2018 AEP FACT BOOK · 53rd EEI Financial Conference | aep.com 1 Bette Jo Rozsa Darcy Reese Managing...

0 53rd EEI Financial Conference | aep.com

2018 AEP FACT BOOK 53rd EEI Financial Conference

San Francisco, California November 11-14, 2018


Bette Jo Rozsa Managing Director Investor Relations 614-716-2840 [email protected]

Darcy Reese Director Investor Relations 614-716-2614 [email protected]

“Safe Harbor” Statement under the

Private Securities Litigation Reform Act of 1995

INVESTOR RELATIONS

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.


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


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


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

include the following: Approximately 23,000 megawatts of regulated

owned generating capacity and more than

4,900 megawatts of regulated PPA capacity in

3 RTOs.

Approximately 40,000 circuit miles of

transmission lines, including more than 1,400

miles of Transco lines and over 2,100 miles of

765kV lines, the backbone of the electric

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.

AEP consistently produces strong

financial results: Delivering operating earnings growth of

5% to 7%.

Strong balance sheet including $68B of

assets.

Cash dividend paid every quarter since 1910.

Dividend payout ratio of 60 % to 70% of

operating earnings and growing dividend in

line with earnings.

WELL POSITIONED AS A REGULATED BUSINESS


AEP CORPORATE LEADERSHIP

Nicholas K. Akins

Chairman, President

and Chief Executive

Officer

Lisa M. Barton

Executive Vice President –

Transmission

David M. Feinberg

Executive Vice President,

General Counsel and

Secretary

Brian X. Tierney

Executive Vice President

and Chief Financial Officer

Charles E. Zebula


Energy Supply

Lana L. Hillebrand

Executive Vice President

and Chief Administrative

Officer

Charles R. Patton


External Affairs

Paul Chodak III


Utilities

Mark C. McCullough


Generation


AEP OPERATIONAL STRUCTURE*

* Does not represent legal structure

AEP, Inc.

Regulated Utilities

Appalachian Power Company

Indiana Michigan Power Company

Kentucky Power Company

Public Service Company of Oklahoma

Southwestern Electric Power Company

Ohio Power Company

Wheeling Power Company

Kingsport Power Company

AEP Texas AEP Generating

Company

AEP Transmission Holding Company

AEP Transmission Company

AEP Appalachian Transco

AEP Kentucky Transco

AEP Southwestern Transco

AEP Ohio Transco

AEP Oklahoma Transco

AEP Indiana Michigan Transco

AEP West Virginia Transco

Joint Ventures

Competitive Operations

AEP Energy Supply

AEP Energy

AEP Energy Partners

AEP Generation Resources

AEP OnSite Partners

AEP Renewables


AEP SERVICE TERRITORY

VERTICALLY INTEGRATED UTILITIES

Appalachian Power Company (APCo)

Indiana Michigan Power Company (I&M)

Kingsport Power Company (KGPCo)

Kentucky Power Company (KPCo)

Wheeling Power Company (WPCo)

Public Service Company of Oklahoma (PSO)

Southwestern Electric Power Company (SWEPCO)

Texas

Arkansas

Oklahoma

Louisiana Indiana

Michigan

Tennessee

Kentucky

West Virginia

Virginia


AEP SERVICE TERRITORY

TRANSMISSION AND DISTRIBUTION UTILITIES

AEP Texas Ohio Power Company (OPCo)

Ohio Texas


2017 RETAIL REVENUE

* Source: 2017 10-K

** Figures from billing system and

do not include Other Revenues

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 **

2%

11%

5%

5%

2%

23%

11%

1%

15%

12%

13% Arkansas

Indiana

Kentucky

Louisiana

Michigan

Ohio

Oklahoma

Tennessee

Texas

Virginia

West Virginia

47%

29%

20%

4%

Residential

Commercial

Industrial

Wholesale

Top 10 Industrial Sectors Across the AEP System By NAICS Code

% of Total 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%

336 Transportation Equipment Manufacturing 4.4%

311 Food Manufacturing 4.4%


GENERATION FLEET Competitive - 2018 Generation Capacity

by Fuel Type

Based on 2,716 MW *

Regulated - 2018 Generation Capacity

by Fuel Type

Based on 28,990 MW **

** Includes:

• 953 MW of OVEC entitlement

• 2,840 MW of renewable PPAs

• 1,151 MW of gas PPAs

• 355 MW for AEP Texas North’s

portion of Oklaunion

• 1,073 MW of Demand Response /

Energy Efficiency Programs

* Includes 175 MW of

wind PPA. Excludes 355

MW of PPA for AEP

Texas North’s portion of

Oklaunion

Total Fleet - 2018 Generation Capacity

by Fuel Type

Based on 31,706 MW ***

*** Includes:

• 953 MW of OVEC entitlement

• 3,015 MW of renewable PPAs

• 1,151 MW of gas PPAs

• 355 MW for AEP Texas North’s

portion of Oklaunion

• 1,073 MW of Demand Response /

Energy Efficiency Programs

Coal/Lignite - Controlled47.3%

Natural Gas 28.4%

Hydro, Wind, Solar, &Pumped Storage 13.7%

Nuclear 7.2%

Demand Response/EnergyEfficiency 3.4%

Coal/Lignite - Controlled76.1%

Hydro, Wind, Solar, &Pumped Storage 23.9%

Coal/Lignite - Controlled 44.6%

Natural Gas 31.1%

Hydro, Wind, Solar, & PumpedStorage 12.7%

Nuclear 7.9%

Demand Response/EnergyEfficiency 3.7%

As of September 30, 2018


TRANSMISSION LINE CIRCUIT MILES DETAIL

Operating Company Level (Circuit Miles)

State Level (Circuit Miles)

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.

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 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


DISTRIBUTION LINE DETAIL

Note: Year End 2017 data per Small World Graphics

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


RATE BASE & ROEs

1. Rate base represents Net Utility Plant plus Regulatory Assets less Net Accumulated Deferred Income Taxes and less Regulatory Liabilities from 2017 FERC Form 1. 2. Operating ROE adjusts GAAP results by eliminating any material nonrecurring items and is not weather normalized. 12-month rolling ROE. 3. 10.4% allowed top of band, 70 BPS above authorized 9.7%, as approved in 2014. Base rates subsequently frozen in VA by the Feb 2015 Rate Freeze Law. A 9.4% ROE was approved in Oct 2016 to be applied to Rate Adjustment Clauses (RACs) only. 4. Approved Debt/AR/Equity. 5. Represents the midpoint of the ROE range approved in the formula rate case settled in Apr 2017. 6. Per Feb 2015 ESP III Order for base distribution. Per Apr 2018 ESP III Extension Order, ROE is 10.0% for riders only. 7. For AEP's PJM Transmission Companies, represents a 9.85% base ROE plus 50 BPS RTO adder. 8. ROE is 12.5% adjusted for SEET items. Note: Chart excludes AEG's Rockport plant investment. AEG sells capacity & energy to I&M and KPCo under a PPA.

