3Q13 Earnings Release Presentation
October 23, 2013
2
“Safe Harbor” Statement under the Private
Securities Litigation Reform Act of 1995
Investor Relations Contacts
Bette Jo Rozsa
Managing Director
Investor Relations
614-716-2840
Julie Sherwood
Director
Investor Relations
614-716-2663
Sara Macioch
Analyst
Investor Relations
614-716-2835
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its
Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual
outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-
looking statements are: the economic climate and growth or contraction within and changes in market demand and demographic patterns in our service territory,
inflationary or deflationary interest rate trends, volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and
developments impairing our ability to finance new capital projects and refinance existing debt at attractive rates, the availability and cost of funds to finance working
capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material, electric load, customer
growth and the impact of retail competition, particularly in Ohio, weather conditions, including storms and drought conditions, and our ability to recover significant storm
restoration costs through applicable rate mechanisms, available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel
suppliers and transporters, availability of necessary generating capacity and the performance of our generating plants, our ability to recover increases in fuel and other
energy costs through regulated or competitive electric rates, our ability to build or acquire generating capacity, and transmission line facilities (including our ability to
obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are
cancelled) through applicable rate cases or competitive rates, new legislation, litigation and government regulation including oversight of nuclear generation, energy
commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or
additional regulation of fly ash and similar combustion products that could impact the continued operation and cost recovery of our plants and related assets, evolving
public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel, a reduction in the federal statutory tax
rate could result in an accelerated return of deferred federal income taxes to customers, timing and resolution of pending and future rate cases, negotiations and other
regulatory decisions including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance, resolution of
litigation, our ability to constrain operation and maintenance costs, our ability to develop and execute a strategy based on a view regarding prices of electricity and other
energy-related commodities, prices and demand for power that we generate and sell at wholesale, changes in technology, particularly with respect to new, developing or
alternative sources of generation, our ability to recover through rates or market prices any remaining unrecovered investment in generating 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 PJM and SPP,
the transition to market and the legal separation of generation in Ohio, including the implementation of ESPs and the successful approval, where applicable, and transfer
of such Ohio generation assets and liabilities to regulated and non-regulated entities at book value, our ability to successfully manage negotiations with stakeholders and
