacity is projected to be 46 percent of total capacity by 2020 and 45 percent by 2026.
Our earnings strength lies in our regulated operations. A combination of reasonable returns on our rate base and the diversity of our service territory will continue to allow us to optimize the investments we make in our regulated business and provide fair returns to our shareholders. AEP Ohio, our largest operating company and earnings contributor, is preparing to transfer its generating assets to an AEP-affiliated competitive generation company or to other operating companies in need of capacity. Ultimately, AEP Ohio will buy its energy through auctions starting in late 2013 rather than relying on its own generation. AEP Ohio will buy generation capacity through auctions beginning in June 2015.
We are building our retail energy business to be more competitive in markets where customers have a choice of generation providers. Our competitive retail business unit, AEP Energy, is poised for continued growth with its offerings of retail electricity, natural gas and energy services and demand response programs, strengthening our capabilities and giving us a stronger platform for growth.