Vertically Integrated Utilities

Jurisdiction

Pro Forma Rate

Base1

($ millions)

Operating Earned ROE2

as of 9/30/2018

Approved

ROE

Approved

Debt/Equity

Effective Date of last approved

rate case

APCo – Virginia 10.40%3

57/43 2/2/15

APCo – West Virginia/WPCo 9.75% 53/47 5/27/15

APCo – FERC 9.82% 52/48 1/1/17

APCo/WPCo Total $8,389 9.9%

Kingsport Power – Tennessee 9.85% 58/42 8/9/16

KGPCo – TN Total $113 7.4%

KPCo – Distribution/Generation 9.70% 54.4/3.9/41.74

1/19/18

KPCo – FERC 10.07% 56.5/43.5 1/1/17

KPCo – Kentucky Total $1,611 9.2%

I&M – Indiana 9.95% 53.5/46.5 7/1/18

I&M – Michigan 9.90% 52.6/47.4 4/26/18

I&M – FERC 9.57% 49/51 1/1/17

I&M Total $4,919 12.0%

PSO – Distribution/Generation 9.30% 51.5/48.5 3/1/18

PSO – Oklahoma Total $2,840 7.7%

SWEPCO – Louisiana 9.80%5

48/52 5/1/17

SWEPCO – Arkansas 10.25% 54/46 11/24/09

SWEPCO – Texas 9.60% 51.5/48.5 5/20/17

SWEPCO – FERC 10.1%-11.1% 52/48 1/1/17

SWEPCO Total $5,021 7.4%

Transmission and Distribution Companies

Jurisdiction

Proforma Rate

Base1

($ millions)


as of 9/30/2018

Approved

ROE

Approved

Debt/Equity


rate case

AEP Ohio – Distribution 10.20%6

52/48 2/25/15

AEP Ohio – Transmission 10.35%7

45/55 1/1/18

AEP Ohio Total $4,661 14.1%8

AEP Texas Central 9.96% 60/40 5/29/07

AEP Texas North 9.96% 60/40 3/4/08

AEP Texas Total $5,079 8.8%

Transcos

Company

Proforma Rate

Base1

($ millions)


as of 9/30/2018

Approved

ROE

Approved

Debt/Equity


formula rate filing

AEP Ohio Transco $2,367 10.0% 10.35%7

45/55 1/1/18

AEP Kentucky Transco $76 11.3% 10.35%7

45/55 1/1/18

AEP Indiana Michigan Transco $1,466 9.9% 10.35%7

45/55 1/1/18

AEP West Virginia Transco $846 9.8% 10.35%7

45/55 1/1/18

AEP Oklahoma Transco $751 11.4% 11.20% Actuals 7/1/16


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

Fuel Clause Renewal Frequency Annually Semi-Annually Monthly Monthly Annually N/A Annually Annually

Tri-

Annually Annually Annually N/A N/A

Approx # of months after filing to

implement rates 10

10 @ 50% if

no order 6 4 10 9 6 9 6

10

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

Base Case Test Year

Partially

Projected

Hist., Forecast

or Hybrid

Forecast

Optional

Hist.

(Formula

Rate)

Forecast

Optional

Partially/Fully

Projected Hist. Hist. Hist. Hist. Hist. Forecast

Historical/

Forecast Filed

Post Test/Year Adjustment Period

(Months) 12 12 12 -- -- --

Min 6,

no max 18 -- 3 12 -- Forecasted

Cash Return on CWIP Partial

Limited

Note 2

Optional

Note 3

Partial

Note 1 Yes

Limited

Note 4

No

Note 1 Yes

Limited

Note 5 Yes Note 7

Limited

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.


RETAIL RECOVERY MECHANISMS BY JURISDICTION Company State

Distribution

Vegetation

Management

Environmental

Investment Energy Efficiency

Renewables

Investment REPA

Other Purchased

Power

(Energy/Capacity)

OATT

Distribution/

Transmission

Capital

Investment

I&M Indiana BR CCTR/FMR/BR

DSM/EE Program

Cost Rider SPR/BR FAC/BR FAC/BR

BR/PJM

Tracker BR/PJM Tracker

Michigan BR BR EO Rider BR PSCR/RES PSCR PSCR BR/PSCR

KPCo Kentucky BR Surcharge DSM Adj. Clause BR N/A FAC/Tariff PPA BR/ Tariff

PPA BR

AEP Ohio Ohio ESRR N/A EE/PDR

Rider RGR AER/RGR PPA BTCR DIR

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

West Virginia VMP

Surcharge ENEC/BR

EE/DR Recovery

Rider BR ENEC ENEC ENEC BR/ENEC

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

PSO Oklahoma BR BR DSM Cost Recovery

Rider BR FAC FAC

BR/SPP

Tracker BR

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


STORM O&M RECOVERY MECHANISMS BY JURISDICTION

State

Ability to

Defer

Description

Latest

Approved

Recovery

Period

(in years)

Arkansas Yes Storm costs are normally expensed as incurred. However, if a storm is ruled to be significant, Commission has

granted authority to request recovery in base rates or a separate proceeding.

3

Indiana Yes Recovery of storm costs is requested in base rate cases. 2018 base case re-established a $4M annual major

storm reserve based on 5-year historical average of major storm expenses and includes over-/under-recovery.

N/A

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

mechanism. Recovery of significant storms are requested in separate proceedings.

1

Oklahoma Yes Recovery of storm costs is requested in base rate cases with over-/under-recovery above/below $2.9M

annually. Recovery of significant storm costs is separately requested.

4

Tennessee Yes Recovery of storm costs is requested in base rate cases. A reliability/storm rider provides for over-/under-

recovery of incremental storm-related costs compared to what is recovered in base rates.

1

Texas

(SWEPCO)

Yes Storm costs are normally expensed as incurred. However, storm costs may be deferred for recovery if the

costs are included in the test period of a base case filing.

3

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

with recovery in base rates or potential securitization.

N/A

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


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.


COMMISSION OVERVIEW

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.

