American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Non-Deal Roadshow (March 2022)
56 slides from American Electric Power's roadshow presentation, March 2022
Slide 1: February/March 2022 Investor Meetings
February/March 2022 Investor Meetings
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are
Slide 3: Pure Play Regulated Utility
Pure Play Regulated Utility 16,700 EMPLOYEES 25GW OWNED GENERATION 5.5M CUSTOMERS, 11 STATES 40,000 TRANSMISSION MILES LARGEST IN THE U.S. $88B TOTAL ASSETS 224,000 DISTRIBUTION MILES $56B RATE BASE $43B CURRENT MARKET CAPITALIZATION Statistics as of December 31, 2021 except for market capitalizatio
Slide 4: AEP's Strategic Vision and Execution
AEP’s Strategic Vision and Execution Execute Strategy Top Priorities Clean • Transform all parts of our business to align with AEP emission reduction goals Lead the transformation to a clean • Improve the reliability and resiliency of the grid to facilitate a clean energy economy for energy economy
Slide 5: AEP Key Themes
AEP KEY THEMES ● Strong Return Proposition with Proven Track Record of EPS Performance and Dividend Growth ● Commitment to ESG ● Generation Transformation ● Flexible Capital Investment Pipeline ● Dedication to Customer Affordability and Credit Rating February/March Investor Meetings • AEP.COM
Slide 6: Strong Return Proposition
Strong Return Proposition Total Shareholder Return 2022 Operating Earnings Guidance Range 9% – 10% $4.87 – $5.07 2021 EPS 2022 EPS Dividend Yield EPS Growth Original 6.5% EPS KY Sale Midpoint Midpoint 3% + 6% – 7% + Growth + Accretion = $4.65 $4.97 Steady Growth Consistent Dividends Low Risk,
Slide 7: Proven Track Record of EPS Performance
Proven Track Record of EPS Performance 2010 Over a Decade of Meeting 2011 or Exceeding Original 2012 EPS Guidance 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 KEY ACTUAL RESULT Note: Chart is representative of actual operating EPS in comparison to original operating EPS guidance range. LOW-END
Slide 8: Strong Dividend Growth
Strong Dividend Growth $3.50 $3.00 $3.12 $2.84 $3.00 $2.71 Targeted payout $2.39 $2.53 ratio 60-70% of $2.50 $2.15 $2.27 operating earnings $2.03 $1.85 $1.88 $1.95 $2.00 $1.71 Over 111 years of consecutive $1.50 quarterly $1.00 dividends $0.50 Targeted dividend growth in line with $- earnings
Slide 9: Commitment to ESG
Commitment to ESG Environmental Social Governance • Accelerated carbon emission reduction • Promote diversity, equity and • 13 Board of Directors, 12 goals: 80% by 2030, net zero by 2050 inclusion independent • ~$9B spent on environmental controls • Service territory economic and • 46% Board diversi
Slide 10: Transforming Our Generation Fleet
Transforming Our Generation Fleet 80% 70% 70% 66% 60% 53% 50% 42% Net Maximum Capacity 40% 30% 28% 19% 22% 19% 20% 20% 19% 10% 7% 6% 8% 6% 4% 4% 1% 1% 2% 3% 0% 1999 2005 2022 2030 1999 2005 2022 2030 1999 2005 2022 2030 1999 2005 2022 2030 1999 2005 2022 2030 Coal Natural Gas Nuclear Hydro, Wind, En
Slide 11: Retirement Progress and Plans
Retirement Progress and Plans 2010 Reduce coal generation by approximately 5,300 MW from 2022-2028 and decrease coal net ~24,800 MW1 book value through retirements and depreciation. Creates opportunities to own replacement wind, solar and natural gas resources. 2021 ~11,850 MW1,2 2028E ~6,500 MW 201
Slide 12: Commitment to Regulated Renewables
Commitment to Regulated Renewables 0.5 GW 15 GW 16 GW North Central Wind 2022-2030 Regulated Renewable In-Service in 2021 Opportunity by 2030 Commission 1 GW NCW – Traverse site in Q1-22 409 MW owned resources filed for approval at APCo in Q4-21 Renewable RFPs in progress at APCo, I&M, PSO and SWEPC
