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What changed in American Electric Power's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of American Electric Power's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+284 added−371 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in American Electric Power's 2025 10-K

284 paragraphs added · 371 removed · 221 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

114 edited+17 added−59 removed57 unchanged
Biggest changeThe following table shows the amount of coal and lignite delivered to the Vertically Integrated Utilities’ plants during the past three years and the average delivered price of coal and lignite purchased by the Vertically Integrated Utilities: 2024 2023 2022 Total coal and lignite delivered to the plants (in millions of tons) 16.5 20.9 20.4 Average cost per ton of coal and lignite delivered $ 62.05 $ 64.31 $ 56.16 The coal supplies at the Vertically Integrated Utilities plants vary from time to time depending on various factors, including, but not limited to, consumption rates driven by the demand for electric power, unit outages, transportation limitations or delays, space limitations, labor issues, supplier outages and issues and weather conditions, all of which may impact production, consumption or deliveries.
Biggest changeThe following table shows the amount of coal and lignite delivered to the Vertically Integrated Utilities’ plants during the past three years and the average delivered price of coal and lignite purchased by the Vertically Integrated Utilities: 2025 2024 2023 (a) Total coal and lignite delivered to the plants (in millions of tons) 19 17 21 Average cost per ton of coal and lignite delivered $ 54.86 $ 62.05 $ 64.31 (a) Deliveries of lignite ended after the first quarter of 2023.
AEP Texas APCo I&M KGPCo KPCo OPCo PSO SWEPCo WPCo Principal Industries Served: Petroleum and Coal Products Manufacturing X X X X X Chemical Manufacturing X X X X X X X X Oil and Gas Extraction X X X X Pipeline Transportation X X X X X X Primary Metal Manufacturing X X X X X Data Processing (a) X X X Coal-Mining X X X Paper Manufacturing X X X X Transportation Equipment X X Plastics and Rubber Products X X X X Fabricated Metals Product Manufacturing X Food Manufacturing X Supply and Market Electric Power at Wholesale to: Other Electric Utility Companies X X X X X X Rural Electric Cooperatives X X X Municipalities X X X X X Other Market Participants X X X X X X (a) Primarily includes data centers and cryptocurrency operations.
AEP Texas APCo I&M KGPCo KPCo OPCo PSO SWEPCo WPCo Principal Industries Served: Petroleum and Coal Products Manufacturing X X X X Chemical Manufacturing X X X X X X X X Oil and Gas Extraction X X X X Pipeline Transportation X X X X X X Primary Metal Manufacturing X X X X X X Data Processing (a) X X X Coal-Mining X X X Paper Manufacturing X X X Transportation Equipment X X Plastics and Rubber Products X X X X Fabricated Metals Product Manufacturing X X Food Manufacturing X X X Supply and Market Electric Power at Wholesale to: Other Electric Utility Companies X X X X X X Rural Electric Cooperatives X X X Municipalities X X X X X Other Market Participants X X X X X X (a) Primarily includes data centers and cryptocurrency operations.
AEP’s reportable segments are as follows: • Vertically Integrated Utilities • Transmission and Distribution Utilities • AEP Transmission Holdco • Generation & Marketing The remainder of AEP’s activities is presented as Corporate and Other, which is not considered a reportable segment. See Note 9 - Business Segments for additional information on AEP’s segments.
AEP’s reportable segments are as follows: • Vertically Integrated Utilities • Transmission and Distribution Utilities • AEP Transmission Holdco • Generation & Marketing The remainder of AEP’s activities are presented as Corporate and Other, which is not considered a reportable segment. See Note 9 - Business Segments for additional information on AEP’s segments.
I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all of its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.
I&M is obligated, whether or not power is available from AEGCo, to pay a demand charge for the right to receive such power (and an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all of its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.
Pursuant to the TCA, PSO, SWEPCo and AEPSC each have responsibility for monitoring and reporting situations or problems that materially affect the reliability of PSO’s and SWEPCo’s transmission systems. The TCA also provides for the allocation among the parties of revenues collected for transmission and ancillary services as determined by the FERC-approved OATT for the SPP.
Pursuant to the TCA, PSO, SWEPCo and AEPSC each have responsibility for monitoring and reporting situations or problems that materially affect the reliability of PSO’s and SWEPCo’s transmission systems. The TCA also provides for the allocation among the parties of revenues collected for transmission and ancillary services as determined by the FERC-approved OATT for SPP.
The FERC also requires all transmitting utilities, directly or through an RTO, to establish an Open Access Same-time Information System, which electronically posts transmission information such as available capacity and prices, and requires utilities to comply with Standards of Conduct that prohibit utilities’ transmission employees from providing non-public transmission information to the utility’s marketing employees.
The FERC also requires all transmitting utilities, directly or through an RTO, to establish an Open Access Same-time Information System, which electronically posts transmission information such as available capacity and prices, and requires utilities to comply with Standards of Conduct that prohibit utilities’ transmission employees from providing non-public transmission information to the utility’s marketing employees.
AEP Generation & Marketing’s retail energy supply business operates in jurisdictions that each establish laws and regulations governing its competitive market, and public utility commission communications and utility default service pricing can affect customer participation in retail competition. Severe load and market volatility, sustained low market volatility and maturing competitive environments can adversely affect this business.
Generation & Marketing’s retail energy supply business operates in jurisdictions that each establish laws and regulations governing its competitive market, and public utility commission communications and utility default service pricing can affect customer participation in retail competition. Severe load and market volatility, sustained low market volatility and maturing competitive environments can adversely affect this business.
West Virginia APCo and WPCo provide retail electric service at bundled rates approved by the WVPSC with rates set on a combined APCo and WPCo cost-of-service basis. West Virginia generally allows for timely recovery of fuel expenses, purchased power expenses and transmission expenses through a single surcharge mechanism.
West Virginia APCo and WPCo provide retail electric service at bundled rates approved by the WVPSC with rates set on a combined APCo and WPCo historical cost-of-service basis. West Virginia generally allows for timely recovery of fuel expenses, purchased power expenses and transmission expenses through a single surcharge mechanism.
The FERC requires each public utility that owns or controls interstate transmission facilities to, directly or through an RTO, file an open access network and point-to-point transmission tariff that offers services comparable to the utility’s own uses of its transmission system.
The FERC requires each public utility that owns or controls interstate transmission facilities to, directly or through an RTO, file an open access network 13 and point-to-point transmission tariff that offers services comparable to the utility’s own uses of its transmission system.
In addition to base rates and fuel cost recovery, APCo is permitted to recover transmission expenses provided at OATT rates based on rates established by the FERC. APCo is subject to a biennial Virginia retail generation and distribution earnings test.
In addition to base rates and fuel cost recovery, APCo is permitted to 11 recover transmission expenses provided at OATT rates based on rates established by the FERC. APCo is subject to a biennial Virginia retail generation and distribution earnings test.
Several of AEP’s natural gas-fired units are connected to at least two pipelines, which allows greater access to competitive supplies and improves delivery reliability. From a natural gas supply perspective, the Vertically Integrated Utilities secure forward month, fixed price baseload supply, prompt month baseload supply, and pursue daily spot market purchases or sales (to balance daily positions).
Several natural gas-fired units are connected to at least two pipelines, which allows greater access to competitive supplies and improves delivery reliability. From a natural gas supply perspective, the Vertically Integrated Utilities secure forward month, fixed price baseload supply, prompt month baseload supply, and pursue daily spot market purchases or sales (to balance daily positions).
However, the states of Utah and Texas have licensed low-level radioactive waste disposal sites which currently accept low-level radioactive waste from Michigan waste generators. There is currently no set date limiting I&M’s access to either of these facilities. The Cook Plant has a facility onsite designed specifically for the storage of low-level radioactive waste.
However, the states of Utah and Texas have licensed low-level radioactive waste disposal sites which currently accept low-level radioactive waste from Michigan waste generators, which I&M currently utilizes. There is currently no set date limiting I&M’s access to either of these facilities. The Cook Plant has a facility onsite designed specifically for the storage of low-level radioactive waste.
Michigan generally allows for timely recovery of fuel expenses, transmission expenses and purchased power expenses through a single surcharge mechanism. Oklahoma PSO provides retail electric service in Oklahoma at bundled rates approved by the OCC. PSO’s rates are set on a historical cost-of-service basis. Fuel and purchased energy costs are recovered through a fuel adjustment clause.
Michigan generally allows for timely recovery of fuel expenses, transmission expenses and purchased power expenses through a single surcharge mechanism. Oklahoma PSO provides retail electric service in Oklahoma at bundled rates approved by the OCC with rates set on a historical cost-of-service basis. Fuel and purchased energy costs are recovered through a fuel adjustment clause.
In addition, the acceleration of AEP’s payment obligations, or the obligations of certain of its major subsidiaries, prior to maturity under any other agreement or instrument relating to debt outstanding in excess of $100 million, would cause an event of default under the credit agreements. As of December 31, 2024, AEP was in compliance with its debt covenants.
In addition, the acceleration of AEP’s payment obligations, or the obligations of certain of its major subsidiaries, prior to maturity under any other agreement or instrument relating to debt outstanding in excess of $100 million, would cause an event of default under the credit agreements. As of December 31, 2025, AEP was in compliance with its debt covenants.
With respect to competing generators and self-generation, the public utility subsidiaries of AEP believe that they currently maintain a competitive position. 14 TRANSMISSION AND DISTRIBUTION UTILITIES GENERAL This segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEP Texas and OPCo.
With respect to competing generators and self-generation, the public utility subsidiaries of AEP believe that they currently maintain a competitive position. 12 TRANSMISSION AND DISTRIBUTION UTILITIES GENERAL This segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEP Texas and OPCo.
In addition, both the FERC and state regulators are permitted to review the 15 books and records of any company within a holding company system.
In addition, both the FERC and state regulators are permitted to review the books and records of any company within a holding company system.
Management has started the application process for license extensions for both units that would extend Unit 1 and Unit 2 to 2054 and 2057, respectively. Nuclear Waste and Decommissioning As the owner of the Cook Plant, I&M has a significant future financial commitment to dispose of SNF and decommission and decontaminate the plant safely.
Management has started the application process for license extensions for both units that would extend Unit 1 and Unit 2 to 2054 and 2057, respectively. Nuclear Waste and Decommissioning As the owner of the Cook Plant, I&M has a significant future financial obligation to dispose of SNF and decommission and decontaminate the plant safely.
The TA has been approved by the FERC. Regional Transmission Organizations OPCo is a member of PJM, a FERC-approved RTO. RTOs operate, plan and control utility transmission assets to provide open access to such assets in a way that prevents discrimination between participants owning transmission assets and those that do not. AEP Texas is a member of ERCOT.
The FERC has approved the TA. Regional Transmission Organizations OPCo is a member of PJM, a FERC-approved RTO. RTOs operate, plan and control utility transmission assets to provide open access to such assets in a way that prevents discrimination between participants owning transmission assets and those that do not. AEP Texas is a member of ERCOT.
Transmission and distribution rates are established on a cost-of-service basis, which is designed to allow a utility an opportunity to recover its cost of providing service and to earn a reasonable return on its investment used in providing that service. The cost-of-service generally reflects operating expenses, including operation and maintenance expense, depreciation expense and taxes.
REGULATION Transmission and distribution rates are established on a cost-of-service basis, which is designed to allow a utility company an opportunity to recover its cost of providing service and to earn a reasonable return on its investment used in providing that service. The cost-of-service generally reflects operating expenses, including operation and maintenance expense, depreciation expense and taxes.
Since open trading contracts are valued based on market prices of various commodities, exposures change daily. See the “Quantitative and Qualitative Disclosures About Market Risk” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information. 19 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following persons are executive officers of AEP.
Since open trading contracts are valued based on market prices of various commodities, exposures change daily. See the “Quantitative and Qualitative Disclosures About Market Risk” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information. 17 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following persons are executive officers of AEP.
Technology advancements, increased demand for clean energy, changing consumer behaviors, low-priced and abundant natural gas, and regulatory and public policy reforms are among the catalysts for transformation within the industry that impact competition for AEP’s Generation & Marketing segment.
Technology advancements, increased demand for clean energy, changing consumer behaviors, low-priced and abundant natural gas, and regulatory and public policy reforms are among the catalysts for transformation within the industry that impact competition for Generation & Marketing.
The protocols include a transparent, formal review process to ensure the updated transmission rates are prudently-incurred and reasonably calculated. The State Transcos’ and the Transmission Joint Ventures’ (where applicable) rates are included in the respective OATT for PJM and SPP.
The protocols include a transparent, formal review process to verify the updated transmission rates are prudently-incurred and reasonably calculated. The State Transcos’ and the Transmission Joint Ventures’ (where applicable) rates are included in the respective OATT for PJM and SPP.
Conversely, unusually extreme weather conditions could increase AEP’s results of operations. VERTICALLY INTEGRATED UTILITIES GENERAL AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo.
Conversely, unusually extreme weather temperatures could increase AEP’s results of operations. VERTICALLY INTEGRATED UTILITIES GENERAL The Vertically Integrated Utilities operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo.
Fuel adjustment clauses permit periodic adjustments to fuel cost recovery from customers and therefore provide protection against exposure to fuel cost changes. The following state-by-state analysis summarizes the regulatory environment of certain major jurisdictions in which AEP’s vertically integrated public utility subsidiaries operate. Several public utility subsidiaries operate in more than one jurisdiction.
Fuel adjustment clauses permit periodic adjustments to fuel cost recovery from customers and therefore provide protection against exposure to fuel cost changes. 10 The following state-by-state analysis summarizes the regulatory environment of jurisdictions in which AEP’s vertically integrated public utility subsidiaries operate. Several public utility subsidiaries operate in more than one jurisdiction.