Federal Energy Regulatory Commission


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


TRANSFORMING OUR GENERATION FLEET

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

2%

30% 5%

Nuclear Natural Gas Coal Hydro, Wind, Solar

& Pumped

Energy Efficiency /

Demand Response

37%

66%

22%

7% 4%

1%

70%

19%

6% 4% 1%

47%

28%

7%

14%

4%

29%

24%

7%

34%

6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Cap

acity

1999 2005 2018 Future 1999 2005 2018 Future 1999 2005 2018 Future 1999 2005 2018 Future 1999 2005 2018 Future

No Change


INVESTMENTS DRIVING EMISSION REDUCTIONS


DRAMATIC REDUCTIONS IN EMISSIONS

SO2

92%

95%

1990-2017

ACTUAL

NOx

Hg 95%

2001-2017

ACTUAL


DRAMATIC REDUCTIONS IN EMISSIONS

CO2

2000-2017

Actual

57%


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

DELIVERING CLEAN ENERGY RESOURCES


RENEWABLE RESOURCES Owned Renewables PPA Renewables Total

Company & Plant Name State Hydro Wind Solar Total

Owned Hydro Wind Solar

Total

PPA


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


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


Owned Renewables PPA Renewables Total

Company & Plant Name State Hydro Wind Solar Total

Owned Hydro Wind Solar

Total

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


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


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

RENEWABLE RESOURCES


RENEWABLE PORTFOLIO/ENERGY EFFICIENCY STANDARDS


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

Sporn 5 450 2011

Stuart 1-4 * 600 2018

Kammer 1-3 630 2015

Total Competitive Retirements 3,738

* Includes 150 MW of Stuart

Unit 1 mothballed in Oct 2017


REGULATED ENVIRONMENTAL CONTROLS

Plant Name

MW

Capacity

SCR

Projected

In-Service FGD

Projected

In-Service ACI

Projected

In-Service

FGD-

DSI

Projected

In-Service Baghouse

Projected

In-Service

Gas

Conversion

Projected

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

In Service Projected * Operated by Kentucky Power

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)


Plant Name

MW

Capacity SCR

Projected

In-Service FGD

Projected

In-Service ACI

Projected

In-Service

FGD-

DSI

Projected

In-Service Baghouse

Projected

In-Service

Gas

Conversion

Projected

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)

REGULATED ENVIRONMENTAL CONTROLS


COMPETITIVE ENVIRONMENTAL CONTROLS

Plant Name MW Capacity SCR FGD ACI

Gore Mercury

Control


Cardinal 1 595

Conesville 4 651

Conesville 5 410

Conesville 6 410

AEP Texas

Oklaunion * 355

In Service * Owned by AEP Texas North, PPA with Competitive

ACI – Activated Carbon Injection FGD – Flue Gas Desulfurization SCR – Selective Catalytic Reduction

(Mercury Control) (SO2 Control) (NOx Control)


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

11/5/2018 33 33 53rd EEI Financial Conference | aep.com

FINANCIAL UPDATE

• Capitalization & Liquidity

• Pension & OPEB Estimates

• AEP Banking Group

• AEP Credit Ratings

• Long-Term Debt Maturity Profile

• Debt Schedules


CAPITALIZATION & LIQUIDITY

Liquidity Summary

Credit Statistics

Qualified Pension Funding

Actual Target

FFO to Total Debt 19.2% Mid Teens

Represents the trailing 12 months as of 9/30/2018

(unaudited) 9/30/2018 Actual

($ in millions) Amount Maturity

Revolving Credit Facility * $3,000 Jun-21

Plus

Cash & Cash Equivalents 788

Less

Commercial Paper Outstanding (1,473)

Letters of Credit Issued -

Net Available Liquidity $2,315

Strong balance sheet, credit metrics and liquidity

2012 2013 2014 2015 2016 Q1-17 Q2-17 Q3-17

2012 2013 2014 2015 2016 Q1-17 Q2-17 Q3-17

Total Debt / Total Capitalization

2013

54.3% 54.3% 53.2% 55.9% 55.5% 56.6% 56.8% 56.8%

Short/Long Term Debt Securitization Debt

2013 2014 2015 2016 2017 Q1-18 Q2-18 Q3-18

99% 97% 97% 96% 101% 102% 103% 104%

2013 2014 2015 2016 2017 Q1-18 Q2-18 Q3-18 * In Oct 2018, credit facility was amended to $4.0B and

extended to mature in Jun-22


PENSION & OPEB ESTIMATES

Qualified Pension Funding

• YTD pension and OPEB returns

were flat at 0.2% and (0.3%)

respectively, as modest risk seeking

asset returns were offset by fixed

income losses attributed to rising

yields. Despite these flat returns, the

funded status of both plans

increased slightly as both plan

liabilities decreased more than plan

assets due to a rising discount rate.

• We expect combined pension and

OPEB costs (pre-tax and including

capitalized portion) to decrease by

$13M from 2018 to 2019 subject to

potential changes in investment

results, interest rates and actuarial

assumptions.

• Pension expense for regulated

subsidiaries is recovered through

base rates.

Assumptions 2018E 2019E

Pension Discount Rate 3.65% 4.31%

OPEB Discount Rate 3.60% 4.32%

Assumed Long Term Rate of

Return on Pension Assets 6.0% 6.0%

Assumed Long Term Rate

of Return on OPEB Assets 6.0% 6.0%

Pension/OPEB Funding $24M $102M

Pension/OPEB Cost * ($20M) ($33M)

* Pre-tax and pre-capitalization

99% 97% 97% 96% 101% 104%

2013 2014 2015 2016 2017 3Q2018


AEP BANKING GROUP

Lender Composition

Lender mix gives AEP

geopolitical diversification

$4.0B Core Credit Facility (as of Oct 2018)

%Share

Bank of America Major US Bank 5.9%

Bank of Tokyo-Mitsubishi Japanese Bank 5.9%

Barclays Bank European Bank 5.9%

Citibank Major US Bank 5.9%

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%

BNP Paribas European Bank 3.75%

Credit Agricole European Bank 3.75%

Credit Suisse European Bank 3.75%

Goldman Sachs Investment Bank 3.75%

Key Bank US Regional Bank 3.75%

Morgan Stanley Investment Bank 3.75%

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%

Sumitomo Bank Ltd Japanese Bank 3.75%

Fifth-Third Bank US Regional Bank 2.0%

Huntington National Bank US Regional Bank 2.0%

Total 100%

28%

15%

13%

17%

16%

11%

Major US Bank US Regional Bank Canadian Bank

European Bank Japanese Bank Investment Bank


AEP CREDIT RATINGS

Ratings current as of September 30, 2018

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

AEP Transmission Company, LLC (1) A2 S A- S

Appalachian Power Company (2) Baa1 S A- S

Indiana Michigan Power Company (2) 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

Transource Energy (3) 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.


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


DEBT SCHEDULES

Note: Debt schedules current as of 9/30/18

* PPN – Private Placement Number

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


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


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


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


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


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


DEBT SCHEDULES



Appalachian Power Company Interest Maturity CUSIP / PPN* Amount


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


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


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


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


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


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


Total $1,287,660,000


DEBT SCHEDULES



Southwestern Electric Power Company Interest Maturity CUSIP / PPN* Amount


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 notif ied 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


OVERVIEW

Appalachian Power Company (APCo) (organized in Virginia in 1926) is engaged in the generation,

transmission and distribution of electric power to approximately

958,000 retail customers in the southwestern portion of Virginia

and southern West Virginia, and in supplying and marketing

electric power at wholesale to other electric utility companies,

municipalities and other market participants. As of December 31,

2017, APCo had 1,817 employees. APCo is a member of PJM.