Slide 13: Current Regulated Renewables Opportunity
Current Regulated Renewables Opportunity Wind Additions Solar Additions Included in Included in 2022-2030 2022-2026 2022-2030 2022-2026 Company Company (MW) Capital Plan (MW) Capital Plan (MW / billions) (MW / billions) APCo 1,504 803 $ 1.3 APCo 629 292 $ 0.5 I&M 800 400 $ 0.6 I&M 1,300 195 $ 0.4 PS
Slide 14: Flexible Capital Investment Pipeline with Significant Organic Growth Opportunities
Flexible Capital Investment Pipeline with Significant Organic Growth Opportunities Regulated 2022-2026 Renewables Transmission Distribution Other Capital Forecast $8.2B $14.4B $10.4B $5.2B $38B Flexible and extended organic pipeline of transmission and distribution investments, and regulated renewab
Slide 15: Dedicated to Keeping Customer Rates Affordable
Dedicated to Keeping Customer Rates Affordable Current Future Customer Total Bill Transformation Fuel Significant fuel costs replaced with capital investment Reduced fixed O&M profiles of generation resource Tax credits passed back to customers Capital Capital Capital Facilitating electrific
Slide 16: Positioning for the Future
POSITIONING FOR THE FUTURE ● 2022-2026 Capital Forecast ● 2022-2026 Cash Flows and Financial Metrics ● Rate Base Growth ● Efficient Cost Recovery Mechanisms February/March Investor Meetings • AEP.COM
Slide 17: 2022-2026 Capital Forecast of $38B
2022-2026 Capital Forecast of $38B Regulated IT/Workplace Services Fossil/Hydro Generation $2.5B • 7% $1.0B • 3% Nuclear Generation Regulated Environmental Generation $0.3B • 1% $0.6B • 1% Regulated New Generation $0.4B • 1% Generation & Marketing $0.4B • 1% The ability to quickly redeploy Distribut
Slide 18: 2022-2026 Capital Forecast by Subsidiary
2022-2026 Capital Forecast by Subsidiary $ in millions, excludes AFUDC 2022E 2023E 2024E 2025E 2026E Total Appalachian Power Company $ 1,093 $ 1,767 $ 943 $ 1,899 $ 993 $ 6,695 Wheeling Power Company $ 63 $ 63 $ 29 $ 30 $ 34 $ 219 Kingsport Power Company $ 25 $ 37 $ 35 $ 36 $ 35 $ 168 Indiana Michig
Slide 19: 2022-2026 Cash Flows and Financial Metrics
2022-2026 Cash Flows and Financial Metrics Cash proceeds related to sale of contracted renewable assets within the unregulated business are not included below. $ in millions 2022E 2023E 2024E 2025E 2026E Cash from Operations $ 5,600 $ 6,100 $ 6,400 $ 6,900 $ 7,400 Net Cash Proceeds from Sale of Kent
Slide 20: 7.8% CAGR in Rate Base Growth
7.8% CAGR in Rate Base Growth Cumulative Change from 2020 Base (in billions) $16 $27.3B $15 2020 RATE BASE PROXY $23.7B $14.1 $14 Vertically Integrated Utilities $25.3B $13 T&D Utilities $13.8B $19.2B $12.0 $12 $11 Transcos/Transource $9.2B $10 TOTAL $48.3B $9.4 $9 $13.9B $8.0 $8 $7.0 $7 $9.7B $6.4
Slide 21: Efficient Cost Recovery Mechanisms
Efficient Cost Recovery Mechanisms Renewables1 Historic Trackers 21% 30% Approximately 85% of 2022-2026 regulated capital plan recovered through reduced lag Base Rates 15% mechanisms Forward Rates 6% Forward Trackers 28% 1 Recovery of renewable investments will occur using a combination of reduced l
Slide 22: Financial Information
FINANCIAL INFORMATION ● Regulated Returns and Authorized Equity Layers ● 2022 Operating Earnings Guidance ● Regulatory Timeline of Kentucky Sale ● Recent Major Regulatory Execution ● Current Rate Case Activity ● Untracked O&M ● Normalized Load Trends ● Capitalization and Liquidity ● 2022 Debt Issuan
Slide 23: Regulated Returns and Authorized Equity Layers
