American Electric Power : 2024 Annual Report/Appendix A
AEP
Appendix A to the
Proxy Statement
American Electric Power
2024 Annual Report
Audited Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of Operations
AMERICAN ELECTRIC POWER 1 Riverside Plaza
CONTENTS
Columbus, Ohio 43215-2373
Glossary of Terms 3
Forward-Looking Information 8
AEP Common Stock Information 10
Management's Discussion and Analysis of Financial Condition and Results of Operations 11
Report of Independent Registered Public Accounting Firm 56
Management's Report on Internal Control Over Financial Reporting 59
Consolidated Statements of Income 60
Consolidated Statements of Comprehensive Income (Loss) 61
Consolidated Statements of Changes in Equity 62
Consolidated Balance Sheets 63
Consolidated Statements of Cash Flows 65
Index of Notes to Financial Statements of Registrants 66
Corporate and Shareholder Information 217
Executive Leadership Team 218
2
GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.
Meaning
AEGCo
AEP Generating Company, an AEP electric utility subsidiary.
AEP
American Electric Power Company, Inc., an investor-owned electric public utility holding
company which includes American Electric Power Company, Inc. (Parent) and
majority-owned consolidated subsidiaries and consolidated affiliates.
AEP Credit
AEP Credit, Inc., a consolidated VIE of AEP which securitizes accounts receivable and
accrued utility revenues for affiliated electric utility companies.
AEP Development Services,
AEP Development Services, LLC, a consolidated VIE of AEP formed for the purpose of
LLC
developing, constructing, and installing energy projects for the regulated operating
companies of AEP.
AEP East Companies
APCo, I&M, KGPCo, KPCo, OPCo and WPCo.
AEP Energy
AEP Energy, Inc., a wholly-owned retail electric supplier for customers in Ohio, Illinois and
other deregulated electricity markets throughout the United States.
AEP Energy Supply, LLC
A nonregulated holding company for AEP's competitive generation, wholesale and retail
businesses, and a wholly-owned subsidiary of AEP.
AEP OnSite Partners
A division of AEP Energy Supply, LLC that builds, owns, operates and maintains customer
solutions utilizing existing and emerging distributed technologies.
AEP Renewables
A division of AEP Energy Supply, LLC that develops and/or acquires large scale renewable
projects that are backed with long-term contracts with creditworthy counter parties.
AEP System
American Electric Power System, an electric system, owned and operated by AEP
subsidiaries.
AEP Texas
AEP Texas Inc., an AEP electric utility subsidiary. AEP Texas engages in the transmission
and distribution of electric power to retail customers in west, central and southern Texas.
AEP Transmission Holdco
AEP Transmission Holding Company, LLC, a wholly-owned subsidiary of AEP.
AEP Wind Holdings, LLC
Acquired in April 2019 as Sempra Renewables LLC, develops, owns and operates, or holds
interests in, wind generation facilities in the United States.
AEPEP
AEP Energy Partners, Inc., a subsidiary of AEP dedicated to wholesale marketing and
trading, hedging activities, asset management and commercial and industrial sales in
deregulated markets.
AEPSC
American Electric Power Service Corporation, an AEP service subsidiary providing
management and professional services to AEP and its subsidiaries.
AEPTCo
AEP Transmission Company, LLC, a wholly-owned subsidiary of AEP Transmission
Holdco, is an intermediate holding company that owns the State Transcos.
AEPTCo Parent
AEP Transmission Company, LLC, the holding company of the State Transcos within the
AEPTCo consolidation.
AEPTHCo
AEP Transmission Holding Company, LLC, a subsidiary of AEP, an intermediate holding
company that owns transmission operations joint ventures and AEPTCo.
AFUDC
Allowance for Equity Funds Used During Construction.
AGR
AEP Generation Resources Inc., a competitive AEP subsidiary in the Generation &
Marketing segment.
ALJ
Administrative Law Judge.
AOCI
Accumulated Other Comprehensive Income.
APCo
Appalachian Power Company, an AEP electric utility subsidiary. APCo engages in the
generation, transmission and distribution of electric power to retail customers in the
southwestern portion of Virginia and southern West Virginia.
Appalachian Consumer Rate
Appalachian Consumer Rate Relief Funding LLC, a wholly-owned subsidiary of APCo and
Relief Funding
a consolidated VIE formed for the purpose of issuing and servicing securitization bonds
related to the under-recovered ENEC deferral balance.
