2015 Fact Book 50th EEI Financial Conference Hollywood, FL November 8 – 11, 2015 1 “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: the economic climate, growth or contraction within and changes in market demand and demographic patterns in our service territory, inflationary or deflationary interest rate trends, volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing our ability to finance new capital projects and refinance existing debt at attractive rates, 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, customer growth and the impact of competition includingcompetition for retail customers; weather conditions, including storms and drought conditions, and our ability to recover significant storm restoration costs, available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters, availability of necessary generation capacity and the performance of our generation plants, our ability to recover increases in fuel and other energy costs through regulated or competitive electric rates, our ability to build transmission lines and facilities (including our 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 or additional regulation of fly ash and similar combustion products that could impact the continued operation, cost recovery and/or profitability of our 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, a reduction in the federal statutory tax rate could result in an accelerated return of deferred federal income taxes to customers, 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, our ability to constrain operation and maintenance costs, our ability to develop and execute a strategy based on a view regarding prices of electricity and other energy-related commodities, prices and demand for power that we generate and sell at wholesale, changes in technology, particularly with respect to new, developing, alternative or distributed sources of generation, our ability to recover through rates or market prices 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, the transition to market for generation in Ohio, including the implementation of ESPs, our ability to successfully and profitably manage our separate competitive generation assets, changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading market, actions of rating agencies, including changes in the ratings of our debt, the impact of volatility in the capital markets on the value of the investments held by our 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 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 Bradley Funk Investor Managing Director Director Relations Investor Relations Regulated Accounting 614-716-2840 614-716-3162 2 [email protected] [email protected] Table of Contents AEP Overview Operating Company Detail for: AEP Overview 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 2014 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 Detail Provided: Summary of Rate Case Filing Requirements Overview Recovery Mechanisms Across Juridictions Financial & Operational Data Storm Recovery Mechanisms by Jurisdictions Customer Statistics Jurisdictional Off-System Sales Sharing Summary Commissions Overview Federal Energy Regulatory Commission Regulated Generation Transforming Our Generation Fleet Regulated Generation - Generation Capacity Transforming Our Generation Fleet Regulated Generation - AEG & APCo Investments Driving Emission Reductions Generation by Company Dramatic Reductions in Emissions Regulated Fuel Procurement - 2016 Projected Large-scale Renewable Opportunities Regulated 2016 Projected Coal Delivery Delivering Clean Energy Resources Jurisdictional Fuel Clause Summary Long-term Renewable Energy Purchase Agreement Renewable Portfolio/Energy Efficiency Standards Competitive Operations Competitive Business Organizational Structure Environmental AEP Generation Resources Footprint Regulated Environmental Retrofit Status Competitive Fleet Characteristics Competitive Environmental Retrofit Status Competitive 2014 Fleet Statistics Regulated Environmental Investment & Retirements Competitive Coal Procurement Competitive Environmental Investment & Retirements AEP Energy Clean Power Plan Additional Environmental Regulations Transmission Initiatives AEP Transmission Ownership Structure Financial Update AEPTHC Growth Plan Project Summary Capitalization & Liquidity AEP Transco Has a Large, Diverse Footprint AEP Banking Group Transco Regulatory Compacts AEP Credit Ratings State Transco Rates are Regulated by FERC Long-term Debt Maturity Profile Project Selection Guidelines Debt Schedules Active Joint Venture Projects 3 Competitive Transmission AEP: America’s Energy Partner AEP IS THE NATION’S LEADING REGULATED ELECTRIC UTILITY Provides generation, transmission and / or distribution services to approximately 5.4 million customers in eleven states with headquarters in Columbus, Ohio (NYSE: AEP) Our regulated electric assets include: Approximately 32,000 megawatts of generating capacity in 3 RTOs (one of the largest US generation portfolios with a significant cost advantage in many of our market areas) Approximately 40,000 circuit miles of transmission lines, including 447 miles of Transco lines, and 2,116 miles of 765kV lines, the backbone of the electric interconnection grid in the Eastern U.S. AEP Transco has $1.8B of transmission assets in-service with plans to construct approximately $3B additional through 2017 Over 223,000 miles of overhead and underground distribution lines AEP consistently produces strong financial results: Operating earnings growth of 4% to 6% Strong balance sheet including $61 billion of assets Cash dividend paid every quarter since 1910 with targeted payout of 60% to 70% of operating earnings 4 AEP: THE NEXT PREMIUM REGULATED UTILITY AEP Corporate Leadership Nicholas K. Akins – Chairman, President, and Chief Executive Officer Brian X. Tierney – Robert P. Powers – Executive Vice President and Executive Vice President and Chief Financial Officer Chief Operating Officer Lisa M. Barton - Mark C. McCullough - Charles E. Zebula- Executive Vice President Executive Vice President Executive Vice President- - Transmission - Generation Energy Supply David M. Feinberg – Lana L. Hillebrand- Executive Vice Senior Vice President President, General and Chief Administrative Counsel and Secretary Officer 5 AEP Operational Structure* AEP, Inc. Regulated Utilities AEP Transmission Holding Competitive Operations Company Appalachian Power Indiana Michigan Power AEP Transmission Joint Ventures AEP Energy Supply Company Company Company Kentucky Power Public Service Company AEP Appalachian AEP Energy Company of Oklahoma Transco Southwestern Electric Ohio Power Company CSW Energy Power Company AEP Kentucky Transco Wheeling Power Kingsport Power AEP Southwestern AEP Generation Company Company Transco Resources AEP Texas Central AEP Texas North Company Company AEP Ohio Transco AEP Generating Company AEP Oklahoma Transco AEP Indiana Michigan Transco AEP West