2018 AEP FACT BOOK 53rd EEI Financial Conference San Francisco, California November 11-14, 2018 53rd EEI Financial Conference | aep.com 0 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: economic growth or contraction within and changes in market demand and demographic patterns in AEP service territories, inflationary or deflationary interest rate trends, volatility in the financial markets, 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 during periods when the time lag between incurring costs and recovery is long and the costs are material, electric load and customer growth, weather conditions, including storms and drought conditions, and the ability to recover significant storm restoration costs, the cost of fuel and its transportation, the creditworthiness and performance of fuel suppliers and transporters and the cost of storing and disposing of used fuel, including coal ash and spent nuclear fuel, availability of necessary generation capacity, the performance of generation plants and the availability of fuel, including processed nuclear fuel, parts and service from reliable vendors, the ability to recover fuel and other energy costs through regulated or competitive electric rates, the ability to build renewable generation, transmission lines and facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs, new legislation, litigation and government regulation, including oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances that could impact the continued operation, cost recovery and/or profitability of generation plants and related assets, evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel, 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, environmental compliance and excess accumulated deferred income taxes, resolution of litigation, the ability to constrain operation and maintenance 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 capacity and electricity, coal and other energy-related commodities, particularly changes in the price of natural gas, changes in utility regulation and the allocation of costs within regional transmission organizations, 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, other postretirement benefit plans, captive insurance entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements, accounting pronouncements periodically issued by accounting standard-setting bodies, impact of federal tax reform on customer rates, income tax expense and cash flows, and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events. Bette Jo Rozsa Darcy Reese INVESTOR RELATIONS Managing Director Director Investor Relations Investor Relations 614-716-2840 614-716-2614 [email protected] [email protected]
53rd EEI Financial Conference | aep.com 1 TABLE OF CONTENTS
AEP Overview Operating Company Detail for: AEP: The Premier Regulated Energy Company Appalachian Power Company (including Wheeling & Kingsport) AEP Corporate Leadership Indiana Michigan Power Company AEP Operational Structure Kentucky Power Company AEP Service Territory Ohio Power Company 2017 Retail Revenue Public Service Company of Oklahoma Generation Fleet Southwestern Power Company Transmission Line Circuit Miles Detail AEP Texas Distribution Line Detail Rate Base & ROEs Regulated Generation Summary of Rate Case Filing Requirements Regulated Generation Summary Retail Recovery Mechanisms by Jurisdiction Owned Regulated Generation Storm O&M Recovery Mechanisms by Jurisdiction Regulated Fuel Procurement – 2019 Projected Jurisdictional Off-System Sales Sharing Summary Regulated Coal Delivery – 2019 Projected Commission Overview Jurisdictional Fuel Clause Summary
Transforming Our Generation Fleet Transmission Initiatives Transforming Our Generation Fleet AEP Transmission Holdco Legal Entity Structure Investments Driving Emission Reductions AEP Transco Business Overview Dramatic Reductions in Emissions AEP Transco Project Mix & Footprint Delivering Clean Energy Resources Transmission Investment Needs Renewable Resources Transco State & FERC Regulatory Compacts Renewable Portfolio/Energy Efficiency Standards FERC Formula Rate & Filings Regulated & Competitive Retirements Active Joint Venture Projects Regulated Environmental Controls Competitive Transmission – Transource Competitive Environmental Controls Evolution of Transmission Trackers Additional Environmental Regulations Favorable Recovery of Transmission Investment
Financial Update Competitive Business Capitalization & Liquidity Organizational Structure Pension & OPEB Estimates Clean Energy Investments AEP Banking Group Customer Energy Solutions AEP Credit Ratings Universal Scale Renewable Projects Long-Term Debt Maturity Profile Competitive Generation – Owned & PPA Debt Schedules Competitive 2017 Fleet Statistics Retail – AEP Energy
53rd EEI Financial Conference | aep.com 2 AEP OVERVIEW
• AEP: The Premier Regulated Energy Company • AEP Corporate Leadership • AEP Operational Structure • AEP Service Territory • 2017 Retail Revenue • Generation Fleet • Transmission Line Circuit Miles Detail • Distribution Line Detail • Rate Base & ROEs • Summary of Rate Case Filing Requirements • Retail Recovery Mechanisms by Jurisdiction • Storm O&M Recovery Mechanisms by Jurisdiction • Jurisdictional Off-System Sales Sharing Summary • Federal Energy Regulatory Commission Overview
53rd EEI Financial Conference | aep.com 3 AEP: THE PREMIER REGULATED ENERGY COMPANY
American Electric Power is one of the largest electric utilities in the United States, delivering electricity and custom energy solutions to nearly 5.4 million customers in 11 states. AEP’s headquarters is in Columbus, Ohio. (NYSE: AEP)
AEP’s regulated electric assets AEP consistently produces strong include the following: financial results:
Approximately 23,000 megawatts of regulated Delivering operating earnings growth of owned generating capacity and more than 5% to 7%. 4,900 megawatts of regulated PPA capacity in Strong balance sheet including $68B of 3 RTOs. assets. Approximately 40,000 circuit miles of Cash dividend paid every quarter since 1910. transmission lines, including more than 1,400 Dividend payout ratio of 60 % to 70% of miles of Transco lines and over 2,100 miles of operating earnings and growing dividend in 765kV lines, the backbone of the electric line with earnings. interconnection grid in the Eastern U.S.
AEP Transco has approximately $7.5B of transmission assets in service with additional capital expenditure plans of approximately $8.1B from 2019 – 2023. Over 219,000 miles of overhead and underground distribution lines.
WELL POSITIONED AS A REGULATED BUSINESS
53rd EEI Financial Conference | aep.com 4 AEP CORPORATE LEADERSHIP
Nicholas K. Akins Chairman, President and Chief Executive Officer
Brian X. Tierney Lisa M. Barton Executive Vice President Executive Vice President – and Chief Financial Officer Transmission
Paul Chodak III Lana L. Hillebrand Mark C. McCullough Executive Vice President – Executive Vice President Executive Vice President – Utilities and Chief Administrative Generation Officer
Charles R. Patton Charles E. Zebula Executive Vice President – Executive Vice President – External Affairs Energy Supply
David M. Feinberg Executive Vice President, General Counsel and Secretary
53rd EEI Financial Conference | aep.com 5 AEP OPERATIONAL STRUCTURE*
AEP, Inc.
Regulated Utilities AEP Transmission Holding Competitive Operations Company
Indiana Michigan Power AEP Transmission AEP Energy Supply Appalachian Power Joint Ventures Company Company Company
AEP Appalachian AEP Energy Kentucky Power Public Service Company Transco Company of Oklahoma
AEP Energy Partners AEP Kentucky Transco Southwestern Electric Ohio Power Company Power Company AEP Generation AEP Southwestern Resources Transco
Wheeling Power Kingsport Power Company Company AEP Ohio Transco AEP OnSite Partners
AEP Generating AEP Texas AEP Renewables Company AEP Oklahoma Transco
AEP Indiana Michigan Transco
AEP West Virginia Transco * Does not represent legal structure
53rd EEI Financial Conference | aep.com 6 AEP SERVICE TERRITORY
VERTICALLY INTEGRATED UTILITIES
Public Service Company of Oklahoma (PSO) Appalachian Power Company (APCo) Southwestern Electric Power Company (SWEPCO) Indiana Michigan Power Company (I&M) Kingsport Power Company (KGPCo) Kentucky Power Company (KPCo) Wheeling Power Company (WPCo) Oklahoma
Arkansas
Michigan
West Virginia Louisiana Indiana Texas Virginia Kentucky
Tennessee
53rd EEI Financial Conference | aep.com 7 AEP SERVICE TERRITORY
TRANSMISSION AND DISTRIBUTION UTILITIES
AEP Texas Ohio Power Company (OPCo)
Texas Ohio
53rd EEI Financial Conference | aep.com 8 2017 RETAIL REVENUE CUSTOMER PROFILE AEP’S SERVICE TERRITORY ENCOMPASSES APPROXIMATELY 5.4 MILLION CUSTOMERS IN 11 STATES
Percentage of AEP System Retail Revenues * Percentage Composition by Customer Class **
Arkansas 2% 4% 13% 11% Indiana
Kentucky 20% 5% 12% Louisiana Residential 5% Michigan Commercial 2% Ohio 47% Industrial Oklahoma Wholesale 15% Tennessee Texas 1% 23% 29% Virginia 11% West Virginia
Top 10 Industrial Sectors Across the AEP System By % of Total NAICS Code Industrial Sales 331 Primary Metal Manufacturing 15.5% 325 Chemical Manufacturing 13.5% 324 Petroleum and Coal Products Manufacturing 11.6% 486 Pipeline Transportation 8.1% 322 Paper Manufacturing 6.5% 211 Oil and Gas Extraction 5.7% 212 Mining (except Oil and Gas) 5.6% 326 Plastics and Rubber Products Manufacturing 5.4% * Source: 2017 10-K 336 Transportation Equipment Manufacturing 4.4% ** Figures from billing system and 311 Food Manufacturing 4.4% do not include Other Revenues
53rd EEI Financial Conference | aep.com 9 GENERATION FLEET Competitive - 2018 Generation Capacity Regulated - 2018 Generation Capacity by Fuel Type by Fuel Type Based on 2,716 MW * Based on 28,990 MW ** Coal/Lignite - Controlled 44.6%
Natural Gas 31.1%
Coal/Lignite - Controlled Hydro, Wind, Solar, & Pumped * Includes 175 MW of 76.1% wind PPA. Excludes 355 Storage 12.7% Hydro, Wind, Solar, & MW of PPA for AEP Texas North’s portion of Pumped Storage 23.9% Nuclear 7.9% Oklaunion
Demand Response/Energy Efficiency 3.7% ** Includes: Total Fleet - 2018 Generation Capacity • 953 MW of OVEC entitlement • 2,840 MW of renewable PPAs by Fuel Type • 1,151 MW of gas PPAs • 355 MW for AEP Texas North’s Based on 31,706 MW *** portion of Oklaunion • 1,073 MW of Demand Response / Coal/Lignite - Controlled *** Includes: Energy Efficiency Programs • 953 MW of OVEC entitlement 47.3% • 3,015 MW of renewable PPAs • 1,151 MW of gas PPAs Natural Gas 28.4% • 355 MW for AEP Texas North’s portion of Oklaunion • 1,073 MW of Demand Response / Energy Efficiency Programs Hydro, Wind, Solar, & Pumped Storage 13.7%
Nuclear 7.2%
Demand Response/Energy As of September 30, 2018 Efficiency 3.4%
53rd EEI Financial Conference | aep.com 10 TRANSMISSION LINE CIRCUIT MILES DETAIL
Operating Company Level (Circuit Miles)
Operating Company 765kV 500kV 345kV 230kV 161kV 138kV 115kV 88kV 69kV 46kV 40kV 34.5kV 23kV Total APCo 732 95 381 107 0 2,856 0 18 976 708 0 155 0 6,028 I&M 611 0 1,612 0 0 1,615 0 0 673 0 0 577 0 5,088 KGPCo 0 0 0 0 0 44 0 0 0 0 0 30 0 74 KPCo 257 0 8 0 48 358 0 0 428 166 0 2 0 1,267 OPCo 507 0 1,456 0 0 3,235 0 0 2,186 0 53 392 49 7,878 PSO 0 0 608 34 8 1,906 10 0 635 0 0 0 0 3,201 SWEPCO 0 0 736 0 305 1,460 29 0 1,572 0 0 0 0 4,102 AEP Texas 0 0 854 0 0 3,920 0 0 3,647 0 0 0 0 8,421 WPCo 0 16 16 0 0 194 0 0 85 0 0 0 0 311 Transco - IM 15 0 41 0 0 69 0 0 74 0 0 17 0 216 Transco - Ohio 1 0 20 0 0 246 0 0 263 0 4 22 19 575 Transco - OK 0 0 0 0 0 197 0 0 304 0 0 0 0 501 Transco - WV 0 0 1 0 0 141 0 0 2 10 0 0 0 154 Total 2,123 111 5,733 141 361 16,241 39 18 10,845 884 57 1,195 68 37,816
State Level (Circuit Miles)
State 765kV 500kV 345kV 230kV 161kV 138kV 115kV 88kV 69kV 46kV 40kV 34.5kV 23kV Total Arkansas 0 0 78 0 305 248 13 0 425 0 0 0 0 1,069 Indiana 610 0 1,419 0 0 1,466 0 0 448 0 0 479 0 4,422 Kentucky 257 0 8 0 48 358 0 0 428 166 0 2 0 1,267 Louisiana 0 0 105 0 0 285 1 0 327 0 0 0 0 718 Michigan 16 0 234 0 0 218 0 0 299 0 0 115 0 882 Ohio 508 0 1,476 0 0 3,440 0 0 2,446 0 57 413 68 8,408 Oklahoma 0 0 650 34 8 2,128 10 0 939 0 0 0 0 3,769 Tennessee 0 0 0 92 0 154 0 0 2 0 0 30 0 278 Texas 0 0 1,365 0 0 4,820 15 0 4,468 0 0 0 0 10,668 Virginia 350 95 69 15 0 1,615 0 0 632 48 0 98 0 2,922 West Virginia 382 16 329 0 0 1,509 0 18 431 670 0 58 0 3,413 Total 2,123 111 5,733 141 361 16,241 39 18 10,845 884 57 1,195 68 37,816
Note: Transmission line circuit miles are current as of 12/31/17; excludes ETT, OVEC and Joint Ventures. Ownership of transmission line assets can cross state lines.
53rd EEI Financial Conference | aep.com 11 DISTRIBUTION LINE DETAIL
By Operating By State Line Miles* Company Line Miles*
Arkansas 4,010 | AEP Texas 43,433 Indiana 15,107 | APCo 51,519 Kentucky 10,040 | I&M 20,471 Louisiana 12,645 | KGPCo 1,579 Michigan 5,364 | KPCo 10,040 Ohio 45,833 | OPCo 45,833 Oklahoma 19,973 | PSO 19,973 Tennessee 1,579 | SWEPCO 25,198 Texas 51,976 | WPCo 1,537 Virginia 31,196 | W. Virginia 21,860 |
Total 219,583 Total 219,583
* Includes approximately 34,000 miles of underground circuit miles
Note: Year End 2017 data per Small World Graphics
53rd EEI Financial Conference | aep.com 12 Vertically Integrated Utilities RATE BASE & ROEs Pro Forma Rate Operating Earned ROE2 Approved Approved Effective Date of last approved Jurisdiction Base1 as of 9/30/2018 ROE Debt/Equity rate case ($ millions) 3 APCo – Virginia 10.40% 57/43 2/2/15 1. Rate base represents Net Utility Plant plus APCo – West Virginia/WPCo 9.75% 53/47 5/27/15 Regulatory Assets less Net Accumulated APCo – FERC 9.82% 52/48 1/1/17 Deferred Income Taxes and less Regulatory APCo/WPCo Total $8,389 9.9% Liabilities from 2017 FERC Form 1. Kingsport Power – Tennessee 9.85% 58/42 8/9/16 KGPCo – TN Total $113 7.4% 2. Operating ROE adjusts GAAP results by eliminating any material nonrecurring items and 4 KPCo – Distribution/Generation 9.70% 54.4/3.9/41.7 1/19/18 is not weather normalized. 12-month rolling KPCo – FERC 10.07% 56.5/43.5 1/1/17 ROE. KPCo – Kentucky Total $1,611 9.2% 3. 10.4% allowed top of band, 70 BPS above I&M – Indiana 9.95% 53.5/46.5 7/1/18 authorized 9.7%, as approved in 2014. Base I&M – Michigan 9.90% 52.6/47.4 4/26/18 rates subsequently frozen in VA by the Feb 2015 I&M – FERC 9.57% 49/51 1/1/17 Rate Freeze Law. A 9.4% ROE was approved in I&M Total $4,919 12.0% Oct 2016 to be applied to Rate Adjustment Clauses (RACs) only. PSO – Distribution/Generation 9.30% 51.5/48.5 3/1/18 PSO – Oklahoma Total $2,840 7.7% 4. Approved Debt/AR/Equity.
5 SWEPCO – Louisiana 9.80% 48/52 5/1/17 5. Represents the midpoint of the ROE range SWEPCO – Arkansas 10.25% 54/46 11/24/09 approved in the formula rate case settled in Apr SWEPCO – Texas 9.60% 51.5/48.5 5/20/17 2017. SWEPCO – FERC 10.1%-11.1% 52/48 1/1/17 SWEPCO Total $5,021 7.4% 6. Per Feb 2015 ESP III Order for base Transmission and Distribution Companies distribution. Per Apr 2018 ESP III Extension Order, ROE is 10.0% for riders only. Proforma Rate Base1 Operating Earned ROE2 Approved Approved Effective Date of last approved Jurisdiction ($ millions) as of 9/30/2018 ROE Debt/Equity rate case 7. For AEP's PJM Transmission Companies, 6 AEP Ohio – Distribution 10.20% 52/48 2/25/15 represents a 9.85% base ROE plus 50 BPS RTO 7 AEP Ohio – Transmission 10.35% 45/55 1/1/18 adder. 8 AEP Ohio Total $4,661 14.1% 8. ROE is 12.5% adjusted for SEET items. AEP Texas Central 9.96% 60/40 5/29/07 AEP Texas North 9.96% 60/40 3/4/08 Note: Chart excludes AEG's Rockport plant AEP Texas Total $5,079 8.8% investment. AEG sells capacity & energy to I&M Transcos and KPCo under a PPA. Proforma Rate Base1 Operating Earned ROE2 Approved Approved Effective Date of last approved Company ($ millions) as of 9/30/2018 ROE Debt/Equity formula rate filing 7 AEP Ohio Transco $2,367 10.0% 10.35% 45/55 1/1/18 7 AEP Kentucky Transco $76 11.3% 10.35% 45/55 1/1/18 7 AEP Indiana Michigan Transco $1,466 9.9% 10.35% 45/55 1/1/18 7 AEP West Virginia Transco $846 9.8% 10.35% 45/55 1/1/18 AEP Oklahoma Transco $751 11.4% 11.20% Actuals 7/1/16
53rd EEI Financial Conference | aep.com 13 SUMMARY OF RATE CASE FILING REQUIREMENTS FERC AR IN KY LA MI OH OK TN TX VA WV FERC Transmission
GENERAL
Time Limitations Between Cases No Yes No No No No No No No Yes No N/A N/A Rates Effective Subject to Refund Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Tri- Fuel Clause Renewal Frequency Annually Semi-Annually Monthly Monthly Annually N/A Annually Annually Annually Annually Annually N/A N/A Approx # of months after filing to 10 @ 50% if 10 implement rates 10 no order 6 4 10 9 6 9 6 Note 8 10 2 or 7 Varies Approx # of months after filing order expected 10 10 6 4 10 9 6 9 6 8 10 2 or 7 N/A
Notice of Intent
Prior PSC Notice Required? Yes Yes Yes No Optional Yes Yes No Yes Yes Yes No No Notice Period (days) 60 Varies 30-60 N/A 45 30 45 N/A 30 60 30 No No
CASE COMPONENTS
Hist. Partially Hist., Forecast Forecast (Formula Forecast Partially/Fully Historical/ Base Case Test Year Projected or Hybrid Optional Rate ) Optional Projected Hist. Hist. Hist. Hist. Hist. Forecast Forecast Filed Post Test/Year Adjustment Period Min 6, (Months) 12 12 12 ------no max 18 -- 3 12 -- Forecasted Limited Optional Partial Limited No Limited Limited Cash Return on CWIP Partial Note 2 Note 3 Note 1 Yes Note 4 Note 1 Yes Note 5 Yes Note 7 Note 6 Forecasted
Note 1: CWIP that is projected to be placed into service within six months post test year is included in rate base (for LA, under separate docket only). No CWIP in annual formula rates. Note 2: CWIP is not included in rate base for a general rate case. However, for Clean Coal Technology using Indiana Coal or Qualified Pollution Control Property, Cook Life Cycle Management Projects and Federally Mandated Projects the Commission may add CWIP to utility property for ratemaking purposes between rate cases via a surcharge. In addition, legislation (SB 251) was passed that will allow CWIP recovery through a tracker for Cook Life Cycle Management projects. Note 3: KPCo uses capitalization instead of rate base which includes CWIP, however, there is also a partial AFUDC offset which partially negates the cash return effect of CWIP in capitalization or rate base. Note 4: Ohio (ESP) cases are cost-based. Distribution cases are cost-of-service based. Note 5: Can request inclusion in rate base but requires a showing that it is needed to maintain financial integrity. The financial integrity standard in Texas is not clearly defined and has been essentially impossible to meet. Note 6: The general FERC rule has been to allow CWIP in rate base. Note 7: Allows environmental CWIP in rate base. Note 8: The SCC is required to issue a triennial order within 8 months of filing. Rates are to be implemented 60 days after order and are NOT subject to refund. Depending on the nature of the RAC, the SCC has a statutory limit to issue decisions within 3 months for a transmission cost recovery RAC, 8 months for a environmental compliance, RPS-RAC or DR/EE-RAC, and 9 months for cost recovery related to a new generating facility.