Wheeling Power Company (WPCo) (organized in West Virginia in 1883 and reincorporated in 1911)

provides electric service to approximately 42,000 retail

customers in northern West Virginia. As of December 31, 2017,

WPCo had 56 employees. WPCo is a member of PJM.

Kingsport Power Company (KGPCo) (organized in Virginia in 1917) provides electric service to

approximately 48,000 retail customers in Kingsport and eight

neighboring communities in northeastern Tennessee. As of

December 31, 2017, KGPCo had 52 employees. KGPCo is a

member of PJM.

PRINCIPAL

INDUSTRIES SERVED:

Coal Mining

Primary Metals

Pipeline Transportation

Chemical Manufacturing

Paper Manufacturing

President and Chief Operating Officer:

Chris Beam

Total Customers at 12/31/17:

Residential 887,000

Commercial 148,000

Industrial 5,000

Other 8,000

Total 1,048,000

Owned Generating Capacity 7,440 MW

PPA Capacity 919 MW

Generating & PPA Capacity by Fuel Mix:

• Coal: 64.3%

• Hydro & Wind: 16.6%

• Natural Gas: 19.1%

Transmission Miles 6,413

Distribution Miles 54,635

Note: Values consolidate APCo, WPCo and KGPCo.

Since January 2017

28 years with AEP


APCo FINANCIAL & OPERATIONAL DATA

* Source: 3Q18 Financial Statements (unaudited)

** Source: 2017 10K Financial Statements

*** GWh Sales – Weather Normalized

Credit Ratings/Outlook

as of 9/30/2018

Moody's S&P

Baa1/S A-/S

Capital Structure (in thousands)

Capital Structure 2017 ** 9/30/2018 *

Debt Equity Total Debt Equity Total

Capitalization Per Balance Sheet 4,166,100

3,804,500 7,970,600 4,160,200

3,971,900

8,132,100

% 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.

11,132 11,327 11,504

6,517 6,687 6,707

9,603 9,410 9,866

1,964 2,009 1,997

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2017 2016 2015

Kilo

watt

-ho

urs

Summary of KWh Energy Sales *** (in millions of KWhs)

Residential Commercial Industrial Other

29,216 29,433 30,074

Summary of Degree Days **

2017 2016 2015

(in degree days)

Heating Actual 1,848 2,105 2,162

Normal 2,235 2,257 2,248

Cooling Actual 1,249 1,480 1,290

Normal 1,201 1,198 1,196

2018 Asset Data * (in thousands)

As of 9/30/18

Total Assets $ 12,057,900

Net Plant Assets $ 10,505,700

Cash $ 2,200


WPCo FINANCIAL & OPERATIONAL DATA


as of 6/30/2018

Moody's S&P

NR A-/S

Summary of Degree Days

2017 2016 2015

(in degree days)


Normal 3,684 3,712 3,694

Cooling Actual 914 1,117 935

Normal 743 732 725


** Source: 2017 Annual Financial Statements





Capitalization Per Balance Sheet

348,807

415,197

764,004

348,361

414,045

762,406





394 407 417

440 441 445

3,079 2,905 2,748

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2017 2016 2015

Kilo

wat

t-h

ou

rs



3,919 3,759 3,615


As of 6/30/18


Net Plant Assets $ 906,491

Cash $ 100


KGPCo FINANCIAL & OPERATIONAL DATA





2017 2016 2015

(in degree days)


Normal 2,208 2,226 2,221


Normal 1,084 1,080 1,078




Capitalization Per Balance Sheet 50,000 43,518 93,518 58,582 45,591 104,173


672 675 683

391 394 395

914 918 981

-

500

1,000

1,500

2,000

2,500

2017 2016 2015

Kilo

watt

-ho

urs

Summary of KWh Energy Sales*** (in millions of KWhs)


2,010 2,022 2,094


As of 6/30/18

Total Assets $ 171,668

Net Plant Assets $ 142,882

Cash $ 69


MAJOR CUSTOMERS:

WVA Manufacturing (WV)

Domtar Paper, LLC (TN)

Georgia-Pacific Corporation (VA)

Greif Brothers Corporation (VA)

Air Products & Chemicals Inc (TN)

Roanoke Electric Steel Corporation (VA)

Steel of WV, Inc. (WV)

Constellium Rolled Products (WV)

The Goodyear Tire and Rubber Co. (VA)

Roanoke Cement Company LLC (VA)

(Data for year ended December 2017)

APPALACHIAN AREA

INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON **

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)

** 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.

*** Effective July 1, 2018, rates reduced to

$118.46/month.

CUSTOMER STATISTICS

* 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/

West Virginia Customers

APCo

425,982

Monongahela Power Co

390,806

The Potomac Edison

Company

141,376

WPCo

41,427

Black Diamond Power Co

3,938

Virginia Customers

Virginia Electric & Power Co

2,454,141

APCo

529,821

Kentucky Utilities Co

28,121

Tennessee Customers

KGPCo 47,840

West Virginia $/month

APCo *** 120.93

WPCo *** 120.93

Monongahela Power Co 110.22

The Potomac Edison

Company 110.22

Virginia $/month

APCo 113.93

Dominion Virginia Power 113.84

Old Dominion Power

Company 103.82

Tennessee $/month

KGPCo 91.88




COMMISSION OVERVIEW Virginia State Corporation Commission

Commissioners

Number: 3 Appointed/Elected: Elected Term: 6 Years Political Makeup: R: 2 D: 0


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.


COMMISSION OVERVIEW Public Service Commission of West Virginia

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.


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.


COMMISSION OVERVIEW Tennessee Public Utility Commission


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, fue l, purchased

power and PJM transmission charges have been removed from base rates and are now recovered through a single tracked surcharge.

Commissioners

Number: 5 Appointed/Elected: Appointed Term: 6 Years


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.


Indiana Michigan Power Company (I&M) (organized in Indiana in 1907) is engaged in the generation,


594,000 retail customers in northern and eastern Indiana and

southwestern Michigan, and in supplying and marketing electric power

at wholesale to other electric utility companies, rural electric

cooperatives, municipalities and other market participants. As of

December 31, 2017, I&M had 2,423 employees. I&M is a member of

PJM.


