Customer Data Valuation: American Electric Power Ohio

Sunil Soares

CEO, YourDataConnect

We conducted a valuation of American Electric Power’s (AEP’s) Ohio customers using details about its Ohio subsidiary, Ohio Power. We wanted to use actual company information as an illustrative use case to calculate customer value. (We used only publicly available information and had no conversations with the company.)

In October 2020, AEP’s market capitalization was $44,000M with a reported long-term debt of $26,638M, for an enterprise valuation of $70,638M (A + B).

AEP reported earnings of $521M for second quarter 2020. Its subsidiary, Ohio Power, reported same-period earnings of $81M, yielding an enterprise valuation for Ohio Power of $10,982M (C * (E / D)).

We can use these figures to calculate Ohio Power’s average value per customer. Dividing Ohio Power’s $10,982M enterprise value by its customer base of 1.5M results in an average value per customer of $7,321 (F / G).

Similar calculations could be performed to arrive at valuations for the company’s residential, commercial, and industrial customer segments.

Note a couple of limitations with this analysis:

  • The average value per Ohio Power customer of $7,321 includes the value of the company’s generation and transmission assets. Obviously, these assets have significant value, but that value could not be determined from the company’s financial statements.
  • The average value of $7,321 is across Ohio Power’s residential, commercial, and industrial customers. We would expect the value of residential customers to be significantly lower than that of commercial and industrial customers.

Other news

Sign up for our Newsletter

Get news from YDC in your inbox.
By submitting this form, you are consenting to receive marketing emails from: YourDataConnect, 180 Old Tappan Road, Building 5, Old Tappan, NJ, 07675, US, You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.
We use cookies to ensure we give you the best experience on our website. If you continue to use this site, we will assume you consent to our privacy policy.

This website uses cookies. By continuing to use this site, you accept our use of cookies as described in our Privacy Policy