53rd EEI Financial Conference | aep.com 14 RETAIL RECOVERY MECHANISMS BY JURISDICTION Distribution/ Distribution Other Purchased Environmental Renewables Transmission Company State Vegetation Energy Efficiency REPA Power OATT Investment Investment Capital Management (Energy/Capacity) Investment
DSM/EE Program BR/PJM Indiana BR CCTR/FMR/BR SPR/BR FAC/BR FAC/BR BR/PJM Tracker Cost Rider Tracker I&M Michigan BR BR EO Rider BR PSCR/RES PSCR PSCR BR/PSCR BR/ Tariff Kentucky BR Surcharge DSM Adj. Clause BR N/A FAC/Tariff PPA BR KPCo PPA
EE/PDR Ohio ESRR N/A RGR AER/RGR PPA BTCR DIR AEP Ohio Rider
KGPCo Tennessee BR/TRP&MS FERC Tariff N/A N/A N/A FERC Tariff FPPAR N/A
APCo Virginia BR ERAC/BR EERAC GRAC/BR RPSRAC/FF FAC/BR TRAC BR/TRAC
VMP EE/DR Recovery West Virginia ENEC/BR BR ENEC ENEC ENEC BR/ENEC Surcharge Rider
Arkansas BR Surcharge/BR EECR BR ECR ECR/BR BR BR SWEPCO Louisiana Formula BR/FAC Formula BR EECR/Formula BR Formula BR FAC FAC/Formula BR Formula BR BR/FRP Texas (SPP) BR BR EECRF BR FAC FAC/BR BR/TCRF DCRF/TCRF AEP TX Texas (ERCOT) BR N/A EECRF /BR N/A N/A N/A TCRF BR/DCRF/TCOS
DSM Cost Recovery BR/SPP Oklahoma BR BR BR FAC FAC BR PSO Rider Tracker
AER - Alternative Energy Rider EO – Energy Optimization RES – Renewable Energy Surcharge BR - Base Rates ERAC - Environmental Rate Adjustment Clause RGR – Renewable Generation Rider BTCR – Basic Transmission Cost Rider ESRR - Enhanced Service Reliability Rider SPP – Southwest Power Pool Regional Transmission Org CCTR - Clean Coal Technology Rider FAC - Fuel Adjustment Clause SPR – Solar Power Rider DIR – Distribution Investment Rider FERC – Federal Energy Regulatory Commission TCOS - Transmission Cost of Service DCRF – Distribution Cost Recovery Factor FF – Fuel Factor TCRF - Transmission Cost Recovery Factor DSM - Demand Side Management FMR – Federal Mandate Rider TRAC – Transmission Rate Adjustment Clause ECR - Energy Cost Recovery Rider FPPAR – Fuel Purchase Power Adj Rider TRP&MS- Targeted Reliability Plan and Major Storms EE - Energy Efficiency FRP – Formula Rate Plan VMP – Vegetation Management Plan EE/DR – Energy Efficiency/Demand Response GRAC – Generation Rate Adjustment Clause EE/PDR - EE Peak Demand Response Rider OATT – Open Access Transmission Tariff EECR - EE Cost Rate Rider PJM – PA-NJ-MD Regional Transmission Org EECRF - Energy Efficiency Cost Recovery Factor Rider PPA – Purchase Power Agreement Rider EERAC – EE Rate Adjustment Clause PSCR- Power Supply Cost Recovery Rider ENEC - Expanded Net Energy Cost RPSRAC – Renewable Portfolio Standard RAC
53rd EEI Financial Conference | aep.com 15 STORM O&M RECOVERY MECHANISMS BY JURISDICTION
Latest Approved Recovery Ability to Period State Defer Description (in years)
Arkansas Yes Storm costs are normally expensed as incurred. However, if a storm is ruled to be significant, Commission has 3 granted authority to request recovery in base rates or a separate proceeding. Indiana Yes Recovery of storm costs is requested in base rate cases. 2018 base case re-established a $4M annual major N/A storm reserve based on 5-year historical average of major storm expenses and includes over-/under-recovery.
Kentucky Yes Recovery of storm costs is requested in base rate cases. Commission approval for deferral is required. 5 Louisiana No Storm costs are expensed as incurred and included for recovery in years of formula rate filings. N/A Michigan No Recovery of storm costs is requested in base rate cases which use forecasted test years. N/A Ohio Yes 2018 Electric Security Plan order established a $5.1M annual major storm reserve and annual true-up 1 mechanism. Recovery of significant storms are requested in separate proceedings. Oklahoma Yes Recovery of storm costs is requested in base rate cases with over-/under-recovery above/below $2.9M 4 annually. Recovery of significant storm costs is separately requested. Tennessee Yes Recovery of storm costs is requested in base rate cases. A reliability/storm rider provides for over-/under- 1 recovery of incremental storm-related costs compared to what is recovered in base rates. Texas Yes Storm costs are normally expensed as incurred. However, storm costs may be deferred for recovery if the 3 (SWEPCO) costs are included in the test period of a base case filing. Texas (North) No Storm costs are normally expensed as incurred and are included in base rates during the test year. N/A Texas (Central) Yes Approved catastrophe reserve ($1.3M annually) in base rates allows deferral of all storm costs above $500K N/A with recovery in base rates or potential securitization. Virginia Yes * APCo continues to expense storm costs for the triennial period of 2017-2019. N/A West Virginia Yes Recovery of extraordinary storm costs is requested in base rate cases. 5
* Subject to an earnings test
53rd EEI Financial Conference | aep.com 16 JURISDICTIONAL OFF-SYSTEM SALES SHARING SUMMARY
State OSS Sharing? Detail Arkansas Yes, above base levels Up to $1,200,000 annual margin, customers receive 100%. Above $1,200,000, customers receive 90%. Indiana Yes, above base levels Effective July 1, 2018, sharing occurs above $0 with customers receiving 95%.
Kentucky Yes, above and below base levels Effective January 19, 2018, sharing occurs above and below levels included in base rates of $7.7M. Customers receive 75%.
Louisiana Yes, above base levels Up to $874,000 annual margin, customers receive 100%. From $874,001 to $1,314,000, customers receive 85%. Above $1,314,000, customers receive 50%.
Michigan No Effective April 26, 2018, customers receive 100% of margins. Ohio N/A N/A Oklahoma Yes Customers receive 90% of profits.
Tennessee N/A N/A Texas (SWEPCO) Yes Customers receive 90% of profits. Virginia Yes 75% of profits are shared with customers. West Virginia Yes With the exception of WPCo’s Mitchell Plant, 100% of profits are passed back to customers through the Expanded Net Energy Cost (ENEC) clause. 82.5% of Mitchell Plant profits are shared with customers.
53rd EEI Financial Conference | aep.com 17 COMMISSION OVERVIEW Federal Energy Regulatory Commission Commissioners
Number: 4 Appointed/Elected: Appointed Term: 5 Years Political Makeup: R: 2 D: 2
Qualifications for Commissioners The Federal Energy Regulatory Commission (FERC) is composed of up to five commissioners who are appointed by the President of the United States with the advice and consent of the Senate. Commissioners serve five-year terms and have an equal vote on regulatory matters. To avoid any undue political influence or pressure, no more than three commissioners may belong to the same political party.
Commissioners Kevin J. McIntyre, Chairman (Rep.) since 2017: second term expires June 2023. Prior to joining the Commission, Chairman McIntyre was the co-leader of the global Energy Practice at the law firm Jones Day, where he practiced law for most of his nearly 30-year legal career. At the firm, he had an expansive FERC practice, counseling and representing clients in nearly all industry sectors, including natural gas, conventional electricity, oil, hydropower, wind power and other renewable resources, and energy marketing and trading. His work for energy clients spanned administrative and appellate litigation, compliance and enforcement matters, and corporate transactions.
Neil Chatterjee, Commissioner (Rep.) since 2017: term expires June 2021. Commissioner Chatterjee served as Chairman from August 2017 to December 2017. Prior to joining the Commission, he was energy policy advisor to U.S. Senate Majority Leader Mitch McConnell (R-KY). Over the years, he has played an integral role in the passage of major energy, highway and agriculture legislation. Prior to serving Leader McConnell, he worked as a principal in government relations for the National Rural Electric Cooperative Association and as an aide to House Republican Conference Chairwoman Deborah Pryce (R-OH). He began his career in Washington, D.C. with the House Committee of Ways and Means.
Richard Glick, Commissioner (Dem.) since 2017: term expires June 2022. Prior to joining the Commission, Commissioner Glick was general counsel for the Democrats on the Senate Energy and Natural Resources Committee, serving as a senior policy advisor on numerous issues including electricity and renewable energy. Prior to that, he was vice president of government affairs for Iberdrola’s renewable energy, electric and gas utility, and natural gas storage businesses in the United States. He ran the company’s Washington, D.C. office and was responsible for developing and implementing the U.S. businesses’ federal legislative and regulatory policy advocacy strategies. Commissioner Glick also previously served as a director of government affairs for PPM Energy and before that was director of government affairs for PacifiCorp. He served as a senior policy advisor to U.S. Energy Secretary Bill Richardson, and before that was legislative director and chief counsel to U.S. Senator Dale Bumpers of Arkansas. From 1988-1992, he was an associate with the law firm of Verner, Liipfert, Bernhard, McPherson and Hand.
Cheryl A. LaFleur, Commissioner (Dem.) since 2010: second term expires June 2019. She served as Acting Chairman from November 2013 to July 2014 and from January 2017 to August 2017 and as Chairman from July 2014 until April 2015. Prior to joining the Commission in 2010, Commissioner LaFleur had more than 20 years’ experience as a leader in the electric and natural gas industry. She served as executive vice president and acting CEO of National Grid USA, responsible for the delivery of electricity to 3.4 million customers in the Northeast. Her previous positions at National Grid USA and its predecessor New England Electric System included chief operating officer, president of the New England distribution companies and general counsel.
53rd EEI Financial Conference | aep.com 18 TRANSFORMING OUR GENERATION FLEET
• Transforming Our Generation Fleet
• Investments Driving Emission Reductions • Dramatic Reductions in Emissions • Delivering Clean Energy Resources • Renewable Resources • Renewable Portfolio/Energy Efficiency Standards • Regulated & Competitive Retirements • Regulated Environmental Controls • Competitive Environmental Controls • Additional Environmental Regulations
53rd EEI Financial Conference | aep.com 19 TRANSFORMING OUR GENERATION FLEET
80%
70% 70% 66%
60%
50%
47%
40% 34%
30% 29%
Capacity 28% 24% 22% 20% 19% 14%
10% 7% 7% 7% 6% 4% 4% 6% 4% 1% 1% 0%
1999 2005 2018 Future 1999 2005 2018 Future 1999 2005 2018 Future 1999 2005 2018 Future 1999 2005 2018 Future Coal Natural Gas Nuclear Hydro, Wind, Solar Energy Efficiency / & Pumped Demand Response
37% 2% No Change 30% 5%
As of September 30, 2018 Future includes IRP forecasted additions and retirements through 2030 Energy Efficiency / Demand Response represents avoided capacity rather than physical assets
53rd EEI Financial Conference | aep.com 20 INVESTMENTS DRIVING EMISSION REDUCTIONS
53rd EEI Financial Conference | aep.com 21 DRAMATIC REDUCTIONS IN EMISSIONS
1990-2017 ACTUAL
SO2 95%
92% NOx
2001-2017 ACTUAL
Hg 95%
53rd EEI Financial Conference | aep.com 22 DRAMATIC REDUCTIONS IN EMISSIONS
2000-2017 Actual
57% CO2
53rd EEI Financial Conference | aep.com 23 DELIVERING CLEAN ENERGY RESOURCES
AEP's September 30, 2018 Renewable Portfolio, in MW Hydro, Wind, Solar & Pumped Storage Owned MW PPA MW Total MW
AEP Ohio 209 209
Appalachian Power Company 816 575 1,391
Indiana Michigan Power Company 36 450 486
Public Service of Oklahoma 1,137 1,137
Southwestern Electric Power Company 469 469
Competitive Wind, Solar & Hydro 473 175 648
Total 1,325 3,015 4,340
53rd EEI Financial Conference | aep.com 24 RENEWABLE RESOURCES
Owned Renewables PPA Renewables Total Total Total Company & Plant Name State Hydro Wind Solar Hydro Wind Solar Owned PPA Appalachian Power Company Buck VA 9 9 9 Byllesby VA 22 22 22 Claytor VA 75 75 75 Leesville VA 50 50 50 London WV 14 14 14 Marmet WV 14 14 14 Niagara VA 2 2 2 Winfield WV 15 15 15 Smith Mtn Pumped VA 615 615 615 Bluff Point IN 120 120 120 Camp Grove WV 75 75 75 Beech Ridge VA 101 101 101 Fowler Ridge III OH 99 99 99 Grand Ridge II & III WV 100 100 100 Gauley River / Summersville WV 80 80 80 Total 816 816 80 495 575 1,391
Indiana Michigan Power Company Berrien Springs MI 6 6 6 Buchanan MI 3 3 3 Constantine MI 1 1 1 Elkhart IN 3 3 3 Mottville MI 2 2 2 Twin Branch IN 5 5 5 Watervliet MI 5 5 5 Olive IN 5 5 5 Deer Creek IN 3 3 3 Twin Branch IN 3 3 3 Fowler Ridge I IN 100 100 100 Fowler Ridge II IN 50 50 50 Wildcat IN 100 100 100 Headwaters IN 200 200 200 Total 20 16 36 450 450 486
53rd EEI Financial Conference | aep.com 25 RENEWABLE RESOURCES
Owned Renewables PPA Renewables Total Total Total Company & Plant Name State Hydro Wind Solar Hydro Wind Solar Owned PPA Ohio Power Company Fowler Ridge II OH 100 100 100 Wyandot Solar OH 10 10 10 Timber Road OH 99 99 99 Total 199 10 209 209
Public Service Company of Oklahoma Weatherford OK 147 147 147 Sleeping Bear OK 94 94 94 Blue Canyon V OK 99 99 99 Minco OK 99 99 99 Elk City OK 99 99 99 Balko OK 200 200 200 Seling OK 199 199 199 Goodwell OK 200 200 200 Total 1,137 1,137 1,137
Southwestern Electric Power Company Majestic TX 79 79 79 Majestic II TX 80 80 80 Flat Ridge II KS 109 109 109 Canadian Hills OK 201 201 201 Total 469 469 469 Total Regulated Renewables 836 16 852 80 2,750 10 2,840 3,692
Competitive Trent Mesa TX 123 123 123 Desert Sky TX 134 134 134 Southwest Mesa TX 175 175 175 Racine OH 48 48 48 AEP Renewables 90 90 90 AEP Onsite Partners 78 78 78 Total Competitive Renewables 48 257 168 473 175 175 648
Total AEP Renewable Resources 884 257 184 1,325 80 2,925 10 3,015 4,340
53rd EEI Financial Conference | aep.com 26 RENEWABLE PORTFOLIO/ENERGY EFFICIENCY STANDARDS
53rd EEI Financial Conference | aep.com 27 REGULATED & COMPETITIVE RETIREMENTS SINCE 2011
Operating Company Plant MW Retirement Date APCo Glen Lyn 5 95 2015 Glen Lyn 6 240 2015 Clinch River 3 235 2015 Sporn 1 150 2015 Sporn 3 150 2015 Kanawha River 1 200 2015 Kanawha River 2 200 2015 Total MW 1,270
I&M Tanners Creek 1-4 995 2015 Total MW 995
KPCo Big Sandy 2 800 2015 Total MW 800
PSO Northeastern 4 470 2016 Total MW 470
SWEPCO Welsh 2 528 2016 Total MW 528
Total Regulated Retirements 4,063 Operating Company Plant MW Retirement Date AEP Generation Resources Beckjord 53 2014 Conesville 3 165 2012 Muskingum River 1-5 1,440 2015 Picway 5 100 2015 Sporn 2,4 300 2015 * Includes 150 MW of Stuart Sporn 5 450 2011 Unit 1 mothballed in Oct 2017 Stuart 1-4 * 600 2018 Kammer 1-3 630 2015 Total Competitive Retirements 3,738
53rd EEI Financial Conference | aep.com 28 REGULATED ENVIRONMENTAL CONTROLS
MW Projected Projected Projected FGD- Projected Projected Gas Projected Plant Name Capacity SCR In-Service FGD In-Service ACI In-Service DSI In-Service Baghouse In-Service Conversion In-Service
APCo
Amos 1 800
Amos 2 800
Amos 3 1,330
Clinch River 1 230
Clinch River 2 235
Mountaineer 1,320
WPCo
Mitchell 1&2* 780
KPCo
Big Sandy 1 280
Mitchell 1&2* 780
I&M/AEG (50/50 share)
Rockport 1 1,310 2017 x 2025
Rockport 2 1,310 x 2020 x 2028 * Operated by Kentucky Power In Service Projected ACI – Activated Carbon Injection DSI – Dry Sorbent Injection FGD – Flue Gas Desulfurization SCR – Selective Catalytic Reduction Baghouse (Mercury Control) (SO3 Control) (SO2 Control) (NOx Control) (Particulate Matter)
53rd EEI Financial Conference | aep.com 29 REGULATED ENVIRONMENTAL CONTROLS
MW Projected Projected Projected FGD- Projected Projected Gas Projected Plant Name Capacity SCR In-Service FGD In-Service ACI In-Service DSI In-Service Baghouse In-Service Conversion In-Service
PSO
Oklaunion 105
Northeastern 3 469
SWEPCO
Dolet Hills 257
Flint Creek 1 264
Pirkey 580
Turk 477
Welsh 1 525
Welsh 3 528 In Service
ACI – Activated Carbon Injection DSI – Dry Sorbent Injection FGD – Flue Gas Desulfurization SCR – Selective Catalytic Reduction Baghouse (Mercury Control) (SO3 Control) (SO2 Control) (NOx Control) (Particulate Matter)
53rd EEI Financial Conference | aep.com 30 COMPETITIVE ENVIRONMENTAL CONTROLS