Regulated Returns and Authorized Equity Layers Twelve Months Ended 12/31/2021 Earned ROE’s (non-GAAP operating earnings, not weather normalized) 16% 14% 12/31/2021 Regulated 12% 11.4% Operations ROE of 10% 9.5% 10.0% 9.2% 8.6% 8.7% 8% 7.9% 6.2% 6.8% Operating companies supported by 6% Transmission H
Slide 24: 2022 Operating Earnings Segment Detail
2022 Operating Earnings Segment Detail 0.17 (0.08) 0.05 $4.97/sh (0.04) 2022 EPS Midpoint 0.13 $4.74/sh 2021 Operating EPS Rate Changes $0.52 Rate Changes $0.21 Invest Growth $0.12 Renewables $0.02 Investment Gain $(0.05) Retail Load $(0.03) Retail Load $0.06 True-up $(0.11) Retail $0.06 Interest $(
Slide 25: Regulatory Timeline of Kentucky Sale
Regulatory Timeline of Kentucky Sale In October 2021, AEP entered into an agreement to sell its Kentucky operations to Algonquin Power & Utilities for an enterprise value of $2.846B. The sale is expected to close in Q2-22 pending regulatory approvals. Nov Dec Jan Feb Mar Apr May June AEP Filings 202
Slide 26: Recent Major Regulatory Execution
Recent Major Regulatory Execution Indiana Michigan • Base rate case settlement APPROVED • Filing IRP to establish presumption for • Rockport Unit 2 settlement APPROVED – gives renewable additions in February 2022 AEP control ensuring retirement by 2028 • Filed IRP in January 2022 Ohio • Base rate ca
Slide 27: Current Rate Case Activity
Current Rate Case Activity AEP Ohio APCo – Virginia Docket # 20-0585-EL-AIR Docket # PUR-2020-00015 Filing Date 6/1/2020 Filing Date 3/31/2020 Requested Revenue Increase $402M Requested Rate Base $2.5B Requested Rate Base $3.105B Requested ROE 9.9% Requested ROE 10.15% Cap Structure 50%D / 50%E Cap
Slide 28: Current Rate Case Activity
Current Rate Case Activity I&M – Indiana PSO Docket # 45576 Docket # 202100055 Filing Date 7/1/2021 Filing Date 4/30/2021 Requested Rate Base $5.2B Requested Rate Base $3.293B Requested ROE 10.0% Requested ROE 10.0% Cap Structure 49.1%D / 50.9%E Cap Structure 47.0%D / 53.0%E $104M $172M3 Gross Reven
Slide 29: Current Rate Case Activity
Current Rate Case Activity SWEPCO – Arkansas1 SWEPCO – Louisiana SWEPCO – Texas Docket # 21-070-U Docket # U-35441 Docket # 51415 Filing Date 7/23/2021 Filing Date 12/18/2020 Filing Date 10/13/2020 Requested Rate Base $1.56B Requested Rate Base $2.1B Requested Rate Base $2.0B Requested ROE 10.35% Re
Slide 30: Untracked O&M
Untracked O&M (in billions) $4.0 $3.5 $3.0 $3.0 O&M focuses on $3.0 $2.9 $3.0 $2.9 bending the O&M $2.5 $2.7 $2.7 $2.7 $2.7 $2.5 $2.6 curve down $2.0 O&M actual spend represents adjusted $1.5 spend throughout $1.0 each year as needed $0.5 $- 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019A 2020A 2021
Slide 31: Weather Normalized Billed Retail Load Trends
Weather Normalized Billed Retail Load Trends AEP Normalized Residential GWh Sales AEP Normalized Commercial GWh Sales % Change vs. Prior Year % Change vs. Prior Year 15% 15% 10.0% 10% 10% 5.2% 5.0% 4.3% 4.3% 5% 5% 1.5% 0% 0% -1.1% -0.4% -1.6% -0.8% -1.6% -1.9% -2.1% -5% -5% -3.1% -10% -10% -15% -15%
Slide 32: Capitalization & Liquidity
Capitalization & Liquidity Total Debt/Total Capitalization Credit Statistics 1 62.2% 62.1% 61.4% 59.8% 61.8% Moody’s GAAP 55.9% 55.5% 57.0% FFO to Total Debt 9.9% 9.8% Adj FFO to Total Debt1 13.3% 13.2% Targeted Range 14.0%-15.0% Represents the trailing 12 months as of 12/31/2021 2016 2017 2018 2019
Slide 33: 2022 Debt Issuance and Maturities Overview
2022 Debt Issuance and Maturities Overview (in millions) $1,400 $1,200 $1,000 $800 $600 $400 $200 $- AEP, Inc. AEG AEP Texas APCo/WPCo AEP Ohio PSO SWEPCO Transco 2022 Maturities 2022 Expected Issuances Note: Pending close of sale of Kentucky operations in Q2-22, AEP proceeds will be net of Kentucky