Toby Thomas

PRINCIPAL INDUSTRIES SERVED:

Primary Metals

Transportation Equipment


Plastics and Rubber Products

Fabricated Metal Product Manufacturing


Residential 516,000

Commercial 71,000

Industrial 5,000

Other 2,000

Total 594,000


PPA Capacity 1,539 MW *


• Coal: 46.5%

• Nuclear: 44.1%

• Hydro, Wind & Solar: 9.4%



OVERVIEW

Since January 2017

17 years with AEP

* Includes 917 MW from AEP Generating Company Rockport Plant PPA


FINANCIAL & OPERATIONAL DATA





as of 9/30/2018

Moody's S&P

A3/S A-/S


2017 2016 2015

(in degree days)


Normal 3,758 3,779 3,762

Cooling Actual 792 1,039 798

Normal 846 845 846




Capitalization Per Balance Sheet 2,956,700 2,217,600 5,174,300 3,062,400 2,342,500 5,404,900






As of 9/30/18



Cash $ 1,600

5,488 5,527 5,509

4,868 4,942 4,904

7,740 7,780 7,570

5,068 5,100 5,041

-

5,000

10,000

15,000

20,000

25,000

30,000

2017 2016 2015

Kilo

watt

-ho

urs



23,164 23,349 23,024


INDIANA & MICHIGAN INVESTOR

OWNED UTILITIES * TYPICAL BILL COMPARISON **

1,779,184

2,156,214

** 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.

Top 10 Customers = 45% of industrial sales




MAJOR CUSTOMERS:

Steel Dynamics Inc. (IN)

IN TEK (IN)

Air Products & Chemicals Inc (IN)

Linde LLC (IN)

Michelin North America (IN)

Ardagh Glass Inc ((IN)

Metal Technologies Inc. (MI)

Unifrax Corporation (IN)

Guardian Industries Corp (IN)

Honeywell International Inc (IN)


CUSTOMER STATISTICS

Indiana Customers

Duke Energy Indiana

819,569

IP & L

491,347

NIPSCO

468,590

I & M

463,352

SIGECo

141,341

Michigan Customers

DTE Electric Company

2,184,813

Consumers Energy

1,816,948

I & M

128,632




Indiana $/month Michigan $/month

SIGECo 158.75

DTE Electric

Company 160.92

NIPSCO 142.40 Consumers Energy 150.06

I & M 122.64 I & M 119.73

Duke Energy Indiana 118.76

IP & L 112.51




COMMISSION OVERVIEW

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.


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.

Indiana Utility Regulatory Commission


Michigan Public Service Commission

COMMISSION OVERVIEW

Commissioners

Number: 3 Appointed/Elected: Appointed Term: 6 Years Political Makeup: I: 2 R: 1


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.


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


OVERVIEW

Kentucky Power Company (KPCo) (organized in Kentucky in 1919) is engaged in the generation,

transmission and distribution of electric power to

approximately 167,000 retail customers in eastern Kentucky,

and in supplying and marketing electric power at wholesale to

other electric utility companies, municipalities and other

market participants. As of December 31, 2017, KPCo had

549 employees. KPCo is a member of PJM.


Brett Mattison


Residential 135,500

Commercial 30,000

Industrial 1,000

Other 500

Total 167,000


PPA Capacity 393 MW *


• Coal: 80.7%





Petroleum and Coal Products Manufacturing


Coal Mining

Oil and Gas Extraction

Primary Metals

Effective January 1, 2019

28 years with AEP

Matthew Satterwhite, President

and Chief Operating Officer

through December 31, 2018

* Represents 393 MW from AEP Generating Company

Rockport Plant PPA




as of 9/30/2018

Moody's S&P

Baa2/N A-/S





2017 2016 2015

(in degree days)


Normal 2,441 2,462 2,446


Normal 1,178 1,172 1,180


As of 9/30/18



Cash $ 698



Debt Equity Total Debt Equity Total Capitalization Per Balance Sheet 876,829 670,263 1,547,092 879,572 719,769 1,599,341





2,042 2,115 2,198

1,268 1,303 1,327

2,403 2,408 2,693

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2017 2016 2015

Kilo

watt

-ho

urs



5,804 5,921 6,319


KENTUCKY INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON **

MAJOR CUSTOMERS:

Catlettsburg Refining LLC

Markwest Hydrocarbon LLC

Air Products & Chemicals, Inc.

Airgas USA, LLC

AK Steel Corporation

Calgon Carbon Corp

Tennessee Gas Pipeline Co

Huntington Alloys

M C Mining, Inc.

Czar Coal Corporation


Top 10 customers = 78% of industrial sales




** 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.

CUSTOMER STATISTICS

Kentucky Customers

Kentucky Utilities 522,511

LG & E 408,738

KPCo 167,599

Duke Energy Kentucky 141,273




Kentucky $/month

KPCo 114.23

LG & E 112.56

Kentucky Utilities 105.70

Duke Energy Kentucky 90.04




COMMISSION OVERVIEW Kentucky Public Service Commission


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.

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 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

approximately 1,477,000 retail customers in Ohio. Following

corporate separation of OPCo's generation assets in December

2013, OPCo purchases energy and capacity to serve generation

service customers. As of December 31, 2017, OPCo had 1,654

employees. OPCo is a member of PJM.


Primary Metals


Plastics and Rubber Products


Fabricated Metal Product Manufacturing

Data Centers


Raja Sundararajan


Residential 1,286,000

Commercial 178,000

Industrial 10,000

Other 3,000

Total 1,477,000

PPA Capacity 646 MW

PPA Capacity by Fuel Mix:

• Coal: 67.6%

• Wind & Solar: 32.4%



Effective January 1, 2019

16 years with AEP

Julie Sloat, President

and Chief Operating

Officer through

December 31, 2018

OVERVIEW




as of 9/30/2018

Moody's S&P

A2/S A-/S





2017 2016 2015

(in degree days)


Normal 3,225 3,245 3,226

Cooling Actual 1,002 1,248 975

Normal 974 969 970


As of 9/30/18



Cash $ 3,500









13,861 14,055 14,159

14,467 14,514 14,468

14,671 14,285 14,653

-

10,000

20,000

30,000

40,000

50,000

60,000

2017 2016 2015

Kilo

watt

-ho

urs



43,126 42,985 43,408


OHIO INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON **

MAJOR CUSTOMERS:

Timken Steel Corporation

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


Top 10 AEP Ohio customers = 35% of industrial sales




** 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. Ohio rates represent standard service

offer bundled residential rates.

CUSTOMER STATISTICS

Ohio Customers

AEP Ohio 1,472,768

FE (Ohio Edison) 1,046,760

FE (CEI) 750,659

Duke Energy Ohio Inc 712,329

DP&L 520,023

FE (Toledo Edison) 310,305




Ohio $/month

AEP Ohio (OPCo) 132.19

FE (Toledo Edison) 131.36

FE (CEI) 128.92

FE (Ohio Edison) 128.72

AEP Ohio (CSPCo) 125.78

Duke Energy Ohio Inc 117.37

DP&L 106.79




Public Utilities Commission of Ohio

COMMISSION OVERVIEW


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.

Commissioners

Number: 5 Appointed/Elected: Appointed Term: 5 Years Political Makeup: R: 2 D: 1 I: 2


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.