Gore Mercury Plant Name MW Capacity SCR FGD ACI Control AEP Generation Resources Cardinal 1 595
Conesville 4 651
Conesville 5 410
Conesville 6 410
AEP Texas Oklaunion * 355
* Owned by AEP Texas North, PPA with Competitive In Service
ACI – Activated Carbon Injection FGD – Flue Gas Desulfurization SCR – Selective Catalytic Reduction (Mercury Control) (SO2 Control) (NOx Control)
53rd EEI Financial Conference | aep.com 31 ADDITIONAL ENVIRONMENTAL REGULATIONS Effluent Limitation Guidelines (ELG) – Final rule went into effect January 2016, but US EPA has reopened parts of the rule and adjusted the compliance schedule • Established standards for discharge of wastewater from FGD control systems and ash handling and storage processes at steam electric generating units • Initial compliance deadline has been delayed two years until Nov 1, 2020 Note: US EPA is reconsidering the requirements for bottom ash transport and FGD wastewater, with a new proposal expected late this year
Coal Combustion Residuals (CCR) – Final rule went into effect October 2015 • Applies to the handling and storage of coal combustion and emission control system by-products (ash ponds and landfills) • Requires the collection and publication of groundwater monitoring data; AEP data was made public in the first quarter. Additional groundwater monitoring data being collected this year Note: The US EPA is reconsidering parts of this rule, and has already finalized some revisions. More revisions are expected in the coming year
ELG and CCR Implementation Strategy • The implementation strategy is being reviewed given the US EPA’s decision to reconsider both rules • Compliance solutions based on the initial rules have been included in capital cost estimates • Efforts are underway to optimize the costs of technology options
Affordable Clean Energy Rule (ACE) – US EPA’s proposed replacement for the Clean Power Plan • Applies to existing coal and gas steam generating plants • EPA has proposed establishing standards based on heat rate improvement technology • A final rule is expected in 2019 with development of state implementation plans within three years
53rd EEI Financial Conference | aep.com 32 FINANCIAL UPDATE
• Capitalization & Liquidity • Pension & OPEB Estimates • AEP Banking Group • AEP Credit Ratings • Long-Term Debt Maturity Profile • Debt Schedules
11/5/2018 33 53rd EEI Financial Conference | aep.com 33 CAPITALIZATION & LIQUIDITY
Total Debt / Total Capitalization Credit Statistics 55.9% 56.6% 56.8% 56.8% Actual Target 54.3% 54.3% 53.2% 55.5% FFO to Total Debt 19.2% Mid Teens
Represents the trailing 12 months as of 9/30/2018
2012 2013 2014 2015 2016 Q1-17 Q2-17 Q3-17 Liquidity Summary 2013 2014 2015 2016 2017 Q1-18 Q2-18 Q3-18 (unaudited) 9/30/2018 Actual Short/Long Term Debt Securitization Debt 2013 ($ in millions) Amount Maturity
Revolving Credit Facility * $3,000 Jun-21 Qualified Pension Funding Plus
104% Cash & Cash Equivalents 788 99% 101% 102% 103% 97% 97% 96% Less Commercial Paper Outstanding (1,473) Letters of Credit Issued -
2012 2013 2014 2015 2016 Q1-17 Q2-17 Q3-17 Net Available Liquidity $2,315
* In Oct 2018, credit facility was amended to $4.0B and 2013 2014 2015 2016 2017 Q1-18 Q2-18 Q3-18 extended to mature in Jun-22 Strong balance sheet, credit metrics and liquidity
53rd EEI Financial Conference | aep.com 34 PENSION & OPEB ESTIMATES
Assumptions 2018E 2019E • YTD pension and OPEB returns were flat at 0.2% and (0.3%) Pension Discount Rate 3.65% 4.31% respectively, as modest risk seeking OPEB Discount Rate 3.60% 4.32% asset returns were offset by fixed Assumed Long Term Rate of income losses attributed to rising 6.0% 6.0% Return on Pension Assets yields. Despite these flat returns, the Assumed Long Term Rate funded status of both plans 6.0% 6.0% of Return on OPEB Assets increased slightly as both plan
Pension/OPEB Funding $24M $102M liabilities decreased more than plan assets due to a rising discount rate. Pension/OPEB Cost * ($20M) ($33M) • We expect combined pension and * Pre-tax and pre-capitalization OPEB costs (pre-tax and including capitalized portion) to decrease by $13M from 2018 to 2019 subject to potential changes in investment Qualified Pension Funding results, interest rates and actuarial assumptions. 104% 99% 97% 97% 96% 101% • Pension expense for regulated subsidiaries is recovered through base rates.
2013 2014 2015 2016 2017 3Q2018
53rd EEI Financial Conference | aep.com 35 AEP BANKING GROUP
Lender Composition $4.0B Core Credit Facility (as of Oct 2018) %Share Bank of America Major US Bank 5.9% 11% Bank of Tokyo-Mitsubishi Japanese Bank 5.9% Barclays Bank European Bank 5.9% 28% Citibank Major US Bank 5.9% 16% JP Morgan Major US Bank 5.9% Mizuho Japanese Bank 5.9% The Bank of Nova Scotia Canadian Bank 5.9% Wells Fargo Major US Bank 5.9% Bank of New York Mellon Investment Bank 3.75% 17% 15% BNP Paribas European Bank 3.75% Credit Agricole European Bank 3.75% 13% Credit Suisse European Bank 3.75% Goldman Sachs Investment Bank 3.75% Major US Bank US Regional Bank Canadian Bank Key Bank US Regional Bank 3.75% Morgan Stanley Investment Bank 3.75% European Bank Japanese Bank Investment Bank SunTrust Bank US Regional Bank 3.75% PNC Financial US Regional Bank 3.75% Royal Bank of Canada Canadian Bank 3.75% U.S. Bank Major US Bank 3.75% TD Securities Canadian Bank 3.75% Lender mix gives AEP Sumitomo Bank Ltd Japanese Bank 3.75% geopolitical diversification Fifth-Third Bank US Regional Bank 2.0% Huntington National Bank US Regional Bank 2.0% Total 100%
53rd EEI Financial Conference | aep.com 36 AEP CREDIT RATINGS
Moody's S&P Company Senior Senior Unsecured Outlook Unsecured Outlook American Electric Power Company Inc. Baa1 S BBB+ S AEP, Inc. Short Term Rating P2 S A2 S AEP Texas Inc. Baa1 S A- S (1) AEP Transmission Company, LLC A2 S A- S (2) Appalachian Power Company Baa1 S A- S (2) Indiana Michigan Power Company A3 S A- S Kentucky Power Company Baa2 N A- S Ohio Power Company A2 S A- S Public Service Company of Oklahoma A3 N A- S Southwestern Electric Power Company Baa2 S A- S (3) Transource Energy A2 S NR NR
(1) AEP Transmission Co. received a senior unsecured debt rating of A- from Fitch. The rating outlook is Stable.
(2) In conjunction with the unenhanced VRDN remarketings, APCo and I&M both received short term credit ratings of A-2/P2 from S&P and Moody’s, respectively.
(3) NR stands for Not Rated.
Ratings current as of September 30, 2018
53rd EEI Financial Conference | aep.com 37 LONG-TERM DEBT MATURITY PROFILE
($ in millions) Year 2018 2019 2020 2021 2022 2023
AEP, Inc. $0 $0 $500 $0 $300 $0 AEP Generating Company $125 $45 $0 $0 $0 $0 AEP Texas* $0 $250 $111 $0 $425 $125 AEP Transmission Company $50 $85 $0 $50 $104 $60 Appalachian Power* $0 $281 $65 $368 $204 $0 Indiana Michigan Power $0 $35 $24 $326 $96 $250 Kentucky Power $75 $0 $65 $40 $0 $0 Ohio Power* $0 $0 $0 $500 $0 $0 Public Service of Oklahoma $0 $375 $13 $250 $0 $0 Southwestern Electric Power $400 $54 $115 $0 $275 $0 Wheeling Power Company $0 $0 $0 $0 $178 $0 Total $650 $1,125 $893 $1,534 $1,582 $435
* Excludes securitization bonds
Includes mandatory tenders (put bonds) Data as of September 30, 2018
53rd EEI Financial Conference | aep.com 38 DEBT SCHEDULES
American Electric Power, Inc Interest Maturity CUSIP / PPN* Amount
Senior Notes, Series G 2.150% 11/13/2020 025537AH4 $500,000,000 Senior Notes, Series H 3.200% 11/13/2027 025537AJ0 $500,000,000 Senior Notes, Series F 2.950% 12/15/2022 025537AG6 $300,000,000
Total $1,300,000,000
AEP Generating Company Interest Maturity CUSIP / PPN* Amount
City of Rockport, Series 1995 A Floating 07/01/2025 773835BG7 $22,500,000 1 City of Rockport, Series 1995 B Floating 07/01/2025 773835BH5 $22,500,000 1 Term Loan Floating 12/15/2018 00104NAD6 $125,000,000
Total $170,000,000
1 Liquidity Letter of Credit matures on 7/15/2019, may be purchased on demand
AEP Generation Resources Interest Maturity CUSIP / PPN* Amount
State of Ohio, Air Quality Bonds 2009B 5.800% 12/01/2038 677525TM9 $32,245,000 2
Total $32,245,000
2 Debt on Ohio Pow er, but the obligation is AGR's through an intercompany note
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 39 DEBT SCHEDULES
AEP Texas Interest Maturity CUSIP / PPN* Amount
Red River Authority of Texas PCRB (CPL, PSO, WTU) 4.450% 06/01/2020 756864BT0 $44,310,000 Senior Note, Series 2008B 6.760% 04/01/2038 0010EQA@5 $70,000,000 Senior Notes, Series C 3.090% 02/28/2023 0010EQA#3 $125,000,000 Senior Notes, Series D 4.480% 02/27/2043 0010EQB*6 $75,000,000 Bank Term Loan Floating 07/25/2019 N/A $75,000,000 Senior Note, Series E 3.270% 09/30/2022 0010EQB@4 $25,000,000 Senior Note, Series F 3.750% 09/30/2025 0010EQB#5 $50,000,000 Senior Note, Series G 4.710% 12/15/2035 0010EQ C*5 $50,000,000 Senior Note, Series A 2.400% 10/01/2022 00108WAD2 $400,000,000 Senior Note, Series B 3.80% 3.800% 10/01/2047 00108WAF7 $300,000,000 Senior Note, Series E due 2028 3.950% 06/01/2028 00108WAG5 $500,000,000 Red River Authority of Texas PCRB (CPL, PSO, WTU) 4.450% 06/01/2020 756864BT0 $6,330,000 Matagorda PCB Series 2001A 6.300% 11/01/2029 576528DM2 $100,635,000 Matagorda Cnty Navigation Dist. #1 PCRB, Series 2008-1 4.000% 06/01/2030 576528DP5 $60,265,000 Matagorda Cnty Navigation Dist. #1 PCRB, Series 2008-2 4.000% 06/01/2030 576528DQ3 $60,000,000
Matagorda Cnty Navigation District #1, Series 1996 1.750% 05/01/2030 576528DS9 $60,000,000 1
1 Put date is 09/01/2020
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 40 DEBT SCHEDULES
AEP Texas (continued) Interest Maturity CUSIP / PPN* Amount
Matagorda Cnty Navigation District #1, Series 2005A 4.400% 05/01/2030 576528CY7 $111,700,000 Matagorda Cnty Navigation District #1, Series 2005B 4.550% 05/01/2030 576528CZ4 $50,000,000 Bank Term Loan Floating 07/25/2019 N/A $125,000,000 Senior Note, Series B 6.65% 6.650% 02/15/2033 0010EPAF5 $275,000,000 Senior Note, Series A 2.610% 04/30/2019 0010EPA*9 $50,000,000 Senior Note, Series B 3.81% 3.810% 04/30/2026 0010EPA@7 $50,000,000 Senior Note, Series C 4.670% 04/30/2044 0010EPA#5 $100,000,000 Senior Note, Series D 4.770% 10/30/2044 0010EPB*8 $100,000,000 Senior Note, Series G 3.850% 10/01/2025 0010EPAN8 $250,000,000
Total $3,113,240,000
Securitization Bonds, Class 2006A-5 5.306% 07/01/2020 00110AAE4 $390,548,566 Securitization Bonds, Class 2012 A-2 1.976% 06/01/2020 00104UAB4 $126,199,853 Securitization Bonds, Class 2012 A-3 2.845% 12/01/2024 00104UAC2 $311,900,000
Total $828,648,419
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 41 DEBT SCHEDULES
AEP Transmission Company Interest Maturity CUSIP / PPN* Amount
Senior Notes, Series A, Tranche 1 3.300% 10/18/2022 00114*AA1 $104,000,000 Senior Notes, Series A, Tranche 2 4.000% 10/18/2032 00114*AB9 $85,000,000 Senior Notes, Series A, Tranche 3 4.730% 10/18/2042 00114*AC7 $61,000,000 Senior Notes, Series A, Tranche 4 4.780% 12/14/2042 00114*AD5 $75,000,000 Senior Notes, Series A, Tranche 5 4.830% 03/18/2043 00114*AE3 $25,000,000 Senior Notes, Series B, Tranche 1 2.730% 11/07/2018 00114*AF0 $50,000,000 Senior Notes, Series B, Tranche 2 4.050% 11/07/2023 00114*AG8 $60,000,000 Senior Notes, Series B, Tranche 3 4.380% 11/07/2028 00114*AL7 $60,000,000 Senior Notes, Series B, Tranche 4 5.320% 11/07/2043 00114*AH6 $100,000,000 Senior Notes, Series B, Tranche 5 5.420% 04/30/2044 00114*AJ2 $30,000,000 Senior Notes, Series B, Tranche 6 5.520% 10/30/2044 00114*AK9 $100,000,000 Senior Notes, Series C, Tranche A 2.680% 11/14/2019 00114*AM5 $85,000,000 Senior Notes, Series C, Tranche B 3.180% 11/14/2021 00114*AN3 $50,000,000 Senior Notes, Series C, Tranche C 3.560% 11/14/2024 00114*AP8 $95,000,000 Senior Notes, Series C, Tranche D 3.660% 03/16/2025 00114*AQ6 $50,000,000 Senior Notes, Series C, Tranche E 3.760% 06/16/2025 00114*AR4 $40,000,000 Senior Notes, Series C, Tranche F 3.810% 11/14/2029 00114*AS2 $55,000,000 Senior Notes, Series C, Tranche G 4.010% 06/15/2030 00114*AT0 $60,000,000 Senior Notes, Series C, Tranche H 4.050% 11/14/2034 00114*AU7 $25,000,000 Senior Notes, Series C, Tranche I 4.530% 11/14/2044 00114*AV5 $40,000,000 Senior Notes, Series F 3.100% 12/01/2026 00115A AE9 $300,000,000 Senior Notes, Series D 3.100% 12/01/2026 00115A AE9 $125,000,000 Senior Notes, Series G 4.000% 12/01/2046 00115A AF6 $400,000,000 Senior Notes, Series H 3.750% 12/01/2047 00115A AH2 $500,000,000 Senior Notes, Series J 4.250% 09/15/2048 00115AAJ8 $325,000,000
Total $2,900,000,000
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 42 DEBT SCHEDULES
Appalachian Power Company Interest Maturity CUSIP / PPN* Amount
Bank Term Loan Floating 06/30/2019 N/A $125,000,000
West Virginia Economic Dev. Authority, Series 2008C 3.250% 05/01/2019 95648NAD9 $30,000,000 Russell County, Series K 4.625% 11/01/2021 782470AR9 $17,500,000 West Virginia Economic Dev. Authority, Series 2008D 3.250% 05/01/2019 95648NAE7 $40,000,000 Mason County, Series L 1.625% 10/01/2022 575200BB5 $100,000,000 1 West Virginia Economic Dev. Authority, Series 2008B Floating 02/01/2036 95648VAL3 $50,275,000 West Virginia Economic Dev. Authority, Series 2008A Floating 02/01/2036 95648VAW9 $75,000,000 West Virginia Economic Dev. Authority, Series 2010A 5.375% 12/01/2038 95648VAS8 $50,000,000 West Virginia Economic Dev. Authority, Series 2011A 1.700% 01/01/2041 95648VAZ2 $65,350,000 2 West Virginia Economic Dev. Authority, Series 2015A (Amos) 1.900% 03/01/2040 95648VAV1 $86,000,000 3 West Virginia Economic Dev. Authority, Series 2009A 2.625% 12/01/2042 95648VBB4 $54,375,000 4 West Virginia Economic Dev. Authority, Series 2009B 2.625% 12/01/2042 95648VBC2 $50,000,000 4
1 Put date 10/01/2018 but remarketed on 10/1/2018 and classifed w ith new maturity date of 2022 2 Put date 09/01/2020 3 Put date 04/01/2019 4 Put date 06/01/2022
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 43 DEBT SCHEDULES
Appalachian Power Company (continued) Interest Maturity CUSIP / PPN* Amount
Senior Note, Series H 5.950% 05/15/2033 037735BZ9 $200,000,000 Senior Note, Series L 5.800% 10/01/2035 037735CE5 $250,000,000 Senior Note, Series N 6.375% 04/01/2036 037735CG0 $250,000,000 Senior Note, Series P 6.700% 08/15/2037 037735CK1 $250,000,000 Senior Note, Series Q 7.000% 04/01/2038 037735CM7 $500,000,000 Senior Note, Series T 4.600% 03/30/2021 037735CR6 $350,000,000 Senior Note, Series U 4.400% 05/15/2044 037735CT2 $300,000,000 Senior Note, Series V 3.400% 06/01/2025 037735CU9 $300,000,000 Senior Note, Series W 4.450% 06/01/2045 037735CV7 $350,000,000 Senior Note, Series X 3.300% 06/01/2027 037735CW5 $325,000,000 Total $3,818,500,000
Securitization Bonds, Tranche A-1 2.008% 02/01/2023 037680AA3 $110,260,610 Securitization Bonds, Tranche A-2 3.772% 08/01/2028 037680AB1 $164,500,000 Total $274,760,610
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 44 DEBT SCHEDULES
Indiana Michigan Power Company Interest Maturity CUSIP / PPN* Amount
Law renceburg, Series I Floating 10/01/2019 520453AN1 $25,000,000 Rockport, Series D 2.050% 04/01/2025 773835BN2 $40,000,000 1 Rockport, Series 2002 A 2.750% 06/01/2025 773835BQ5 $50,000,000 Law renceburg, Series H Floating 11/01/2021 520453AM3 $52,000,000 City of Rockport, Series 2009A 3.050% 06/01/2025 773835BR3 $50,000,000 City of Rockport, Series 2009B 3.050% 06/01/2025 773835BS1 $50,000,000
Bank Term Loan Floating 05/09/2021 45488QAA6 $200,000,000
DCC Fuel VII Floating Rate Floating 04/28/2019 N/A $4,074,111 DCC Fuel VIII Floating Rate Floating 10/27/2019 N/A $6,168,041 DCC Fuel IX Floating Rate Floating 10/29/2020 N/A $24,004,623 DCC Fuel X Floating Rate Floating 04/27/2021 N/A $34,323,611 DCC Fuel XI Floating Rate Floating 03/01/2022 N/A $46,816,913 DCC Fuel XII Floating Rate Floating 09/04/2022 N/A $48,833,012
Senior Note, Series H 6.050% 03/15/2037 454889AM8 $400,000,000 Senior Note, Series J 3.200% 03/15/2023 454889AP1 $250,000,000 Senior Note, Series K 4.550% 03/15/2046 454889 AQ9 $400,000,000 Senior Note, Series L 3.750% 07/01/2047 454889 AR7 $300,000,000 Senior Note, Series M 3.850% 05/15/2028 454889AS5 $350,000,000 Senior Note, Series N 4.250% 08/15/2048 454889AT3 $475,000,000 Total $2,806,220,311
1 Put date is 06/01/2021