Slide 34: Credit Ratings
Credit Ratings Current Ratings for AEP, Inc. and Subsidiaries (as of 12/31/2021) Moody’s S&P Fitch Senior Senior Senior Company Unsecured Outlook Unsecured Outlook Unsecured Outlook American Electric Power Company, Inc. Baa2 S BBB+ N BBB S AEP, Inc. Short Term Rating P2 S A2 N NR NR AEP Texas Inc. B
Slide 35: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ● Emission Reduction Goals ● Investing to Reduce Emissions ● Committed to Being a Top ESG Employer February/March Investor Meetings • AEP.COM
Slide 36: Carbon Emission Reduction Goals
Carbon Emission Reduction Goals AEP’s Environmental, Social and Governance (ESG) Reporting: 80% Corporate Accountability Report Climate Impact Analysis Report (a TCFD report) ESG Data Center (featuring 250+ ESG metrics) by 2030 EEI ESG Sustainability Report Net Zero Sustainability Accounti
Slide 37: Investing to Reduce Emissions
Investing to Reduce Emissions Investment in Environmental Controls Total $ in millions $9 Billion $1,366 (Estimated) $1,400 $1,200 $994 $1,000 $887 $811 $800 $599 $600 $540 $457 $424 $364 $340 $384 $400 $275 $304 $217 $241 $253 $187 $136 $167 $200 $102 $116 $102 $94 $0 Total AEP System – Annual CO2
Slide 38: Investing to Reduce Emissions
Investing to Reduce Emissions Total AEP System – NOx and SO2 Emissions in million U.S. tons 2.0 1990-2021 Actual 1.5 SO2 98% 1.0 SO2 – 37,500 NOx – 29,700 0.5 0.0 NOx 95% 1990 1996 2002 2008 2014 2021 Direct annual emissions of SO2 and NOx from AEP’s ownership share of generation as reported under T
Slide 39: Committed to Being a Top ESG Employer
Committed to Being a Top ESG Employer Recognizes companies that set the standard Benchmarking tool for businesses to report in commitment to their stakeholders disability policies and practices Recognizes organizations with engaged workplace cultures Annual measure of how Recognizes companies that a
Slide 40: Generation Transformation
GENERATION TRANSFORMATION • Delivering Clean Energy Resources • Regulated Renewable Projects and RFPs • North Central Wind Overview February/March Investor Meetings • AEP.COM
Slide 41: Delivering Clean Energy Resources
Delivering Clean Energy Resources AEP's January 31, 2022 Renewable Portfolio (in MW) Owned PPA Total Hydro, Wind, Solar and Pumped Storage MW MW MW AEP Ohio - 209 209 Appalachian Power Company 785 595 1,380 Indiana Michigan Power Company 56 450 506 Public Service Company of Oklahoma 221 1,137 1,358
Slide 42: Regulated Renewable Projects and RFPs
Regulated Renewable Projects and RFPs Owned Renewable Projects Currently Seeking Regulatory Approval Projected Regulatory filing date: Resource Project MWs In-Service Date December 30, 2021 Solar Amherst / Virginia 5 Q4-22 Expected Order: Solar Bedington / West Virginia 50 Q4-23 July 2022 Solar Fire
Slide 43: North Central Wind Overview
North Central Wind Overview PSO and SWEPCO Regulated Wind Investment Total Rate Base Investment ~$2 billion (1,484 MW) Estimated Commercial Name MW Investment Date Apr. 14, 2021 Sundance 199 $300M (100% PTC) North Central Wind North Central Wind – Maverick Sept. 10, 2021 Maverick 287 $400M (80% PTC)
Slide 44: Transmission Transformation
TRANSMISSION TRANSFORMATION ● Transmission in Focus ● Investments in Asset Renewals ● Stable Cost Recovery Framework ● Delivering Customer and Shareholder Value ● Well Positioned to Capture New Investment ● Holdco Legal Entity Structure February/March Investor Meetings • AEP.COM
Slide 45: Transmission in Focus