Seasonality The consumption and delivery of electric power is generally seasonal which impacts the results of operations of AEP’s reportable segments. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In other areas, power demand peaks during the winter.
Seasonality The consumption and delivery of electric power is generally seasonal which impacts the results of operations of AEP’s reportable segments. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In some areas, power demand peaks during the cold winter months.
Fuel Supply The following table shows the owned and leased generation sources by type (including wind purchase agreements), on an actual net generation (MWhs) basis, used by the Vertically Integrated Utilities: 2024 2023 2022 Coal and Lignite 40% 37% 43% Nuclear 22% 22% 21% Natural Gas 22% 22% 19% Renewables 16% 19% 17% 8 An increase/decrease in one or more generation types relative to previous years reflects changes in resource mix and price changes in one or more fuel commodity sources relative to the pricing of other fuel commodity sources.
Fuel Supply The following table shows the owned and leased generation sources by type (including wind purchase agreements), on an actual net generation (MWhs) basis, used by the Vertically Integrated Utilities: 2025 2024 2023 Coal and Lignite 43% 40% 37% Nuclear 19% 22% 22% Natural Gas 22% 22% 22% Renewables 16% 16% 19% An increase/decrease in one or more generation types relative to previous years reflects changes in resource mix and price changes in one or more fuel commodity sources relative to the pricing of other fuel commodity sources.
Tennessee KGPCo currently provides retail electric service in Tennessee at bundled rates approved by the TPUC. Tennessee generally allows for timely recovery of fuel expenses and purchased power expenses through a surcharge mechanism. Texas SWEPCo provides retail electric service in Texas at bundled rates approved by the PUCT with rates set on a historical cost-of-service basis.
Tennessee KGPCo currently provides retail electric service in Tennessee at bundled rates approved by the TPUC with rates set on a historical cost-of-service basis. Tennessee generally allows for timely recovery of fuel expenses and purchased power expenses through a surcharge mechanism.
As of December 31, 2024 and 2023, the total decommissioning trust fund balance for the Cook Plant was approximately $4 billion and $3.5 billion, respectively. The balance of funds available to eventually decommission Cook Plant will differ based on contributions and investment returns.
As of December 31, 2025 and 2024, the total decommissioning trust fund balance for the Cook Plant was approximately $4.5 billion and $4 billion, respectively. The balance of funds available to eventually decommission Cook Plant will differ based on contributions and investment returns.
AEP’s transmission and distribution utility subsidiaries hold franchises or other rights to provide electric service in various municipalities and regions in their service areas. In some cases, these franchises provide the utility with the exclusive right to provide electric service. These franchises have varying provisions and expiration dates.
The Transmission and Distribution Utilities hold franchises or other rights to provide electric service in various municipalities and regions in their service areas. In some cases, these franchises provide the utility with the exclusive right to provide electric service. These franchises have varying provisions and expiration dates.
OPCo, which is a subsidiary in AEP’s Transmission and Distribution Utilities segment that provides transmission service under the PJM OATT, is also a party to the TA. The TA defines how the parties to the agreement share the revenues associated with their transmission facilities and the costs of transmission service provided by PJM.
OPCo, which is a subsidiary in AEP’s Transmission and Distribution Utilities segment that provides transmission service under the PJM OATT, is also a party to the TA. The TA defines how the parties to 9 the agreement share the revenues associated with their transmission facilities and the costs of transmission service provided by PJM. The FERC has approved the TA.
In general, the operating companies consider their franchises to be adequate for the conduct of their business. The use and the recovery of costs associated with the transmission assets of the AEP transmission and distribution utility subsidiaries are subject to the rules, protocols and agreements in place with PJM and ERCOT, and as approved by the FERC.
In general, the operating companies consider their franchises to be adequate for the conduct of their business. The use and the recovery of costs associated with the transmission assets of the Transmission and Distribution Utilities are subject to the rules, protocols and agreements in place with PJM and ERCOT, and as approved by the FERC.
FERC The FERC regulates rates for interstate power sales at wholesale, transmission of electric power, accounting and other matters, including construction and operation of hydroelectric projects. The FERC regulations require AEP’s vertically integrated public utility subsidiaries to provide open access transmission service at FERC-approved rates, and AEP has approved cost-based formula transmission rates on file at the FERC.
FERC The FERC regulates rates for interstate power sales at wholesale, transmission of electric power, accounting and other matters, including construction and operation of hydroelectric projects. The FERC regulations require the Vertically Integrated Utilities to provide open access transmission service at FERC-approved rates, and AEP has approved cost-based formula transmission rates on file at the FERC.
Public Utility Subsidiaries by Jurisdiction The following table illustrates certain regulatory information with respect to the jurisdictions in which the public utility subsidiaries of AEP operate: Principal Jurisdiction AEP Utility Subsidiaries Operating in that Jurisdiction Authorized Return on Equity (a) Arkansas SWEPCo 9.50 % FERC AEPTCo - PJM 10.35 % (b) AEPTCo - SPP 10.50 % Indiana I&M 9.85 % Kentucky KPCo 9.75 % Louisiana SWEPCo 9.50 % Michigan I&M 9.86 % Ohio OPCo 9.70 % Oklahoma PSO 9.50 % Tennessee KGPCo 9.50 % Texas AEP Texas 9.76 % SWEPCo 9.25 % (c) Virginia APCo 9.75 % West Virginia APCo 9.75 % WPCo 9.75 % (a) Identifies the predominant current authorized ROE, and may not include other, less significant, permitted recovery.
Public Utility Subsidiaries by Jurisdiction The following table illustrates certain regulatory information with respect to the jurisdictions in which the public utility subsidiaries of AEP operate: Principal Jurisdiction AEP Utility Subsidiaries Operating in that Jurisdiction Authorized Return on Equity (a) Arkansas SWEPCo 9.65 % (b) FERC AEPTCo - APTCo, IMTCo, KTCo, WVTCo 10.35 % FERC AEPTCo - OHTCo 9.85 % FERC AEPTCo - OKTCo and SWTCo 10.50 % Indiana I&M 9.85 % Kentucky KPCo 9.75 % Louisiana SWEPCo 9.50 % Michigan I&M 9.86 % Ohio OPCo 9.70 % Oklahoma PSO 9.50 % Tennessee KGPCo 9.50 % Texas AEP Texas 9.76 % Texas SWEPCo 9.25 % Virginia APCo 9.75 % West Virginia APCo 9.25 % West Virginia WPCo 9.25 % (a) Identifies the predominant current authorized ROE, and may not include other, less significant, permitted recovery.
In addition, both the FERC and state regulators are permitted to review the books and records of any company within a holding company system. COMPETITION AEP’s vertically integrated public utility subsidiaries primarily generate, transmit and distribute electricity to retail customers of AEP’s vertically integrated public utility subsidiaries in their service territories.
In addition, both the FERC and state regulators are permitted to review the books and records of any company within a holding company system. COMPETITION The Vertically Integrated Utilities primarily generate, transmit and distribute electricity to their retail customers in their service territories.
Historically, the state regulatory frameworks in the service area of the AEP vertically integrated public utility subsidiaries reflected specified fuel costs as part of bundled (or, more recently, unbundled) rates or incorporated fuel adjustment clauses in a utility’s rates and tariffs.
Historically, the state regulatory frameworks in the service area of the Vertically Integrated Utilities reflected specified fuel costs as part of bundled (or, more recently, unbundled) rates or incorporated fuel adjustment clauses in a utility’s rates and tariffs.
AEP’s transmission and distribution utility subsidiaries own and operate transmission and distribution lines and other facilities to deliver electric power. See Item 2 – Properties, for more information regarding the transmission and distribution lines. Transmission and distribution services are sold to retail customers of AEP’s transmission and distribution utility subsidiaries in their service territories.
The Transmission and Distribution Utilities own and operate transmission and distribution lines and other facilities to deliver electric power. See Item 2 – Properties, for more information regarding the transmission and distribution lines. Transmission and distribution services are sold to their retail customers in their service territories.
REGULATION General AEP’s vertically integrated public utility subsidiaries’ retail rates and certain other matters are subject to traditional cost-based regulation by the state utility commissions. AEP’s vertically integrated public utility subsidiaries are also subject to regulation by the FERC under the Federal Power Act with respect to wholesale power and transmission service transactions.
REGULATION General The Vertically Integrated Utilities’ retail rates and certain other matters are subject to traditional cost-based regulation by the state utility commissions. The Vertically Integrated Utilities are also subject to regulation by the FERC under the Federal Power Act with respect to wholesale power and transmission service transactions.
A recordable event is a work-related event that results in death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, loss of consciousness or a significant injury or illness diagnosed by a physician or other licensed health care professional.
A recordable event is a work-related event that results in death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, loss of consciousness or a significant injury or illness diagnosed by a physician or other licensed health care professional. TRIR shows how often these recordable injuries happen.
In general, the operating companies consider their franchises to be adequate for the conduct of their business. 11 Transmission Agreement APCo, I&M, KGPCo, KPCo and WPCo own and operate transmission facilities that are used to provide transmission service under the PJM OATT and are parties to the TA.
These franchises have varying provisions and expiration dates. In general, the operating companies consider their franchises to be adequate for the conduct of their business. Transmission Agreement APCo, I&M, KGPCo, KPCo and WPCo own and operate transmission facilities that are used to provide transmission service under the PJM OATT and are parties to the TA.
Indiana I&M provides retail electric service in Indiana at fully bundled rates approved by the IURC, with rates set on a forecasted cost-of-service basis. Indiana generally allows for timely recovery of fuel expenses through a fuel recovery surcharge mechanism. I&M is subject to a semi-annual Indiana jurisdictional earnings test.
I&M is subject to a semi-annual Indiana jurisdictional earnings test. Kentucky KPCo provides retail electric service in Kentucky at bundled rates approved by the KPSC with rates currently set on a historical cost-of-service basis. Kentucky generally allows for timely recovery of fuel expenses through a fuel recovery surcharge mechanism.
ITEM 1. BUSINESS GENERAL Overview and Description of Major Subsidiaries AEP was incorporated under the laws of the State of New York in 1906 and reorganized in 1925. It is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries.
ITEM 1. BUSINESS GENERAL Overview and Description of Major Subsidiaries AEP was incorporated under the laws of the State of New York in 1906 and reorganized in 1925. It is a public utility holding company that directly owns all of the outstanding common stock of the public utility subsidiaries identified below.
The member companies of AEP also obtain certain accounting, administrative, information systems, engineering, financial, legal, maintenance and other services at cost from a common provider, AEPSC. As of December 31, 2024, the subsidiaries of AEP had a total of 16,330 employees. Because it is a holding company rather than an operating company, AEP has no employees.
The member companies of AEP also obtain certain accounting, administrative, information systems, engineering, financial, legal, maintenance and other services at cost from a common provider, AEPSC. As of December 31, 2025, the subsidiaries of AEP had a total of 17,581 employees. As a holding company rather than an operating company, AEP has no employees.
OVEC financed capital expenditures in excess of $1 billion in connection with flue gas desulfurization projects and the associated scrubber waste disposal landfills at its two generation plants through debt issuances, including tax-advantaged debt issuances. Both OVEC generation plants are operating with the environmental controls in-service. See Note 18 - Variable Interest Entities and Equity Method Investments for additional information.
OVEC financed capital expenditures in connection with the engineering and construction of FGD projects and the associated waste disposal landfills at its two generation plants through debt issuances, including tax-advantaged debt issuances. Both OVEC generation plants are operating with environmental controls in-service. See Note 18 - Variable Interest Entities and Equity Method Investments for additional information.
AEPSC, as agent for AEP’s public utility subsidiaries, performs marketing, generation dispatch, fuel procurement and power-related risk management and trading activities on behalf of each of these subsidiaries. ELECTRIC GENERATION Facilities As of December 31, 2024, AEP’s vertically integrated public utility subsidiaries owned approximately 23,200 MWs of generation.
AEPSC, as agent for AEP’s public utility subsidiaries, performs marketing, generation dispatch, fuel procurement and power-related risk management and trading activities on behalf of each of these subsidiaries. ELECTRIC GENERATION Facilities As of December 31, 2025, the Vertically Integrated Utilities owned approximately 25,400 MWs of generation.
As of December 31, 2024, counterparties posted approximately $16 million in cash, cash equivalents or letters of credit with AEPSC for the benefit of AEP’s public utility subsidiaries (while, as of that date, AEP’s public utility subsidiaries posted approximately $201 million with counterparties and exchanges).
As of December 31, 2025, counterparties posted 8 approximately $112 million in cash, cash equivalents or letters of credit with AEPSC for the benefit of AEP’s public utility subsidiaries (while, as of that date, AEP’s public utility subsidiaries posted approximately $214 million with counterparties and exchanges).
A key part of AEP’s business is replacing and upgrading transmission facilities, assets and components of the existing AEP System as needed to maintain reliability. As of December 31, 2024, the State Transcos had $15.4 billion of transmission and other assets in-service, excluding CWIP, with plans to construct approximately $4.7 billion of additional transmission assets through 2027.
A key part of AEP’s business is replacing and upgrading transmission facilities, assets and components of the existing AEP System as needed to maintain reliability. As of December 31, 2025, the State Transcos had $17.1 billion of transmission and other assets in-service, excluding CWIP, with plans to construct approximately $11.6 billion of additional transmission assets through 2030.
Additionally, the transmission and distribution utility subsidiaries are subject to mandatory reliability standards as set forth by the NERC, with the approval of the FERC, which standards protect the nation’s bulk power system against potential disruptions from cyber and physical security breaches.
Additionally, the transmission and distribution utility subsidiaries are subject to mandatory reliability standards as set forth by the NERC, with the approval of the FERC, which standards protect the nation’s bulk power system against potential disruptions from cyber and physical security breaches. AEP TRANSMISSION HOLDCO GENERAL AEPTHCo is a holding company for AEPTCo.