obtain regulatory approval to terminate the Interconnection Agreement, changes in the creditworthiness of the counterparties with whom we have contractual
arrangements, including participants in the energy trading market, actions of rating agencies, including changes in the ratings of our debt, the impact of volatility in the
capital markets on the value of the investments held by our pension, other postretirement benefit plans, captive insurance entity and nuclear decommissioning trust and
the impact on future funding requirements, accounting pronouncements periodically issued by accounting standard-setting bodies and other risks and unforeseen events,
including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.
3
Company Highlights
$1.00 $1.02
$0.89
$1.10
GAAP EPS OPERATING EPS
2012
2013
Refer to appendix for reconciliations between GAAP and Operating EPS
3rd Quarter
YTD
$2.55
$2.59
$2.33
$2.63
GAAP EPS OPERATING EPS
2012
2013
Earnings Update Delivered GAAP and operating earnings of $0.89 and
$1.10 per share, respectively, for the third quarter and
$2.33 and $2.63 per share, respectively, for the nine
month YTD period
Narrowing 2013 operating earnings range to $3.15 -
$3.25 per share
Dividend Increase Board declared dividend of $0.50/share
Increase of $0.01 or 2%; 3.72% annual
Regulatory Update
Kentucky Asset Transfer Order
West Virginia Asset Transfer
SWEPCO Texas Rate Case Order
Financial Update
Committed to delivering 4-6% earnings growth off of
2013 original guidance
Continuous improvement initiatives
Twelve Months Ended 09/30/13 Pro-forma* Earned ROEs
* pro-forma adjusts GAAP results by eliminating any material nonrecurring items and is not weather normalized
Delivered Strong Regulated Results
4
Regulated operations ROE of 10.3% as of September, 2013
(AEP Trans HoldCo)
5
3Q13 and YTD Performance
Operating Operating
Earnings Earnings
EPS ($ in millions) EPS ($ in millions)
2012 1.02$ 496$ 2.59$ 1,255$
Ohio Transition Items (0.03) (0.24)
Effective Tax Rate (0.04) (0.09)
AFUDC (0.02) (0.07)
Off-System Sales (0.02) (0.04)
AEP River Operations - (0.04)
Regulated Retail Load - (0.02)
Weather (0.08) (0.01)
O&M, net of offsets 0.06 (0.01)
Transmission Operations 0.01 0.05
Interest Income - 0.06
Other 0.05 0.09
Rate Changes 0.15 0.36
2013 1.10$ 533$ 2.63$ 1,277$
Third Quarter September YTD
Refer to appendix for explanation of variances
Narrowing 2013 operating earnings guidance to $3.15-$3.25 per share
6 Earnings impact neutral for quarter; unfavorable by $0.02 YTD
-0.5% -1.1%
1.3%
-0.1%
-1.8%
-0.2%
-5%
0%
5%
3Q12 4Q12 1Q13 2Q13 3Q13 YTD13
Normalized Load Trends
0.1%
-0.4%
0.5%
-2.1%
1.3%
-0.1%
-5%
0%
5%
3Q12 4Q12 1Q13 2Q13 3Q13 YTD13
-3.1% -4.2%
-6.0% -5.3%
-3.9%
-5.1%
-10%
-5%
0%
5%
3Q12 4Q12 1Q13 2Q13 3Q13 YTD13
-1.2% -2.0%
-1.5%
-2.7% -1.5% -1.9%
-5%
0%
5%
3Q12 4Q12 1Q13 2Q13 3Q13 YTD13
AEP Residential Normalized GWh Sales
%Change vs. Prior Year
AEP Commercial Normalized GWh Sales
%Change vs. Prior Year
AEP Industrial Normalized GWh Sales
%Change vs. Prior Year
AEP Total Normalized GWh Sales
%Change vs. Prior Year
Note: Charts reflect connected load and exclude firm wholesale load & Buckeye Power backup load.
7
Industrial Sales Volumes
Industrial sales headwinds
8
Liquidity Summary
(unaudited) Actual
($ in millions) Amount Maturity
Revolving Credit Facility 1,750$ Jul-17
Revolving Credit Facility 1,750 Jun-16
Term Credit Facility 1,000 May-15