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 45 DEBT SCHEDULES
Kentucky Power Interest Maturity CUSIP / PPN* Amount
Bank Term Loan Floating 11/05/2018 N/A $75,000,000 1
Senior Note, Series A 7.250% 06/18/2021 491386C*7 $40,000,000 Senior Note, Series B 8.030% 06/18/2029 491386C@5 $30,000,000 Senior Note, Series C 8.130% 06/18/2039 491386C#3 $60,000,000 Senior Note, Series D 5.625% 12/01/2032 491386AL2 $75,000,000 Senior Note, Series A 4.180% 09/30/2026 491386D*6 $120,000,000 Senior Note, Series B 4.330% 12/30/2026 491386D@4 $80,000,000 Senior Note, Series F 3.130% 09/12/2024 491386D#2 $65,000,000 Senior Note, Series G 3.350% 09/12/2027 491386E*5 $40,000,000 Senior Note, Series H 3.450% 09/12/2029 491386E@3 $165,000,000 Senior Note, Series I 4.120% 09/12/2047 491386E#1 $55,000,000
WV Economic Dev. Authority, Series 2014A (Mitchell) 2.000% 04/01/2036 N/A $65,000,000 2 Total $870,000,000
1 Refinanced on 10/26/2018 2 Put date is 06/19/2020
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 46 DEBT SCHEDULES
Ohio Power Company Interest Maturity CUSIP / PPN* Amount
Senior Note, Series D 6.600% 03/01/2033 199575AT8 $250,000,000 Senior Note, Series F 5.850% 10/01/2035 199575AV3 $250,000,000 Senior Note, Series G Due 2/15/2033 6.600% 02/15/2033 677415CF6 $250,000,000 Senior Notes, Series M Due 10/1/2021 5.375% 10/01/2021 677415CP4 $500,000,000 Senior Notes, Series N 4.150% 04/01/2048 677415CQ2 $400,000,000 Total $1,650,000,000
Securitization Bonds, Tranche A-2 2.049% 07/01/2019 67741YAB4 $47,922,805 Total $47,922,805
Public Service Company of Oklahoma Interest Maturity CUSIP / PPN* Amount
Red River Authority of Texas PCRB (CPL, PSO, WTU) 4.450% 06/01/2020 756864BT0 $12,660,000
Senior Note, Series H 5.150% 12/01/2019 744533BK5 $250,000,000 Senior Note, Series G 6.625% 11/15/2037 744533BJ8 $250,000,000 Senior Note, Series I 4.400% 02/01/2021 744533BL3 $250,000,000 Senior Note, Series A 3.170% 03/31/2025 744533C*9 $125,000,000 Senior Note, Series B 4.090% 03/31/2045 744533C@7 $125,000,000 Senior Note, Series C 3.050% 08/01/2026 744533C#5 $50,000,000 Senior Note, Series D 4.110% 08/01/2046 744533D*8 $100,000,000
Bank Term Loan Floating 11/04/2019 N/A $125,000,000
Total $1,287,660,000
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 47 DEBT SCHEDULES
Southwestern Electric Power Company Interest Maturity CUSIP / PPN* Amount
Bank Term Loan Floating 06/29/2020 N/A $115,000,000
Sabine Mines 6.370% 10/31/2024 78532*AC7 $25,000,000 Sabine Mines 4.580% 02/21/2032 78532*AD5 $43,875,000
Parish of DeSoto, Series 2010 1.600% 01/01/2019 241627AW8 $53,500,000
Senior Note, Series G 6.450% 01/15/2019 845437BK7 $400,000,000 1 Senior Note, Series H 6.200% 03/15/2040 845437BL5 $350,000,000 Senior Note, Series I 3.550% 02/15/2022 845437BM3 $275,000,000 Senior Note, Series J 3.900% 04/01/2045 845437BN1 $400,000,000 Senior Note, Series K 2.750% 10/01/2026 845437BP6 $400,000,000 Senior Note, Series L 3.850% 02/01/2048 845437BQ4 $450,000,000 Senior Note, Series M 4.100% 09/15/2028 845437BR2 $575,000,000 Total $3,087,375,000
1 Bondholders w ere notified of a Q4 2018 redemption in the aggregate principal amount of $400M
Wheeling Power Company Interest Maturity CUSIP / PPN* Amount
West Virginia Economic Development Authority, Series 2013A 3.000% 06/01/2037 95648VBA6 $65,000,000 2
Senior Note, Series A, Tranche A 3.360% 06/01/2022 96316#AB9 $113,000,000 Senior Note, Series A, Tranche B 3.700% 06/01/2025 96316#AC7 $122,000,000 Senior Note, Series A, Tranche C 4.200% 06/01/2035 96316#AD5 $50,000,000 Total $350,000,000
2 Put date 04/01/2022
Note: Debt schedules current as of 9/30/18 * PPN – Private Placement Number
53rd EEI Financial Conference | aep.com 48 OVERVIEW President and Chief Operating Officer: Chris Beam Since January 2017 28 years with AEP
Appalachian Power Company (APCo) Total Customers at 12/31/17: (organized in Virginia in 1926) is engaged in the generation, Residential 887,000 transmission and distribution of electric power to approximately 958,000 retail customers in the southwestern portion of Virginia Commercial 148,000 and southern West Virginia, and in supplying and marketing Industrial 5,000 electric power at wholesale to other electric utility companies, municipalities and other market participants. As of December 31, Other 8,000 2017, APCo had 1,817 employees. APCo is a member of PJM. Total 1,048,000
Wheeling Power Company (WPCo) PRINCIPAL Owned Generating Capacity 7,440 MW INDUSTRIES SERVED: (organized in West Virginia in 1883 and reincorporated in 1911) PPA Capacity 919 MW provides electric service to approximately 42,000 retail Coal Mining customers in northern West Virginia. As of December 31, 2017, Primary Metals Generating & PPA Capacity by Fuel Mix: WPCo had 56 employees. WPCo is a member of PJM. Pipeline Transportation • Coal: 64.3%
Kingsport Power Company (KGPCo) Chemical Manufacturing • Hydro & Wind: 16.6% (organized in Virginia in 1917) provides electric service to Paper Manufacturing • Natural Gas: 19.1% approximately 48,000 retail customers in Kingsport and eight neighboring communities in northeastern Tennessee. As of Transmission Miles 6,413 December 31, 2017, KGPCo had 52 employees. KGPCo is a Distribution Miles 54,635 member of PJM. Note: Values consolidate APCo, WPCo and KGPCo.
53rd EEI Financial Conference | aep.com 49 APCo FINANCIAL & OPERATIONAL DATA Capital Structure (in thousands) 2017 ** 9/30/2018 * Credit Ratings/Outlook Capital Structure as of 9/30/2018 Debt Equity Total Debt Equity Total Moody's S&P
Capitalization Per Balance Sheet 4,166,100 3,804,500 7,970,600 4,160,200 3,971,900 8,132,100 Baa1/S A-/S % of Capitalization Per Balance Sheet 52.3% 47.7% 100.0% 51.2% 48.8% 100.0% FFO Interest Coverage 5.44^ 4.82^ FFO Total Debt 21.3%^ 18.8%^ ^ - calculated on rolling 12-month avg.
Summary of KWh Energy Sales *** Summary of Degree Days ** (in millions of KWhs) 35,000 2017 2016 2015 29,216 29,433 30,074 (in degree days) 30,000 2,009 1,997 1,848 2,105 2,162 Actual 1,964 Heating 25,000 Normal 2,235 2,257 2,248 9,603 9,410 9,866
hours 20,000 Actual 1,249 1,480 1,290 - Cooling Normal 1,201 1,198 1,196 15,000 6,517 6,687 6,707
10,000 Kilowatt 5,000 11,132 11,327 11,504 2018 Asset Data * (in thousands) As of 9/30/18 - Total Assets $ 12,057,900 2017 2016 2015 Residential Commercial Industrial Other Net Plant Assets $ 10,505,700 Cash $ 2,200 * Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 10K Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 50 WPCo FINANCIAL & OPERATIONAL DATA Capital Structure (in thousands)
2017 ** 6/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Credit Ratings/Outlook as of 6/30/2018
Capitalization Per Balance Sheet 348,807 415,197 764,004 348,361 414,045 762,406 Moody's S&P % of Capitalization Per Balance Sheet 45.7% 54.3% 100.0% 45.7% 54.3% 100.0% NR A-/S FFO Interest Coverage 7.09^ 6.95^ FFO Total Debt 20.6%^ 20.8%^ ^ - calculated on rolling 12-month avg.
Summary of KWh Energy Sales *** Summary of Degree Days (in millions of KWhs) 2017 2016 2015 3,919 3,759 3,615 4,000 (in degree days) Actual 3,048 3,292 3,569 3,500 Heating
3,000 Normal 3,684 3,712 3,694 Actual 914 1,117 935 2,500 Cooling hours 3,079 - 2,905 2,748 743 732 725 2,000 Normal 1,500
Kilowatt 1,000 2018 Asset Data * (in thousands) 500 440 441 445 As of 6/30/18 394 407 417 - Total Assets $ 1,073,269 2017 2016 2015 Net Plant Assets $ 906,491 Residential Commercial Industrial Other Cash $ 100
* Source: 2Q18 Financial Statements (unaudited) ** Source: 2017 Annual Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 51 KGPCo FINANCIAL & OPERATIONAL DATA
Capital Structure (in thousands)
2017 ** 6/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Capitalization Per Balance Sheet 50,000 43,518 93,518 58,582 45,591 104,173 % of Capitalization Per Balance Sheet 53.5% 46.5% 100.0% 56.2% 43.8% 100.0%
Summary of KWh Energy Sales*** Summary of Degree Days (in millions of KWhs) 2017 2016 2015 2,500 (in degree days) 2,010 2,022 2,094 Actual 1,757 2,070 1,979 2,000 Heating Normal 2,208 2,226 2,221 Actual 1,107 1,455 1,260
1,500 914 918 981 Cooling hours - Normal 1,084 1,080 1,078 1,000
391 394 395 Kilowatt 500 2018 Asset Data * (in thousands) 672 675 683 As of 6/30/18 - Total Assets $ 171,668 2017 2016 2015 Net Plant Assets $ 142,882 Cash $ 69 Residential Commercial Industrial Other
* Source: 2Q18 Financial Statements (unaudited) ** Source: 2017 Annual Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 52 CUSTOMER STATISTICS APPALACHIAN AREA INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON **
West Virginia Customers West Virginia $/month Virginia $/month
APCo *** 120.93 APCo 425,982 APCo 113.93 WPCo *** 120.93 Dominion Virginia Power 113.84 Monongahela Power Co 390,806 Monongahela Power Co 110.22 Old Dominion Power The Potomac Edison The Potomac Edison Company 103.82 Company 141,376 Company 110.22
WPCo 41,427 MAJOR CUSTOMERS: Tennessee $/month
KGPCo 91.88 WVA Manufacturing (WV) Black Diamond Power Co 3,938 Domtar Paper, LLC (TN) Georgia-Pacific Corporation (VA) ** Typical bills are displayed in $/month, based Virginia Customers on 1,000 kWh of residential usage. Billing Greif Brothers Corporation (VA) amounts sourced from the EEI Typical Bills Air Products & Chemicals Inc (TN) Virginia Electric & Power Co 2,454,141 and Average Rates Report as of January 1, Roanoke Electric Steel Corporation (VA) 2018. Steel of WV, Inc. (WV) Constellium Rolled Products (WV) APCo 529,821 *** Effective July 1, 2018, rates reduced to $118.46/month. The Goodyear Tire and Rubber Co. (VA) Roanoke Cement Company LLC (VA) Kentucky Utilities Co 28,121 (Data for year ended December 2017) Tennessee Customers KGPCo 47,840 * Customer counts are a 12-month average as of December 31, 2017 and were sourced from Sales_Ult_Cust_2017.xlsx at https://www.eia.gov/electricity/data/eia861/
Top 10 Customers = 28% of industrial sales Metropolitan areas account for 57% of ultimate sales 102 persons per square mile (U.S. = 87) (Data for 12 months ended December 2017)
53rd EEI Financial Conference | aep.com 53 COMMISSION OVERVIEW Virginia State Corporation Commission
Commissioners
Number: 3 Appointed/Elected: Elected Term: 6 Years Political Makeup: R: 2 D: 0 Qualifications for Commissioners The Virginia State Corporation Commission (VSCC) is composed of three members elected by the General Assembly. Commissioners are elected to serve six-year terms, staggered in two year increments. The chair rotates annually among the three commissioners on February 1. Commissioners
Mark C. Christie, Chairman (Rep.), since 2004; current term expires 2022. Prior counsel to the Speaker of the House of delegates of the Virginia General Assembly. Lawyer, private practice. Law degree from Georgetown. Judith Williams Jagdmann, (Rep.), since 2006; current term expires 2024. Served as Deputy Attorney General for Civil Litigation Division from 1998 to 2005. Attorney General for Commonwealth of Virginia from 2005 to 2006. Law degree from T.C. Williams School of Law at the University of Richmond. Vacant – Vacant following the retirement of Judge James C. Dimitri in February 2018.
AEP Regulatory Status
APCo-VA provides retail electric service in Virginia at unbundled rates. In early 2018, the General Assembly of VA passed the “Grid Transformation and Security Act” effective in July 2018. The Act establishes triennial rate reviews beginning in 2020 for APCo-VA, with a 2017-2019 earnings test period and 2019 test year. APCo-VA is entitled to adjustments to fuel, transmission and certain other rates to recover its actual costs. Virginia currently has a voluntary renewable energy standard which phased in starting at 4% in 2010 and increases to 15% by 2025, with double credits applied to wind and solar resources.
53rd EEI Financial Conference | aep.com 54 COMMISSION OVERVIEW Public Service Commission of West Virginia
Commissioners
Number: 3 Appointed/Elected: Appointed Term: 6 Years Political Makeup: R: 2 D: 1 Qualifications for Commissioners The West Virginia Public Service Commission (WVPSC) consists of three members, appointed by the Governor, with the advice and consent of the senate. No more than two members of the commission may belong to the same political party. The Commissioners serve six year staggered terms, with one term expiring as of July 1 of each odd numbered year. One Commissioner is designated as Chairman of the Commission by the Governor. The Chairman serves as the chief fiscal officer of the Commission. Commissioners Michael A. Albert, Chairman (Rep.), since 2007; term expires June 2019. Served as a Manager and Member in the Business Law Department of Jackson Kelly. Serves on the board of directors of the Kanawha County Public Library and has served as president. Bachelor’s degree and Doctorate of Jurisprudence from West Virginia University. Renee A. Larrick, Commissioner (Rep.), since 2017; term expires June 2023. Former Business Manager for a private law firm. Served on the board of directors of the United Way of Southern West Virginia. Bachelor’s degree from University of Kentucky. Brooks McCabe, Commissioner (Dem.), since 2014; term expires June 2021. Commissioner McCabe is the Managing Member and Broker of West Virginia Commercial, LLC. Served as a Senator representing Kanawha County from 1998-2014. Doctor of Education degree from West Virginia University.
AEP Regulatory Status
APCo and Wheeling Power in WV provide retail electric service at bundled rates approved by the WV PSC. APCo and Wheeling Power filed a base rate case in May 2018. West Virginia has an active annual ENEC (Expanded Net Energy Cost) mechanism, which provides for a rate adjustment for fuel costs, among other items. In August 2018, the Commission authorized new rates through the ENEC.
53rd EEI Financial Conference | aep.com 55 COMMISSION OVERVIEW Tennessee Public Utility Commission Commissioners
Number: 5 Appointed/Elected: Appointed Term: 6 Years Qualifications for Commissioners The Tennessee Public Utility Commission (TPUC) directors are appointed, one each, by the Governor, Lieutenant Governor (as Speaker of the Senate), Speaker of the House and two joint appointments by the three together, and are confirmed by the Tennessee General Assembly. The directors are appointed for six and three-year staggered terms. The chairmanship rotates every year in an agreed upon decision by the directors. Commissioners Herbert H Hilliard, since 2012; current term expires June 2023. Former Executive Vice President and Chief Government Relations Officer for Frist Horizon National Corporation. Serves as Chairman of the Board of Directors of The National Civil Rights Museum, Board member of Blue Cross Blue Shield of Tennessee and former Chairman of the Memphis Housing Authority Board. BBA in Personnel Administration and Industrial Relations from University of Memphis. David Jones, since 2013; current term expires June 2024. Chief Executive Officer and President of Complete Holding Group. Certified facilitator/executive coach with the Alternative Board. BS in Business from University of Tennessee, Knoxville and an MBA from the University of Houston. Kenneth C. Hill, Vice Chairman, since 2009; current term expires June 2020. At the time of his appointment to the commission, Hill was President and Chief Executive Officer of Appalachian Educational Communication Corporation. Serves as a member and mentor of the International Confederation of Energy Regulators. Doctor of Religious Education, Andersonville Baptist Seminary. Robin L. Morrison, Chairman, since 2013; current term expires June 2020. Vice President and financial center manager for First Tennessee Bank. Served on the board of Chattanooga Chamber of Commerce’s Southside Council. Bachelor’s degree in Business Administration-Finance from the University of Tennessee-Chattanooga. John Hie, since 2018; current term expires June 2024. Retired from investment firm Stephens, Inc. in 2015 where he served as a financial advisor and was a former pharmacist at Walter Reed Army Medical Center. Degree from University of Tennessee’s College of Pharmacy.
