American Electric Power Company, Inc. · NASDAQ:AEP

American Electric Power — Investor Presentation (June 2017)

32 slides from American Electric Power's investor presentation, June 2017

  1. Slide 1: Transmission Formula Rate Annual Customer Meeting June 2017

    American Electric Power Transmission Formula Rate Annual Customer Meeting Public Service Company of Oklahoma Southwestern Electric Power Company June 2017

  2. Slide 2: 2017 Annual Update

    2017 Annual Update Internet Posting Annual Update 2017 • Notice of Annual Filing (PDF) • AEP-SPP Transmission Formula Rate Annual Update for Rates eff 7/01/2017 (XLS) • http://www.aep.com/about/codeofco • Supplemental Worksheets F & G (Part nduct/OASIS/TariffFilings/ IV) -- PSO BPU Project Tables (X

  3. Slide 3: 2017 Annual Update

    2017 Annual Update • Projected Rates – Projection based on 2016 year-end rate base balances plus projected 2017 plant balances, plus 2016 O&M and Depreciation expenses. – To be billed for the period July 1, 2017 through June 30, 2018 and trued up in 2018 • True-up of 2016 Calendar Year – Rates effec

  4. Slide 4: Summary of Projected Rates (PSO/SWEPCO)

    Summary of Projected Rates (PSO/SWEPCO) July 1, 2016 July 1, 2017 2015 FERC Form 1 2016 FERC Form 1 Charge (projected plant 2016) (projected plant 2017) % Change NITS & PTP Rate $1,623.70 $1,651.41 2% $/MW Month (Sch. 7, 8 & 9) Base Plan $70,531,855 $90,656,981 29% (Sch. 11) Load Dispatch and $0.082

  5. Slide 5: Primary Drivers - NITS Rate (PSO / SWEPCO)

    Primary Drivers - NITS Rate (PSO / SWEPCO) – Increased Net Plant in Service resulted in higher Depreciation, Income Taxes, and Taxes other than Income Taxes – 1% Decrease (44 MW) in AEP Zone Coincident Peak Demands (denominator in the rate) 5

  6. Slide 6: Base Plan Upgrades (Schedule 11)

    Base Plan Upgrades (Schedule 11) • PSO – 21 BP Projects. $53 million invested by end of 2017 – Added 3 new projects in 2016 with $1 million investment • SWEPCO – 63 BP projects. $666 million invested by end of 2017 – Added 8 new projects in 2016 with $43.3 million investment 6

  7. Slide 7: Summary Comparison

    Summary Comparison 2016 Projected – 2016 True-Up PSO SWEPCO TOTAL REVENUE REQUIREMENT REVENUE REQUIREMENT (w/o incentives) 2016 Projected 91,596,170 155,087,151 246,683,321 2016 True-Up 91,918,180 155,847,092 247,765,271 Inc/(Dec) 322,010 759,941 1,081,950 Percentage Inc/(Dec) 0.35% 0.49% 0.44% REVE

  8. Slide 8: Summary Comparison

    Summary Comparison 2016 Projected – 2016 True-Up PSO SWEPCO TOTAL RATE BASE CALCULATION TOTAL GROSS PLANT 2016 Projected 811,597,999 1,444,039,554 2,255,637,553 2016 True-Up 788,947,539 1,436,511,513 2,225,459,052 Inc/(Dec) (22,650,460) (7,528,040) (30,178,500) Percentage Inc/(Dec) -2.79% -0.52% -1.