APTCo
AEP Appalachian Transmission Company, Inc., a wholly-owned AEPTCo transmission
subsidiary.
APSC
Arkansas Public Service Commission.
3
Term
Meaning
ARO
Asset Retirement Obligations.
ASU
Accounting Standards Update.
ATM
At-the-Market.
BHE
Berkshire Hathaway Energy.
CAA
Clean Air Act.
CAMT
Corporate Alternative Minimum Tax.
CCR
Coal Combustion Residual.
CEO
Chief Executive Officer.
CLECO
Central Louisiana Electric Company, a nonaffiliated utility company.
CO2
Carbon dioxide and other greenhouse gases.
CODM
Chief Operating Decision Maker.
Cook Plant
Donald C. Cook Nuclear Plant, a two-unit, 2,296 MW nuclear plant owned by I&M.
CRES Provider
Competitive Retail Electric Service providers under Ohio law that target retail customers by
offering alternative generation service.
CSAPR
Cross-State Air Pollution Rule.
CSPCo
Columbus Southern Power Company, a former AEP electric utility subsidiary that was
merged into OPCo effective December 31, 2011.
CWIP
Construction Work in Progress.
DCC Fuel
DCC Fuel XIV, DCC Fuel XV, DCC Fuel XVI, DCC Fuel XVII, DCC Fuel XVIII, DCC
Fuel XIX and DCC Fuel XX consolidated VIEs formed for the purpose of acquiring,
owning and leasing nuclear fuel to I&M.
DHLC
Dolet Hills Lignite Company, LLC, a wholly-owned lignite mining subsidiary of SWEPCo.
DIR
Distribution Investment Rider.
Diversion
Diversion, acquired in December 2024, consists of 201 MWs of wind generation in Texas.
DOE
U. S. Department of Energy.
EIS
Energy Insurance Services, Inc., a nonaffiliated captive insurance company and consolidated
VIEofAEP.
ELG
Effluent Limitation Guidelines.
ENEC
Expanded Net Energy Cost.
Equity Units
AEP's Equity Units issued in August 2020 and March 2019.
ERCOT
Electric Reliability Council of Texas regional transmission organization.
ESP
Electric Security Plans, a PUCO requirement for electric utilities to adjust their rates by
filing with the PUCO.
ETT
Electric Transmission Texas, LLC, an equity interest joint venture between AEP
Transmission Holdco and Berkshire Hathaway Energy Company formed to own and
operate electric transmission facilities in ERCOT.
Excess ADIT
Excess accumulated deferred income taxes.
FAC
Fuel Adjustment Clause.
FASB
Financial Accounting Standards Board.
Federal EPA
United States Environmental Protection Agency.
FERC
Federal Energy Regulatory Commission.
FGD
Flue Gas Desulfurization or scrubbers.
FIP
Federal Implementation Plan.
FTR
Financial Transmission Right, a financial instrument that entitles the holder to receive
compensation for certain congestion-related transmission charges that arise when the
power grid is congested resulting in differences in locational prices.
GAAP
Generally Accepted Accounting Principles in the United States of America.
GHG
Greenhouse gas.
G&M
Generation & Marketing.
Meaning
I&M
Indiana Michigan Power Company, an AEP electric utility subsidiary. I&M engages in the
generation, transmission and distribution of electric power to retail customers in
northern and eastern Indiana and southwestern Michigan.
IMTCo
AEP Indiana Michigan Transmission Company, Inc., a wholly-owned AEPTCo transmission
subsidiary.
IRA
On August 16, 2022 President Biden signed into law legislation commonly referred to as the
"Inflation Reduction Act" (IRA).
IRC
Internal Revenue Code.
IRP
Integrated Resource Plan.
IRS
Internal Revenue Service.
ITC
Investment Tax Credit.
IURC
Indiana Utility Regulatory Commission.
KGPCo
Kingsport Power Company, an AEP electric utility subsidiary. KGPCo provides electric
service to retail customers in Kingsport, Tennessee and eight neighboring communities
in northeastern Tennessee.
KPCo
Kentucky Power Company, an AEP electric utility subsidiary. KPCo engages in the
generation, transmission and distribution of electric power to retail customers in eastern
Kentucky.
KPSC
Kentucky Public Service Commission.
KTCo
AEP Kentucky Transmission Company, Inc., a wholly-owned AEPTCo transmission
subsidiary.
kV
Kilovolt.