As of December 31, 2024, counterparties posted approximately $156 million in cash, cash equivalents or letters of credit with AEP for the benefit of AEP’s Generation & Marketing segment subsidiaries (while, as of that date, AEP’s Generation & Marketing segment subsidiaries posted approximately $153 million with counterparties and exchanges).
As of December 31, 2025, counterparties posted approximately $146 million in cash, cash equivalents or letters of credit with AEP for the benefit of Generation & Marketing subsidiaries (while, as of that date, Generation & Marketing subsidiaries posted approximately $133 million with counterparties and exchanges).
AEP Energy had approximately 987,000 customer accounts as of December 31, 2024. The wholesale trading and marketing business transacts within RTOs to provide supply to customers, manage pricing risk or otherwise provide service to fulfill contractual obligations. Additionally in certain instances this business procures physical electricity from identified sources, including renewable generation, when providing service to customers.
The wholesale trading and marketing business transacts within RTOs to provide supply to customers, manage pricing risk or otherwise provide service to fulfill contractual obligations. Additionally in certain instances this business procures physical electricity from identified sources, including renewable generation, when providing service to customers.
Instead, AEPSC and certain AEP utility subsidiaries provide services to these entities. Service Company Subsidiary AEPSC is a service company subsidiary that provides accounting, administrative, information systems, engineering, financial, legal, maintenance and other services at cost to AEP subsidiaries. The executive officers of AEP and certain of the executive officers of its public utility subsidiaries are employees of AEPSC.
Neither AEPTCo nor its subsidiaries have any employees. Instead, AEPSC and certain AEP utility subsidiaries provide services to these entities. Service Company Subsidiary AEPSC is a service company subsidiary that provides accounting, administrative, information systems, engineering, financial, legal, maintenance and other services at cost to AEP subsidiaries.
Texas generally provides for timely fuel and purchased power cost recovery through respective fuel and purchased power recovery mechanisms. 13 Virginia APCo currently provides retail electric service in Virginia at unbundled generation and distribution rates approved by the Virginia SCC. Virginia generally allows for timely recovery of fuel expenses through a fuel cost recovery surcharge mechanism.
Virginia APCo currently provides retail electric service in Virginia at unbundled generation and distribution rates approved by the Virginia SCC with rates set on a historical cost-of-service basis. Virginia generally allows for timely recovery of fuel expenses through a fuel cost recovery surcharge mechanism.
(b) OPCo purchases energy and capacity at auction to serve generation service customers who have not switched to a competitive generation supplier. (c) AEPTCo is a holding company for the State Transcos. Five State Transcos are members of PJM and two State Transcos are members of SPP. Neither AEPTCo nor its subsidiaries have any employees.
(b) OPCo purchases energy and capacity at auction to serve generation service customers who have not switched to a competitive generation supplier. (c) AEPTCo is a holding company for the State Transcos, other than IMTCo and OHTCo, and Midwest Transmission Holdings. Five State Transcos are members of PJM and two State Transcos are members of SPP.
This includes focusing our efforts to prevent serious injuries and fatalities, strengthening pre-job briefing effectiveness, learning from safety incidents, providing appropriate training and education and improving proactive safety initiatives and data analysis to identify and address potential performance gaps.
AEP is committed to fundamentally embedding layers of protection in its operations. This includes focusing efforts to prevent serious injuries and fatalities, strengthening pre-job briefing effectiveness, learning from safety incidents, providing appropriate training and education and improving proactive safety initiatives and data analysis to identify and address potential performance gaps.
The cost to decommission a nuclear plant is affected by NRC regulations and the SNF disposal program. The most recent decommissioning cost study was completed in 2024.
NRC regulations and the SNF disposal program impact the cost to decommission the Cook Plant. The most recent decommissioning cost study was completed in 2024.
Ferneau Executive Vice President and Chief Nuclear Officer Age 56 Executive Vice President and Chief Nuclear Officer since November 2024. I&M Site Vice President-Donald C. Cook Plant from July 2022 to October 2024. I&M Plant Manager from 2018 to June 2022. Q.
Ferneau Executive Vice President and Chief Nuclear Officer Age 57 Executive Vice President and Chief Nuclear Officer since November 2024. I&M Site Vice President - Donald C. Cook Plant from July 2022 to October 2024. I&M Plant Manager from 2018 to June 2022. Alicia R. Knapp President - Nuclear Development Age 47 President - Nuclear Development since September 2025.
As of December 31, 2024, AEPSC had 6,237 employees. 1 Principal Industries Served The following table illustrates the principal industries and wholesale electric markets served by AEP’s public utility subsidiaries.
The executive officers of AEP and certain of the executive officers of its public utility subsidiaries are employees of AEPSC. As of December 31, 2025, AEPSC had 6,994 employees. 1 Principal Industries Served The following table illustrates the principal industries and wholesale electric markets served by AEP’s public utility subsidiaries.
The TA has been approved by the FERC. Transmission Coordination Agreement and Open Access Transmission Tariff PSO, SWEPCo and AEPSC are parties to the TCA.
Transmission Coordination Agreement and Open Access Transmission Tariff PSO, SWEPCo and AEPSC are parties to the TCA.
The total filed transmission revenue requirements, including prior year over/under-recovery of revenue and associated carrying charges were $1.9 billion, $1.8 billion and $1.7 billion for 2024, 2023 and 2022, respectively. The rates of ETT, which is located in ERCOT, are determined by the PUCT.
The total filed transmission revenue requirements, including prior year over/under-recovery of revenue and associated carrying charges were $2.1 billion, $1.9 billion and $1.8 billion for 2025, 2024 and 2023, respectively. The rates of ETT, which is located in ERCOT, are determined by the PUCT through a combination of base rate cases and interim Transmission Cost of Services (TCOS) filings.
The following table shows the amount of natural gas delivered to the Vertically Integrated Utilities’ plants during the past three years and the average delivered price of natural gas purchased by the Vertically Integrated Utilities: 2024 2023 2022 Total natural gas delivered to the plants (in billions cubic feet) 155.0 146.0 126.0 Average delivered price per MMBtu of purchased natural gas $ 3.05 $ 2.69 $ 6.94 9 Nuclear I&M has made commitments to meet the current nuclear fuel requirements of the Cook Plant.
The Vertically Integrated Utilities’ natural gas supply, transportation and storage costs are typically recovered through various fuel reconciliation mechanisms. 7 The following table shows the amount of natural gas delivered to the Vertically Integrated Utilities’ plants during the past three years and the average delivered price of natural gas purchased by the Vertically Integrated Utilities: 2025 2024 2023 Total natural gas delivered to the plants (in billions of cubic feet) 164 155 146 Average delivered price per MMBtu of purchased natural gas $ 3.71 $ 3.05 $ 2.69 Nuclear I&M has made commitments to meet the current nuclear fuel requirements of the Cook Plant.
It also serves as a means for the company to understand how we can foster a workplace focused on performance, accountability, efficiency, and customer orientation. 2024 marks our eleventh consecutive year of formally surveying employees about their experience at AEP.
It also serves as a means for the Company to understand how to foster a workplace 4 focused on performance, accountability, collaboration and customer orientation. 2025 marks AEP’s twelfth consecutive year of formally surveying employees about their experience.
ENVIRONMENTAL AND OTHER MATTERS General AEP subsidiaries are currently subject to regulation by federal, state and local authorities with regard to air and water-quality control, solid and hazardous waste disposal and other environmental matters, and are subject to zoning and other regulation by local authorities.
ENVIRONMENTAL AND OTHER MATTERS AEP subsidiaries are currently subject to regulation by federal, state and local authorities with regard to air and water-quality control, solid and hazardous waste disposal and other environmental matters, and are subject to zoning and other regulation by local authorities. Current and proposed environmental laws and regulations will have an impact on AEP’s operations.
Their ages are given as of February 13, 2025. The officers are appointed annually for a one-year term by the board of directors of AEP. William J. Fehrman President, Chief Executive Officer and Director Age 64 President, Chief Executive Officer and Director since August 2024. President and Chief Executive Office of Centuri Holdings, Inc. from January 2024 to July 2024.
Their ages are given as of February 12, 2026. The officers are appointed annually for a one-year term by the board of directors of AEP. William J. Fehrman Chair of the Board of Directors, President and Chief Executive Officer Age 65 Chair of the Board of Directors since August 2025. President and Chief Executive Officer since August 2024.
Business – Vertically Integrated Utilities – Regulation – FERC. As discussed below, some transmission services also are separately sold to nonaffiliated companies. Other than AEGCo, AEP’s vertically integrated public utility subsidiaries hold franchises or other rights to provide electric service in various municipalities and regions in their service areas.
As discussed below, some transmission services also are separately sold to nonaffiliated companies. Other than AEGCo, the Vertically Integrated Utilities hold franchises or other rights to provide electric service in various municipalities and regions in their service areas. In some cases, these franchises provide the utility with the exclusive right to provide electric service within a specific territory.
Summary information related to AEP subsidiary operating companies as of December 31, 2024 is shown in the table below: AEP Texas AEPTCo APCo I&M KGPCo (a) KPCo OPCo (b) PSO SWEPCo WPCo State of Incorporation Delaware, 1925 Delaware, 2006 Virginia, 1926 Indiana, 1907 Virginia, 1917 Kentucky, 1919 Ohio, 1907 Oklahoma, 1913 Delaware, 1912 West Virginia, 1883 AEP Reportable Segment Transmission and Distribution Utilities AEP Transmission Holdco Vertically Integrated Utilities Vertically Integrated Utilities Vertically Integrated Utilities Vertically Integrated Utilities Transmission and Distribution Utilities Vertically Integrated Utilities Vertically Integrated Utilities Vertically Integrated Utilities RTO Affiliation ERCOT (c) PJM PJM PJM PJM PJM SPP SPP PJM Approximate Number of Retail Customers 1,122,000 (c) 969,000 617,000 50,000 163,000 1,539,000 584,000 555,000 41,000 Number of Employees 1,598 (c) 1,613 2,069 47 279 1,594 1,044 1,314 229 (a) KGPCo does not own any generating facilities and purchases electric power from APCo for distribution to its customers.
Summary information related to AEP subsidiary operating companies as of December 31, 2025 is shown in the table below: AEP Texas AEPTCo APCo I&M KGPCo (a) KPCo OPCo (b) PSO SWEPCo WPCo State of Incorporation Delaware, 1925 Delaware, 2006 Virginia, 1926 Indiana, 1907 Virginia, 1917 Kentucky, 1919 Ohio, 1907 Oklahoma, 1913 Delaware, 1912 West Virginia, 1883 AEP Reportable Segment T&D AEPTHCo VIU VIU VIU VIU T&D VIU VIU VIU RTO Affiliation ERCOT (c) PJM PJM PJM PJM PJM SPP SPP PJM Approximate Number of Retail Customers 1,133,000 (c) 971,000 621,000 50,000 161,000 1,547,000 588,000 558,000 41,000 Number of Employees 1,730 (c) 1,682 2,152 48 304 1,556 1,150 1,392 229 (a) KGPCo does not own any generating facilities and purchases electric power from APCo for distribution to its customers.
Trevor I. Mihalik Executive Vice President and Chief Financial Officer Age 58 Executive Vice President and Chief Financial Officer since January 2025. Executive Vice President and Group President of Sempra from January 2024 to January 2025. Executive Vice President and Chief Financial Officer of Sempra from 2018 to 2023.
President and CEO of BHE Renewables from December 2020 to September 2025. Trevor I. Mihalik Executive Vice President and Chief Financial Officer Age 59 Executive Vice President and Chief Financial Officer since January 2025. Executive Vice President and Group President of Sempra from January 2024 to January 2025.
The FERC regulates and approves the rates for both wholesale transmission transactions and wholesale generation contracts. The use and the recovery of costs associated with the transmission assets of the AEP vertically integrated public utility subsidiaries are subject to the rules, principles, protocols and agreements in place with PJM and SPP, and as approved by the FERC. See Item 1.
The use and the recovery of costs associated with the transmission assets of the Vertically Integrated Utilities are subject to the rules, principles, protocols and agreements in place with PJM and SPP, and as approved by the FERC. See Item 1. Business – Vertically Integrated Utilities – Regulation – FERC.
Senior Vice President - Grid Solutions from January 2021 to April 2023. Senior Vice President - Transmission Ventures, Strategy & Policy from October 2018 to December 2020. Phillip R. Ulrich Executive Vice President and Chief Human Resources Officer Age 54 Executive Vice President since January 2023. Chief Human Resources Officer since August 2021.
Executive Vice President and Chief Financial Officer of Sempra from 2018 to 2023. Phillip R. Ulrich Executive Vice President and Chief Human Resources Officer Age 54 Executive Vice President since January 2023. Chief Human Resources Officer since August 2021. Senior Vice President from August 2021 to December 2022.
See the “Quantitative and Qualitative Disclosures About Market Risk” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information. 10 Certain Power Agreements I&M A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the energy and capacity available to AEGCo at the Rockport Plant unless it is sold to another utility.
Certain Power Agreements I&M A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the energy and capacity available to AEGCo at the Rockport Plant unless it is sold to another utility.
ELECTRIC DELIVERY General Other than AEGCo, AEP’s vertically integrated public utility subsidiaries own and operate transmission and distribution lines and other facilities to deliver electric power. See Item 2 – Properties for more information regarding the transmission and distribution lines.
ELECTRIC DELIVERY General Other than AEGCo, the Vertically Integrated Utilities own and operate transmission and distribution lines and other facilities to deliver electric power. See Item 2 – Properties for more information regarding the transmission and distribution lines. Most of the transmission and distribution services are sold to retail customers of the Vertically Integrated Utilities in their service territories.