  9. Slide 9: Summary Comparison

    Summary Comparison 2016 Projected – 2016 True-Up PSO SWEPCO TOTAL EXPENSE, TAXES, RETURN & REVENUE REQUIREMENTS CALCULATION TOTAL O&M EXPENSE 2016 Projected 21,632,441 25,160,083 46,792,524 2016 True-Up 20,415,108 26,265,765 46,680,873 Inc/(Dec) (1,217,333) 1,105,682 (111,651) Percentage Inc/(Dec) -

  10. Slide 10: Summary Comparison

    Summary Comparison 2016 Projected – 2016 True-Up PSO SWEPCO TOTAL WEIGHTED AVERAGE COST OF CAPITAL (WACC) LONG TERM DEBT INTEREST 2016 Projected 61,279,457 118,777,528 180,056,985 2016 True-Up 61,279,549 119,509,503 180,789,052 Inc/(Dec) 92 731,975 732,067 Percentage Inc/(Dec) 0.00% 0.62% 0.41% COMM

  11. Slide 11: Questions

    Questions “) 11

  12. Slide 12: Oklahoma Transmission Co. Southwestern Transmission Co.

    American Electric Power Oklahoma Transmission Co. Southwestern Transmission Co. 12

  13. Slide 13: 2017 Annual Update

    2017 Annual Update Internet Posting Annual Update 2017 - AEPTCo SPP • Notice of Annual Filing • ATRR Summary SPP Formula Rate • http://www.aep.com/about/codeofco • OKTCo Supplemental Worksheet F&G nduct/OASIS/TariffFilings/ • SWTCo Supplemental Worksheet F&G • OKTCo 2016 NITS True-Up AEP-SPP Docket

  14. Slide 14: 2017 Annual Update (OKTCo / SWTCo)

    2017 Annual Update (OKTCo / SWTCo) • Projected Rates – Projection based on 2016 year-end balances plus projected 2017 plant balances – Rate Year begins July 1, 2017 through June 30, 2018 • True-up (CY2016) – Rates effective July 1, 2015 (billed January – June 2016) -- $345.99 (OKTCo) & 1.44 (SWTCo)/

  15. Slide 15: Summary of Projected Rates (OKTCo / SWTCo)

    Summary of Projected Rates (OKTCo / SWTCo) July 1, 2016 July 1, 2017 Charge 2015 FERC Form 1 2016 FERC Form 1 (projected plant 2016) (projected plant 2017) NITS & PTP Rate OKTCo - $509.49 OKTCo - $698.21 $/MW Month SWTCo - $ 1.33 SWTCo - $ 1.27 (Sch. 7, 8 & 9) Base Plan OKTCo - $13,475,209 OKTCo - $

  16. Slide 16: Drivers Affecting NITS Rate

    Drivers Affecting NITS Rate – Increased capital investment in OKTCo results in higher O&M Expense and Depreciation Expense 16

  17. Slide 17: Base Plan Upgrades (Schedule 11)

    Base Plan Upgrades (Schedule 11) • OKTCo – Added 3 new Base Plan projects – $102.3 million investment • SWTCo – No Base Plan projects until final regulatory approval is obtained from all state commissions 17 - TCO

  18. Slide 18: Summary Comparison - Transcos

    Summary Comparison - Transcos 2016 Projected – 2016 True-Up OKTCo SWTCo REVENUE REQUIREMENT REVENUE REQUIREMENT (w/o incentives) 2016 Projected 65,470,116 136,455 2016 True-Up 66,232,655 138,248 Inc/(Dec) 762,539 1,793 Percentage Inc/(Dec) 1.16% 1.31% REVENUE CREDITS 2016 Projected 1,793,628 5,682 2

  19. Slide 19: Summary Comparison - Transcos

    Summary Comparison - Transcos 2016 Projected – 2016 True-Up OKTCo SWTCo RATE BASE CALCULATION TOTAL GROSS PLANT 2016 Projected 555,772,695 0 2016 True-Up 548,105,957 0 Inc/(Dec) (7,666,738) 0 Percentage Inc/(Dec) -1.38% 0.00% TOTAL NET PLANT IN SERVICE 2016 Projected 528,672,562 0 2016 True-Up 524,4

  20. Slide 20: Summary Comparison - Transcos

    Summary Comparison - Transcos 2016 Projected – 2016 True-Up OKTCo SWTCo EXPENSE, TAXES, RETURN & REVENUE REQUIREMENTS CALCULATION TOTAL O&M EXPENSE 2016 Projected 4,223,490 135,770 2016 True-Up 5,853,450 137,565 Inc/(Dec) 1,629,960 1,795 Percentage Inc/(Dec) 38.59% 1.32% TOTAL DEPRECIATION AND AMORT