Total Credit Facilities 4,500
Plus
Cash & Cash Equivalents 147
Less
Commercial Paper Outstanding (518)
Amount drawn on bank loans (600)
Letters of credit issued (185)
Net available Liquidity 3,344$
Capitalization & Liquidity
Liquidity Summary (09/30/2013)
Credit Statistics
Note: Credit statistics represent the trailing 12 months as of 09/30/2013
Strong balance sheet, solid credit metrics and adequate liquidity
Total Debt / Total Capitalization
74%
82%
88% 92%
94% 97% 98%
70%
80%
90%
100%
2009 2010 2011 2012 1Q13 2Q13 3Q13
Qualified Pension Liability Funding
Actual Target
FFO Interest Coverage 4.6 >3.6x
FFO To Total Debt 19.7% 15%- 20%
9
EEI Financial Conference Expectations
Support 4-6% earnings growth rate
Continuous Improvement Plan
Transmission growth opportunities
AEP Generation Resources detail
Detail growth in Regulated Utility Operations
10
Appendix
11
3Q13 Performance Drivers Third Quarter Reconciliation
3Q13 Performance
Weather was unfavorable by $60M vs. prior
year, unfavorable $10M vs. normal
Effective tax rate of 36.3% in 3Q2013 vs. 32.9%
in 3Q2012
Ohio transition items include reduced CRES
capacity reimbursements
AFUDC unfavorable $17M primarily due to Turk
plant in service December 2012
Transmission Operations favorable $8M
Other favorable primarily due to decreased
interest and depreciation expense
O&M expense, net of offsets, decreased $44M
primarily due to employee related expenses
Rate Changes, net of offsets, of $114M from
multiple jurisdictions
Operating
Earnings
EPS ($ in millions)
3Q12 1.02$ $496Weather (0.08)$ Effective Tax Rate (0.04)$ Ohio Transition Items (0.03)$ AFUDC (0.02)$ Off-System Sales (0.02)$ Transmission Operations 0.01$ Other 0.05$ O&M, net of offsets 0.06$ Rate Changes 0.15$
3Q13 1.10$ $533EPS Based on 487MM shares in 3Q13, 485MM in 3Q12
12
YTD 2013 Performance Drivers September YTD Reconciliation
September YTD 2013 Performance
Ohio transition items include reduced CRES capacity
reimbursements, prior year reversal of a fuel
provision, prior year reversal of a regulatory
obligation and customer switching and capacity
deferral. As of September 2013, 58% of total Ohio
load switched
Effective tax rate of 35.9% in 2013 vs. 32.9% in 2012
AFUDC unfavorable $57M primarily due to Turk plant
in service December 2012
AEP River Operations unfavorable due to reduced
grain and coal exports and water conditions
Regulated retail load down $18M
O&M expense net of offsets increased $10M
primarily due to increased storm restoration
expenses
Weather was unfavorable by $9M vs. prior year,
favorable $18M vs. normal
Transmission Operations favorable $22M
Favorable interest income $48M
Other favorable primarily due to decreased interest
expense
Rate Changes net of offsets of $270M from multiple
operating jurisdictions
Operating
Earnings
EPS ($ in millions)
2012 2.59$ $1,255
Ohio Transition Items (0.24)$
Effective Tax Rate (0.09)$
AFUDC (0.07)$
AEP River Operations (0.04)$
Off-System Sales (0.04)$
Regulated Retail Load (0.02)$
O&M, net of offsets (0.01)$
Weather (0.01)$
Transmission Operations 0.05$
Interest Income 0.06$
Other 0.09$
Rate Changes 0.36$
2013 2.63$ $1,277EPS Based on 486MM shares in YTD13, 484MM in YTD12
13
Reconciliation of GAAP to Operating Earnings
3rd Qtr 3rd Qtr 3rd Qtr 3rd Qtr
2012 2013 Change 2012 2013 Change
Reported Earnings (GAAP) 487$ 433$ (54)$ 1.00$ 0.89$ (0.11)$
Special Items:
Turk Plant Impairment 9 79 70 0.02 0.17 0.15