See “Noncontrolling Interest in OHTCo and IMTCo” section of Note 21 for additional information. 16 AEPTHCO JOINT VENTURE INITIATIVES AEP has established joint ventures with nonaffiliated electric utility companies for the purpose of developing, building and owning transmission assets that seek to improve reliability and market efficiency and provide transmission access to remote generation sources in North America (Transmission Joint Ventures).
Net proceeds were used to help finance AEP’s capital plan. 14 AEPTHCO JOINT VENTURE INITIATIVES AEPTHCo has established joint ventures with nonaffiliated electric utility companies for the purpose of developing, building and owning transmission assets that seek to improve reliability and market efficiency and provide transmission access to remote generation sources in North America (Transmission Joint Ventures).
Senior Vice President from August 2021 to December 2022. Chief Human Resources Officer of Flex, LTD from May 2019 to July 2021. 20
Chief Human Resources Officer of Flex, LTD from May 2019 to July 2021. 18
Kentucky KPCo provides retail electric service in Kentucky at bundled rates approved by the KPSC, with rates currently set on a historical cost-of-service basis. Kentucky generally allows for timely recovery of fuel expenses through a fuel recovery surcharge mechanism.
Texas SWEPCo provides retail electric service in Texas at bundled rates approved by the PUCT with rates set on a historical cost-of-service basis. Texas generally provides for timely fuel and purchased power cost recovery through respective fuel and purchased power recovery mechanisms.
See “2020 Texas Base Rate Case” section of Note 4 for additional information. 2 CLASSES OF SERVICE AEP and subsidiaries recognize revenues from customers for retail and wholesale electricity sales and electricity transmission and distribution delivery services.
Actual ROE varies from authorized ROE. (b) The APSC issued an order approving a 9.65% ROE effective February 2026. See “2025 Arkansas Base Rate Case” section of Note 4 for additional information. 2 CLASSES OF SERVICE AEP and subsidiaries recognize revenues from customers for retail and wholesale electricity sales and electricity transmission and distribution delivery services.
(13.5%) (d) 148.1 (g) 10.4 % Pennsylvania AEP (86.5%) (d) (a) ETT is undertaking multiple projects and the completion dates will vary for those projects. ETT’s investment in completed and active projects in ERCOT is expected to be $5.0 billion by 2030. Future projects will be evaluated on a case-by-case basis.
ETT’s investment in completed and active projects in ERCOT is expected to be $5.6 billion by 2030. Future projects will be evaluated on a case-by-case basis. (b) The projects awarded by MISO are estimated to cost approximately $1.2 billion. (c) Transource Energy, LLC is undertaking multiple projects and the completion dates will vary for those projects.
In 2024, approximately 502 AEPSC employees and 302 operating company employees provided service to one or more joint ventures. 17 REGULATION The State Transcos and the Transmission Joint Ventures located outside of ERCOT establish transmission rates annually through forward-looking formula rate filings with the FERC pursuant to FERC-approved implementation protocols.
Business services for the joint ventures are provided by AEPSC and other AEP subsidiaries and the joint venture partners. REGULATION The State Transcos and the Transmission Joint Ventures located outside of ERCOT establish transmission rates annually through forward-looking formula rate filings with the FERC pursuant to FERC-approved implementation protocols.
Nearly all AEP employees participate in an annual incentive program that rewards individual performance and achievement of business goals, fostering a high-performance culture. AEP also offers paid time off in the form of vacation, holidays, sick time, and parental leave. 7 BUSINESS SEGMENTS AEP’s Reportable Segments AEP’s primary business is the generation, transmission and distribution of electricity.
AEP also offers paid time off in the form of vacation, holidays, sick time and parental leave. 5 BUSINESS SEGMENTS AEP’s Reportable Segments AEP’s primary business is the generation, transmission and distribution of electricity.
The price paid for coal delivered in 2024 decreased approximately 3.5% from 2023 mainly due to the completion of higher priced coal supply agreements that were agreed to in 2021 and 2022 when coal market pricing was stronger. The decrease in the delivered cost of coal should continue into 2025 as some higher priced agreements ended in 2024.
The price paid for coal delivered in 2025 decreased approximately 11.6% from 2024 mainly due to the completion of higher priced coal supply agreements that were agreed to in 2021 and 2022 when coal market pricing was stronger. The Vertically Integrated Utilities’ coal costs are typically recovered through various fuel reconciliation mechanisms.
AEP’s culture and inclusion progress is measured through our annual Employee Voice Survey. The Employee Voice Survey is an opportunity for employees to provide feedback about their experience at AEP.
AEP is focused on building a performance-based and accountable culture to effectively support its operating companies and enhance customer service. AEP’s culture progress is measured in part through the annual Employee Voice Survey. The Employee Voice Survey is an opportunity for employees to provide feedback about their experience at AEP.
Training and Professional Development Attracting, developing, and retaining high-performing employees with the skills and experience needed to serve our customers efficiently and effectively is crucial to AEP’s growth and long-term strategy.
Training and Professional Development Attracting, developing, and retaining high-performing employees with the skills and experience needed to serve customers efficiently and effectively is crucial to AEP’s growth and long-term strategy. AEP is preparing its workforce for the future by providing opportunities to learn new skills and engaging higher education institutions to better prepare the next generation of workers.
Other than AEGCo, AEP’s vertically integrated public utility subsidiaries hold franchises or other rights that effectively grant the exclusive ability to provide electric service in various municipalities and regions in their service areas.
Other than AEGCo, the Vertically Integrated Utilities hold franchises or other rights that effectively grant the exclusive ability to provide electric service in various municipalities and regions in their service areas. The Vertically Integrated Utilities compete with self-generation and with distributors of other energy sources, such as natural gas, fuel oil, renewables and coal, within their service areas.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest change(Applies to all Registrants except AEP Texas, AEPTCo and OPCo) AEP is exposed to changes in the price and availability of purchased power and fuel (including the cost to procure coal and gas) and the price and availability to transport fuel.
Biggest change(Applies to all Registrants except AEP Texas, AEPTCo and OPCo) AEP is exposed to changes in the price and availability of purchased power and fuel (including the cost to procure coal and gas) and the price and availability to transport fuel. • AEP is exposed to changes in the price and availability of fuel, including coal, natural gas and uranium, as existing contracts for the supply of such fuel end or are not honored. 26 • The inability to procure fuel at costs that are economical could cause AEP to retire generating capacity prior to the end of its useful life. • AEP is exposed to changes in the price and availability of emission allowances. • AEP is exposed to changes in the price and availability of diesel, the primary fuel used in transporting coal by barge.
AEP and I&M are, therefore, subject to the risks of nuclear generation, which include the following: • The potential harmful effects on the environment and human health due to an adverse incident/event resulting from the operation of nuclear facilities and the storage, handling and disposal of radioactive materials such as SNF. • Limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations. • Uncertainties with respect to contingencies and assessment amounts triggered by a loss event (federal law requires owners of nuclear units to purchase the maximum available amount of nuclear liability insurance unless the NRC specifies a lesser amount and potentially contribute to the coverage for losses of others). • Uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.
AEP and I&M are, therefore, subject to the risks of nuclear generation, which include the following: • The potential harmful effects on the environment and human health due to an adverse incident/event resulting from the operation of nuclear facilities and the storage, handling and disposal of radioactive materials such as SNF. • Limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations. • Uncertainties with respect to contingencies and assessment amounts triggered by a loss event (federal law requires owners of nuclear units to purchase the maximum available amount of nuclear liability insurance unless the NRC specifies a lesser amount and potentially contribute to the coverage for losses of others). 21 • Uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.
The impact of new laws, regulations and policies and the related interpretations, as well as changes in enforcement practices or regulatory scrutiny generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase AEP’s operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or services AEP offers, or result in adverse publicity and harm AEP’s reputation.
The impact of new laws, regulations and policies and the related interpretations, as well as changes in enforcement practices or 28 regulatory scrutiny generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase AEP’s operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or services AEP offers, or result in adverse publicity and harm AEP’s reputation.
Delays in obtaining permits, challenges in securing suitable land for the siting, shortages in materials and qualified labor, levels of public support or opposition, suppliers and contractors not performing as expected or required under their contracts and/or experiencing financial problems that inhibit their ability to fulfill their obligations under contracts, changes in the scope and timing of projects, poor quality initial cost estimates from contractors, the inability to raise capital on favorable terms, changes in commodity prices affecting revenue, fuel costs, or materials costs, downward changes in the economy, changes in law or regulation, including environmental compliance requirements, further direct and indirect trade and tariff issues, supply chain delays or disruptions, and other events beyond AEP’s control may occur that may materially affect the schedule, cost, and performance of needed acquisitions or construction 32 projects.
Delays in obtaining permits, challenges in securing suitable land for the siting, shortages in materials and qualified labor, levels of public support or opposition, suppliers and contractors not performing as expected or required under their contracts and/or experiencing financial problems that inhibit 29 their ability to fulfill their obligations under contracts, changes in the scope and timing of projects, poor quality initial cost estimates from contractors, the inability to raise capital on favorable terms, changes in commodity prices affecting revenue, fuel costs, or materials costs, downward changes in the economy, changes in law or regulation, including environmental compliance requirements, further direct and indirect trade and tariff issues, supply chain delays or disruptions, and other events beyond AEP’s control may occur that may materially affect the schedule, cost, and performance of needed acquisitions or construction projects.
AEP has multiple stakeholders, including our shareholders, customers, associates, federal and state regulatory authorities, and the communities in which AEP operates, and these stakeholders will often have differing priorities and expectations regarding issues related to the use of fossil fuels. Any adverse publicity in connection with AEP’s use of fossil fuels could curtail availability from certain sources of capital.
AEP has multiple stakeholders, including shareholders, customers, associates, federal and state regulatory authorities and the communities in which AEP operates, and these stakeholders will often have differing priorities and expectations regarding issues related to the use of fossil fuels. Any adverse publicity in connection with AEP’s use of fossil fuels could curtail availability from certain sources of capital.
RISKS RELATED TO OWNING AND OPERATING GENERATION ASSETS AND SELLING POWER Costs of compliance with existing and evolving environmental laws are significant. (Applies to all Registrants except AEPTCo) Operations are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, natural resources and health and safety.
RISKS RELATED TO OWNING AND OPERATING GENERATION ASSETS AND SELLING POWER Costs of compliance with existing and evolving environmental laws are significant. (Applies to all Registrants except AEPTCo) AEP’s operations are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, natural resources and health and safety.
A majority of the electricity generated by AEP subsidiaries is produced by the combustion of fossil fuels. Emissions of nitrogen and sulfur oxides, mercury and particulates and the discharge and disposal of solid waste (including coal-combustion residuals or CCR) resulting from fossil fueled generation plants are subject to increased regulations, controls and mitigation expenses.
A majority of the electricity generated by AEP is produced by the combustion of fossil fuels. Emissions of nitrogen and sulfur oxides, mercury and particulates and the discharge and disposal of solid waste (including coal-combustion residuals or CCR) resulting from fossil fueled generation plants are subject to increased regulations, controls and mitigation expenses.
Failure to attract and retain an appropriately qualified workforce could harm results of operations. (Applies to all Registrants) Certain events, such as an aging workforce without appropriate replacements, mismatch of skillset or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs.
Failure to attract and retain an appropriately qualified workforce and management could harm results of operations. (Applies to all Registrants) Certain events, such as an aging workforce without appropriate replacements, mismatch of skillset or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs.
All aspects of AEP’s rates accepted or approved by the FERC, including the formula rate templates, the rates of return on the actual equity portion of its respective capital structures and the approved targeted capital structures, are subject to challenge by interested parties at the FERC, or by the FERC on its own initiative.
All aspects of AEP’s rates accepted or approved by the FERC, including the formula rate templates, the rates of return on the actual equity portion of its respective capital structures and the approved targeted capital structures, are subject to challenge by interested parties at the FERC, or by the 20 FERC on its own initiative.
Failure to recover increased capital costs could reduce future net income and cash flows and possibly harm AEP’s financial condition. Increases in inflation raises our costs for labor, materials and services, and failure to secure these on reasonable terms may adversely impact our financial condition.
Failure to recover increased capital costs could reduce future net income and cash flows and possibly harm AEP’s financial condition. Increases in inflation raises costs for labor, materials and services, and failure to secure these on reasonable terms may adversely impact financial condition.
(Applies to all Registrants) AEP’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support our underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of our operations.
(Applies to all Registrants) AEP’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of operations.
(Applies to all Registrants except AEP Texas, AEPTCo and OPCo) Federal or state laws or regulations may be adopted that would impose new or additional limits on the emissions of greenhouse gases, including, but not limited to, carbon dioxide and methane, from electric generation units using fossil fuels like coal.
(Applies to all Registrants except AEP Texas, AEPTCo and OPCo) Federal or state laws or regulations may be adopted that could impose new or additional limits on the emissions of greenhouse gases, including, but not limited to, carbon dioxide and methane, from electric generation units using fossil fuels like coal.
Our information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future.
AEP’s information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future.
The AEP regulated utility businesses have large customer and stakeholder bases and, as a result, could be the subject of public criticism or adverse publicity focused on issues including the operation and maintenance of their assets and infrastructure, their preparedness for major storms or other extreme weather events and/or the time it takes to restore service after such events, or the quality of their service or the reasonableness of the cost of their service.
(Applies to all Registrants) The AEP regulated utility businesses have large customer and stakeholder bases and, as a result, could be subject to public criticism or adverse publicity focused on issues including the operation and maintenance of their assets and infrastructure, their preparedness for major storms or other extreme weather events and/or the time it takes to restore service after such events, or the quality of their service or the reasonableness of the cost of their service.
(Applies to AEP and I&M) I&M owns the Cook Plant, which consists of two nuclear generating units for a rated capacity of 2,296 MWs, or about a tenth of the regulated generating capacity in the AEP System as of December 31, 2024.
