Fact Book 2020
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2020 AEP FACT BOOK 55th EEI Financial Conference November 9-10, 2020 “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: changes in economic conditions, electric market demand and demographic patterns in AEP service territories, The impact of pandemics, including COVID-19, and any associated disruption of AEP’s business operations due to impacts on economic or market conditions, electricity usage, employees, customers, service providers, vendors and suppliers, 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, decreased demand for electricity, 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, the availability of fuel and necessary generation capacity and performance of generation plants, the ability to recover fuel and other energy costs through regulated or competitive electric rates, the ability to build or acquire 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 coal ash and 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 and environmental compliance, 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 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 standards periodically issued by accounting standard-setting bodies, and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, naturally occurring and human-caused fires, cyber security threats and other catastrophic events, the ability to attract and retain requisite work force and key personnel. Darcy Reese, Managing Director Tom Scott, Director Investor Relations Investor Relations 614-716-2614 614-716-2686 [email protected] [email protected] 55th EEI FINANCIAL CONFERENCE • AEP.COM 2 Table of Contents AEP OVERVIEW FINANCIAL UPDATE TRANSMISSION INITIATIVES • AEP: The Premier Regulated Energy Company • Capitalization and Liquidity • AEP Transmission Holdco Legal Entity Structure • AEP Corporate Leadership • AEP Banking Group • Benchmarking by RTO • AEP Operational Structure • AEP Credit Ratings • Evolution of Transmission Trackers • AEP Service Territory • Long-Term Debt Maturity Profile • Favorable Recovery of Transmission Investment • Retail Revenue • Debt Schedules • AEP Transco Footprint • Generation Fleet • FERC Formula Rate • Transmission Line Circuit Miles Detail • Transmission Rate Recovery • Distribution Line Detail OPERATING COMPANY DETAIL • Transmission Project Mix • Rate Base & ROEs • Active Joint Venture Projects • Summary of Rate Case Filing Requirements • Appalachian Power • Competitive Transmission • Retail Recovery Mechanisms by Jurisdiction • Indiana Michigan Power • ETT • Storm O&M Recovery Mechanisms by Jurisdiction • Kentucky Power • Grid Assurance • Federal Energy Regulatory Commission Overview • Ohio Power • Public Service Company of Oklahoma • Southwestern Electric Power Company TRANSFORMING OUR GENERATION FLEET • AEP Texas COMPETITIVE BUSINESS • Transforming Our Generation Fleet • Organizational Structure • Largest Investment in Environmental Controls • Business Strategy and Operations • Dramatic Reductions in Emissions REGULATED GENERATION • Business Presence • Advancing Towards a Clean Energy Future • Customer Energy Solutions • Delivering Clean Energy Resources • Regulated Generation Summary • Universal Scale Renewable Projects • Renewable Resources • Owned Regulated Generation • Retail – AEP Energy • Renewable Portfolio/Energy Efficiency Standards • Regulated Fuel Procurement – 2021 Projected • Retirement Progress and Plans • Regulated Coal Delivery – 2021 Projected • Regulated Environmental Controls • Jurisdictional Fuel Clause Summary • Additional Environmental Regulations 55th EEI FINANCIAL CONFERENCE • AEP.COM 3 AEP OVERVIEW • AEP: The Premier Regulated Energy Company • AEP Corporate Leadership • AEP Operational Structure • AEP Service Territory • 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 • Federal Energy Regulatory Commission Overview 55th EEI FINANCIAL CONFERENCE • AEP.COM 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 approximately 5.5 million customers in 11 states. AEP’s headquarters is in Columbus, Ohio. (NASDAQ: AEP) AEP’s regulated electric assets include the following: AEP consistently produces strong financial results: More than 22,000 megawatts of regulated owned Delivering operating earnings growth of generating capacity and approximately 4,900 5% to 7%. megawatts of regulated PPA capacity in 3 RTOs. Strong balance sheet with nearly $79B of assets. Approximately 40,000 circuit miles of transmission Cash dividend paid every quarter since 1910. Dividend lines, including more than 2,400 miles of Transco payout ratio of 60% to 70% of operating earnings and lines and over 2,100 miles of 765kV lines, the growing dividend in line with earnings. backbone of the electric interconnection grid in the Eastern U.S. AEP Transco has approximately $10.4B of transmission assets in service with additional capital expenditure plans of approximately $7.9B from 2021 – 2025. Over 221,000 miles of overhead and underground distribution lines. A PURE PLAY ELECTRIC UTILITY Statistics as of 10/01/2020 55th EEI FINANCIAL CONFERENCE • AEP.COM 5 AEP Corporate Leadership Nicholas K. Akins Brian X. Tierney Lisa M. Barton Chairman, President Executive Vice Executive Vice and Chief Executive President President – Officer and Chief Financial Utilities Officer David M. Feinberg Lana L. Hillebrand Paul Chodak III Executive Vice President, Executive Vice President and Executive Vice General Counsel and Secretary Chief Administrative Officer President – Generation Mark C. McCullough Charles R. Patton Charles E. Zebula Executive Vice Executive Vice Executive Vice President – President – President – Transmission External Affairs Energy Supply Note: Effective January 1, 2021 the following leadership changes will occur: a) Lisa Barton becomes Executive Vice President and Chief Operating Officer b) Brian Tierney becomes Executive Vice President – Strategy c) Julie Sloat, current Senior Vice President – Treasury and Risk, becomes Executive Vice President and Chief Financial Officer d) Lana Hillebrand retires, effective December 31, 2020 55th EEI FINANCIAL CONFERENCE