KWh
Kilowatt-hour.
Liberty
Liberty Utilities Co., a subsidiary of Algonquin Power & Utilities Corporation.
LPSC
Louisiana Public Service Commission.
MATS
Mercury and Air Toxic Standards.
Maverick
Maverick, part of the North Central Wind Energy Facilities, consists of 287 MWs of wind
generation in Oklahoma.
MISO
Midcontinent Independent System Operator.
Mitchell Plant
A two unit, 1,560 MW coal-fired power plant located in Moundsville, West Virginia. The
plant is jointly owned by KPCo and WPCo.
MMBtu
Million British Thermal Units.
MPSC
Michigan Public Service Commission.
MTM
Mark-to-Market.
MW
Megawatt.
MWh
Megawatt-hour.
NAAQS
National Ambient Air Quality Standards.
NCWF
North Central Wind Energy Facilities, a joint PSO and SWEPCo project, which includes
three Oklahoma wind facilities totaling approximately 1,484 MWs of wind generation.
NERC
North American Electric Reliability Corporation.
Net Zero
Represents net-zero Scope 1 and Scope 2 GHG emissions by 2045.
NMRD
New Mexico Renewable Development, LLC.
Nonutility Money Pool
Centralized funding mechanism AEP uses to meet the short-term cash requirements of
certain nonutility subsidiaries.
NOL
Net operating losses.
NOLC
Net operating loss carryforward.
NOx
Nitrogen Oxide.
NRC
Nuclear Regulatory Commission.
OATT
Open Access Transmission Tariff.
OCC
Corporation Commission of the State of Oklahoma.
OHTCo
AEP Ohio Transmission Company, Inc., a wholly-owned AEPTCo transmission subsidiary.
5
Meaning
OKTCo
AEP Oklahoma Transmission Company, Inc., a wholly-owned AEPTCo transmission
subsidiary.
OPCo
Ohio Power Company, an AEP electric utility subsidiary. OPCo engages in the transmission
and distribution of electric power to retail customers in Ohio.
OPEB
Other Postretirement Benefits.
Operating Agreement
Agreement, dated January 1, 1997, as amended, by and among PSO and SWEPCo governing
generating capacity allocation, energy pricing, and revenues and costs of third-party
sales. AEPSC acts as the agent.
OTC
Over-the-counter.
OVEC
Ohio Valley Electric Corporation, which is 43.47% owned by AEP.
Parent
American Electric Power Company, Inc., the equity owner of AEP subsidiaries within the
AEP consolidation.
PCA
Power Coordination Agreement among APCo, I&M, KPCo and WPCo.
PFD
Proposal for Decision.
PJM
Pennsylvania - New Jersey - Maryland regional transmission organization.
PLR
Private Letter Ruling.
PM
Particulate Matter.
PPA
Power Purchase Agreement.
PSA
Purchase and Sale Agreement.
PSO
Public Service Company of Oklahoma, an AEP electric utility subsidiary. PSO engages in
the generation, transmission and distribution of electric power to retail customers in
eastern and southwestern Oklahoma.
PTC
Production Tax Credit.
PUCO
Public Utilities Commission of Ohio.
PUCT
Public Utility Commission of Texas.
Registrant Subsidiaries
AEP subsidiaries which are SEC registrants: AEP Texas, AEPTCo, APCo, I&M, OPCo,
PSO and SWEPCo.
Registrants
SEC registrants: AEP, AEP Texas, AEPTCo, APCo, I&M, OPCo, PSO and SWEPCo.
REP
Texas Retail Electric Provider.
Restoration Funding
AEP Texas Restoration Funding LLC, a wholly-owned subsidiary of AEP Texas and a
consolidated VIE formed for the purpose of issuing and servicing securitization bonds
related to storm restoration in Texas primarily caused by Hurricane Harvey.
Risk Management Contracts
Trading and non-trading derivatives, including those derivatives designated as cash flow and
fair value hedges.
Rockport Plant
A generation plant, jointly-owned by AEGCo and I&M, consisting of two 1,310 MW coal-
fired generating units near Rockport, Indiana.
ROE
Return on Equity.
RPM
Reliability Pricing Model.
RTO
Regional Transmission Organization, responsible for moving electricity over large interstate
areas.
Sabine
Sabine Mining Company, a lignite mining company that is a consolidated VIE for AEP and
SWEPCo.