Big Sandy FGD Impairment - 21 21 - 0.04 0.04
AEP Operating Earnings 496 533 37 1.02 1.10 0.08
$ millions Earnings Per Share
YTD Sept YTD Sept YTD Sept YTD Sept
2012 2013 Change 2012 2013 Change
Reported Earnings (GAAP) 1,238$ 1,134$ (104)$ 2.55$ 2.33$ (0.22)$
Special Items:
Turk Plant Impairment 9 79 70 0.02 0.17 0.15
Restructuring Program 8 5 (3) 0.02 0.01 (0.01)
Reversal of Storm Deferral - Virginia - 19 19 - 0.04 0.04
UK Windfall Taxes - (80) (80) - (0.16) (0.16)
Muskingum River Plant Unit 5 Impairment - 99 99 - 0.20 0.20
Big Sandy FGD Impairment - 21 21 - 0.04 0.04
AEP Operating Earnings 1,255 1,277 22 2.59 2.63 0.04
$ millions Earnings Per Share
14
Quarterly Performance Comparison
2012 GAAP 2012 Operating 2013 GAAP 2013 Operating
2012 Volumes Earnings Adjustments Earnings 2013 Volumes Earnings Adjustments Earnings
(GWh) ($ millions) ($ millions) ($ millions) (GWh) ($ millions) ($ millions) ($ millions)
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated Utilities 16,847 766 - 766 16,311 774 - 774
2 Ohio Companies 13,327 666 - 666 11,958 644 - 644
3 West Regulated Integrated Utilities 12,744 450 - 450 12,360 481 - 481
4 Texas Wires 8,650 183 - 183 8,439 186 - 186
5 Off-System Sales 91 - 91 69 - 69
6 Transmission Revenue - 3rd Party 129 - 129 158 - 158
7 Other Operating Revenue 153 - 153 139 - 139
8 Utility Gross Margin 2,438 - 2,438 2,451 - 2,451
9 Operations & Maintenance (860) - (860) (802) - (802)
10 Depreciation & Amortization (458) - (458) (433) - (433)
11 Taxes Other than Income Taxes (219) - (219) (222) - (222)
12 Interest Exp & Preferred Dividend (221) - (221) (217) - (217)
13 Other Income & Deductions 21 13 34 (123) 144 21
14 Income Taxes (231) (4) (235) (246) (44) (290)
15 Utility Operations Earnings 470 9 479 408 100 508
16 Transmission Operations 14 - 14 22 - 22
NON-UTILITY OPERATIONS:
17 AEP River Operations (1) - (1) (1) - (1)
18 Generation & Marketing 10 - 10 4 - 4
PARENT & OTHER:
19 Parent & Other Earnings (6) - (6) - - -
20 EARNINGS 487 9 496 433 100 533
Weighted average no. of shares outstanding: EPS EPS EPS EPS
2012: 485 million 1.00 1.02 0.89 1.10
2013: 487 million
American Electric Power
Financial Results for 3rd Quarter 2013 Actual vs 3rd Quarter 2012 Actual
15
YTD Performance Comparison
2012 GAAP 2012 Operating 2013 GAAP 2013 Operating
2012 Volumes Earnings Adjustments Earnings 2013 Volumes Earnings Adjustments Earnings
(GWh) ($ millions) ($ millions) ($ millions) (GWh) ($ millions) ($ millions) ($ millions)
UTILITY OPERATIONS:
Gross Margin:
1 East Regulated Integrated Utilities 49,340 2,240 - 2,240 49,456 2,355 - 2,355
2 Ohio Companies 38,638 1,852 - 1,852 35,099 1,827 - 1,827
3 West Regulated Integrated Utilities 32,906 1,105 - 1,105 32,111 1,156 - 1,156
4 Texas Wires 22,614 493 - 493 21,988 499 - 499
5 Off-System Sales 274 - 274 176 - 176
6 Transmission Revenue - 3rd Party 366 - 366 430 - 430
7 Other Operating Revenue 386 - 386 396 - 396
8 Utility Gross Margin 6,716 - 6,716 6,839 - 6,839
9 Operations & Maintenance (2,386) 13 (2,373) (2,495) 37 (2,458)
10 Depreciation & Amortization (1,318) - (1,318) (1,268) - (1,268)
11 Taxes Other than Income Taxes (632) - (632) (644) - (644)
12 Interest Exp & Preferred Dividend (662) - (662) (664) - (664)
13 Other Income & Deductions 95 13 108 (230) 298 68
14 Income Taxes (596) (9) (605) (561) (112) (673)
15 Utility Operations Earnings 1,217 17 1,234 977 223 1,200