AEP Regulatory Status
Tennessee has no deregulation legislation and no base rate freeze or cap. Tennessee has an active fuel clause. In August 2016, the TPUC authorized new base rates in Kingsport Power Company’s first base rate case since 1992. Effective with the authorization, fuel, purchased power and PJM transmission charges have been removed from base rates and are now recovered through a single tracked surcharge.
53rd EEI Financial Conference | aep.com 56 OVERVIEW
President and Chief Operating Officer: Toby Thomas Since January 2017 17 years with AEP
Total Customers at 12/31/17: Residential 516,000 Commercial 71,000 Industrial 5,000 Indiana Michigan Power Company (I&M) Other 2,000 (organized in Indiana in 1907) is engaged in the generation, Total 594,000 transmission and distribution of electric power to approximately 594,000 retail customers in northern and eastern Indiana and southwestern Michigan, and in supplying and marketing electric power Owned Generating Capacity 3,624 MW at wholesale to other electric utility companies, rural electric cooperatives, municipalities and other market participants. As of PPA Capacity 1,539 MW * December 31, 2017, I&M had 2,423 employees. I&M is a member of Generating & PPA Capacity by Fuel Mix: PJM. • Coal: 46.5% • Nuclear: 44.1% PRINCIPAL INDUSTRIES SERVED: • Hydro, Wind & Solar: 9.4% Primary Metals Transmission Miles 5,088 Transportation Equipment Chemical Manufacturing Distribution Miles 20,471 Plastics and Rubber Products Fabricated Metal Product Manufacturing
* Includes 917 MW from AEP Generating Company Rockport Plant PPA
53rd EEI Financial Conference | aep.com 57 FINANCIAL & OPERATIONAL DATA
Capital Structure (in thousands)
2017 ** 9/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Credit Ratings/Outlook as of 9/30/2018 Capitalization Per Balance Sheet 2,956,700 2,217,600 5,174,300 3,062,400 2,342,500 5,404,900 Moody's S&P % of Capitalization Per Balance Sheet 57.1% 42.9% 100.0% 56.7% 43.3% 100.0% FFO Interest Coverage 5.97^ 6.02^ A3/S A-/S FFO Total Debt 23.3%^ 24.9%^ ^ - calculated on rolling 12-month avg.
Summary of KWh Energy Sales *** Summary of Degree Days ** (in millions of KWhs) 30,000 2017 2016 2015 (in degree days) 25,000 23,164 23,349 23,024 Actual 3,213 3,429 3,789 Heating 20,000 5,068 5,100 5,041 Normal 3,758 3,779 3,762
hours Actual 792 1,039 798 - Cooling 15,000 7,740 7,780 7,570 Normal 846 845 846 10,000
Kilowatt 4,868 4,942 4,904 2018 Asset Data * (in thousands) 5,000 5,488 5,527 5,509 As of 9/30/18 - Total Assets $ 10,108,100 2017 2016 2015 Net Plant Assets $ 6,236,500 Residential Commercial Industrial Other Cash $ 1,600
* Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 10K Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 58 CUSTOMER STATISTICS
INDIANA & MICHIGAN INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON ** Indiana Customers Indiana $/month Michigan $/month
DTE Electric Duke Energy Indiana 819,569 SIGECo 158.75 Company 160.92
IP & L 491,347 NIPSCO 142.40 Consumers Energy 150.06 I & M 122.64 I & M 119.73 NIPSCO 468,590 Duke Energy Indiana 118.76 I & M 463,352 IP & L 112.51
SIGECo 141,341 ** Typical bills are displayed in $/month, based on 1,000 kWh of residential usage. Billing amounts Michigan Customers 1,779,184 sourced from the EEI Typical Bills and Average Rates Report as of DTE Electric Company 2,156,2142,184,813 January 1, 2018.
MAJOR CUSTOMERS: Consumers Energy 1,816,948
Steel Dynamics Inc. (IN) I & M 128,632 IN TEK (IN) Air Products & Chemicals Inc (IN) * Customer counts are a 12-month average as of December 31, Linde LLC (IN) 2017 and were sourced from Sales_Ult_Cust_2017.xlsx at Michelin North America (IN) https://www.eia.gov/electricity/data/eia861/ Ardagh Glass Inc ((IN) Metal Technologies Inc. (MI) Unifrax Corporation (IN) Top 10 Customers = 45% of industrial sales Guardian Industries Corp (IN) Metropolitan areas account for 66% of ultimate sales Honeywell International Inc (IN) 205 persons per square mile (U.S. = 87) (Data for 12 months ended December 2017) (Data for year ended December 2017)
53rd EEI Financial Conference | aep.com 59 COMMISSION OVERVIEW Indiana Utility Regulatory Commission Commissioners
Number: 5 Appointed/Elected: Appointed Term: 4 Years Political Makeup: R: 3 D: 2 Qualifications for Commissioners Five members, appointed by the Governor from among persons nominated by a legislatively mandated utility commission nominating committee; four-year, staggered terms, full-time positions. Not more than three of the members of the IURC shall be members of the same political party. At least one of the commissioners must be an attorney qualified to practice law before the Indiana Supreme Court. The Governor appoints one of the five as chairperson. Commissioners
Stefanie Krevda, Commissioner (Rep.), since 2018; current term ends April 2022. Served as Chief of Staff and Interim Director at the State Personnel Department. Served as gubernatorial aid during the Daniels Administration. Earned degree from Purdue University. Sarah Freeman, Commissioner ( Dem.), since 2016; current term ends January 2022. Former senior staff attorney with the nonpartisan Indiana Legislative Services Agency for 16 years. Served as a deputy attorney general with the Office of the Indiana Attorney General. Juris doctor degree from the Indiana University Maurer School of Law. David Ober, Commissioner (Rep.), since 2018; current term ends January 2020. Served House District 82 in the Indiana House of Representatives from 2012 to 2018. Was also Asst. Majority Whip for the House Republican Caucus from 2014 to 2016. Degree in computer science from Purdue University Northwest.
David E. Ziegner, Commissioner (Dem.), since 1990; current term ends April 2019. General Counsel for IURC and served as staff attorney for the Legislative Services Agency. Treasurer of NARUC, former vice-chair NARUC Committee on Electricity. Law degree from the Indiana University School of Law in Indianapolis.
James Huston, Chairman (Rep.), since September 2014; current term ends March 2021. Served as Chief of Staff at the Indiana State Department of Health. Also served as Asst. Deputy Treasurer and Deputy Commissioner for the Bureau of Motor Vehicles. Earned his B.S. and M.A. from Ball State University.
AEP Regulatory Status
I&M provides retail electric service at bundled rates approved by the IURC on May 30, 2018. Rates are set on a cost of service basis with a fuel recovery mechanism. I&M has trackers in place for PJM expenses, OSS Sharing, clean coal technology, nuclear life cycle management and DSM/EE. In Indiana, I&M is authorized to: collect through base rates amounts to fund future decommissioning costs for the Cook nuclear plant; collected amounts are placed in external trusts; establish a regulatory asset/liability for incremental storm-related costs for consideration in the company's next rate case; and authorized to earn an incentive on certain demand-side management programs. Indiana regulation provides: • A 300 day rate case procedural schedule along, with interim rates after 10 months, limited to 50% of the utility's proposed permanent increase • Base rate cases can utilize a historical test year, a forward-looking test year, or a "hybrid" test year that includes both historic and projected data • Riders to facilitate recovery of the costs associated with certain electric infrastructure expansion projects, including those intended to improve safety or reliability, modernize the system or improve an area's economic development prospects • A voluntary renewable portfolio standard is in place Retail competition has not been implemented.
53rd EEI Financial Conference | aep.com 60 COMMISSION OVERVIEW Michigan Public Service Commission
Commissioners
Number: 3 Appointed/Elected: Appointed Term: 6 Years Political Makeup: I: 2 R: 1 Qualifications for Commissioners
The Michigan Public Service Commission (MPSC) is composed of three members appointed by the Governor with the advice and consent of the Senate. Commissioners are appointed to serve staggered six-year terms. No more than two commissioners may represent the same political party. One commissioner is designated as chairman by the Governor. Commissioners Rachel Eubanks, Commissioner, (Rep.), since 2016; current term expires July 2023. Worked in public finance for 13 years, most recently as a director at Robert W. Baird & Co. Inc. Serves on the NARUC Board of Directors and represents Michigan on the board of the Organization of PJM States. Holds a bachelor’s degree in economics from the University of Michigan.
Sally Talberg, Chairman (Ind.), since 2013; current term expires July 2021. Former senior consultant at Public Sector Consultants. Previously served as an analyst at the MPSC, managed enforcement and contested cases at the Michigan Department of Environmental Quality and advised commissioners at the Public Utility Commission of Texas. Holds a bachelor of science from Michigan State University and a masters in Public Affairs from the University of Texas – Austin. Norman J. Saari, Commissioner, (Ind.) , since 2015; current term expires July 2019. Served as an executive director of governmental affairs for 20 years at the Consumers Energy Company. Commissioner Saari is a member of the National Association of Regulatory Utility Commissioners and serves as the board vice-president of the Mid-America Regulatory Conference. Earned a bachelor’s degree from Michigan State University.
AEP Regulatory Status
I&M serves customers through rates approved on April 12, 2018 and an active fuel clause that recovers fuel, purchased energy and capacity, PJM expenses and consumable expenses. Michigan has been deregulated with customer choice since 2002. Generation is not deregulated. Retail rates are unbundled (though they continue to be regulated) to allow customers to evaluate generation costs. Currently, due to legislative changes, I&M’s choice cap is set at 0% until February 1, 2019 at which time it resets to 10% of I&M’s annual sales, and adjusted every two years thereafter. Michigan regulation provides: • 10-month rate case procedural schedule • Utilities required to demonstrate sufficient resources to serve anticipated loads • Voluntary green pricing programs • 35% overall waste reduction and renewable energy goal by 2025, with 15% of generation from renewables by 2021 • DSM/EE shared savings mechanism • I&M to collect through base rates amounts to fund the projected future decommissioning costs for the Cook nuclear plant; the collected amounts are placed in external trusts
53rd EEI Financial Conference | aep.com 61 OVERVIEW
President and Chief Operating Officer: Brett Mattison
Effective January 1, 2019 28 years with AEP
Matthew Satterwhite, President and Chief Operating Officer through December 31, 2018
Total Customers at 12/31/17:
Kentucky Power Company (KPCo) Residential 135,500 (organized in Kentucky in 1919) is engaged in the generation, Commercial 30,000 transmission and distribution of electric power to approximately 167,000 retail customers in eastern Kentucky, Industrial 1,000 and in supplying and marketing electric power at wholesale to Other 500 other electric utility companies, municipalities and other market participants. As of December 31, 2017, KPCo had Total 167,000 549 employees. KPCo is a member of PJM. Owned Generating Capacity 1,060 MW PPA Capacity 393 MW * PRINCIPAL INDUSTRIES SERVED: Generating & PPA Capacity by Fuel Mix: Petroleum and Coal Products Manufacturing Chemical Manufacturing • Coal: 80.7% Coal Mining • Natural Gas: 19.3% Oil and Gas Extraction Primary Metals Transmission Miles 1,267 Distribution Miles 10,040
* Represents 393 MW from AEP Generating Company Rockport Plant PPA
53rd EEI Financial Conference | aep.com 62 FINANCIAL & OPERATIONAL DATA
Capital Structure (in thousands)
2017 ** 9/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Capitalization Per Balance Sheet 876,829 670,263 1,547,092 879,572 719,769 1,599,341 Credit Ratings/Outlook % of Capitalization Per Balance Sheet 56.7% 43.3% 100.0% 55.0% 45.0% 100.0% as of 9/30/2018
FFO Interest Coverage 4.26^ 4.17^ Moody's S&P FFO Total Debt 16.8%^ 14.1%^ ^ - calculated on rolling 12-month avg. Baa2/N A-/S
Summary of KWh Energy Sales *** (in millions of KWhs) Summary of Degree Days 2017 2016 2015 7,000 5,804 5,921 6,319 (in degree days) 6,000 Actual 2,005 2,233 2,482 Heating Normal 2,441 2,462 2,446 5,000 2,693 2,403 2,408 Actual 1,138 1,543 1,096
hours 4,000 Cooling - Normal 1,178 1,172 1,180 3,000 1,268 1,303 1,327
Kilowatt 2,000 2018 Asset Data * (in thousands) 1,000 2,042 2,115 2,198 As of 9/30/18 Total Assets $ 2,350,105 - Net Plant Assets $ 1,843,092 2017 2016 2015 Cash $ 698 Residential Commercial Industrial Other * Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 Annual Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 63 CUSTOMER STATISTICS
KENTUCKY INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON ** Kentucky Customers Kentucky $/month Kentucky Utilities 522,511 KPCo 114.23 LG & E 408,738 LG & E 112.56 KPCo 167,599 Kentucky Utilities 105.70 Duke Energy Kentucky 141,273 Duke Energy Kentucky 90.04
* Customer counts are a 12-month average as of December 31, ** Typical bills are displayed in $/month, based on 1,000 kWh of 2017 and were sourced from Sales_Ult_Cust_2017.xlsx at residential usage. Billing amounts sourced from the EEI https://www.eia.gov/electricity/data/eia861/ Typical Bills and Average Rates Report as of January 1, 2018.
MAJOR CUSTOMERS:
Catlettsburg Refining LLC Markwest Hydrocarbon LLC Top 10 customers = 78% of industrial sales Air Products & Chemicals, Inc. Metropolitan areas account for 44% of ultimate sales Airgas USA, LLC 67 persons per square mile (U.S. = 87) AK Steel Corporation (Data for 12 months ended December 2017) Calgon Carbon Corp Tennessee Gas Pipeline Co Huntington Alloys M C Mining, Inc. Czar Coal Corporation
(Data for year ended December 2017)
53rd EEI Financial Conference | aep.com 64 COMMISSION OVERVIEW Kentucky Public Service Commission
Commissioners
Number: 3 Appointed/Elected: Appointed Term: 4 Years Political Makeup: R: 3 D: 0 Qualifications for Commissioners
Typically three members, appointed by the governor and confirmed by the state Senate for four-year, staggered terms, full-time positions. The governor appoints one of the three as chairman and another of the three as vice chairman to serve in the chairman’s absence. Not more than two members of the KPSC shall be of the same profession or occupation. Commissioners Michael J. Schmitt, Chairman (Rep.), since 2016; current term expires June 30, 2019. Prior to joining, the PSC Chairman Schmitt was a partner at the law firm Porter, Schmitt, Banks and Baldwin where he specialized in energy and education law. J.D. from the University of Kentucky College of Law. Robert Cicero, Vice Chairman (Rep.), since 2016; current term expires June 30, 2020. Prior to appointment, was a small business owner and business executive. Served for 10 years as CFO and Treasurer for Aristech Acrylics LLC. He also has 20 years experience in various managerial and financial positions with US Steel and its affiliates. Earned an MBA from the Joseph M. Katz Graduate School of Management and a BS in Accounting from the University of Pittsburgh. Talina R. Mathews, Commissioner (Rep.), since 2017; current term expires June 30, 2021. Prior to appointment as commissioner, Mathews served as executive director of the Public Service Commission. She has also served as executive director of the Governor’s Office of Energy Policy. She is on the board of directors of the Organization of MISO States and the Organization of PJM States. Earned a Doctor of Philosophy and a Master of Arts in economics from the University of Kentucky.
AEP Regulatory Status
KPCo provides retail electric service at regulated bundled rates in Kentucky. Kentucky has an environmental surcharge to recover approved environmental costs and it has an active fuel clause. Kentucky also has an OSS sharing mechanism and a monthly adjustment clause in place for DSM. KPCo last implemented base rates in January 2018. Kentucky does not have a renewable portfolio standard. KPCo is currently in a 3-yr base rate case stay out provision and any new rates can’t go into effect any earlier than January 1, 2021.
53rd EEI Financial Conference | aep.com 65 OVERVIEW President and Chief Operating Officer: Raja Sundararajan
Effective January 1, 2019 16 years with AEP
Julie Sloat, President and Chief Operating Officer through December 31, 2018
AEP Ohio - Ohio Power Company (OPCo) (organized in Ohio in 1907 and re-incorporated in 1924) is engaged in the transmission and distribution of electric power to Total Customers at 12/31/17: approximately 1,477,000 retail customers in Ohio. Following corporate separation of OPCo's generation assets in December Residential 1,286,000 2013, OPCo purchases energy and capacity to serve generation Commercial 178,000 service customers. As of December 31, 2017, OPCo had 1,654 employees. OPCo is a member of PJM. Industrial 10,000 Other 3,000 Total 1,477,000 PRINCIPAL INDUSTRIES SERVED: Primary Metals PPA Capacity 646 MW Petroleum and Coal Products Manufacturing PPA Capacity by Fuel Mix: Plastics and Rubber Products • Coal: 67.6% Chemical Manufacturing Fabricated Metal Product Manufacturing • Wind & Solar: 32.4% Data Centers Transmission Miles 7,878 Distribution Miles 45,833
53rd EEI Financial Conference | aep.com 66 FINANCIAL & OPERATIONAL DATA
Capital Structure (in thousands) 2017 ** 9/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Credit Ratings/Outlook as of 9/30/2018 Capitalization Per Balance Sheet 1,807,100 2,310,300 4,117,400 1,959,200 2,209,300 4,168,500 % of Capitalization Per Balance Sheet 43.9% 56.1% 100.0% 47.0% 53.0% 100.0% Moody's S&P FFO Interest Coverage 7.16^ 9.24^ A2/S A-/S FFO Total Debt 37.0%^ 45.6%^ ^ - calculated on rolling 12-month avg.