SEC
U.S. Securities and Exchange Commission.
Sempra Renewables LLC
Sempra Renewables LLC, acquired in April 2019 (subsequently renamed as AEP Wind
Holdings LLC), consists of 724 MWs of wind generation and battery assets in the
United States.
SIP
State Implementation Plan.
SNF
Spent Nuclear Fuel.
SO2
Sulfur dioxide.
SPP
Southwest Power Pool regional transmission organization.
SSO
Standard service offer.
Term
Meaning
State Transcos
AEPTCo's seven wholly-owned, FERC regulated, transmission only electric utilities, which
are geographically aligned with AEP's existing utility operating companies.
Storm Recovery Funding
SWEPCo Storm Recovery Funding LLC, a wholly-owned subsidiary of SWEPCo and
consolidated VIE formed for the purpose of issuing and servicing securitization bonds
related to storm restoration in Louisiana.
Sundance
Sundance, acquired in April 2021 as part of the North Central Wind Energy Facilities,
consists of 199 MWs of wind generation in Oklahoma.
SWEPCo
Southwestern Electric Power Company, an AEP electric utility subsidiary. SWEPCo
engages in the generation, transmission and distribution of electric power to retail
customers in northeastern and panhandle of Texas, northwestern Louisiana and western
Arkansas.
SWTCo
AEP Southwestern Transmission Company, Inc., a wholly-owned AEPTCo transmission
subsidiary.
TA
Transmission Agreement, effective November 2010, among APCo, I&M, KGPCo, KPCo,
OPCo and WPCo with AEPSC as agent.
Tax Reform
On December 22, 2017, President Trump signed into law legislation referred to as the "Tax
Cuts and Jobs Act" (the TCJA). The TCJA includes significant changes to the Internal
Revenue Code of 1986, including a reduction in the corporate federal income tax rate
from 35% to 21% effective January 1, 2018.
TCA
Transmission Coordination Agreement dated January 1, 1997, by and among, PSO,
SWEPCo and AEPSC, in connection with the operation of the transmission assets of the
two public utility subsidiaries.
T&D
Transmission and Distribution Utilities.
Transition Funding
AEP Texas Central Transition Funding III LLC, a wholly-owned subsidiary of AEP Texas
and consolidated VIE formed for the purpose of issuing and servicing securitization
bonds related to restructuring legislation in Texas.
Transource Energy
Transource Energy, LLC, a consolidated VIE formed for the purpose of investing in utilities
which develop, acquire, construct, own and operate transmission facilities in accordance
with FERC-approved rates.
Traverse
Traverse, part of the North Central Wind Energy Facilities, consists of 998 MWs of wind
generation in Oklahoma.
Turk Plant
John W. Turk, Jr. Plant, a 650 MW coal-fired plant in Arkansas that is 73% owned by
SWEPCo.
UMWA
United Mine Workers of America.
UPA
Unit Power Agreement.
Utility Money Pool
Centralized funding mechanism AEP uses to meet the short-term cash requirements of
certain utility subsidiaries.
VIE
Variable Interest Entity.
Virginia SCC
Virginia State Corporation Commission.
VIU
Vertically Integrated Utilities.
WPCo
Wheeling Power Company, an AEP electric utility subsidiary. WPCo provides electric
service to retail customers in northern West Virginia.
WVPSC
Public Service Commission of West Virginia.
WVTCo
AEP West Virginia Transmission Company, Inc., a wholly-owned AEPTCo transmission
subsidiary.
.
FORWARD-LOOKING INFORMATION
This report made by the Registrants contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Many forward-looking statements appear in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations," but there are others throughout this document which may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue" and similar expressions, and include statements reflecting future results or guidance and statements of outlook. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Forward-looking statements in this document are presented as of the date of this document. Except to the extent required by applicable law, management undertakes no obligation to update or revise any forward-looking statement. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are:
• Changes in economic conditions, electric market demand and demographic patterns in AEP service territories.
• The economic impact of increased global conflicts and trade tensions, and the adoption or expansion of economic sanctions, tariffs or trade restrictions.
• Inflationary or deflationary interest rate trends.
• New legislation adopted in the states in which we operate that alters the regulatory framework or that prevents the timely recovery of costs and investments.