16 Transmission Operations 31 - 31 53 - 53
NON-UTILITY OPERATIONS:
17 AEP River Operations 11 - 11 (12) - (12)
18 Generation & Marketing 4 - 4 15 - 15
PARENT & OTHER:
19 Parent & Other Earnings (25) - (25) 101 (80) 21
20 EARNINGS 1,238 17 1,255 1,134 143 1,277
Weighted average no. of shares outstanding: EPS EPS EPS EPS
2012: 484 million 2.55 2.59 2.33 2.63
2013: 486 million
American Electric Power
Financial Results for YTD September 2013 Actual vs YTD September 2012 Actual
16
Retail Rate Performance
Rate Changes, net of
trackers (in millions)
Rate Changes, net of
trackers (in millions)
3Q13 vs. 3Q12 YTD13 vs. YTD12
East Regulated
Integrated Utilities $23
East Regulated
Integrated
Utilities
$70
Ohio Companies $29 Ohio Companies $95
West Regulated
Integrated Utilities $62
West Regulated
Integrated
Utilities
$106
Texas Wires $0 Texas Wires $0
AEP System Total $114 AEP System Total $270
Impact on EPS Impact on EPS
May not foot due to rounding
$0.15 $0.36
17
Retail Load Performance
Retail Load*
(weather normalized)
Retail Load*
(weather normalized)
3Q13 vs. 3Q12 YTD13 vs. YTD12
East Regulated
Integrated Utilities (0.6%)
East Regulated
Integrated
Utilities
(0.8%)
Ohio Companies (4.7%) Ohio Companies (4.6%)
West Regulated
Integrated Utilities (0.4%)
West Regulated
Integrated
Utilities
(1.1%)
Texas Wires 0.1% Texas Wires (0.8%)
Impact on EPS $0.00 Impact on EPS
*Excludes Firm Wholesale Load
$0.02
18
Weather Impact
Weather Impact
(in millions)
Weather Impact
(in millions)
3Q13 vs. 3Q12 YTD13 vs. YTD12
East Regulated
Integrated Utilities ($23)
East Regulated
Integrated
Utilities
$27
Ohio Companies ($24) Ohio Companies ($9)
West Regulated
Integrated Utilities ($9)
West Regulated
Integrated
Utilities
($19)
Texas Wires ($3) Texas Wires ($9)
Impact on EPS Impact on EPS $0.08 $0.01
19
Gas to Coal Switching
Overall generation from natural gas has decreased 34 percent year-to-date
38 days system average coal inventory at September 30, 2013
Coal approximately 81% hedged for 2014
3rd Quarter 2012 vs. 2013 Capacity Factor YTD 2012 vs. 2013 Capacity Factor
West East West East
20
Off System Sales Gross Margin Detail
CRES/RPM capacity payments decreased from last year by $9M
AEP/Dayton Hub pricing: 7% increase in liquidation prices
Lower Trading & Marketing results by $7M
Margins reduced by $19M due to a true-up of prior period PJM expenses
Third Quarter
YTD September 2013 Physical off-system sales margins increased from last year by $3M
CRES/RPM capacity payments decreased from last year by $88M
AEP/Dayton Hub pricing: 16% increase in liquidation prices
Lower Trading & Marketing results by $20M
Margins reduced by $15M due to a true-up of prior period PJM expenses
* CRES Payments of $23M in 2012 and $14M in 2013 included in Ohio Transition items on pages 5, 11 & 12
* CRES Payments of $96M in 2012 and $32M in 2013 included in Ohio Transition items on pages 5, 11 & 12
2012 2013
GWh ($millions) GWh ($millions)
OSS Physical Sales 8,926 76$ 10,425 66$
Capacity Payments CRES/RPM* 25$ 16$
Marketing/Trading - 18$ - 11$
Pre-Sharing Gross Margin 8,926 119$ 10,425 93$
Margin Shared (28)$ (24)$
Net OSS 91$ 69$
2012 2013
GWh ($millions) GWh ($millions)
OSS Physical Sales 18,462 152$ 24,445 155$
Capacity Payments CRES/RPM* 125$ 37$
Marketing/Trading 59$ 39$
Pre-Sharing Gross Margin 336$ 231$
Margin Shared (62)$ (55)$
Net OSS 274$ 176$
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