(Applies to AEP and I&M) I&M owns the Cook Plant, which consists of two nuclear generating units for a rated capacity of 2,296 MWs, or about a tenth of the regulated generating capacity in the AEP System as of December 31, 2025.
The rate of return on assets held in those trusts can significantly impact both the costs of decommissioning and the funding requirements for the trusts. Supply chain disruptions, tariffs and inflation could negatively impact our operations and corporate strategy.
The rate of return on assets held in those trusts can significantly impact both the costs of decommissioning and the funding requirements for the trusts. 25 Supply chain disruptions, tariffs and inflation could negatively impact operations and corporate strategy.
Operating these facilities involves many risks, including: • Operator error and breakdown or failure of equipment or processes. • Operating limitations that may be imposed by environmental or other regulatory requirements. • Labor disputes. • Compliance with mandatory reliability standards, including mandatory cybersecurity standards. • Information technology failure, including failure of artificial intelligence technology, that impairs AEP’s information technology infrastructure or disrupts normal business operations. • Information technology failure that affects AEP’s ability to access customer information or causes loss of confidential or proprietary data that materially and adversely affects AEP’s reputation or exposes AEP to legal claims. • Supply chain disruptions and inflation. 24 • Fuel or water supply interruptions caused by transportation constraints, adverse weather such as drought, non-performance by suppliers and other factors. • Catastrophic events such as fires, earthquakes, explosions, hurricanes, tornadoes, ice storms, terrorism (including cyber-terrorism), floods or other similar occurrences. • Fuel costs and related requirements triggered by financial stress in the coal industry.
Operating these facilities involves many risks, including: • Operator error and breakdown or failure of equipment or processes. • Operating limitations that may be imposed by environmental or other regulatory requirements. • Labor disputes. • Compliance with mandatory reliability standards, including mandatory cybersecurity standards. • Information technology failure, including failure of AI technology, that impairs AEP’s information technology infrastructure or disrupts normal business operations. • Information technology failure that affects AEP’s ability to access customer information or causes loss of confidential or proprietary data that materially and adversely affects AEP’s reputation or exposes AEP to legal claims. • Supply chain disruptions and inflation. • Fuel or water supply interruptions caused by transportation constraints, adverse weather such as drought, non-performance by suppliers and other factors. • Catastrophic events such as extreme weather, fires, earthquakes, explosions, hurricanes, tornadoes, winter storms, terrorism (including cyber-terrorism), floods or other similar occurrences. • Fuel costs and related requirements triggered by financial stress in the coal industry.
The occurrence of one or more wildfires could cause tremendous loss, impact the market value and credit ratings of our securities and have a material adverse effect on our financial condition.
The occurrence of one or more wildfires could cause tremendous loss, impact the market value and credit ratings of Registrants’ securities and have a material adverse effect on Registrants’ financial condition.
Criticism or adverse publicity of this nature could render legislatures and other governing bodies, public service commissions and other regulatory authorities, and government officials less likely to view the applicable operating company in a favorable light and could potentially negatively affect legislative or regulatory processes or outcomes, as well as lead to increased regulatory oversight or more stringent legislative or regulatory requirements or other legislation or regulatory actions that adversely affect the regulated utility businesses.
Criticism or adverse publicity of any nature could render legislatures and other governing bodies, public service commissions and other regulatory authorities, and government officials less likely to view AEP or the applicable regulated utility in a favorable light and could potentially negatively affect legislative or regulatory processes or outcomes, as well as lead to increased regulatory oversight, more stringent legislative or regulatory requirements, or other legislation or regulatory actions that adversely affect the regulated utility businesses.
The price of energy, as a factor in a region’s cost of living as well as an important input into the cost of goods and services, has an impact on the economic health of the communities within AEP’s service territories. Climate change may impact the economy, which could impact our sales and revenues.
The price of energy, as a factor in a region’s cost of living as well as an important input into the cost of goods and services, impacts the economic health of the communities within AEP’s service territories. Climate change may impact the economy, which could impact sales and revenues.
Certain sources of insurance and debt and equity capital have expressed increasing unwillingness to procure insurance for or to invest in companies, such as AEP, that rely on fossil fuels. The public holds diverse and often conflicting views on the use of fossil fuels.
In the past, certain sources of insurance and debt and equity capital have expressed unwillingness to provide insurance for or to invest in companies, such as AEP, that rely on fossil fuels. The public holds diverse and often conflicting views on the use of fossil fuels.
Costs of compliance with environmental statutes and regulations could reduce future net income and negatively impact financial condition, especially if emission limits, CCR waste discharge and/or discharge disposal obligations are tightened, more extensive operating and/or permitting requirements are imposed or additional substances or facilities become regulated.
Costs of compliance with environmental statutes and regulations, and penalties or damages assessed for noncompliance, could reduce future net income and negatively impact financial condition, especially if emission limits, CCR waste discharge and/or discharge disposal obligations are tightened, more extensive operating and/or permitting requirements are imposed or additional substances or facilities become regulated.
In 2024, AEP Texas’ two largest REPs accounted for 40% of its operating revenue. Any delay or default in payment by REPs could adversely affect cash flows, financial condition and results of operations.
In 2025, AEP Texas’ two largest REPs accounted for 38% of its operating revenue. Any delay or default in payment by REPs could adversely affect cash flows, financial condition and results of operations.
(Applies to AEP and AEP Texas) AEP Texas collects receivables from the distribution of electricity from REPs that supply the electricity it distributes to its customers. As of December 31, 2024, AEP Texas did business with approximately 135 REPs.
(Applies to AEP and AEP Texas) AEP Texas collects receivables from the distribution of electricity from REPs that supply the electricity it distributes to its customers. As of December 31, 2025, AEP Texas did business with approximately 146 REPs.
These variables include, but are not limited to, project management expertise, escalating costs for capital, materials, labor, and environmental compliance, reliance on suppliers for timely and satisfactory performance, continued pandemic-related delays and cost increases, and supply chains and material constraints, including those that may result from major storm events.
These variables include, but are not limited to, project management expertise, escalating costs for capital, materials, labor, and environmental compliance, changes in RTO cost allocation and cost recovery, reliance on suppliers for timely and satisfactory performance, delays and cost increases, and supply chains and material constraints, including those that may result from major storm events.
Decisions are typically subject to appeal, further exacerbating the regulatory lag and leading to additional uncertainty associated with rate case proceedings.
Decisions are typically subject to appeal, further exacerbating the regulatory lag and leading to additional uncertainty associated with rate case proceedings. AEP is subject to negative publicity.
Registrants are subject to the jurisdiction of many federal and state agencies, including the FERC, NERC, Commodities Futures Trading Commission, Federal EPA, NRC, Occupational Safety and Health Administration, the SEC and the United States Department of Justice which may impose significant civil and criminal penalties to enforce compliance requirements relative to AEP’s business, which could have a material adverse effect on financial operating results including earnings, cash flow and liquidity.
Registrants are subject to the jurisdiction of many federal and state agencies, including the FERC, NERC, Commodity Futures Trading Commission, Federal EPA, NRC, Occupational Safety and Health Administration, the SEC and the United States Department of Justice which may impose significant civil and criminal penalties to enforce compliance requirements relative to AEP’s business, which could have a material adverse impact on results of operations and cash flows and impact financial condition.
These disruptions and constraints could reduce future net income and cash flows and possibly harm AEP’s financial condition. The United States economy has been in an elevated inflationary environment and supply chain disruptions have contributed to higher prices of components, materials, equipment and other needed commodities.
These disruptions and constraints could reduce future net income and cash flows and impact financial condition. The United States economy has experienced an inflationary environment and supply chain disruptions have contributed to higher prices of components, materials, equipment and other needed commodities.
Further, real or alleged violations of environmental regulations, including those related to climate change, or an inability to meet AEP’s voluntary climate aspirations, could adversely impact AEP’s reputation, reduce future net income and cash flows and harm financial condition. AEP may be unable to procure or construct generation capacity when needed or to recover the costs of such generation capacity.
Further, real or alleged violations of environmental regulations, including those related to climate change, could reduce future net income and cash flows and possibly harm financial condition. AEP may be unable to procure or construct generation capacity when needed or to recover the costs of such generation capacity.
As of December 31, 2024, OVEC has outstanding indebtedness of approximately $997 million, of which APCo, I&M and OPCo are collectively responsible for $433 million through the ICPA.
As of December 31, 2025, OVEC has outstanding indebtedness of approximately $873 million, of which APCo, I&M and OPCo are collectively responsible for $379 million through the ICPA.
In addition, although management has no reason to anticipate a serious nuclear incident at the Cook Plant, if an incident did occur, it could harm results of operations or financial condition. A major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation or licensing of any domestic nuclear unit.
In addition, if an incident did occur, it could harm results of operations or financial condition. A major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation or licensing of any domestic nuclear unit.
(Applies to all Registrants) The rates customers pay to AEP regulated utility businesses are subject to approval by the FERC and the respective state utility commissions of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.
(Applies to all Registrants) The rates customers pay to AEP regulated utility businesses are subject to approval by the FERC and the respective state utility commissions of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. AEP cannot predict the ultimate outcomes of any actions by the FERC or the respective state commissions in establishing rates.
Prices for coal, natural gas and emission allowances have shown material swings in the past. Changes in the cost of purchased power, fuel or emission allowances and changes in the relationship between such costs and the market prices of power could reduce future net income and cash flows and negatively impact financial condition.
Changes in the cost of purchased power, fuel or emission allowances and changes in the relationship between such costs and the market prices of power could reduce future net income and cash flows and negatively impact financial condition.
Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, or the future availability and cost of contract labor may adversely affect the ability to manage and operate the business.
In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may rise. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, or the future availability and cost of contract labor may adversely affect the ability to manage and operate the business.
In addition, regulators have initiated and may initiate additional proceedings to investigate the prudence of costs in the AEP regulated utility businesses and in base rates and examine, among other things, the reasonableness or prudence of operation and maintenance practices, level of expenditures (including storm costs and costs associated with capital projects), allowed rates of return and rate base, proposed resource acquisitions and previously incurred capital expenditures that the regulated utility businesses seek to place in rates.
In these proceedings and in base rate proceedings regulators examine the reasonableness or prudence of operation and maintenance practices, the level of expenditures (including storm costs and costs associated with capital projects), the allowed rates of return and rate base, the proposed resource acquisitions and the previously incurred capital expenditures that the regulated utility businesses seek to keep or place in rates.
The FERC has approved the cost-based formula rate templates used by AEP to calculate its respective annual revenue requirements, but it has not expressly approved the amount of actual capital and operating expenditures to be used in the formula rates.
(Applies to all Registrants other than AEP Texas) AEP provides transmission service under rates regulated by the FERC. The FERC approved the cost-based formula rate templates used by AEP to calculate its respective annual revenue requirements, but it has not expressly approved the amount of actual capital and operating expenditures to be used in the formula rates.
Existing, new or changed rules of these RTOs could result in significant additional fees and increased costs to participate in those structures, including the cost of transmission facilities built by others due to changes in transmission rate design. In addition, these RTOs may assess costs resulting from improved transmission reliability, reduced transmission congestion and firm transmission rights.
Existing, new or changed rules of these RTOs could result in significant additional fees and increased costs to participate in those structures, including the cost of transmission and generation facilities built by others due to changes in rules and allocations, including transmission rate design.
AEP’s stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism. 26 Downgrades in AEP’s credit ratings could negatively affect its ability to access capital.
AEP’s stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism. Downgrades in AEP’s credit ratings could negatively affect its ability to access capital. (Applies to all Registrants) The credit ratings agencies periodically review AEP’s capital structure and the quality and stability of earnings and cash flows.
(Applies to all Registrants) Shareholder activism, which can take many forms and arise in a variety of situations, could result in substantial costs and divert management’s and AEP’s board’s attention and resources from AEP’s business.
Shareholder activism could cause AEP to incur significant expense, hinder execution of AEP’s business strategy and impact AEP’s stock price. (Applies to all Registrants) Shareholder activism, which can take many forms and arise in a variety of situations, could result in substantial costs and divert management’s and the AEP Board’s attention and resources from AEP’s business.
If the FERC were to adopt a different policy, if states were to limit or restrict such policies, or if transmission needs do not continue or develop as projected, AEP’s strategy of investing in transmission could be impacted.
If the FERC were to adopt a different policy, if states were to limit or restrict such policies, or if transmission needs do not continue or develop as projected, AEP’s strategy of investing in transmission could be impacted. Further, AEP’s transmission strategy seeks to obtain authorization or to win bids to install, construct and operate new transmission lines and facilities.
Costs also may include replacement power, any unamortized investment at the end of the useful life of the Cook Plant (whether scheduled or premature), the carrying costs of that investment and retirement costs.
Costs also may include replacement power, any unamortized investment at the end of the useful life of the Cook Plant (whether scheduled or premature), the carrying costs of that investment and retirement costs. The ability to obtain adequate and timely recovery of costs associated with the Cook Plant is not assured.
Compliance with these legal requirements (including any new and more stringent application of existing CCR regulations) requires AEP to commit significant capital toward environmental monitoring, installation of pollution control equipment, emission fees, disposal, remediation and permits at AEP facilities and could cause AEP to retire generating capacity prior to the end of its estimated useful life.
Compliance requires AEP to commit significant capital toward environmental monitoring, installation of pollution control equipment, emission fees, disposal, remediation and permits at AEP facilities and could require AEP to retire generating capacity prior to the end of its estimated useful life.
In addition, AEP has exposure to international banks, including those in Europe, Canada and Asia. Disruptions in these markets could reduce or restrict the AEP’s ability to secure sufficient liquidity or secure liquidity at reasonable terms. As of December 31, 2024, approximately 8%, 25% and 16% of the Registrants’ available credit facilities were with European, Canadian, and Asian banks, respectively.
