Some big changes were afoot in the utility sector Wednesday as the eyes of the world were turned to the Middle East.

News of a CEO retirement at

AEP

(AEP) - Get Report

-- and even an upside earnings surprise at

Dominion

(D) - Get Report

-- barely budged the stocks in early trading.

AES

(AES) - Get Report

moved higher early on an analyst upgrade before falling back. The companies' actions were overshadowed by geopolitical events on a day when U.S. troops took control of much of Baghdad.

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After a quarter-century as a utility executive, AEP CEO E. Linn Draper is calling it quits. Draper announced Wednesday that he will step down from the helm of America's largest electricity generator around this time next year. Draper has spent the past decade as AEP's chairman, president and CEO -- positions he also filled at Gulf States Utilities before joining the larger company.

"It is important to renew leadership from time to time at all organizations," Draper explained. "And the time is right both for me and for AEP to begin an orderly succession process."

Still, some observers were surprised to hear a retirement announcement from Draper at the age of 61. While they view Draper's departure as voluntary, they nevertheless see some tough times ahead for the big utility. Specifically, they are bracing for massive writedowns related to some off-balance-sheet subsidiaries. But for the time being, they expect the stock to remain stable -- and even rise a few points -- before AEP starts taking hits.

The stock, cut in half during the recent industry downturn, remained virtually unchanged after news of Draper's planned exit. Shares of AEP inched up 18 cents, to $23.85.

Meanwhile, Dominion was starting to take off. Following promises to beat the Street, the big utility rose 14 cents, to $56.43. The move came after Dominion announced that it will beat profit expectations of $1.24 a share when it reports earnings next week.

AES, meanwhile, enjoyed an early surge after Williams Capital took a fresh -- and favorable -- look at the stock. Williams analyst Christopher Ellinghaus upgraded AES from hold to buy, despite a reduction in his 2004 earnings estimates for the company. He also raised his target price from $6 to $7 and lowered his risk rating for AES shares from speculative to high.

Ellinghaus attributed his new enthusiasm to reduced bankruptcy risks, which were cut by recent financial arrangements, and he even expressed regret that he'd downgraded the stock in the first place.

"All the restructuring events that we had expected to take place were achieved," said Ellinghaus, who owns stock in the company. "But the heat of extreme risk that we felt back in October wilted our resolve."

Ellinghaus went on to describe AES as an exceptional power generator that pursued a "fool's errand" of pursuing growth through the telecommunications and utility industries.

"Where we find fault with AES is its use of excessive leverage and its aggressive pursuit of a failed investment policy," Ellinghaus wrote.

Nevertheless, Ellinghaus sees brighter days ahead. After a quick early bounce took the stock up 6% to $4.82, AES was down 3 cents around midday, at $4.52.