I’ll be covering another story about Appalachian Power today which will no doubt get some of you going about ApCo’s “profits.”
Look, it’s true ApCo’s parent company, AEP, made money last year.
And it’s true a good portion of those earnings were due to rate increases not only here but in other states.
But, when dealing with any company in today’s media age (albeit ApCo, the banks, insurance companies, etc.), make sure the broader view of the profit margin, or net income, plays a role in forming your opinion.
Sure a given company might have reaped in $100 billion in profits during 2009.
But how much money did it spend?
How much money went out to paying its employees, paying their benefits, capital projects to improve the company’s system?
If a company made $100 billion in one year, but spent $80 billion, then it’s margin of profit was $20 billion.
$20 billion’s a lot of money, but it’s a lot smaller than $100 billion.
So keep that in mind when digesting news about ApCo, insurance companies, and the banks.
From the short amount of research I’ve done on the web, I can tell you AEP, for example, did not make more money in 2009 as it did in 2008 (about 23 million dollars less).
Yes ApCo posted a nice profit, but it also spent millions getting you your electricity, and millions more meeting new federal environmental regulations.
Good opinions require perspective.
Some of that perspective should include profit margins.
Posted by Scott Leamon at 12:06 PM. Filed under: leamon •
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