Disruptions in these markets could reduce or restrict AEP’s ability to secure sufficient liquidity or secure liquidity at reasonable terms. As of December 31, 2025, approximately 8%, 23% and 15% of the Registrants’ available credit facilities were with European, Canadian, and Asian banks, respectively.
If AEP is unable to successfully attract and retain an appropriately qualified workforce, operations may be negatively impacted and future net income and cash flows may be reduced.
If AEP is unable to successfully attract and retain an appropriately qualified workforce, operations may be negatively impacted and future net income and cash flows may be reduced. Difficulties in sustaining leadership continuity could negatively impact AEP’s business and financial condition.
In addition, if any construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event the project is canceled. AEP is exposed to nuclear generation risk.
In addition, if any construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event a project is canceled. This would cause financial results to be diminished.
(Applies to all Registrants) A significant portion of AEP’s earnings is derived from transmission investments and activities. FERC policy currently favors the expansion and updating of the transmission infrastructure within its jurisdiction.
AEP’s transmission investment strategy and execution are dependent on federal and state regulatory policy and implementation by RTOs. (Applies to all Registrants) A significant portion of AEP’s earnings is derived from transmission investments and activities. FERC policy currently supports the expansion and updating of the transmission infrastructure within its jurisdiction.
If a REP were unable to meet its obligations, it could consider, among various options, restructuring under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations, and claims might be made by creditors involving payments AEP Texas had received from such REP.
If a REP were unable to meet its obligations, it could consider, among various options, restructuring under the bankruptcy laws, in which event such REP might seek to avoid honoring its obligations, and claims might be made by creditors involving payments AEP Texas had received from such REP. 22 RISKS RELATED TO MARKET, ECONOMIC OR FINANCIAL VOLATILITY AND OTHER RISKS AEP’s financial performance may be adversely affected if AEP is unable to successfully operate facilities or perform certain corporate functions.
(Applies to all Registrants) AEP is subject to income taxation at the federal level and by certain states and municipalities. In determining AEP’s income tax liability for these jurisdictions, management monitors changes to the applicable tax laws and related regulations, including tax incentives and credits designed to support the sale of energy from utility scale renewable energy facilities.
In determining AEP’s income tax liability for these jurisdictions, management monitors changes to the applicable tax laws and related regulations, administrative interpretations and judicial determinations, including tax incentives and credits designed to support the sale of energy from utility scale renewable energy facilities.
Other potential risks associated with wildfires include the inability to secure sufficient insurance coverage, increased costs for insurance and mitigation efforts, regulatory recovery risk, litigation risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets. 29 The generation, transmission and distribution of electricity are dangerous and involve inherent risks of damage to private property and injury to AEP’s workforce and the general public.
Other potential risks associated with wildfires include the inability to secure sufficient insurance coverage, increased costs for insurance and 27 mitigation efforts, regulatory recovery risk, litigation risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets.
The challenges include potential higher rates of existing employee departures, lack of resources, loss of knowledge and a lengthy time period associated with skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may rise.
The challenges include potential higher rates of existing employee departures, lack of resources, loss of knowledge and a lengthy time period associated with skill development.
Changes in regulatory policies and advances in batteries or energy storage, wind turbines, small 22 modular reactors and photovoltaic solar cells are reducing costs of new technology to levels that are making them competitive with some central station electricity production and delivery.
Other technologies, such as light emitting diodes (LEDs), increase the efficiency of electricity and, as a result, lower the demand for it. Changes in regulatory policies and advances in batteries or energy storage, wind turbines and photovoltaic solar cells are reducing costs of new technology to levels that are making them competitive with some central station electricity production and delivery.
(Applies to all Registrants) AEP’s business plan calls for extensive investment in capital improvements and additions, including the construction or acquisition of additional transmission and generation facilities, modernizing existing infrastructure, installation of environmental upgrades and retrofits as well as other initiatives. AEP’s public utility subsidiaries currently provide service at rates approved by one or more regulatory commissions.
(Applies to all Registrants) AEP’s business and capital investment plans call for extensive investment in capital improvements and additions, including the construction or acquisition of additional transmission and generation facilities, installation and interconnection with data centers, modernizing existing infrastructure, installation of environmental upgrades and retrofits as well as other initiatives.
AEP also relies on access to insurance markets to assist in managing its risk and liability profile. Volatility, increased interest rates and reduced liquidity in the financial markets could affect AEP’s ability to raise capital on reasonable terms to fund capital needs, including construction costs and refinancing maturing indebtedness.
Volatility, increased interest rates and reduced liquidity in the financial markets could affect AEP’s ability to raise capital on reasonable terms to fund capital needs, including construction costs and refinancing maturing indebtedness. In addition, AEP has exposure to international banks, including those in Europe, Canada and Asia.
Any adverse developments in tax laws, incentives, credits or regulations, including legislative changes, judicial holdings or administrative interpretations, could have a material and adverse effect on financial condition and results of operations. If AEP is unable to access capital markets or insurance markets on reasonable terms, it could reduce future net income and cash flows and negatively impact financial condition.
Any adverse developments in tax laws, incentives, credits or regulations, including legislative changes, judicial holdings or administrative interpretations, could have a material and adverse effect on financial condition and results of operations.
Changes in the price of purchased power and commodities, the cost of procuring fuel, emission allowances for criteria pollutants and the costs of transport may increase AEP’s cost of purchasing and producing power, impacting financial performance.
The ability to maintain strong leadership relies on effective succession planning, and gaps in preparing or transitioning individuals into critical roles may impact performance. Changes in the price of purchased power and commodities, the cost of procuring fuel, emission allowances for criteria pollutants and the costs of transport may increase AEP’s cost of purchasing and producing power, impacting financial performance.
Customer growth and customer usage are affected by a number of factors outside the control of AEP, such as mandated energy efficiency measures, demand-side management goals, distributed generation resources and economic and demographic conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity, including changes due to public health considerations.
Customer growth and customer usage are affected by a number of factors outside the control of AEP, such as economic and demographic conditions, population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. Some or all of these factors could impact the demand for electricity.
(Applies to all Registrants) AEP is involved in legal proceedings, claims and litigation arising out of its business operations, the most significant of which are summarized in Note 6 - Commitments, Guarantees and Contingencies. Adverse outcomes in these proceedings could require significant expenditures that could reduce future net income and cash flows and negatively impact financial condition.
(Applies to all Registrants) AEP is involved in legal proceedings, claims and litigation arising out of its business operations, the most significant of which are summarized in Note 6 - Commitments, Guarantees and Contingencies. Management cannot predict the outcome of such legal proceedings.
If sources of capital for AEP are reduced and/or expected sale proceeds do not become available, capital costs could increase materially. Restricted access to capital or insurance markets and/or increased borrowing costs or insurance premiums could reduce future net income and cash flows and negatively impact financial condition.
Restricted access to capital or insurance markets and/or increased borrowing costs or insurance premiums could reduce future net income and cash flows and negatively 24 impact financial condition.
International tensions from any source, including the ramifications of regional conflict or increased tariffs, could further exacerbate the global supply chain upheaval. These disruptions and shortages could adversely impact business operations and corporate strategy. The current administration has implemented tariffs on certain imported goods and may impose additional tariffs.
Any disruptions and shortages could adversely impact business operations and corporate strategy. The current administration has implemented tariffs on certain imported goods and may impose additional tariffs.
In addition, AEP may be held responsible for the actions of its contractors. No assurance can be given that future losses will not exceed the limits of AEP’s or its contractors’ insurance coverage. Management cannot predict the outcome of the legal proceedings relating to AEP’s business activities.
Deaths, injuries and property damage caused by such events can subject AEP to liability that, despite the existence of insurance coverage, can be significant. In addition, AEP may be held responsible for the actions of its contractors. No assurance can be given that future losses will not exceed the limits of AEP’s or its contractors’ insurance coverage.
As a result, prevailing economic conditions may reduce future net income and cash flows and negatively impact financial condition. Volatility in the securities markets, interest rates, and other factors could substantially increase defined benefit pension and other postretirement plan costs and the costs of nuclear decommissioning.
Volatility in the securities markets, interest rates, and other factors could substantially increase defined benefit pension and other postretirement plan costs and the costs of nuclear decommissioning.
Failure to recover these costs could reduce future net income and cash flows and possibly harm financial condition. 31 Regulation of greenhouse gas emissions could materially increase costs to AEP and its customers or cause some electric generating units to be uneconomical to operate or maintain.
Regulation of GHG emissions could materially increase costs to AEP and its customers or cause some electric generating units to be uneconomical to operate or maintain.
(Applies to all Registrants) Results are likely to be affected by differences in the market and transmission structures in various regional power markets. The rules governing the various RTOs, including SPP and PJM, may also change from time to time which could affect costs or revenues.
The rules governing the various RTOs, including SPP and PJM, may also change from time to time which could affect costs or revenues.
The delivery of components, materials, equipment and 27 other resources that are critical to AEP’s business operations and corporate strategy has been restricted by domestic and global supply chain upheaval. This has resulted in the shortage of critical items.
The delivery of components, materials, equipment and other resources that are critical to AEP’s business operations and corporate strategy are affected by domestic and global supply chain upheaval. This can result in the shortage of critical items. International tensions from any source, including the ramifications of regional conflict or increased tariffs, could further exacerbate global supply chain upheaval.
Any failure to negotiate successful project development agreements for new facilities with third-parties could have similar results. Changes in technology and regulatory policies may lower the value of electric utility facilities and franchises.
Any failure to timely construct contracted generation, transmission and distribution facilities or to negotiate successful project development agreements for new facilities with third-parties, including new data centers and other large load customers, could impact future net income and cash flows and impact financial condition. Changes in technology and regulatory policies may lower the value of electric utility facilities and franchises.
Traditional base rate proceedings, as opposed to formula rate plans, generally have long timelines, are primarily based on historical costs and may or may not be limited in scope or duration by statute.
Traditional base rate proceedings generally have long timelines, are primarily based on historical costs and may or may not be limited in scope or duration by statute. The length of these base rate proceedings can cause the regulated utility businesses to experience regulatory lag in recovering costs and result in earning less than the allowed returns.
Further advancement of affordable new generation technologies and a market for offsets, as well as continued alignment with our states, would be required to achieve net-zero emissions. AEP’s results of operations could be materially adversely affected to the extent that new federal or state laws or regulations impose any new greenhouse gas emission limits.
AEP’s results of operations could be materially adversely affected to the extent that new federal or state laws or regulations impose any new greenhouse gas emission limits.
If these regulatory commissions do not approve adjustments to the rates charged, affected AEP subsidiaries would not be able to recover the costs associated with their investments. This would cause financial results to be diminished. Regulated electric revenues and earnings are dependent on federal and state regulation that may limit AEP’s ability to recover costs and other amounts.
AEP’s public utility subsidiaries currently provide service at rates approved by one or more regulatory commissions. If these regulatory commissions do not approve adjustments to the rates charged, affected AEP subsidiaries would not be able to recover the costs associated with their investments. This would cause financial results to be diminished.
(Applies to all Registrants) AEP primarily generates electricity at large central facilities and delivers that electricity to customers over its transmission and distribution facilities to customers usually situated within an exclusive franchise.
(Applies to all Registrants) AEP primarily generates electricity at large central facilities and delivers that electricity over its transmission and distribution facilities to customers usually situated within an exclusive franchise. This method results in economies of scale and generally lower costs than newer technologies, such as fuel cells and microturbines, and distributed generation using either new or existing technology.
The ability to obtain adequate and timely recovery of costs associated with the Cook Plant is not assured. 23 AEP subsidiaries are exposed to risks through participation in the market and transmission structures in various regional power markets that are beyond their control.
AEP subsidiaries are exposed to risks through participation in the market and transmission structures in various regional power markets that are beyond their control. (Applies to all Registrants) Differences in the market and transmission structures in various regional power markets are likely to affect results.
If any of these projects are canceled for any reason, including shifts in large customer needs, preferences or financial stability, failure to receive necessary regulatory approvals, cost recovery and/or siting or environmental permits, significant unrecoverable costs or cancellation penalties under the equipment purchase orders and construction contracts could occur.
While AEP utilizes measures to limit the impact of these events, if any of these projects are canceled for any reason, including shifts in large customer needs, preferences or financial stability, shifts in demand for large customer products or services, changes in technology, failure to receive necessary regulatory approvals, cost recovery and/or siting or environmental permits, mitigation efforts might not be sufficient and it could result in significant unrecoverable costs and the execution of AEP’s business and capital investment plans would be negatively impacted.
(Applies to all Registrants) AEP relies on access to capital markets as a significant source of liquidity for capital requirements not satisfied by operating cash flows or proceeds from the strategic sale of assets and investments, including subsidiaries or portions thereof, such as the announced transaction involving a noncontrolling interest in IMTCo and OHTCo.
(Applies to all Registrants) AEP relies on access to capital markets as a significant source of liquidity for capital requirements not satisfied by operating cash flows. AEP also relies on access to insurance markets to assist in managing its risk and liability profile.
The regulated utility businesses, and the energy industry as a whole, have experienced a period of rising costs and investments and an upward trend in spending, especially with respect to infrastructure investments, which is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms, all of which could face resistance from customers and other stakeholders especially in a rising cost environment, whether due to inflation, tariffs, high fuel prices or otherwise, and/or in periods of economic decline or hardship.
The regulated utility businesses, and the energy industry as a whole have experienced a period of rising costs and investments and an upward trend in spending, especially with respect to infrastructure investments, which are likely to continue in the foreseeable future.
RISKS RELATED TO MARKET, ECONOMIC OR FINANCIAL VOLATILITY AND OTHER RISKS AEP’s financial performance may be adversely affected if AEP is unable to successfully operate facilities or perform certain corporate functions. (Applies to all Registrants) Performance is highly dependent on the successful operation of generation, transmission and/or distribution facilities.