Summary of Degree Days ** Summary of KWh Energy Sales *** (in millions of KWhs) 2017 2016 2015 60,000 (in degree days) 43,126 42,985 43,408 Actual 2,709 2,957 3,235 50,000 Heating
Normal 3,225 3,245 3,226 40,000 Actual 1,002 1,248 975
14,671 14,285 14,653 Cooling hours
- Normal 974 969 970 30,000
20,000 14,467 14,514 14,468
Kilowatt 2018 Asset Data * (in thousands) 10,000 13,861 14,055 14,159 As of 9/30/18 - Total Assets $ 7,118,600 2017 2016 2015 Net Plant Assets $ 6,102,700 Residential Commercial Industrial Other Cash $ 3,500
* Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 10K Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 67 CUSTOMER STATISTICS
OHIO INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON ** Ohio Customers Ohio $/month AEP Ohio 1,472,768 AEP Ohio (OPCo) 132.19 FE (Ohio Edison) 1,046,760 FE (Toledo Edison) 131.36 FE (CEI) 128.92 FE (CEI) 750,659 FE (Ohio Edison) 128.72 Duke Energy Ohio Inc 712,329 AEP Ohio (CSPCo) 125.78 DP&L 520,023 Duke Energy Ohio Inc 117.37 FE (Toledo Edison) 310,305 DP&L 106.79
* Customer counts are a 12-month average as of December 31, ** Typical bills are displayed in $/month, based on 1,000 2017 and were sourced from Sales_Ult_Cust_2017.xlsx at kWh of residential usage. Billing amounts sourced from https://www.eia.gov/electricity/data/eia861/ the EEI Typical Bills and Average Rates Report as of January 1, 2018. Ohio rates represent standard service offer bundled residential rates.
Top 10 AEP Ohio customers = 35% of industrial sales MAJOR CUSTOMERS: Metropolitan areas account for 67% of ultimate sales 169 persons per square mile (U.S. = 87) Timken Steel Corporation (Data for 12 months ended December 2017) Lima Refining Co. Globe Metallurgical, Inc. Republic Steel Eramet Marietta, Inc. Markwest Utica EMG, LLC Marathon Petroleum Company LP Airgas USA, LLC PH Glatfelter Company
(Data for year ended December 2017)
53rd EEI Financial Conference | aep.com 68 COMMISSION OVERVIEW Public Utilities Commission of Ohio Commissioners
Number: 5 Appointed/Elected: Appointed Term: 5 Years Political Makeup: R: 2 D: 1 I: 2 Qualifications for Commissioners Five members, appointed by the governor and confirmed by the state senate; five-year staggered terms, full-time positions, commissioners shall be selected from the lists of qualified persons submitted to the governor by the PUCO nominating council. Not more than three of the members of the PUCO shall be members of the same political party. The governor appoints one of the five as chairman, who serves at the pleasure of the governor until a successor has been designated. Commissioners Asim Haque, Chairman, (Ind.) since 2013; term expires April 2021. Prior to joining the commission was assistant counsel at Honda North America. Prior to that was an attorney with Ice Miller LLP. Bachelor’s degrees in chemistry and political science from Case Western Reserve University and Juris Doctorate from Ohio State University.
M. Beth Trombold, Commissioner, (Ind.) since 2013; term expires April 2023. Prior to joining the commission, was the assistant director of the Ohio Development Services Agency. Served as director of Economic Development and Public Affairs within PUCO. Bachelor’s degree in business administration from Ohio University and master’s in public policy and management from Ohio State University. Thomas W. Johnson, Commissioner, (Rep.) , since 2014; term expires April 2019. Prior to joining the commission, was on the Ohio House of Representatives for 22 years serving Southeastern Ohio. Afterwards served as Governor Bob Taft’s director of the Office of Budget and Management from 1999 to 2006. Bachelor’s degree in government from Muskingum University. Lawrence Friedeman, Commissioner, (Dem.), since 2017; term expires April 2020. Prior to joining the commission, was employed as vice president of regulatory affairs and compliance at IGS Energy. Received undergraduate and graduate degrees from the University of Pittsburgh and the University of Pittsburgh School of Law. Daniel Conway, Commissioner, (Rep.) since 2017; term expires April 2022. Prior to joining the commission, practiced energy and telecommunications law for more than 35 years representing utilities and telecommunications companies before the PUCO. Serves as an adjunct professor at The Ohio State University. Bachelor’s degree in physics from Miami University and law degree from the University of Michigan.
AEP Regulatory Status
OPCo currently has an approved electric security plan through May 2024. Transmission rates are regulated by FERC as reflected in the OATT and billed to retail customers via the basic transmission cost rider. Distribution rates are regulated by PUCO and are scheduled for review in June 2020. In Ohio, certain distribution investments and operating costs are recoverable contemporaneously via separate riders.
53rd EEI Financial Conference | aep.com 69 OVERVIEW President and Chief Operating Officer: Peggy Simmons Since September 2018 19 years with AEP
Total Customers at 12/31/17: Public Service Company of Oklahoma (PSO) Residential 474,000 (organized in Oklahoma in 1913) is engaged in the generation, transmission and distribution of electric power to approximately Commercial 63,000 551,000 retail customers in eastern and southwestern Oklahoma, Industrial 6,000 and in supplying and marketing electric power at wholesale to other electric utility companies, municipalities, rural electric cooperatives Other 8,000 and other market participants. At December 31, 2017, PSO had Total 551,000 1,141 employees. PSO is a member of SPP.
Owned Generating Capacity 3,934 MW Gas PPA Capacity 1,065 MW PRINCIPAL INDUSTRIES SERVED: Paper Manufacturing Wind PPA Capacity 1,137 MW Oil and Gas Extraction Generating & PPA Capacity by Fuel Mix: Petroleum and Coal Products Manufacturing • Coal 9.4% Transportation Equipment • Natural Gas 72.1% Pipeline Transportation • Wind 18.5%
Transmission Miles 3,201 Distribution Miles 19,973
53rd EEI Financial Conference | aep.com 70 FINANCIAL & OPERATIONAL DATA Capital Structure (in thousands) 2017 ** 9/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Capitalization Per Balance Sheet 1,436,100 1,215,300 2,651,400 1,308,900 1,267,400 2,576,300 Credit Ratings/Outlook % of Capitalization Per Balance Sheet 54.2% 45.8% 100.0% 50.8% 49.2% 100.0% as of 9/30/2018
Moody's S&P FFO Interest Coverage 6.20^ 6.40^ A3/N A-/S FFO Total Debt 19.8%^ 25.4%^ ^ - calculated on rolling 12-month avg.
Summary of Degree Days ** Summary of KWh Energy Sales *** 2017 2016 2015 (in millions of KWhs) (in degree days) 18,332 18,167 17,941 Actual 1,249 1,341 1,588 20,000 Heating
1,776 1,778 1,774 1,248 1,249 1,242 Normal 15,000 Actual 2,131 2,444 2,182
5,669 5,534 5,410 Cooling hours
- Normal 2,147 2,132 2,127 10,000 5,225 5,229 5,146
Kilowatt 5,000 6,190 6,155 6,143 2018 Asset Data * (in thousands) - As of 9/30/18 2017 2016 2015 Total Assets $ 4,513,500 Residential Commercial Industrial Other Net Plant Assets $ 3,933,700 Cash $ 1,900 * Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 10-K Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 71 CUSTOMER STATISTICS
OKLAHOMA INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON **
Oklahoma Customers Oklahoma $/month OG&E 771,427 OG&E 111.33 PSO 550,022 PSO 96.58 Empire District 4,680 Empire District 89.01
* Customer counts are a 12-month average as of December 31, ** Typical bills are displayed in $/month, based on 2017 and were sourced from Sales_Ult_Cust_2017.xlsx at 1,000 kWh of residential usage. Billing amounts https://www.eia.gov/electricity/data/eia861/ sourced from the EEI Typical Bills and Average Rates Report as of January 1, 2018.
MAJOR CUSTOMERS:
International Paper Company Kimberly Clark Corp Top 10 customers = 44% of industrial sales Goodyear Tire & Rubber Company Metropolitan areas account for 74% of ultimate sales Enable Products, LLC. 49 persons per square mile (U.S. = 87) HollyFrontier Corporation (Data for 12 months ended December 2017) American Airlines Terra Nitrogen Republic Paperboard
(Data for year ended December 2017)
53rd EEI Financial Conference | aep.com 72 COMMISSION OVERVIEW Oklahoma Corporation Commission
Commissioners
Number: 3 Appointed/Elected: Elected Term: 6 Years Political Makeup: R: 3 D: 0
Qualifications for Commissioners The Oklahoma Corporation Commission (OCC) is composed of three commissioners who are elected by state-wide vote. Commissioners serve staggered six-year terms. The election pattern was established when the Commission was created by the state constitution. Commissioners Bob Anthony, Commissioner, (Rep.), since 1989; current term expires January 2019 (up for re-election in November 2018 general election). Member, NARUC. Served on the boards of the Oklahoma State, Oklahoma City and South Oklahoma City chambers of commerce. Earned an M.Sc. from the London School of Economics, an M.A. from Yale University and an M.P.A. from the Kennedy School of Government at Harvard University. Todd Hiett, Vice Chairman (Rep.), since 2015; current term ends January 2021. Member, NARUC. Elected to the Oklahoma House of Representatives in 1994, selected as House Minority Leader in 2002 and Speaker of House from 2004-2006. After 12 years in the Legislature, he returned to the business world and ran his cattle ranch until his election as a Commissioner. He received his undergraduate degree in Animal Science/Business from Oklahoma State University. Dana Murphy, Chairman (Rep.), since 2008; current term expires January 2023. Member, NARUC. Murphy’s prior experience includes working as an administrative law judge at the Commission. She has more than 22 years experience in the petroleum industry including owning and operating her own private law practice and working as a geologist in the Oklahoma petroleum industry. Juris Doctorate Oklahoma City University.
AEP Regulatory Status
PSO provides retail electric service in Oklahoma at bundled rates approved by the OCC. PSO’s rates are set on a cost-of-service basis. Fuel and purchased power costs are recovered by applying a fuel adjustment factor to retail kilowatt-hour sales. The factor is generally adjusted annually and is based upon forecasted fuel and purchased energy costs. Over- or under-collections of fuel costs for prior periods are returned to or recovered from customers when new annual factors are established. PSO has an OSS margin sharing mechanism. Oklahoma currently has a voluntary renewable energy standard of 15% by 2015. PSO filed a base rate case in September 2018.
53rd EEI Financial Conference | aep.com 73 OVERVIEW
President and Chief Operating Officer: Malcolm Smoak Since March 2018 34 years with AEP
Southwestern Electric Power Company (SWEPCO) (organized in Delaware in 1912) is engaged in the generation, transmission and distribution of electric power to approximately 535,000 retail customers Total Customers at 12/31/17: in northeastern and panhandle of Texas, northwestern and central Louisiana, Residential 454,000 and western Arkansas and in supplying and marketing electric power at wholesale to other electric utility companies, municipalities, rural electric Commercial 74,000 cooperatives and other market participants. At December 31, 2017, Industrial 6,500 SWEPCO had 1,479 employees. The territory served by SWEPCO also includes several military installations, colleges and universities. SWEPCO Other 500 also owns and operates a lignite coal mining operation. SWEPCO is a Total 535,000 member of SPP. Owned Generating Capacity 5,250 MW PPA Capacity 555 MW PRINCIPAL INDUSTRIES SERVED: Generating & PPA Capacity by Fuel Mix: Petroleum and Coal Products Manufacturing • Coal: 45.3% Food Manufacturing • Natural Gas: 46.6% Paper Manufacturing • Wind: 8.1% Oil and Gas Extraction Transmission Miles 4,102 Chemical Manufacturing Distribution Miles 25,198
53rd EEI Financial Conference | aep.com 74 FINANCIAL & OPERATIONAL DATA Capital Structure (in thousands) 2017 ** 9/30/2018 * Capital Structure Debt Equity Total Debt Equity Total Capitalization Per Balance Sheet 2,560,600 2,234,500 4,795,100 3,072,700 2,314,300 5,387,000 Credit Ratings/Outlook % of Capitalization Per Balance Sheet 53.4% 46.6% 100.0% 57.0% 43.0% 100.0% as of 9/30/2018
FFO Interest Coverage 4.52^ 4.58^ Moody's S&P FFO Total Debt 16.7%^ 15.0%^ ^ - calculated on rolling 12-month avg. Baa2/S A-/S
Summary of KWh Energy Sales *** Summary of Degree Days ** (in millions of KWhs) 30,000 2017 2016 2015 23,490 23,447 23,888 25,000 (in degree days)
Actual 829 917 1,168 Heating
20,000 6,022 6,190 6,252 Normal 1,208 1,208 1,204 hours
- Actual 2,197 2,516 2,450 15,000 5,268 5,074 5,370 Cooling Normal 2,312 2,298 2,293
10,000 5,989 6,031 6,032 Kilowatt 5,000 2018 Asset Data * (in thousands) 6,211 6,152 6,234 As of 9/30/18 - Total Assets $ 7,987,400 2017 2016 2015 Net Plant Assets $ 6,794,000 Residential Commercial Industrial Other Cash $ 2,500
* Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 10-K Financial Statements *** GWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 75 CUSTOMER STATISTICS SOUTHWESTERN INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON ** Arkansas Customers Arkansas $/month Louisiana $/month Texas $/month Entergy AR 708,855 Entergy New Empire District 117.78 Orleans 119.53 SPSCo 133.21 SWEPCO 119,159 Entergy AR 109.14 CLECO 118.06 El Paso 120.32 OG&E 66,825 OG&E 92.42 SWEPCO 97.68 Entergy TX 108.16 Empire District 4,537 SWEPCO 90.41 Entergy LA 96.25 SWEPCO 86.35 Entergy Gulf St 89.64
Louisiana Customers ** Typical bills are displayed in $/month, based on 1,000 kWh of residential usage. Billing amounts sourced from the EEI Typical Bills and Average Rates Report as of January 1, 2018. Entergy LA 1,078,545 CLECO 286,400
SWEPCO 230,568 MAJOR CUSTOMERS:
Texas Customers XTO Energy (TX) Calumet Lubricants (LA) Entergy TX 446,771 Domtar Corporation (AR) El Paso 318,055 International Paper Company (TX) Cooper Tire & Rubber Company (AR) SPSCo 269,340 US Steel Tubular Products, Inc. (TX) Pratt Paper, LLC (LA) SWEPCO 185,249 Air Liquide Large Industries (TX) * Customer counts are a 12-month average as of December 31, Pilgrims Pride (TX) 2017 and were sourced from Sales_Ult_Cust_2017.xlsx at Glad Manufacturing Company (AR) https://www.eia.gov/electricity/data/eia861/ (Data for year ended December 2017) Top 10 customers = 37% of industrial sales Metropolitan areas account for 72% of ultimate sales 70 persons per square mile (U.S. = 87) (Data for 12 months ended December 2017)
53rd EEI Financial Conference | aep.com 76 COMMISSION OVERVIEW Arkansas Public Service Commission
Commissioners
Number: 3 Appointed/Elected: Appointed Term: 6 Years Political Makeup: R: 1 D: 2 Qualifications for Commissioners The Arkansas Public Service Commission (APSC) is composed of 3 members. The Governor appoints the Commissioners as well as the Chairman. Governor Asa Hutchinson appointed Chairman Thomas and Commissioner O’Guinn while former Governor Mike Beebe appointed Commissioner Wills. Commissioners
Ted Thomas, Chairman (Rep.), since 2015; current term expires in Jan 2021. Previously served as Chief Deputy Prosecuting Attorney, Administrative Law Judge at the Public Service Commission, Budget Director for the Governor and in the Arkansas House of Representatives. Chairman Thomas received his Juris Doctorate from the University of Arkansas School of Law.
Kimberly A. O’Guinn. Commissioner (Dem.), since 2016; current term expires in Jan 2023. Served as Director of Communications for the Arkansas Department of Environmental Quality. Received her Bachelor of Science in Environmental Engineering from the University of Oklahoma. Elana C. Wills, Commissioner (Dem.), since 2011; current term expires Jan 2019. Served as an Associate Justice on the Arkansas Supreme Court by gubernatorial appointment from October 2008 – December 2010. Received her Juris Doctorate from the University of Arkansas School of Law in Fayetteville.
AEP Regulatory Status
SWEPCO-AR provides service at regulated bundled rates in Arkansas. Arkansas has an active fuel pass-through clause. Arkansas has an OSS margin sharing mechanism. Arkansas allows a forward looking test year that can be based on six months actual and six months budget data. Arkansas also allows adjustments to the test year for all known and measurable changes which occur within twelve months after the end of the test year.
53rd EEI Financial Conference | aep.com 77 COMMISSION OVERVIEW Louisiana Public Service Commission
Commissioners
Number: 5 Appointed/Elected: Elected Term: 6 Years Political Makeup: R: 3 D: 2 Qualifications for Commissioners The Louisiana Public Service Commission (LPSC) is composed of five elected members. The commissioners serve overlapping terms of six years. Commissioners Mike Francis, Commissioner, (Rep.), since 2016; current term ends December 2022. Past founder and chief executive officer of Francis Drilling Fluids, Ltd; one of the oldest drilling fluids companies on the Gulf Coast. Chairman of the Republican Party in Louisiana from 1994- 2000.
Foster L. Campbell, Commissioner, (Dem.), since 2003; current term ends December 2020. Member, Louisiana State Senate (1976- 2002). Independent insurance businessman and farmer, former school teacher and agricultural products salesman. Bachelor’s degree from Northwestern State University. Lambert C. Bossiere, III, Commissioner, (Dem.), since 2005; current term ends December 2022. Former First City Court Constable for the City of New Orleans. Member of NARUC. B.S. Business Administration from Southern University. Eric Skrmetta, Chairman, (Rep.), since 2009; current term ends December 2020. Practicing Attorney since 1985. Practicing Mediator since 1989. Republican State Central Committee District 81. Juris Doctorate from Southern University Law School.
Craig Green, Commissioner (Rep.), elected in special election in fall of 2017 to fill unexpired term; current term ends December 2018 (running unopposed in November 2018 general election). Orthopedic surgeon in Baton Rouge. Undergraduate and medical degrees from Louisiana State University and holds an MBA from Yale University.
AEP Regulatory Status
SWEPCO-LA provides service at regulated bundled rates in Louisiana. Louisiana has an active fuel pass-through clause and an OSS margin sharing mechanism. All IOUs are regulated pursuant to formula rate plans (FRP). Louisiana has allowed CWIP return on new generation projects, in limited circumstances. The FRP was implemented for SWEPCO on August 1, 2008 with annual true-ups required. The LPSC recently extended the FRP to cover the 2015 and 2017 test years. SWEPCO currently has its 2015, 2017, and 2018 FRP filing (for test years 2014, 2015, and 2017, respectively) pending before the LPSC.