Transmission in Focus 2022-2026 Transmission Investment $564 $2,099 From 2022 through 2026, AEP’s transmission investment is Asset Replacement ~50% of AEP’s transmission well positioned to grow with Customer Service capital investment will be $14.4 deployed to modernize the renewable expansion while
Slide 46: Investments in Asset Renewal Strengthen and Enable the Grid of the Future
Investments in Asset Renewal Strengthen and Enable the Grid of the Future AEP T-Line Age Profile (Line Mile Age based on oldest conductor age) • $2.7 billion of annual on-system capital investment is Life Expectancy Avg Age required to replace and enhance all assets beyond life 1,200 70 years 45.9 y
Slide 47: Stable Cost Recovery Framework
Stable Cost Recovery Framework PJM SPP ERCOT 9.85% Base + 10.0% Base ROE + ROE 9.4% Stable and 0.50% RTO adder 0.50% RTO adder transparent Forward Looking Allowed two updates wholesale cost Rates Yes Yes per year (not forward looking) recovery for Equity Structure Capped at 55% No Cap Capped at 42.5
Slide 48: Delivering Significant Customer and Shareholder Value
Delivering Significant Customer and Shareholder Value Shareholder Benefits Customer Benefits AEPTHC Target Earnings 2022-2024 Cumulative Capital Investment ($ in billions) 1.48-1.51 Reducing Enabling efficient economic dispatch 1.39-1.42 of generation in each of our regions 1.35 customer costs EPS C
Slide 49: Well Positioned to Capture Potential New Transmission Investment
Well Positioned to Capture Potential New Transmission Investment Necessary to Link Clean Resource Rich Areas to Customers Increased flows across regional seams will link clean, resource-rich areas to customers and AEP is well-situated to deliver competitive or non-competitive transmission AEP’s Comp
Slide 50: AEP Transmission Holdco Legal Entity Structure
AEP Transmission Holdco Legal Entity Structure AEP Transmission Company, LLC (“AEP Transco”) is wholly-owned American Electric Power, Inc. by AEP Transmission Holding Company, LLC (“AEP Transmission Holdco”) AEP Transmission Holding Co. LLC AEP Transmission Holdco is a wholly-owned subsidiary of Ame
Slide 51: Utility Transformation
UTILITY TRANSFORMATION ● Robust Distribution Capital Investment Opportunities ● Grid Transformation February/March Investor Meetings • AEP.COM
Slide 52: Robust Distribution Capital Investment Opportunities
Robust Distribution Capital Investment Opportunities 2022 – 2026 Distribution Capital Forecast Distribution Spend Categories Capital Investment Category Category Description Investment (in billions) 8% Capacity Expansion, Asset renewal and reliability investments including pole, conductor, cutout, s
Slide 53: Grid Transformation
Grid Transformation AEP is preparing to accommodate new grid resources, grow load in our service territories and open the door to future customer-driven growth opportunities • 224,000 miles of distribution lines AEP’s Expansive Distribution System Provides Significant Opportunity for Investment • ~3
Slide 54: Competitive Business
COMPETITIVE BUSINESS ● Business Strategy and Operations ● Business Presence February/March Investor Meetings • AEP.COM
Slide 55: Competitive Business Strategy and Operations
Competitive Business Strategy and Operations Retail Businesses • Provides electricity, natural • Build, own, operate and gas and demand response maintain customer solutions Retail to residential, commercial utilizing existing and Distributed Commodities and industrial customers in six states emergin
Slide 56: Competitive Business Presence
Competitive Business Presence Active in 29 States (5 states overlap with AEP Utilities) As of 12/31/2021 56 February/March Investor Meetings • AEP.COM
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