(Applies to all Registrants) Performance is highly dependent on the successful operation of generation, transmission and/or distribution facilities.
The regulators may disallow costs subject to their jurisdiction found not to have been prudently incurred or found not to have been incurred in compliance with applicable tariffs, creating some risk to the ultimate recovery of those costs. Regulatory proceedings relating to rates and other matters typically involve multiple parties seeking to limit or reduce rates.
Regulators may disallow costs found not to have been prudently incurred or found not to have been incurred in compliance with applicable tariffs, creating risk in the ultimate recovery of those costs. Disallowance of these costs would adversely affect AEP’s business, financial position, results of operations and cash flows.
Physical attacks or hostile cyber intrusions could severely impair operations, lead to the disclosure of confidential information and damage AEP’s reputation. (Applies to all Registrants) AEP and its regulated utility businesses face physical security and cybersecurity risks as the owner-operators of generation, transmission and/or distribution facilities and as participants in commodities trading.
Physical attacks or hostile cyber intrusions could severely impair operations, lead to the disclosure of confidential information and damage AEP’s reputation. (Applies to all Registrants) Risks from cybersecurity and physical threats to energy infrastructure are increasing. Threat actors, including sophisticated nation-state actors and criminal groups, exploit potential vulnerabilities in the electric utility industry, grid infrastructure and other energy infrastructures.
In addition, the risks associated with the operation of transmission and distribution assets and power generation and storage facilities include public and workforce safety issues and the risk of utility assets causing or contributing to wildfires. Deaths, injuries and property damage caused by such events can subject AEP to liability that, despite the existence of insurance coverage, can be significant.
In addition, the risks associated with the operation of transmission and distribution assets and power generation and storage facilities include public and workforce safety issues and the risk of utility assets causing or contributing to wildfires, explosions, mechanical failure, unscheduled downtime, equipment interruptions, remediation, chemical and oil spills, discharges or releases of toxic or hazardous substances or gases and other environment risks.
Management believes AEP’s experience with transmission facilities construction and operation gives AEP an advantage over other competitors in securing authorization to install, construct and operate new transmission lines and facilities. However, there can be no assurance that PJM, SPP, ERCOT or other RTOs will authorize new transmission projects or will award such projects to AEP.
However, there can be no assurance that PJM, SPP, ERCOT or other RTOs will authorize new transmission projects or will award such projects to AEP. Certain elements of AEP’s transmission formula rates have been challenged, which could result in lowered rates and/or refunds of amounts previously collected.
Management also cannot predict whether transmission facilities will be expanded in specific markets to accommodate competitive access to those markets. 33 OVEC may require additional liquidity and other capital support. (Applies to AEP, APCo, I&M and OPCo) AEP and several nonaffiliated utility companies own OVEC.
If restrictive transmission price regulation is imposed, the transmission companies may not have sufficient incentive to invest in expansion of transmission infrastructure. 30 OVEC may require additional liquidity and other capital support. (Applies to AEP, APCo, I&M and OPCo) AEP and several nonaffiliated utility companies own OVEC.
(Applies to all Registrants) The credit ratings agencies periodically review AEP’s capital structure and the quality and stability of earnings and cash flows. Any negative ratings actions could constrain the capital available to AEP and could limit access to funding for operations.
From time to time, AEP’s financial metrics have approached, and may in the future approach, thresholds designated by the credit rating agencies for potential ratings downgrades. Any negative ratings actions could constrain the capital available to AEP and could limit access to funding for operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAEP is not aware of any occurrence from cybersecurity threats, including as a result of 34 any previous cybersecurity incidents, that has materially affected or is reasonably likely to materially affect AEP’s business strategy, results of operations, cash flows or financial condition. AEP has undertaken a variety of actions to monitor and address cyber-related risks.
Biggest changeAEP has not identified any cybersecurity incidents that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition. 32
Removed
ITEM 1C. CYBERSECURITY The electric utility industry is an identified critical infrastructure function with mandatory cybersecurity requirements under the authority of FERC. The NERC, which FERC certified as the nation’s Electric Reliability Organization, developed mandatory critical infrastructure protection cybersecurity reliability standards.
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ITEM 1C. CYBERSECURITY Cybersecurity is a critical component of AEP’s risk management framework. As an electric utility operating critical infrastructure, AEP is subject to mandatory requirements under applicable federal, state, and industry standards. AEP maintains a risk-based cybersecurity program designed to protect the confidentiality, integrity, and availability of its information technology, operational technology, and critical infrastructure assets.
Removed
AEP’s service territory covers multiple NERC regions and is audited at least annually by one or more of the regions. AEP has participated in the NERC grid security and emergency response exercises, GridEx, for the past ten years and continues to participate in the bi-yearly exercises.
Added
Cybersecurity Risk Management and Strategy AEP’s cybersecurity risk management program is designed to identify, assess, and manage risks from cybersecurity threats, including those posed by third parties. The program incorporates a defense-in-depth approach, leverages partnerships with government and peers to assess the evolving threats and aligns with recognized industry standards and regulatory requirements applicable to electric utilities.
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These NERC-led efforts test and further develop the coordination, threat sharing and interaction between utilities and various government agencies relative to potential cyber and physical threats against the nation’s electric grid. AEP also conducts internal exercises to test and further refine AEP’s cyber response plans.
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Key elements of AEP’s cybersecurity program include, among others: • Continuous monitoring and detection of cyber threats; • Vulnerability assessments and penetration testing; • Incident response planning and exercises; • Business continuity and disaster recovery planning; • Security awareness training, including advanced phishing simulations; • Third-party risk management, including vendor due diligence and contractual controls; • Cybersecurity insurance coverage.
Removed
These internal scenarios are chosen based on real world events and often include coordination with and communication to AEP’s Chief Executive Officer and executive team. The operations of AEP’s electric utility subsidiaries are subject to extensive and rigorous mandatory cyber and physical security requirements that are developed and enforced by NERC to protect grid security and reliability.
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AEP regularly evaluates and updates its cybersecurity controls, processes, and technologies in response to the evolving threat landscape and regulatory developments. We leverage both internal expertise and external partners to assist with assessments, testing, and program maturity evaluations. Governance and Oversight AEP’s Board of Directors, through the Technology Committee, oversees the cybersecurity program and our approach to cyber risk management.
Removed
Cook Plant is also subject to NRC regulation for cybersecurity. AEP’s enterprise-wide security program includes cyber and physical security and incorporates many of the guidelines set forth in the National Institute of Standards and Technology Cybersecurity Framework.
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The Technology Committee receives periodic updates from management regarding cybersecurity risks, the threat environment, and the status of AEP’s security programs, including significant incidents, if any. Management’s Role and Expertise Management is responsible for implementing and maintaining AEP’s cybersecurity programs.
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AEP'’s Chief Security Officer (CSO) has accountability for cyber aspects of third-party risk and data loss prevention and is also its NERC Critical Infrastructure Protection Senior Manager, who is responsible for ensuring alignment of compliance with the enterprise-wide security program. AEP’s CSO possesses extensive experience across cybersecurity, risk and data controls and infrastructure engineering.
Added
Day-to-day oversight is led by AEP’s Senior Vice President (SVP) of Enterprise Security, Resilience, and National Security Policy who reports to AEP’s Chief Executive Officer. The SVP for Enterprise Security, Resilience, and National Security Policy has expertise in electricity sector risk management, critical infrastructure protection, cybersecurity, and incident response.
Removed
AEP’s CSO was the Chief Security Officer at Bread Financial Holdings, Inc., a publicly registered financial services company, and an executive director of cyber security at JPMorgan Chase & Co. prior to joining AEP. Critical cyber assets, such as data centers, power plants, transmission operations centers and business networks are protected using multiple layers of cybersecurity controls and authentication.
Added
This individual also oversees and leads AEP’s engagements with Federal agencies on cybersecurity and physical security threat information sharing and 31 partnerships with the Department of Homeland Security, Federal Bureau of Investigation, Department of Energy, and the intelligence community.
Removed
Cyber hackers and other malicious actors have caused material disruption by successfully breaching a number of very secure facilities of entities across the spectrum of industries, including federal agencies and financial institutions.
Added
The SVP for Enterprise Security, Resilience, and National Security Policy also works closely with AEP’s Chief Information Officer, Generation, Transmission, and Distribution operations leadership, along with legal, compliance, internal audit, and business resilience to help ensure cybersecurity risks are identified, assessed, and managed across the enterprise. Management also provides relevant cybersecurity updates to the Audit Committee.
Removed
As understanding of these events develop, AEP has adopted a defense in depth approach to cybersecurity and continually assesses its cybersecurity tools and processes to determine where to strengthen its defenses. These strategies include monitoring, alerting and emergency response, forensic analysis, disaster recovery, threat sharing and criminal activity reporting.
Removed
This approach has allowed AEP to deal with cyber and related threats, intrusions and attempted breaches in real-time and to limit their impact to levels that would be expected in the ordinary course of business in the absence of such malicious activity.
Removed
Cybersecurity and the effectiveness of AEP’s cybersecurity processes are reviewed annually with the Board of Directors and at several meetings throughout the year with the Technology Committee of the Board, the principal committee that exercises oversight with respect to these matters.
Removed
AEP’s Chief Executive Officer and executive team participate in interactive threat briefings from AEP’s CSO and/or Chief Information & Technology Officer on a regular basis. AEP’s strategy and procedure for managing cyber-related risks is integrated within its enterprise risk management processes.
Removed
These procedures are designed to ensure that any material information regarding potentially relevant cyber incidents is elevated in a timely manner both to the appropriate leadership and, where applicable, to our external financial reporting and disclosure team. AEP’s enterprise-wide security program continually adjusts staff and resources in response to the evolving threat landscape.
Removed
The costs for such investments are material and have remained generally consistent over time, a pattern that is expected to continue. In addition, AEP maintains cyber liability insurance to cover certain damages caused by cyber incidents.
Removed
AEP’s CSO leads the cybersecurity and physical security teams which are responsible for the design, implementation and execution of AEP’s security risk management strategy, which includes cybersecurity. AEP’s cybersecurity team operates a 24/7 Cybersecurity Intelligence and Response Center responsible for monitoring the AEP System for cyber risks and threats.
Removed
The cybersecurity team constantly scans the AEP System for cyber risks and threats. In addition, under the direction of the CSO, the cybersecurity team actively monitors best practices, performs penetration testing, leads response exercises and internal awareness campaigns and provides training and communication across the organization.
Removed
AEP’s security awareness training is mandatory for all employees and includes regular phish email testing to train employees to identify malicious emails that could put AEP at risk. AEP also continually reviews its business continuity plan to develop an effective recovery strategy that seeks to decrease response times, limit financial impacts and maintain customer confidence during any business interruption.
Removed
AEP administers a third-party risk governance program that identifies potential risks introduced through third-party relationships, such as vendors, software and hardware manufacturers or professional service providers. As warranted, AEP obtains certain contractual security guarantees and assurances with these third-party relationships to help ensure the security and safety of its information.
Removed
The cyber security team works closely with a broad range of departments, including legal, regulatory, corporate communications, internal audit services, information technology and operational technology functions critical to the power grid. The cybersecurity team collaborates with partners from both industry and government, and routinely participates in industry-wide programs that exchange knowledge of threats with utility peers, industry and federal agencies.
Removed
AEP is an active member of a number of industry-specific threat and information sharing communities including the Department of Homeland Security’s Joint Cyber Defense Collaborative, the Electricity Information Sharing and Analysis Center and the National Defense Information Sharing and Analysis Center. AEP participates in classified briefings to maintain an awareness of current cybersecurity threats and vulnerabilities.
Removed
AEP continues to work with nonaffiliated entities to do penetration testing and to design and implement appropriate remediation strategies. There can be no assurance, however, that these efforts will be effective to prevent material interruption of services or other damages to AEP's business or operations in connection with any cyber-related incident.
Removed
See “Risk Factors - Risks Related to Market, Economic or Financial Volatility and Other Risks - Physical attacks or hostile cyber intrusions could severely impair operations, lead to the disclosure of confidential information and damage AEP’s reputation”. 35

Item 2. Properties

Properties — owned and leased real estate

15 edited+2 added−1 removed9 unchanged
Biggest changeAPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Ceredo 6 WV Natural Gas 516 2001 Dresden 3 OH Natural Gas 665 2012 Smith Mountain 5 VA Pumped Storage 585 1965 Amos 3 WV Steam - Coal 2,950 1971 Mountaineer 1 WV Steam - Coal 1,320 1980 Clinch River 2 VA Steam - Natural Gas 465 1958 Hydro (Various Plants) Various VA Hydro 158 1906-1964 Hydro (Various Plants) Various WV Hydro 53 1935-1938 Amherst NA VA Solar 5 2023 Total MWs 6,717 I&M Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Rockport (a) 2 IN Steam - Coal 1,310 1984 Cook 2 MI Steam - Nuclear 2,296 1975 Hydro (Various Plants) Various IN Hydro 7 1904-1913 Hydro (Various Plants) Various MI Hydro 13 1908-1923 Solar (Various Plants) NA IN Solar 31 2016-2021 Solar (Various Plants) NA MI Solar 5 2016 Total MWs 3,662 (a) I&M owns a 50% interest in the Rockport Plant units.
Biggest changeAPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Ceredo 6 WV Natural Gas 516 2001 Dresden 3 OH Natural Gas 665 2012 Smith Mountain 5 VA Pumped Storage 585 1965 Amos 3 WV Steam - Coal 2,950 1971 Mountaineer 1 WV Steam - Coal 1,320 1980 Clinch River 2 VA Steam - Natural Gas 465 1958 Hydro (Various Plants) Various VA Hydro 158 1906-1964 Hydro (Various Plants) Various WV Hydro 53 1935-1938 Amherst NA VA Solar 5 2023 Top Hat NA IL Wind 204 2025 Total MWs 6,921 NA Not applicable.