53rd EEI Financial Conference | aep.com 78 COMMISSION OVERVIEW Public Utility Commission of Texas
Commissioners
Number: 3 Appointed/Elected: Appointed Term: 6 Years Political Makeup: R: 3 D: 0
Qualifications for Commissioners To be eligible for appointment, a commissioner must be: a qualified voter and a citizen of the U.S.; a competent and experienced administrator; well informed and qualified in the field of public utilities and public utility regulation; and, have at least five years of experience in the administration of business or government or as a practicing attorney or certified public accountant. Chairman appointed by the Governor. Commissioners
DeAnn T. Walker, Chairman, (Rep.), since 2017; current term expires September 2021. Previously served as Senior Policy Advisor to current Governor Abbott related to policy matters on regulated industries. Also served as Director of Regulatory Affairs and as an Associate General Counsel for CenterPoint Energy. Received a law degree from the South Texas College of Law. Arthur C. D’Andrea, Commissioner, (Rep.), since 2017; current term expires September 2023. Previously served as Assistant General Counsel to Governor Abbott. Also worked in the Supreme Court and Appellate Litigation Practice Group for a private law firm where he represented clients before the United States Supreme Court and in federal and state courts of appeals. Earned a Bachelor of Science degree in Chemical Engineering from the University of Texas and a Juris Doctor from the University of Texas School of Law. Shelly Botkin, Commissioner, (Rep.) since 2018; current term expires September 2019. Previously served as Director of Corporate Communications and Government Relations for the Electric Reliability Council of Texas (ERCOT). Also worked ten years in the Texas capitol as a senior policy analyst on business, regulatory, and environmental issues for two state senators and for both the Lieutenant Governor and Speaker of the House. Earned a Bachelor of Arts in Anthropology at Washington University in St. Louis.
AEP Regulatory Status
Retail competition in the SPP area of Texas, including SWEPCO’s, has been delayed by legislation. SWEPCO-TX has an active fuel pass- through clause as well as OSS margin sharing. In limited circumstances, CWIP is allowed in rate base. Texas has a mandatory, statewide renewable installed capacity requirement of 5,880 MW by 2015 and a target of 10,000 MW by 2025, which it has surpassed. SWEPCO-TX is able to file a formula-rate styled application for its transmission and distribution investment via the Transmission Cost Recovery Factor (TCRF) and Distribution Cost Recovery Factor (DCRF) in Texas. An order for the most recent SWEPCO-TX base rate case was received in January 2018 and was retroactive to May 2017.
53rd EEI Financial Conference | aep.com 79 OVERVIEW
President and Chief Operating Officer: Judith Talavera Since June 2016 18 years with AEP
AEP Texas (organized in Delaware in 1925) was formed by the merger of AEP Texas Central Company and AEP Texas North Company on December 31, 2016 and is engaged in the transmission and distribution of electric power to approximately 1,030,000 retail customers in west, central and southern Texas. The total output from AEP Texas’ remaining active generating unit (Oklaunion Plant) is sold to an affiliate at AEP Texas’ cost pursuant to an agreement effective until the plant’s planned closure by September 2020. The territory served by AEP Texas also includes several military installations. At December 31, 2017, AEP Texas had 1,540 Total Customers at 12/31/17: employees. AEP Texas is a member of ERCOT. Residential 865,500
MAJOR CUSTOMERS: PRINCIPAL INDUSTRIES SERVED: Commercial 149,000 Formosa Utility Venture Petroleum and Coal Products Manufacturing Industrial 9,000 Valero Energy Corporation Chemical Manufacturing Flint Hills Resources Other 6,500 Oil and Gas Extraction Markwest Energy Partners Total 1,030,000 Equistar Bay City Pipeline Transportation Primary Metal Manufacturing Owned Generating Capacity 355 MW (Data for year ended December 2017) Generating Capacity by Fuel Mix: • Coal 100.0% Top 10 customers = 51% of industrial sales Metropolitan areas account for 74% ultimate Transmission Miles 8,421 sales 31 persons per square mile (U.S. = 87) Distribution Miles 43,433 (Data for 12 months ended December 2017)
53rd EEI Financial Conference | aep.com 80 FINANCIAL & OPERATIONAL DATA
Capital Structure (in thousands)
2017 ** 9/30/2018 * Capital Structure Debt^ Equity Total Debt^ Equity Total Credit Ratings/Outlook Capitalization Per Balance Sheet 3,649,300 2,169,900 5,819,200 3,992,200 2,421,000 6,413,200 % of Capitalization Per Balance Sheet 62.7% 37.3% 100.0% 62.2% 37.8% 100.0% as of 9/30/2018
FFO Interest Coverage 5.05^^ 4.26^^ Moody's S&P FFO Total Debt 16.2%^^ 12.9%^^ Baa1/S A-/S ^^ - calculated on rolling 12-month avg. ^includes securitization debt of $1,026M and $825M at December 31, 2017 and September 30, 2018 respectively
Summary of KWh Energy Sales *** Summary of Degree Days ** (in millions of KWhs) 2017 2016 2015 35,000 31,334 31,225 30,285 (in degree days) 30,000 Actual 239 202 390
Heating 8,418 7,900 25,000 7,699 Normal 330 328 325
Actual 2,950 3,058 2,718 hours
- 20,000 Cooling 2,669 2,648 2,642 10,870 11,068 10,736 Normal 15,000 10,000
Kilowatt 2018 Asset Data * (in thousands) 5,000 11,481 11,682 11,273 As of 9/30/18 - Total Assets $ 9,291,700 2017 2016 2015 Net Plant Assets $ 7,641,700 Cash $ 100 Residential Commercial Industrial Other * Source: 3Q18 Financial Statements (unaudited) ** Source: 2017 10-K Financial Statements *** KWh Sales – Weather Normalized
53rd EEI Financial Conference | aep.com 81 COMMISSION OVERVIEW Public Utility Commission of Texas
Commissioners
Number: 3 Appointed/Elected: Appointed Term: 6 Years Political Makeup: R: 3 D: 0
Qualifications for Commissioners To be eligible for appointment, a commissioner must be: a qualified voter and a citizen of the U.S.; a competent and experienced administrator; well informed and qualified in the field of public utilities and public utility regulation; and, have at least five years of experience in the administration of business or government or as a practicing attorney or certified public accountant. Chairman appointed by the Governor. Commissioners
DeAnn T. Walker, Chairman, (Rep.), since 2017; current term expires September 2021. Previously served as Senior Policy Advisor to current Governor Abbott related to policy matters on regulated industries. Also served as Director of Regulatory Affairs and as an Associate General Counsel for CenterPoint Energy. Received a law degree from the South Texas College of Law. Arthur C. D’Andrea, Commissioner, (Rep.), since 2017; current term expires September 2023. Previously served as Assistant General Counsel to Governor Abbott. Also worked in the Supreme Court and Appellate Litigation Practice Group for a private law firm where he represented clients before the United States Supreme Court and in federal and state courts of appeals. Earned a Bachelor of Science degree in Chemical Engineering from the University of Texas and a Juris Doctor from the University of Texas School of Law. Shelly Botkin, Commissioner, (Rep.) since 2018; current term expires September 2019. Previously served as Director of Corporate Communications and Government Relations for the Electric Reliability Council of Texas (ERCOT). Also worked ten years in the Texas capitol as a senior policy analyst on business, regulatory, and environmental issues for two state senators and for both the Lieutenant Governor and Speaker of the House. Earned a Bachelor of Arts in Anthropology at Washington University in St. Louis.
AEP Regulatory Status
AEP Texas provides retail transmission and distribution service on a cost-of-service basis at rates approved by the PUCT and wholesale transmission service under tariffs approved by the FERC consistent with PUCT rules. Distribution rate riders are in place to recover AMI, wholesale transmission expenses and energy efficiency costs. Interim Transmission Cost of Service (TCOS) filings can be filed twice a year to recover transmission investment and Distribution Cost Recovery Factor (DCRF) filings can be filed once a year to recover distribution investment.
53rd EEI Financial Conference | aep.com 82 REGULATED GENERATION
• Regulated Generation Summary • Owned Regulated Generation • Regulated Fuel Procurement – 2019 Projected • Regulated Coal Delivery – 2019 Projected • Jurisdictional Fuel Clause Summary
53rd EEI Financial Conference | aep.com 83 REGULATED GENERATION SUMMARY
Net Maximum Capacity (in MW)
Owned Renewable Gas OVEC Total Company Capacity PPA PPA PPA *** Capacity
AEP Generating Company * 1,310 1,310 Appalachian Power Company 6,660 575 344 7,579 Wheeling Power Company 780 780 Kentucky Power Company 1,060 1,060 Indiana Michigan Power Company 3,624 450 172 4,246 Ohio Power Company 209 437 646 Public Service Company of Oklahoma 3,934 1,137 1,065 6,136 Southwestern Electric Power Company 5,250 469 86 5,805 AEP Texas ** 355 355 Total Capacity 22,973 2,840 1,151 953 27,917 Energy Efficiency/Demand Response 1,073 Total Capacity & EE/DR 28,990
* AEP Generating Company has PPA with I&M (70%) and KPCo (30%) for its owned Rockport capacity
** AEP Texas North has a PPA for its share of Oklaunion (with Competitive operations)
*** Represents AEP's 43.7% interest in Ohio Valley Electric Corporation (OVEC)
See Renewable Resources pages in “Transforming our Generation Fleet” for additional information on Renewable PPAs.
53rd EEI Financial Conference | aep.com 84 OWNED REGULATED GENERATION
Owned Year Plant Owned Owned Owned Owned Owned Plant Name Units State Fuel Type Net Maximum Commissioned Coal / Lignite Gas Nuclear Hydro Solar Capacity (MW)
AEP Generating Company Rockport * 2 IN 1984 Steam - Coal 1,310 1,310
Appalachian Power Company Buck 3 VA 1912 Hydro 9 9 Byllesby 4 VA 1912 Hydro 22 22 Claytor 4 VA 1939 Hydro 75 75 Leesville 2 VA 1964 Hydro 50 50 London 3 WV 1935 Hydro 14 14 Marmet 3 WV 1935 Hydro 14 14 Niagara 2 VA 1906 Hydro 2 2 Winfield 3 WV 1938 Hydro 15 15 Smith Mountain 5 VA 1965 Pumped Storage 615 615 Ceredo 6 WV 2001 Natural Gas 516 516 Clinch River 2 VA 1958/2016 Natural Gas 465 465 Dresden 1 OH 2012 Natural Gas 613 613 Amos 3 WV 1971 Steam - Coal 2,930 2,930 Mountaineer 1 WV 1980 Steam - Coal 1,320 1,320 4,250 1,594 816 6,660 Wheeling Power Company Mitchell 2 WV 1971 Steam - Coal 780 780
Kentucky Power Company Big Sandy 1 KY 1963/2016 Natural Gas 280 280 Mitchell 2 WV 1971 Steam - Coal 780 780 780 280 1,060
* PPA with I&M (70%) and KPCo (30%) for capacity and energy entitlements
53rd EEI Financial Conference | aep.com 85 OWNED REGULATED GENERATION
Owned Year Plant Owned Owned Owned Owned Owned Plant Name Units State Fuel Type Net Maximum Commissioned Coal / Lignite Gas Nuclear Hydro Solar Capacity (MW)
Indiana Michigan Power Company
Berrien Springs 12 MI 1908 Hydro 6 6 Buchanan 10 MI 1919 Hydro 3 3 Constantine 4 MI 1921 Hydro 1 1 Elkhart 3 IN 1913 Hydro 3 3 Mottville 4 MI 1923 Hydro 2 2 Twin Branch 6 IN 1904 Hydro 5 5 Deer Creek 1 IN 2016 Solar 3 3 Olive 1 IN 2016 Solar 5 5 Twin Branch 1 IN 2016 Solar 3 3 Watervliet 1 MI 2016 Solar 5 5 Rockport 2 IN 1984 Steam - Coal 1,310 1,310 Cook 2 MI 1975 Steam - Nuclear 2,278 2,278 1,310 2,278 20 16 3,624
Public Service Company of Oklahoma
Comanche 1 OK 1973 Steam - Natural Gas 248 248 Northeastern (1&2) 2 OK 1961 Steam - Natural Gas 906 906 Riverside (1&2) 2 OK 1974 Steam - Natural Gas 907 907 Riverside (3&4) 2 OK 2008 Steam - Natural Gas 160 160 Southwestern (1-3) 3 OK 1952 Steam - Natural Gas 465 465 Southwestern (4&5) 2 OK 2008 Steam - Natural Gas 170 170 Tulsa 2 OK 1923 Steam - Natural Gas 319 319 Weleetka 3 OK 1975 Steam - Natural Gas 185 185 Northeastern (3) 1 OK 1979 Steam - Coal 469 469 Oklaunion 1 TX 1986 Steam - Coal 105 105 574 3,360 3,934
53rd EEI Financial Conference | aep.com 86 OWNED REGULATED GENERATION
Owned Owned Year Plant Owned Owned Owned Owned Plant Name Units State Fuel Type Coal / Net Maximum Commissioned Gas Nuclear Hydro Solar Lignite Capacity (MW)
Southwestern Electric Power Company
Stall 1 LA 2010 Natural Gas 534 534 Mattison 4 AR 2007 Natural Gas 315 315 Arsenal Hill 1 LA 1960 Steam - Natural Gas 110 110 Lieberman 3 LA 1947 Steam - Natural Gas 242 242 Knox Lee 4 TX 1950 Steam - Natural Gas 475 475 Wilkes 3 TX 1964 Steam - Natural Gas 893 893 Lone Star 1 TX 1954 Steam - Natural Gas 50 50 Welsh 2 TX 1977 Steam - Coal 1,053 1,053 Flint Creek 1 AR 1978 Steam - Coal 264 264 Turk 1 AR 2012 Steam - Coal 477 477 Pirkey 1 TX 1985 Steam - Lignite 580 580 Dolet Hills 1 LA 1986 Steam - Lignite 257 257 2,631 2,619 5,250
AEP Texas
Oklaunion * 1 TX 1986 Steam - Coal 355 355
Total Owned Regulated Net Maximum Capacity 11,990 7,853 2,278 836 16 22,973
* AEP Texas North sells its share of Oklaunion energy to AEP Energy Partners through a PPA
53rd EEI Financial Conference | aep.com 87 REGULATED FUEL PROCUREMENT – 2019 PROJECTED
Total Coal - Regulated Coal – East Regulated
Central Powder River Appalachian Powder River Central Basin 18% Basin Appalachian 44% 29% 29%
Lignite 12%
Northern Northern Appalachian Appalachian 26% 42% Coal – West Regulated Fuel Stats: - Expected 2019 Consumption: Coal: approx. 30M tons Powder River Natural Gas: approx. 126 BCF Basin 69% Lignite 31% - Coal 68% contracted for 2019 and 50% contracted for 2020 - Avg. 2018 YTD Regulated Delivered Price: Coal: System - ~$42/ton East - ~$46/ton West - ~$37/ton Natural Gas: ~$3/MMBtu
- Projected 2019 Regulated Coal Delivered Price: System - ~$43/ton East - ~$46/ton West - ~$38/ton
53rd EEI Financial Conference | aep.com 88 REGULATED COAL DELIVERY – 2019 PROJECTED Total AEP Regulated System
Belt 16%
Barge Rail/Barge* 40% 18%
Rail 26%
AEP East AEP West Belt 7%
Belt 31%
Rail/ Barge* Barge 30% 63%
Rail 69%
* Reflects coal delivered to AEP plants transported through a combination of rail and barge
53rd EEI Financial Conference | aep.com 89 JURISDICTIONAL FUEL CLAUSE SUMMARY
Adjustment Jurisdiction Active Fuel Clause Frequency Arkansas Yes Annually Indiana Yes Biannually Kentucky Yes Monthly Louisiana Yes Monthly Michigan Yes Annually Oklahoma Yes Annually Tennessee Yes Annually Texas (SPP) Yes As Needed/Threshold * Virginia Yes Annually West Virginia Yes Annually
* The fuel clause may be revised on an as needed basis through a fuel factor filing in the months of April, August, or December, unless there is an emergency, or it can be revised in a base rate case. The fuel clause may be adjusted on an interim basis if the recovery is +/- 4% of the annual fuel cost on a rolling 12 month basis.
53rd EEI Financial Conference | aep.com 90 TRANSMISSION INITIATIVES
• AEP Transmission Holdco Legal Entity Structure • AEP Transco Business Overview • AEP Transco Project Mix & Footprint • Transmission Investment Needs • Transco State & FERC Regulatory Compacts • FERC Formula Rate & Filings • Active Joint Venture Projects • Competitive Transmission – Transource • Evolution of Transmission Trackers • Favorable Recovery of Transmission Investment
53rd EEI Financial Conference | aep.com 91 AEP TRANSMISSION HOLDCO LEGAL ENTITY STRUCTURE
AEP Transmission Company, LLC (“AEP Transco”) is wholly-owned by AEP Transmission Holding Company, LLC (“AEP Trans Holdco”) AEP Trans Holdco is a wholly-owned subsidiary of American Electric Power Company, Inc. (“AEP”), one of the largest utility holding companies in the U.S.
American Electric Power Company, Inc. (AEP)
AEP Transmission Holding Co. LLC. (“AEP Trans Holdco”)
Electric Electric Pioneer Transource AEP Transmission Company, Transmission Transmission Grid Assurance Transmission, Energy, LLC Total $7,529M Net Plant LLC. (“AEP Transco”) * LLC America, LLC Texas, LLC
Prairie Wind $185M Net Plant Transource $2,929M Net Plant AEP Indiana Michigan AEP Appalachian Transmission, Missouri, LLC $2,011M Net Plant Transmission Co., Inc. Transmission Company, Inc. LLC $45M Net Plant $144M Net Plant Transource AEP Kentucky AEP Oklahoma West Virginia, $114M Net Plant Transmission Co., Inc. Transmission Co., Inc. $990M Net Plant LLC
Fully operational Transource AEP Ohio Transmission AEP West Virginia $3,187M Net Plant $1,182M Net Plant Maryland, LLC Joint Venture Co., Inc. Transmission Co., Inc.
Transource Pennsylvania, LLC
Net Plant totals are as of September 30, 2018, except Pioneer and Prairie Wind, which are as of August 31, 2018 $359M Net Plant * Debt issued at AEP Transco level for transmission companies
53rd EEI Financial Conference | aep.com 92 AEP TRANSCO BUSINESS OVERVIEW
• An unbundled transmission business focused on ensuring grid reliability at the regional and local level; formed in 2009 with seven wholly-owned FERC regulated utilities (“State Transcos”) • Active State Transcos located in Indiana and Michigan, Kentucky, Ohio, Oklahoma, Tennessee and West Virginia • AEP Appalachian Transco is authorized to submit projects for commission approval in Virginia
• Significant investment opportunities in AEP’s transmission system provides growth opportunities for AEP Transco and provides flexibility to AEP’s integrated utility operating companies to direct capital to their distribution and generation businesses • Improve local reliability by replacing aging infrastructure • Enhance resilience to combat severe weather and increasing security threats • Integrate renewables and support environmental mandates • Relieve congestion to support an efficient generation market and provide customers with lower power prices • Support economic development
• Favorable regulatory framework including forward-looking formula rates • Allowed returns on equity (“ROEs”) of 10.35% and 11.2% in PJM and SPP, respectively, subject to change pending 206 outcomes • Limited revenue risk and have strong counterparties through their participation in the PJM Interconnection (“PJM”) and Southwest Power Pool (“SPP”) RTOs
• Headquartered in Columbus, OH, AEP Transco is supported by the entire AEP Transmission organization. This organization plans, builds and manages all of AEP’s transmission assets.