OVERVIEW

Public Service Company of Oklahoma (PSO) (organized in Oklahoma in 1913) is engaged in the generation,


551,000 retail customers in eastern and southwestern Oklahoma,

and in supplying and marketing electric power at wholesale to other

electric utility companies, municipalities, rural electric cooperatives

and other market participants. At December 31, 2017, PSO had

1,141 employees. PSO is a member of SPP.


Peggy Simmons


Paper Manufacturing



Transportation Equipment



Residential 474,000

Commercial 63,000

Industrial 6,000

Other 8,000

Total 551,000


Gas PPA Capacity 1,065 MW

Wind PPA Capacity 1,137 MW


• Coal 9.4%

• Natural Gas 72.1%

• Wind 18.5%



Since September 2018

19 years with AEP




** Source: 2017 10-K Financial Statements







FFO Interest Coverage 6.20^

6.40^




2017 2016 2015

(in degree days)


Normal 1,776 1,778 1,774


Normal 2,147 2,132 2,127


As of 9/30/18



Cash $ 1,900


as of 9/30/2018

Moody's S&P

A3/N A-/S

6,190 6,155 6,143

5,225 5,229 5,146

5,669 5,534 5,410

1,248 1,249 1,242

18,332 18,167 17,941

-

5,000

10,000

15,000

20,000

2017 2016 2015

Kilo

watt

-ho

urs




MAJOR CUSTOMERS:

International Paper Company

Kimberly Clark Corp

Goodyear Tire & Rubber Company

Enable Products, LLC.

HollyFrontier Corporation

American Airlines

Terra Nitrogen

Republic Paperboard


OKLAHOMA INVESTOR OWNED UTILITIES * TYPICAL BILL COMPARISON **

Oklahoma Customers

OG&E 771,427

PSO 550,022

Empire District 4,680





** 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.

Oklahoma $/month

OG&E 111.33

PSO 96.58

Empire District 89.01




CUSTOMER STATISTICS



COMMISSION OVERVIEW Oklahoma Corporation Commission

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.


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.


OVERVIEW

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

in northeastern and panhandle of Texas, northwestern and central Louisiana,

and western Arkansas and in supplying and marketing electric power at

wholesale to other electric utility companies, municipalities, rural electric

cooperatives and other market participants. At December 31, 2017,

SWEPCO had 1,479 employees. The territory served by SWEPCO also

includes several military installations, colleges and universities. SWEPCO

also owns and operates a lignite coal mining operation. SWEPCO is a

member of SPP.


Petroleum and Coal Products

Manufacturing

Food Manufacturing

Paper Manufacturing




Malcolm Smoak


Residential 454,000

Commercial 74,000

Industrial 6,500

Other 500

Total 535,000


PPA Capacity 555 MW


• Coal: 45.3%


• Wind: 8.1%



Since March 2018

34 years with AEP







Capital Structure

2017 ** 9/30/2018 *








2017 2016 2015

(in degree days)

Heating Actual 829 917 1,168

Normal 1,208 1,208 1,204


Normal 2,312 2,298 2,293


As of 9/30/18



Cash $ 2,500


as of 9/30/2018

Moody's S&P

Baa2/S

A-/S

6,211 6,152 6,234

5,989 6,031 6,032

5,268 5,074 5,370

6,022 6,190 6,252

23,490 23,447 23,888

-

5,000

10,000

15,000

20,000

25,000

30,000

2017 2016 2015

Kilo

watt

-ho

urs




MAJOR CUSTOMERS:

XTO Energy (TX)

Calumet Lubricants (LA)

Domtar Corporation (AR)

International Paper Company (TX)

Cooper Tire & Rubber Company (AR)

US Steel Tubular Products, Inc. (TX)

Pratt Paper, LLC (LA)

Air Liquide Large Industries (TX)

Pilgrims Pride (TX)

Glad Manufacturing Company (AR)


SOUTHWESTERN INVESTOR

OWNED UTILITIES * TYPICAL BILL COMPARISON **

Arkansas Customers

Entergy AR 708,855

SWEPCO 119,159

OG&E 66,825

Empire

District 4,537

Louisiana Customers

Entergy LA 1,078,545

CLECO 286,400

SWEPCO 230,568

Texas Customers

Entergy TX 446,771

El Paso 318,055

SPSCo 269,340

SWEPCO 185,249





Arkansas $/month Louisiana $/month Texas $/month

Empire District 117.78

Entergy New

Orleans 119.53 SPSCo 133.21

Entergy AR 109.14 CLECO 118.06 El Paso 120.32

OG&E 92.42 SWEPCO 97.68 Entergy TX 108.16

SWEPCO 90.41 Entergy LA 96.25 SWEPCO 86.35

Entergy Gulf St 89.64




CUSTOMER STATISTICS

** 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.



COMMISSION OVERVIEW Arkansas Public Service Commission

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.


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.


Louisiana Public Service Commission

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.


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.

COMMISSION OVERVIEW


Public Utility Commission of Texas

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.


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.

COMMISSION OVERVIEW



Residential 865,500

Commercial 149,000

Industrial 9,000

Other 6,500

Total 1,030,000

Owned Generating Capacity 355 MW

Generating Capacity by Fuel Mix:

• Coal 100.0%



OVERVIEW

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

employees. AEP Texas is a member of ERCOT.






Primary Metal Manufacturing

MAJOR CUSTOMERS:

Formosa Utility Venture

Valero Energy Corporation

Flint Hills Resources

Markwest Energy Partners

Equistar Bay City



Judith Talavera

Since June 2016

18 years with AEP


Metropolitan areas account for 74% ultimate

sales 31 persons per square mile (U.S. = 87)






*** KWh Sales – Weather Normalized


2017 2016 2015

(in degree days)

Heating Actual 239 202 390

Normal 330 328 325


Normal 2,669 2,648 2,642



Debt^ Equity Total Debt^ Equity Total



FFO Interest Coverage 5.05^^ 4.26^^

FFO Total Debt 16.2%^^ 12.9%^^

^^ - calculated on rolling 12-month avg.

^includes securitization debt of $1,026M and $825M at December 31, 2017 and September 30, 2018 respectively


as of 9/30/2018

Moody's S&P

Baa1/S A-/S

11,481 11,682 11,273

10,870 11,068 10,736

8,418 7,900 7,699

31,334 31,225 30,285

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2017 2016 2015

Kilo

watt

-ho

urs




As of 9/30/18



Cash $ 100


Public Utility Commission of Texas

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 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.

COMMISSION OVERVIEW


REGULATED GENERATION

• Regulated Generation Summary

• Owned Regulated Generation

• Regulated Fuel Procurement – 2019 Projected

• Regulated Coal Delivery – 2019 Projected

• Jurisdictional Fuel Clause Summary


REGULATED GENERATION SUMMARY

Net Maximum Capacity

(in MW)

Company Owned

Capacity

Renewable

PPA

Gas

PPA

OVEC

PPA ***

Total

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.