• Volatility and disruptions in financial markets precipitated by any cause, including fiscal and monetary policy, turmoil related to federal budget or debt ceiling matters or instability in the banking industry; particularly developments affecting the availability or cost of capital to finance new capital projects and refinance existing debt.
• The availability and cost of funds to finance working capital and capital needs, particularly (a) if expected sources of capital such as proceeds from the sale of assets, subsidiaries and tax credits and anticipated securitizations do not materialize or do not materialize at the level anticipated, and (b) during periods when the time lag between incurring costs and recovery is long and the costs are material.
• Shifting demand for electricity.
• The impact of extreme weather conditions, natural disasters and catastrophic events such as storms, drought conditions and wildfires that pose significant risks including potential litigation and the inability to recover significant damages and restoration costs incurred.
• Limitations or restrictions on the amounts and types of insurance available to cover losses that might arise in connection with natural disasters or operations.
• The cost of fuel and its transportation, the creditworthiness and performance of parties who supply and transport fuel and the cost of storing and disposing of used fuel, including coal ash and SNF.
• The availability of fuel and necessary generation capacity and the performance of generation plants.
• The ability to recover fuel and other energy costs through regulated or competitive electric rates.
• The ability to build or acquire generation (including from renewable sources), transmission lines and facilities (including the ability to obtain any necessary regulatory approvals and permits) to meet the demand for electricity at acceptable prices and terms, including favorable tax treatment, cost caps imposed by regulators and other operational commitments to regulatory commissions and customers for generation projects, and to recover all related costs.
• The disruption of AEP's business operations due to impacts on economic or market conditions, costs of compliance with potential government regulations, electricity usage, supply chain issues, customers, service providers, vendors and suppliers caused by pandemics, natural disasters or other events.
• New legislation, litigation or government regulation, including changes to tax laws and regulations, oversight of nuclear generation, energy commodity trading and new or modified requirements related to emissions of sulfur, nitrogen, mercury, carbon, soot or PM and other substances that could impact the continued operation, cost recovery and/or profitability of generation plants and related assets.
• The impact of federal tax legislation, including potential changes to existing tax incentives, on results of operations, financial condition, cash flows or credit ratings.
• The risks before, during and after generation of electricity associated with the fuels used or the by-products and wastes of such fuels, including coal ash and SNF.
• Timing and resolution of pending and future rate cases, negotiations and other regulatory decisions, including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance.
• Resolution of litigation or regulatory proceedings or investigations.
• The ability to efficiently manage and recover operation, maintenance and development project costs.
• Prices and demand for power generated and sold at wholesale.
• Changes in technology, particularly with respect to energy storage and new, developing, alternative or distributed sources of generation.
• The ability to recover through rates any remaining unrecovered investment in generation units that may be retired before the end of their previously projected useful lives.
• Volatility and changes in markets for coal and other energy-related commodities, particularly changes in the price of natural gas.
• The impact of changing expectations and demands of customers, regulators, investors and stakeholders, including development, adoption, and use of artificial intelligence by us, our customers and our third party vendors and evolving expectations related to environmental, social and governance concerns.
• Changes in utility regulation and the allocation of costs within RTOs including ERCOT, PJM and SPP.
• Changes in the creditworthiness of the counterparties with contractual arrangements, including participants in the energy trading market.
• Actions of rating agencies, including changes in the ratings of debt.
• The impact of volatility in the capital markets on the value of the investments held by the pension, OPEB, captive insurance entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements.
• Accounting standards periodically issued by accounting standard-setting bodies.
• Other risks and unforeseen events, including wars and military conflicts, the effects of terrorism (including increased security costs), embargoes, cybersecurity threats, labor strikes impacting material supply chains, global information technology disruptions and other catastrophic events.
• The ability to attract and retain the requisite work force and key personnel.
The forward-looking statements of the Registrants speak only as of the date of this report or as of the date they are made. The Registrants expressly disclaim any obligation to update any forward-looking information, except as required by law. For a more detailed discussion of these factors, see "Risk Factors" in Part I of this report.
The Registrants may use AEP's website as a distribution channel for material company information. Financial and other important information regarding the Registrants is routinely posted on and accessible through AEP's website atwww.aep.com/ investors/. In addition, you may automatically receive email alerts and other information about the Registrants when you enroll your email address by visiting the "Email Alerts" section atwww.aep.com/investors/.
Disclaimer
AEP - American Electric Power Company Inc. published this content on March 25, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 25, 2025 at 14:51:04.608.