53rd EEI Financial Conference | aep.com 93 AEP TRANSCO PROJECT MIX Transmission has asset replacement, local reliability and customer projects combined with RTO mandated projects
53rd EEI Financial Conference | aep.com 94 AEP TRANSCO FOOTPRINT
The Transcos exist within the expansive service territories of AEP, operating across two RTOs and 10 states.
AEP State Transcos AEP Appalachian Transmission Co., Inc. AEP Indiana Michigan Transmission Co., Inc. AEP Kentucky Transmission Co., Inc. AEP Ohio Transmission Co., Inc. AEP Oklahoma Transmission Co., Inc. AEP Southwestern Transmission Co., Inc. AEP West Virginia Transmission Co., Inc.
Net Transmission Plant 2019-2023 Capital Plan State Transco ($ in Millions) * ($ in Millions) IM Transco $2,011 $2,246 OH Transco $3,187 $3,129 OK Transco $990 $1,023 WV Transco $1,182 $1,586 KY Transco $114 $36 AP Transco $45 $51 Total $7,529 $8,071 * As of September 30, 2018
Transco investment opportunity is directly proportional to AEP's footprint. As the largest owner, operator and developer of transmission infrastructure in North America, AEP Transco is well positioned for consistent and stable growth.
53rd EEI Financial Conference | aep.com 95 TRANSMISSION INVESTMENT NEEDS
Life Current Quantity that Total Renewal Projected Percent of Total Expectancy Quantity over will exceed Life Opportunity Replacement Life Expectancy Expectancy in Cost next ten years (in millions) Line Rebuilds 70 6,085 5,057 11,142 $21,076 91.2%
Transformers 60 234 133 367 $614 2.7%
Circuit Breakers 50 998 653 1,651 $1,408 6.1%
Total $23,098 100.0%
Conductor Avg Age 47.6 years Life Expectancy Avg Circuit Breaker Life Expectancy 50 years Age 22.3 years 70 years Area of Focus Area of Focus
Note: Table and graphs refer to transmission equipment only. Distribution equipment is not included.
53rd EEI Financial Conference | aep.com 96 TRANSCO REGULATORY COMPACTS
AEP Transco and its seven Transco subsidiaries were formed in 2009 to focus on upgrades to AEP’s transmission system and provide financial flexibility to AEP’s electric utility Operating Companies. A summary of regulatory approval status is provided in the table below:
State State Operational and Approval Status Transco OH Transco No state regulatory agency approval was required to construct and operate transmission assets in the state of Ohio. OH Transco is fully operational with assets in-service.
IM Transco Indiana Utility Regulatory Commission approval for utility status received November 2011; no Michigan approval required. IM Transco is fully operational with assets in-service. OK Transco No state regulatory approval required for utility status. OK Transco is fully operational with assets in-service. WV Transco In a December 2012 order, the West Virginia Public Service Commission (“WVPSC”) required WV Transco to obtain a Certificate of Public Convenience and Necessity (“CPCN”) before beginning construction on each proposed project, until WV Transco established a track record, revenue stream and utility plant base. In September 2015, the WVPSC recognized that WV Transco had established the required track record and granted WV Transco’s petition to exempt projects from the CPCN requirement, when such projects met the “ordinary extension of existing systems” condition, as established for public utilities in the West Virginia Code. WV Transco is fully operational with assets in service.
AP Transco In February 2012, the Virginia State Corporation Commission (“VSCC”) approved a service agreement between AP Transco and APCo limited to studying and evaluating potential transmission projects and for preparation of applications for future submission of project certificate applications to the VSCC. In May 2013, AP Transco and APCo filed a joint application with the VSCC for the approval of the Cloverdale Extra High Voltage Transmission Improvements Project. The VSCC approved the project for APCo to construct. AP Transco can seek certification of future projects in its own name but the VSCC will determine whether the project will ultimately be owned by AP Transco or APCo. AP Transco has not yet filed other project applications. As a result of separate orders issued by the VSCC and the WVPSC in December 2016, AP Transco was granted consent to enter into a joint license agreement that will support investment in Tennessee. AP Transco currently has assets in service and under construction in Tennessee. KY Transco In February 2011, KY Transco filed an application with the Kentucky Public Service Commission (“KPSC”) in Case No. 2011-00042 seeking a CPCN to operate as a transmission-only public utility in Kentucky. In June 2013, the KPSC denied the application, stating that KY Transco could not be defined as a public utility under Kentucky statute and therefore was not subject to KPSC regulatory jurisdiction. KY Transco is fully operational with assets in service.
53rd EEI Financial Conference | aep.com 97 STATE TRANSCOS ARE REGULATED BY FERC Conservative FERC regulation results in timely recovery of costs • In April 2011, the FERC approved a formula rate mechanism for the State Transcos. • The FERC order dictates how the State Transcos determine their rates, including the recovery of all authorized expenses and the return on and of invested plant. • The approved formula rate mechanism established an annual revenue requirement for transmission services under the PJM and SPP OATTs, as applicable, and implemented a transmission cost of service formula rate. • Annual rate updates provide a highly predictable and stable source of revenues and income. • Each State Transco’s annual transmission revenue requirement (“ATRR”) is reset in January, establishing rates for the one-year forward period of January to December. The rate base component of the formula rate calculation includes the prior year’s transmission plant in service ending balance, plus the current year’s projected plant in service additions. • The revenue requirements are derived from the following capital structure and authorized ROEs:
Capital Structure % ATRR ** Rate Base Company RTO Authorized ROE * Equity Cap
AP Transco PJM 55% 10.35% $486 KH $3.4 MH IM Transco PJM 55% 10.35% $171 MH $1.2 BH KY Transco PJM 55% 10.35% $11 MH $81 MH OH Transco PJM 55% 10.35% $368 MH $2 BH WV Transco PJM 55% 10.35% $88 MH $624 MH OK Transco SPP None 11.20% $119 MH $699 MH SW Transco SPP None 11.20% $66 KH $3 KH
* Subject to change pending 206 complaints outcome ** Effective January 2018
53rd EEI Financial Conference | aep.com 98 9 9 FERC FORMULA RATE The Transcos benefit from a transparent, forward-looking formula rate mechanism, authorized by the FERC, which minimizes regulatory lag:
PJM * SPP **
Operations and maintenance expense + Projected + Projected Operating Expenses Depreciation & amortization expense + Projected + Projected Tax expense + Projected + Projected +
Plant in-service + 13 Month Average + Beginning & Ending Average Rate Base Accumulated depreciation & amortization - 13 Month Average - Beginning & Ending Average Deferred income taxes - Beginning & Ending Average - Beginning & Ending Average Working capital + Beginning & Ending Average + Beginning & Ending Average x
Capital structure . 13 Month Average . Beginning and Ending Average WACC ROE for Transcos . 10.35% . 11.20%
+ Prior Year (Over)/Under + Annual true-up revenue amount to (return)/collect any (over)/under recovery of revenues Recovery =
Revenue Requirement = Annual Transmission Revenue Requirement (ATRR) for collection during Rate Year
* ROE reflects a settlement rate billed on an interim basis, subject to FERC ruling 206 complaint ** Subject to change pending 205 application outcome
53rd EEI Financial Conference | aep.com 99 FERC 205 & 206 FILINGS
East • 206 complaint against AEP East companies filed in October 2016 • AEP and all the Complainants filed a contested settlement in April 2018 resolving all issues and implemented the terms of the settlement on an interim basis • FERC has not ruled on the settlement
West • 206 complaint against AEP West companies in SPP filed in June 2017 and September 2018 • AEP filed a 205 application in October 2017 for a modified formula rate that seeks to mitigate regulatory lag
Transmission investment strategy unchanged
53rd EEI Financial Conference | aep.com 100 ACTIVE JOINT VENTURE PROJECTS
Approved Return on Equity Projected Total Estimated Complete Project costs at Project Project Name Location Date Owners (ownership %) completion Base RTO Risk Total
BHE Texas Transco, LLC (50%), AEP ETT Texas (ERCOT) Ongoing (50%) $3.1 billion 9.60% 0.00% 0.00% 9.60% Prairie Wind Kansas 2014 Westar Energy (50%), ETA (50%) $158.1 million 10.80% 0.50% 1.50% 12.80% Northern Indiana Public Service Company (50%), Duke Energy Pioneer Project * Indiana 2018 (25%), AEP (25%) $346 million 10.32% 0.50% 0.00% 10.82% AEP (86.5%), Great Plains Energy Transource-Iatan-Nashua Missouri 2015 (13.5%) $64 million 9.80% 0.50% 0.00% 10.30% AEP (86.5%), Great Plains Energy Transource-Nebraska-Sibley Missouri 2016 (13.5%) $248 million 9.80% 0.50% 1.00% 11.30% AEP (86.5%), Great Plains Energy Transource-WV West Virginia 2019 (13.5%) $67 million 10.00% 0.50% 0.00% 10.50% Pennsylvania & AEP (86.5%), Great Plains Energy Transource-PA & MD ** Maryland 2020 (13.5%) $217 million 9.90% 0.50% 0.00% 10.40%
* Duke Energy and AEP are equal share owners of Pioneer Transmission LLC, which is 50% of the Pioneer Project ** Transource Pennsylvania and Maryland: Pending settlement of a 9.9% base ROE will result in an authorized ROE of 10.4%
Non-active joint ventures and prospects excluded from the financial forecasts
53rd EEI Financial Conference | aep.com 101 COMPETITIVE TRANSMISSION -
Transource Missouri • The Iatan – Nashua 345 kV transmission line was placed in-service on April 8, 2015
Net CWIP/PPE Balance $309 million • The Sibley – Nebraska City 345 kV line project was placed in-service on December 15, 2016
YTD After-tax Net Income $14 million
45% debt Actual Capital Structure 55% equity
Authorized ROE1 11.15%
Transource West Virginia • In 2015, Transource was designated the Clendenin-Fort Walton Area Improvements Total Estimated Project Size ~$67 million • The project is a ~25-mile 138kV line from AEP’s Thorofare Creek Station to FirstEnergy’s YTD After-tax Net Income $1 million Powell-Mountain-Goff Run 138 kV line and includes 2 new substations
40% debt • Project is on schedule for a June 1, 2019 in-service date Post-Construction Capital Structure 60% equity
Authorized ROE2 10.5%
Transource Pennsylvania & Maryland • On August 2, 2016, PJM Board approved a Transource project that will improve congestion in the AEP-Dominion interface Total Estimated Project Size3 ~$217 million • The project includes the construction of two greenfield 230 kV lines (each in Pennsylvania and 40% debt Hypothetical Capital Structure Maryland) and two greenfield 500/230 kV substations (both in Pennsylvania) 60% equity • Approved incentives: Recovery of cost upon abandonment, pre-commercial costs/regulatory Authorized ROE4 10.4% asset, 100% CWIP in rate base during construction
1 Transource Missouri is authorized a 10.3% ROE for the Iatan-Nashua and a 11.3% ROE for Sibley-Nebraska City, resulting in a combined authorized ROE of 11.15% 2 Transource West Virginia is authorized a base ROE of 10.0% with an approved 0.5% adder for RTO participation 3 Figure in 2018 dollars 4 Transource Pennsylvania and Maryland are authorized a base ROE of 9.9% with an approved 0.5% adder for RTO participation
53rd EEI Financial Conference | aep.com 102 COMPETITIVE TRANSMISSION - FERC Formula Rate Mechanism Example
Transource benefits from a transparent, FERC-authorized, fully forward-looking formula rate mechanism, with a true-up. This allows for Transource to minimize regulatory lag and ensure full and timely recovery of costs.
Operating Expenses
+
Rate Base
x
WACC
+ Prior Year (Over)/Under Recovery = Revenue Requirement
53rd EEI Financial Conference | aep.com 103 EVOLUTION OF TRANSMISSION TRACKERS IN THE OPERATING COMPANIES PJM Trackers
7% 17% 25% Base Rates
75% Trackers 83% 93% 2005 2010 2018 SPP Trackers
26% 33% Base Rates 38%
62% Trackers 74% 67%
2005 2010 2018
ERCOT Trackers
Base Rates 100% 100% 100% Trackers
2005 2010 2018
53rd EEI Financial Conference | aep.com 104 FAVORABLE RECOVERY OF TRANSMISSION INVESTMENT Jurisdictional Capital Investment Recovery Mechanism
TOTAL • Projected $10 Billion of 2018 Net Plant in Service is • Projected $1.1 Billion of 2018 PJM and SPP Expenses will be recoverable through Trackers and from Wholesale recovered through Trackers 10% Customers
• Projected $1.1 Billion of 2018 Net Plant in Service is • Projected $245.6 Million of 2018 PJM and SPP Expenses recoverable through Base Rates must be recovered through either existing or future Base Rates 90% AP-Va AP -… PJM I&M… I&M-… SPP TRACKED KPCO TRACKED BASE RATES OPCO BASE RATES
ERCOT PSO SWE… $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $- $200 $400 $600 2018 Recoverable Plant in Service ($M)
2018 Capital – Projected Recovery by RTO Projected 2018 OATT Expense ($M) PJM SPP ERCOT 7% Jurisdictional Trackers provide most efficient recovery of 33% Transmission Investment
67% 93% 100% Note: Investment based on 2018 formula rate filings
53rd EEI Financial Conference | aep.com 105
COMPETITIVE BUSINESS
• Organizational Structure • Clean Energy Investments • Customer Energy Solutions • Universal Scale Renewable Projects • Competitive Generation – Owned & PPA • Competitive 2017 Fleet Statistics • Retail - AEP Energy
53rd EEI Financial Conference | aep.com 106 COMPETITIVE OPERATIONS ORGANIZATIONAL STRUCTURE
AEP
AEP Energy Supply
AEP Generation AEP Energy AEP OnSite AEP Energy AEP Renewables Resources Partners Partners
Generation Wholesale Trading Retail Customer Universal Scale & Marketing Solutions Renewable Assets Business with Long-Term Oklaunion PPA Focused on PPAs Assets Backed with Long-Term Wind Operations PPAs
53rd EEI Financial Conference | aep.com 107 CLEAN ENERGY INVESTMENTS $2.2B CAPITAL ALLOCATED 2019-2023
Renewable Generation Asset Owner
“Behind-the-Meter” Energy Assets
Universal Scale Energy Assets
Utilities, Municipalities, Schools, Cities, Hospitals and Key Customers Corporations and Cooperative Commercial / Industrial Accounts Accounts
Distributed Generation, Fuel Cells, Renewables, Storage, Key Technologies Wind and Solar Substations and Combined Heat and Power
53rd EEI Financial Conference | aep.com 108 CUSTOMER ENERGY SOLUTIONS
Trinity College Fuel Cell (CT) – 1.4 MW Paloma High School (CA) – 1.0 MW-AC
• Committed to nearly $330 million in energy assets
• Portfolio of 51 operating and under construction projects in 15 different states
• Projects include customer sited solar projects, behind the meter energy storage assets, customer sited substations, and fuel cell projects
City of Superior (NE) – 1.0 MW-AC MarkWest (OH) – 25 MVA
53rd EEI Financial Conference | aep.com 109 UNIVERSAL SCALE RENEWABLE PROJECTS
Desert Sky Wind Farm (TX) – 134 MW Trent Wind Farm (TX) – 123 MW
• PPA with City Public Service San Antonio • PPAs with various Cooperatives • Commercial Operation in 2001 • Commercial Operation in 2001 • Repowered in 2018 by GE • Repowered in 2018 by GE • Represents AEP’s 79.9% share • Represents AEP’s 79.9% share
Pavant Solar III (UT) – 20 MW-AC Boulder Solar II (NV) – 50 MW-AC Jacumba Solar (CA) – 20 MW-AC
• PPA with PacifiCorp • PPA with NV Energy • PPA with Southern California Edison • COD on December 30, 2016 • COD on January 27, 2017 • COD on July 25, 2017 • Constructed by JSI Construction • Constructed by SunPower • Constructed by BayWa
53rd EEI Financial Conference | aep.com 110 COMPETITIVE GENERATION – OWNED & PPA
Owned Owned Owned Owned Owned Owned Plant Name State Fuel Type Coal Hydro Wind Solar Gas Fuel Net Maximum (MW - AC) Cell Capacity (MW) Cardinal 1 OH Steam - Coal 595 595 Conesville 4 a OH Steam - Coal 651 651 Conesville 5 & 6 OH Steam - Coal 820 820 Racine OH Hydro 48 48 Trent Mesa Wind b TX Wind 123 123 Desert Sky Wind b TX Wind 134 134 AEP Renewables Solar 90 90 AEP Onsite Partners Solar 78 78 AEP Onsite Partners Fuel Cell 1 1 Total Owned 2,066 48 257 168 1 2,540
PPA PPA Total PPA PPA Resource State Fuel Type Coal Wind Capacity (MW) Oklaunion c TX Steam - Coal 355 355 Southwest Mesa TX Wind 175 175 Total PPA 355 175 530
Total Coal Hydro Wind Solar Capacity (MW) Total Owned & PPA 2,421 48 432 168 1 3,070
a Represents AEP’s capacity portion of jointly owned unit, operated by AEP b Represents AEP’s 79.9% share c Represents capacity owned by AEP Texas North, operated by PSO. Competitive has PPA with AEP Texas North
53rd EEI Financial Conference | aep.com 111 COMPETITIVE 2017 FLEET STATISTICS
2017 2017 FGD 2017 FOB 2017 MWh Capacity Plant / Unit Fuel Type Delivery Reagent Plant $/Ton $/MMBtu Produced Factor
Cardinal 1 NAPP Barge & Truck Limestone 46.54 1.86 3,218,886 61.59% Conesville 4 a,b NAPP Rail & Truck Limestone 65.12 2.79 1,223,120 25.45% Conesville 5 & 6 b NAPP Rail & Truck Lime / Limestone 57.88 2.48 2,019,494 28.38% Oklaunion c Powder River Basin Rail Limestone 33.36 2.15 919,208 29.48% Racine d Hydro N/A N/A 0 0.00%
7,380,708
a Exchanged Zimmer Plant with Dynegy for an additional 312 MW of Conesville 4 in the second quarter of 2017 b Announced plans in 2018 to close Conesville 4 in 2020 and Conesville 5 & 6 in 2019 or 2020 c Announced plans in 2018 to close Oklaunion by September 2020 d No production in 2017 as project to reconstruct a defective dam structure began in the first quarter of 2017 and continued in 2018
53rd EEI Financial Conference | aep.com 112 RETAIL – AEP ENERGY
Customer Accounts * Geography of Customers *
C&I New Jersey Maryland 0.9% Delaware 0.1% 13% 1.5% Washington DC 0.1% Pennsylvania 12.5%
Illinois 18.1%
Residential 87%
Delivered Load *
Residential Ohio 66.8% 21%
• Approximately 415,000 retail customer accounts (including approximately 66,000 retail gas accounts)
• YTD served 13.7 TWh of load C&I 79% • Seven states, focus on Ohio
* As of September 30, 2018
53rd EEI Financial Conference | aep.com 113