Figures presented reflect only the portion owned by SWEPCo. NA Not applicable. WPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Mitchell (a) 2 WV Steam - Coal 780 1971 (a) WPCo owns 50% in the Mitchell Plant units. KPCo owns the remaining 50%.
NA Not applicable. WPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Mitchell (a) 2 WV Steam - Coal 780 1971 (a) WPCo owns a 50% in the Mitchell Plant units. KPCo owns the remaining 50%. Figures presented reflect only the portion owned by WPCo.
Figures presented reflect only the portion owned by SWEPCo. The Arkansas jurisdictional portion of SWEPCo’s interest in Turk Plant is not in rate base. 37 (b) In November 2020, management announced it will cease using coal at the Welsh Plant in 2028.
Figures presented reflect only the portion owned by SWEPCo. The Arkansas jurisdictional portion of SWEPCo’s interest in Turk Plant is not in rate base. (b) In November 2020, management announced it will cease using coal at the Welsh Plant in 2028.
Unless allowed to be recovered through rates, future losses or liabilities which are not completely insured could reduce net income and impact the financial conditions of AEP and subsidiaries. For risks related to owning a nuclear generating unit, see the “Nuclear Contingencies” section of Note 6 - Commitments, Guarantees and Contingencies for additional information. 38
Unless allowed to be recovered through rates, future losses or liabilities which are not completely insured could reduce net income and impact the financial conditions of AEP and subsidiaries. For risks related to owning a nuclear generating unit, see the “Nuclear Contingencies” section of Note 6 - Commitments, Guarantees and Contingencies for additional information. 36
NA Not applicable. 36 KPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Mitchell (a) 2 WV Steam - Coal 780 1971 Big Sandy 1 KY Steam - Natural Gas 295 1963 Total MWs 1,075 (a) KPCo owns a 50% interest in the Mitchell Plant units. WPCo owns the remaining 50%.
NA Not applicable. 33 KPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Mitchell (a) 2 WV Steam - Coal 780 1971 Big Sandy 1 KY Steam - Natural Gas 295 1963 Total MWs 1,075 (a) KPCo owns a 50% interest in the Mitchell Plant units. WPCo owns the remaining 50%.
ITEM 2. PROPERTIES GENERATION FACILITIES The tables below summarize the net maximum capacity of AEP's owned generation plants as of December 31, 2024. AEP subsidiaries serve customer electricity needs from these facilities and from purchased power in the PJM and SPP markets based on demand and other economic conditions.
ITEM 2. PROPERTIES GENERATION FACILITIES The tables below summarize the net maximum capacity of AEP's owned generation plants as of December 31, 2025. AEP subsidiaries serve customer electricity needs from these facilities and from purchased power in the PJM and SPP markets based on demand and other economic conditions.
Estimated construction expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, supply chain issues, weather, legal reviews, inflation and the ability to access capital.
Estimated construction expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, supply chain issues, weather, legal reviews, technology advancements, inflation and the ability to access capital.
AEP has experienced delays and additional costs in constructing facilities as a result of proceedings conducted pursuant to such statutes and in proceedings in which AEP’s operating companies have sought to acquire rights-of-way through condemnation. These proceedings may result in additional delays and costs in future years.
AEP has experienced delays and additional costs in constructing facilities as a result of proceedings conducted pursuant to such statutes and in proceedings in which AEP’s operating companies have sought to acquire rights-of-way through condemnation.
SWEPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Mattison 4 AR Natural Gas 314 2007 Stall 3 LA Natural Gas 534 2010 Flint Creek (a) 1 AR Steam - Coal 259 1978 Turk (a) 1 AR Steam - Coal 477 2012 Welsh (b) 2 TX Steam - Coal 1,056 1977 Arsenal Hill 1 LA Steam - Natural Gas 111 1960 Knox Lee 1 TX Steam - Natural Gas 344 1950 Lieberman 3 LA Steam - Natural Gas 219 1947 Wilkes 3 TX Steam - Natural Gas 889 1964 North Central Wind Energy Facilities (c) NA OK Wind 809 2021-2022 Diversion Wind Farm NA TX Wind 201 2024 Total MWs 5,213 (a) Jointly-owned with nonaffiliated entities.
NA Not applicable. 34 SWEPCo Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Mattison 4 AR Natural Gas 314 2007 Stall 3 LA Natural Gas 535 2010 Flint Creek (a) 1 AR Steam - Coal 259 1978 Turk (a) 1 AR Steam - Coal 477 2012 Welsh (b) 2 TX Steam - Coal 1,056 1977 Arsenal Hill 1 LA Steam - Natural Gas 111 1960 Knox Lee 1 TX Steam - Natural Gas 344 1950 Lieberman 2 LA Steam - Natural Gas 219 1947 Wilkes 3 TX Steam - Natural Gas 889 1964 Diversion Wind Farm NA TX Wind 201 2024 North Central Wind Energy Facilities (c) NA OK Wind 809 2021-2022 Wagon Wheel NA OK Wind 598 2025 Total MWs 5,812 (a) Jointly-owned with nonaffiliated entities.
In this assessment process, assumptions are continually being reviewed as new information becomes available and assessments and plans are modified, as appropriate. AEP forecasts approximately $11.5 billion of construction expenditures for 2025.
In this assessment process, assumptions are being reviewed as new information becomes available and assessments and plans are modified, as appropriate. AEP forecasts approximately $12.2 billion of construction expenditures for 2026.
In December 2024, SWEPCo filed an application for a Certificate of Convenience and Necessity (CCN) with the APSC, LPSC and PUCT to convert Welsh Plant, Units 1 and 3 to natural gas in 2028 and 2027, respectively. (c) SWEPCo owns a 54.5% interest and PSO owns the remaining 45.5% interest in Sundance, Maverick and Traverse.
In December 2024, SWEPCo filed an application for a CCN with the APSC, LPSC and PUCT to convert Welsh Plant, Units 1 and 3 to natural gas in 2028 and 2027, respectively. (c) SWEPCo owns a 54.5% interest and PSO owns the remaining 45.5% interest in Sundance, Maverick and Traverse. Figures presented reflect only the portion owned by SWEPCo.
The greater portion of the transmission and distribution lines of the AEP System has been constructed over lands of private owners pursuant to easements or along public highways and streets pursuant to appropriate statutory authority.
The greater portion of the transmission and distribution lines of the AEP System has been constructed over property owned by third parties pursuant to easements or along public highways and streets pursuant to appropriate statutory authority.
Figures presented reflect only the portion owned by WPCo. TRANSMISSION AND DISTRIBUTION FACILITIES The AEP System has significant investments in transmission and distribution lines across its Vertically Integrated Utilities, Transmission and Distribution Utilities and AEP Transmission Holdco Segments. TITLE TO PROPERTY The AEP System’s generating facilities are generally located on lands owned in fee simple.
TRANSMISSION AND DISTRIBUTION FACILITIES The AEP System has significant investments in transmission and distribution lines across its Vertically Integrated Utilities, Transmission and Distribution Utilities and AEP Transmission Holdco Segments. TITLE TO PROPERTY The AEP System’s generating facilities are generally located on AEP owned property.
CONSTRUCTION PROGRAM With input from its state utility commissions, AEP subsidiaries continuously assess the adequacy of their transmission, distribution, generation and other facilities to plan and provide for the reliable supply of electric power and energy to its customers.
These proceedings may result in additional delays and costs in future years. 35 CONSTRUCTION PROGRAM With input from its state utility commissions, AEP subsidiaries regularly assess the adequacy of their transmission, distribution, generation and other facilities to plan and provide for the reliable supply of electric power and energy to its customers.
PSO Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Comanche 3 OK Natural Gas 238 1973 Northeastern, Unit 1 1 OK Natural Gas 470 1961 Riverside, Units 3 and 4 2 OK Natural Gas 160 2008 Southwestern, Units 4 and 5 2 OK Natural Gas 166 2008 Weleetka 2 OK Natural Gas 75 1975 Northeastern, Unit 3 1 OK Steam - Coal 472 1979 Northeastern, Unit 2 1 OK Steam - Natural Gas 435 1961 Riverside, Units 1 and 2 2 OK Steam - Natural Gas 879 1974 Southwestern, Units 1, 2 and 3 3 OK Steam - Natural Gas 446 1952 Tulsa 2 OK Steam - Natural Gas 318 1956 North Central Wind Energy Facilities (a) NA OK Wind 675 2021-2022 Rock Falls NA OK Wind 155 2017 Total MWs 4,489 (a) PSO owns a 45.5% interest and SWEPCo owns the remaining 54.5% interest in Sundance, Maverick and Traverse.
PSO Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Comanche 3 OK Natural Gas 228 1973 Green Country 3 OK Natural Gas 904 2002 Northeastern, Unit 1 3 OK Natural Gas 470 1961 Riverside, Units 3 and 4 2 OK Natural Gas 160 2008 Southwestern, Units 4 and 5 2 OK Natural Gas 166 2008 Weleetka 2 OK Natural Gas 90 1975 Northeastern, Unit 3 (a) 1 OK Steam - Coal 472 1979 Northeastern, Unit 2 1 OK Steam - Natural Gas 435 1961 Riverside, Units 1 and 2 2 OK Steam - Natural Gas 879 1974 Southwestern, Units 1, 2 and 3 3 OK Steam - Natural Gas 446 1952 Tulsa 2 OK Steam - Natural Gas 319 1956 North Central Wind Energy Facilities (b) NA OK Wind 675 2021-2022 Rock Falls NA OK Wind 155 2017 Flat Ridge IV NA KS Wind 135 2025 Flat Ridge V NA KS Wind 153 2025 Pixley NA KS Solar 189 2025 Total MWs 5,876 (a) Northeastern, Unit 3 operated on coal up through December 2025 and began to operate on natural gas beginning in January 2026.
Removed
Figures presented reflect only the portion owned by PSO. NA Not applicable.
Added
I&M Plant Name Units State Fuel Type Net Maximum Capacity (MWs) Year Plant or First Unit Commissioned Rockport (a) 2 IN Steam - Coal 1,310 1984 Cook 2 MI Steam - Nuclear 2,296 1975 Hydro (Various Plants) Various IN Hydro 7 1904-1913 Hydro (Various Plants) Various MI Hydro 13 1908-1923 Solar (Various Plants) NA IN Solar 31 2016-2021 Solar (Various Plants) NA MI Solar 5 2016 Total MWs 3,662 (a) I&M owns a 50% interest in the Rockport Plant units.
Added
(b) PSO owns a 45.5% interest and SWEPCo owns the remaining 54.5% interest in Sundance, Maverick and Traverse. Figures presented reflect only the portion owned by PSO.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changeThe performance graph assumes an initial investment of $100 on December 31, 2019 and that all dividends were reinvested. Source: S&P Dow Jones Indices LLC. Data as of December 31, 2024. Past performance is no guarantee of future results. Chart provided for illustrative purposes. 40
Biggest changeThe performance graph assumes an initial investment of $100 on December 31, 2020 and that all dividends were reinvested. Past performance is no guarantee of future results. Chart provided for illustrative purposes. 38
During the quarter ended December 31, 2024, neither AEP nor its publicly-traded subsidiaries purchased or issued equity securities that are registered by AEP or its publicly-traded subsidiaries pursuant to Section 12 of the Exchange Act other than in amounts that were not material as described in Note 16 referenced above.
During the quarter ended December 31, 2025, neither AEP nor its publicly-traded subsidiaries purchased equity securities that are registered by AEP or its publicly-traded subsidiaries pursuant to Section 12 of the Exchange Act other than in amounts that were not material as described in Note 16 referenced above.
MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AEP In addition to the AEP Common Stock Information section below, the remaining information required by this item is incorporated herein by reference to (i) the material under the “Dividend Policy and Restrictions” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations and (ii) Note 16 Stock-Based Compensation.
MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AEP In addition to the AEP Common Stock Information section below, the remaining information required by this item is incorporated herein by reference to (a) the material under the “Dividend Policy and Restrictions” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations and (b) Note 16 - Stock-Based Compensation.
AEP COMMON STOCK INFORMATION AEP common stock is principally traded using the trading symbol “AEP” on the NASDAQ Stock Market. As of December 31, 2024, AEP had 44,820 registered shareholders. The performance graph below compares the cumulative total return among AEP, the S&P 500 Index and the S&P 500 Utilities (Sector) Index over a five year period.
AEP COMMON STOCK INFORMATION AEP common stock is principally traded using the trading symbol “AEP” on the NASDAQ Stock Market. As of December 31, 2025, AEP had 42,604 registered shareholders. The performance graph below compares the cumulative total return among AEP, the S&P 500 Index and the S&P 500 Utilities (Sector) Index over a five year period.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

2 edited+0 added−0 removed1 unchanged
Biggest changeYear-to-year comparisons between 2023 and 2022 have been omitted from this Form 10-K but may be found in "Management's Discussion and Analysis of Financial Condition" in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2023, which specific discussion is incorporated herein by reference.
Biggest changeYear-to-year comparisons between 2024 and 2023 have been omitted from this Form 10-K but may be found in "Management's Discussion and Analysis of Financial Condition" in Part II, Item 7 of AEP’s Form 10-K for the fiscal year ended December 31, 2024. AEP Texas, AEPTCo, APCo, I&M, OPCo, PSO and SWEPCo Omitted pursuant to Instruction I(2)(a).
AEP Texas, AEPTCo, APCo, I&M, OPCo, PSO and SWEPCo Omitted pursuant to Instruction I(2)(a). Management’s narrative analysis of the results of operations and other information required by Instruction I(2)(a) is incorporated herein by reference to the material under Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s narrative analysis of the results of operations and other information required by Instruction I(2)(a) is incorporated herein by reference to the material under Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Other AEP 10-K year-over-year comparisons