Plant Name Units State Year Plant

Commissioned Fuel Type

Owned Coal / Lignite

Owned Gas

Owned Nuclear

Owned Hydro

Owned Solar

Owned Net Maximum Capacity (MW)

AEP Generating Company

Rockport * 2 IN 1984 Steam - Coal 1,310 1,310


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

OWNED REGULATED GENERATION




Owned Coal / Lignite

Owned Gas

Owned Nuclear

Owned Hydro

Owned Solar

Owned Net Maximum Capacity (MW)


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


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





Owned

Coal /

Lignite

Owned

Gas

Owned

Nuclear

Owned

Hydro

Owned

Solar

Owned

Net Maximum

Capacity (MW)


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



Coal – West Regulated

Coal – East Regulated Total Coal - Regulated

REGULATED FUEL PROCUREMENT – 2019 PROJECTED

Fuel Stats:

- Expected 2019 Consumption: Coal: approx. 30M tons

Natural Gas: approx. 126 BCF

- 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

Central Appalachian

18%

Lignite 12%

Northern Appalachian

26%

Powder River Basin 44%

Central Appalachian

29%

Northern Appalachian

42%


Lignite 31%



Barge 40%

Rail 26%

Rail/Barge* 18%

Belt 16%

Total AEP Regulated System

* Reflects coal delivered to AEP plants transported

through a combination of rail and barge

AEP East AEP West

REGULATED COAL DELIVERY – 2019 PROJECTED

Barge 63%

Rail/ Barge*

30%

Belt 7%

Belt 31%

Rail 69%


Arkansas

Indiana

Kentucky

Louisiana

Michigan

Oklahoma

Tennessee

Texas (SPP)

Virginia

West Virginia

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Annually

Biannually

Monthly

Monthly

Annually

Annually

Annually

As Needed/Threshold *

Annually

Annually

Jurisdiction Active Fuel Clause

Adjustment

Frequency

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.

JURISDICTIONAL FUEL CLAUSE SUMMARY

*


• 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

TRANSMISSION INITIATIVES


Fully operational

Joint Venture

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.

$2,929M Net Plant

$359M Net Plant Net Plant totals are as of September 30, 2018, except Pioneer and Prairie Wind, which are as of August 31, 2018 * Debt issued at AEP Transco level for transmission companies

$144M Net Plant

$185M Net Plant

$2,011M Net Plant

$114M Net Plant

$3,187M Net Plant

$990M Net Plant

$1,182M Net Plant

$45M Net Plant

Grid Assurance Electric

Transmission

Texas, LLC

Transource Energy, LLC

Transource Missouri, LLC

Transource West Virginia,

LLC

Transource Pennsylvania,

LLC

Transource Maryland, LLC

AEP Appalachian Transmission Company, Inc.

Electric Transmission America, LLC

Prairie Wind Transmission,

LLC

Pioneer Transmission,

LLC

AEP Transmission Company,

LLC. (“AEP Transco”) *

American Electric Power

Company, Inc. (AEP)

AEP Transmission Holding Co.

LLC. (“AEP Trans Holdco”)

AEP Indiana Michigan Transmission Co., Inc.

AEP Kentucky Transmission Co., Inc.

AEP Ohio Transmission Co., Inc.

AEP Oklahoma Transmission Co., Inc.

AEP West Virginia Transmission Co., Inc.

Total $7,529M Net Plant


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.


AEP TRANSCO PROJECT MIX

Transmission has asset replacement, local reliability and

customer projects combined with RTO mandated projects


AEP TRANSCO FOOTPRINT

* As of September 30, 2018

The Transcos exist within the expansive service territories of AEP, operating across two RTOs and 10 states.

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.

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.

State Transco Net Transmission Plant

($ in Millions) * 2019-2023 Capital Plan

($ 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


TRANSMISSION INVESTMENT NEEDS

Note: Table and graphs refer to transmission equipment only. Distribution equipment is not included.

Life Expectancy

Current Quantity over

Life Expectancy

Quantity that will exceed Life Expectancy in next ten years

Total Renewal Opportunity

Projected Replacement

Cost (in millions)

Percent of Total

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%

Life Expectancy 70 years

Life Expectancy 50 years

Conductor Avg Age 47.6 years

Avg Circuit Breaker Age 22.3 years

Area of Focus Area of Focus


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 Transco

State Operational and Approval Status

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.


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:

Company RTO

Capital Structure %

Equity Cap Authorized ROE *

ATRR **

Rate Base

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


Operations and maintenance expense

Depreciation & amortization expense

Tax expense

Plant in-service

Accumulated depreciation & amortization

Deferred income taxes

Working capital

FERC FORMULA RATE

99

The Transcos benefit from a transparent, forward-looking formula rate

mechanism, authorized by the FERC, which minimizes regulatory lag:

+

Operating Expenses

Prior Year (Over)/Under

Recovery

+

=

Revenue Requirement

+ 13 Month Average

- 13 Month Average

- Beginning & Ending Average

+ Beginning & Ending Average

+ Projected

+ Projected

+ Projected

13 Month Average

10.35%

+ Annual true-up revenue amount to (return)/collect any (over)/under recovery of revenues

= Annual Transmission Revenue Requirement (ATRR) for collection during Rate Year

x

Rate Base

WACC





+ Projected

+ Projected

+ Projected

Beginning and Ending Average

11.20%

Capital structure

ROE for Transcos

PJM * SPP **

* ROE reflects a settlement rate billed on an interim basis, subject to FERC ruling 206 complaint ** Subject to change pending 205 application outcome


FERC 205 & 206 FILINGS

• 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

• 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

East

West


ACTIVE JOINT VENTURE PROJECTS

* 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

Project Name Location

Projected Complete

Date Owners (ownership %)

Total Estimated Project costs at

completion

Approved Return on Equity

Base RTO Project

Risk Total

ETT Texas (ERCOT) Ongoing BHE Texas Transco, LLC (50%), AEP

(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%

Pioneer Project * Indiana 2018

Northern Indiana Public Service Company (50%), Duke Energy

(25%), AEP (25%) $346 million 10.32% 0.50% 0.00% 10.82%

Transource-Iatan-Nashua Missouri 2015 AEP (86.5%), Great Plains Energy

(13.5%) $64 million 9.80% 0.50% 0.00% 10.30%

Transource-Nebraska-Sibley Missouri 2016 AEP (86.5%), Great Plains Energy

(13.5%) $248 million 9.80% 0.50% 1.00% 11.30%

Transource-WV West Virginia 2019 AEP (86.5%), Great Plains Energy

(13.5%) $67 million 10.00% 0.50% 0.00% 10.50%

Transource-PA & MD ** Pennsylvania &

Maryland 2020 AEP (86.5%), Great Plains Energy

(13.5%) $217 million 9.90% 0.50% 0.00% 10.40%


COMPETITIVE TRANSMISSION -

• The Iatan – Nashua 345 kV transmission line was placed in-service on April 8, 2015