  21. Slide 21: Summary Comparison - Transcos

    Summary Comparison - Transcos 2016 Projected – 2016 True-Up OKTCo SWTCo WEIGHTED AVERAGE COST OF CAPITAL (WACC) LONG TERM DEBT INTEREST 2016 Projected 8,069,540 0 2016 True-Up 8,825,886 0 Inc/(Dec) 756,346 0 Percentage Inc/(Dec) 9.37% 0.00% COMMON EQUITY 2016 Projected 213,669,471 (831,371) 2016 Tru

  22. Slide 22: Questions

    Questions “) 22

  23. Slide 23: Schedule 9 True-Up Results

    American Electric Power Schedule 9 True-Up Results 23

  24. Slide 24: Network Transmission Service Annual True-up

    Network Transmission Service Annual True-up Schedule 9, Network Integration Transmission Service (NITS), charges are trued up annually on an individual customer basis. True-up amounts will be credited or charged, with interest, with the July service month billings. 24

  25. Slide 25: Network Customer True-Up (PSO/SWEPCO)

    Network Customer True-Up <<PSO/SWEPCO>> (A) (B) (C) (D) = (B) - (C) (E) (F) = (D) + (E) Invoiced for Total Actual Charge CY2016 True-Up Customer Interest True-Up Surcharge / (2016 True-Up) Transmission (w/o Interest) (Refund) Service AECC $ 13,611,071 $ 13,161,055 $ 450,016 $ 16,222 $ 466,238 Benton

  26. Slide 26: Network Customer True-Up (Oklahoma Transmission Company)

    Network Customer True-Up <<Oklahoma Transmission Company>> (A) (B) (C) (D) = (B) - (C) (E) (F) = (D) + (E) Invoiced for Total Actual Charge CY2016 True-Up Customer Interest True-Up Surcharge / (2016 True-Up) Transmission (w/o Interest) (Refund) Service AECC $ 3,932,080 $ 3,580,293 $ 351,787 $ 16,910

  27. Slide 27: Network Customer True-Up (Southwestern Transmission Company)

    Network Customer True-Up <<Southwestern Transmission Company>> (A) (B) (C) (D) = (B) - (C) (E) (F) = (D) + (E) Invoiced for Total Actual Charge True-Up Customer CY2016 Transmission Interest True-Up Surcharge / (2016 True-Up) (w/o Interest) Service (Refund) AECC $ 11,039 $ 11,372 $ (333) $ (14) $ (34

  28. Slide 28: Network Customer True-Up (AEP West Net NITS True-Up)

    Network Customer True-Up <<AEP WEST --- NET NITS TRUE-UP>> (A) (B) (C) (D) = (B) - (C) (E) (F) = (D) + (E) Invoiced for Total Actual Charge True-Up Customer CY2016 Transmission Interest True-Up Surcharge / (2016 True-Up) (w/o Interest) Service (Refund) AECC $ 17,554,189 $ 16,752,720 $ 801,470 $ 33,1

  29. Slide 29: Schedule 11 True-Up

    American Electric Power Schedule 11 True-Up 29

  30. Slide 30: Base Plan Upgrades Annual True-up

    Base Plan Upgrades Annual True-up Schedule 11, Base Plan Upgrades (BPU), charges are trued up annually, with interest. The true-up adjustment will be rolled together with the Projected BPU revenue requirement and collected or refunded over the ensuing rate year. 30

  31. Slide 31: Schedule 11 True Up Results

    Schedule 11 True Up Results Projected 2017 2016 True-Up Adjusted ATRR Company Base ATRR Adjustment Interest Effective 7/1/17 PSO 6,729,904 (287,901) (15,353) 6,426,650 SWEPCO 83,927,077 673,313 (148,212) 84,452,178 OKTCO 27,948,610 4,589,170 296,416 32,834,196 31

  32. Slide 32: Questions

    Questions “) 32

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