• The Sibley – Nebraska City 345 kV line project was placed in-service on December 15, 2016

• In 2015, Transource was designated the Clendenin-Fort Walton Area Improvements

• The project is a ~25-mile 138kV line from AEP’s Thorofare Creek Station to FirstEnergy’s

Powell-Mountain-Goff Run 138 kV line and includes 2 new substations

• Project is on schedule for a June 1, 2019 in-service date

Transource Missouri

Net CWIP/PPE Balance $309 million

YTD After-tax Net Income $14 million

Actual Capital Structure 45% debt

55% equity

Authorized ROE1 11.15%

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

Transource West Virginia

Total Estimated Project Size ~$67 million

YTD After-tax Net Income $1 million

Post-Construction Capital Structure 40% debt

60% equity


Transource Pennsylvania & Maryland

Total Estimated Project Size3 ~$217 million

Hypothetical Capital Structure 40% debt

60% equity


• On August 2, 2016, PJM Board approved a Transource project that will improve congestion in

the AEP-Dominion interface

• The project includes the construction of two greenfield 230 kV lines (each in Pennsylvania and

Maryland) and two greenfield 500/230 kV substations (both in Pennsylvania)

• Approved incentives: Recovery of cost upon abandonment, pre-commercial costs/regulatory

asset, 100% CWIP in rate base during construction


FERC Formula Rate Mechanism Example

COMPETITIVE TRANSMISSION -

+

Operating Expenses

Prior Year (Over)/Under

Recovery

+

=

Revenue Requirement

x

Rate Base

WACC

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.


EVOLUTION OF TRANSMISSION TRACKERS IN THE OPERATING COMPANIES

Base Rates

Trackers

PJM Trackers

Base Rates

Trackers

SPP Trackers

Base Rates

Trackers

ERCOT Trackers

2005 2010 2018

2005 2010 2018

2005 2010 2018

17%

83% 75%

25%

93%

7%

26%

74%

38%

62% 67%

33%

100% 100% 100%


FAVORABLE RECOVERY OF TRANSMISSION INVESTMENT Jurisdictional Capital Investment Recovery Mechanism

• Projected $10 Billion of 2018 Net Plant in Service is recoverable through Trackers and from Wholesale Customers

• Projected $1.1 Billion of 2018 Net Plant in Service is recoverable through Base Rates

2018 Capital – Projected Recovery by RTO

2018 Recoverable Plant in Service ($M)

• Projected $1.1 Billion of 2018 PJM and SPP Expenses will be recovered through Trackers

• Projected $245.6 Million of 2018 PJM and SPP Expenses must be recovered through either existing or future Base Rates

Projected 2018 OATT Expense ($M)

Jurisdictional Trackers provide most efficient recovery of Transmission Investment

Note: Investment based on 2018 formula rate filings

$- $200 $400 $600

SWE…

PSO

OPCO

KPCO

I&M-…

I&M…

AP -…

AP-Va

TRACKED

BASE RATES

$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000

ERCOT

SPP

PJM

TRACKED

BASE RATES

90%

10%

TOTAL

93%

7%

PJM

67%

33%

SPP

100%

ERCOT


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


AEP

AEP Energy Supply


AEP Energy Partners

AEP Energy AEP OnSite

Partners AEP Renewables

COMPETITIVE OPERATIONS

ORGANIZATIONAL STRUCTURE

Generation Wholesale Trading

& Marketing

Oklaunion PPA

Wind Operations

Retail Customer

Solutions

Business

Focused on

Assets Backed

with Long-Term

PPAs

Universal Scale

Renewable Assets

with Long-Term

PPAs


CLEAN ENERGY INVESTMENTS

$2.2B CAPITAL ALLOCATED 2019-2023

Renewable Generation

Asset Owner

“Behind-the-Meter”

Energy Assets

Universal Scale

Energy Assets

Key Customers Schools, Cities, Hospitals and

Commercial / Industrial Accounts

Utilities, Municipalities,

Corporations and Cooperative

Accounts

Key Technologies

Distributed Generation, Fuel

Cells, Renewables, Storage,

Substations and Combined Heat

and Power

Wind and Solar


CUSTOMER ENERGY SOLUTIONS

• 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

Trinity College Fuel Cell (CT) – 1.4 MW Paloma High School (CA) – 1.0 MW-AC


• PPA with PacifiCorp

• COD on December 30, 2016

• Constructed by JSI Construction

• PPA with NV Energy

• COD on January 27, 2017

• Constructed by SunPower

• PPA with Southern California Edison

• COD on July 25, 2017

• Constructed by BayWa

Pavant Solar III (UT) – 20 MW-AC Boulder Solar II (NV) – 50 MW-AC Jacumba Solar (CA) – 20 MW-AC

• PPA with City Public Service San Antonio

• Commercial Operation in 2001

• Repowered in 2018 by GE

• Represents AEP’s 79.9% share

• PPAs with various Cooperatives

• Commercial Operation in 2001

• Repowered in 2018 by GE

• Represents AEP’s 79.9% share

Trent Wind Farm (TX) – 123 MW Desert Sky Wind Farm (TX) – 134 MW

UNIVERSAL SCALE RENEWABLE PROJECTS


COMPETITIVE GENERATION – OWNED & PPA

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

Plant Name State Fuel Type

Owned Owned Owned Owned Owned Owned

Coal Hydro Wind Solar (MW - AC)

Gas Fuel Cell

Net Maximum 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 Resource State Fuel Type PPA

PPA Total PPA

Coal Wind Capacity (MW)

Oklaunion c TX Steam - Coal 355 355

Southwest Mesa TX Wind 175 175

Total PPA 355 175 530

Coal Hydro Wind Solar Total

Capacity (MW)

Total Owned & PPA 2,421 48 432 168 1 3,070


COMPETITIVE 2017 FLEET STATISTICS

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

2017 2017

Plant / Unit Fuel Type Delivery FGD 2017 FOB 2017 MWh Capacity

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


Geography of Customers * Customer Accounts *

Delivered Load *

RETAIL – AEP ENERGY

C&I 13%

Residential 87%

C&I 79%

Residential 21%

• Approximately 415,000 retail customer accounts

(including approximately 66,000 retail gas accounts)

• YTD served 13.7 TWh of load

• Seven states, focus on Ohio

* As of September 30, 2018

Ohio 66.8%

Illinois 18.1%

Pennsylvania 12.5%

New Jersey 1.5%

Maryland 0.9% Delaware 0.1% Washington DC

0.1%

2018 AEP FACT BOOK · 53rd EEI Financial Conference | aep.com 1 Bette Jo Rozsa Darcy Reese Managing...

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Transcript of 2018 AEP FACT BOOK · 53rd EEI Financial Conference | aep.com 1 Bette Jo Rozsa Darcy Reese Managing...