Earnings Release Presentation - 3rd Quarter 2017 October 26, 2017 - AEP.com
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3rd Quarter 2017
Earnings Release Presentation
October 26, 2017
“Safe Harbor” Statement under the
Private Securities Litigation Reform Act of 1995
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant
Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes
and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking
statements are: the economic growth or contraction within and changes in market demand and demographic patterns in our service territories, inflationary or deflationary
interest rate trends, volatility in the financial markets, particularly developments affecting the availability or cost of capital to finance new capital projects and refinance
existing debt, the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and
recovery is long and the costs are material, electric load and customer growth, weather conditions, including storms and drought conditions, and our ability to recover
significant storm restoration costs, the cost of fuel and its transportation, the creditworthiness and performance of fuel suppliers and transporters and the cost of storing and
disposing of used fuel, including coal ash and spent nuclear fuel, availability of necessary generation capacity, the performance of our generation plants and the availability
of fuel, including processed nuclear fuel, parts and service from reliable vendors, our ability to recover fuel and other energy costs through regulated or competitive electric
rates, our ability to build transmission lines and facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices
and terms and to recover those costs, new legislation, litigation and government regulation, including oversight of nuclear generation, energy commodity trading and new or
heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances that could impact the continued
operation, cost recovery and/or profitability of our generation plants and related assets, evolving public perception of the risks associated with fuels used before, during and
after the generation of electricity, including nuclear fuel, a reduction in the federal statutory tax rate could result in an accelerated return of deferred federal income taxes to
customers, timing and resolution of pending and future rate cases, negotiations and other regulatory decisions, including rate or other recovery of new investments in
generation, distribution and transmission service and environmental compliance, resolution of litigation, our ability to constrain operation and maintenance costs, our ability
to develop and execute a strategy based on a view regarding prices of electricity and gas, prices and demand for power that we generate and sell at wholesale, changes in
technology, particularly with respect to energy storage and new, developing, alternative or distributed sources of generation, our ability to recover through rates any
remaining unrecovered investment in generation units that may be retired before the end of their previously projected useful lives, volatility and changes in markets for
capacity and electricity, coal and other energy-related commodities, particularly changes in the price of natural gas, changes in utility regulation and the allocation of costs
within regional transmission organizations, including ERCOT, PJM and SPP, our ability to successfully and profitably manage our competitive generation assets, including
the evaluation and execution of strategic alternatives for these assets as some of the alternatives could result in a loss, changes in the creditworthiness of the
counterparties with whom we have contractual arrangements, including participants in the energy trading market, actions of rating agencies, including changes in the
ratings of our debt, the impact of volatility in the capital markets on the value of the investments held by our pension, other postretirement benefit plans, captive insurance
entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements, accounting pronouncements periodically issued by accounting
standard-setting bodies and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security
threats and other catastrophic events.
Bette Jo Rozsa Bette Jo Rozsa Darcy Reese
Investor Managing Director Managing Director Director
Relations Investor Relations Investor Relations Investor Relations
614-716-2840 614-716-2840 614-716-2614
Contacts
bjrozsa@aep.com bjrozsa@aep.com dlreese@aep.com
2
Non-GAAP Financial Measures
AEP reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). AEP supplements the reporting of financial
information determined in accordance with GAAP with certain non-GAAP financial measures, including operating earnings (non-GAAP) and FFO to Total Debt. Operating
earnings (non-GAAP) excludes certain gains and losses and other specified items, including mark-to-market adjustments from commodity hedging activities and other
items as set forth in the reconciliation in the Appendix. FFO to Total Debt is adjusted for the effects of securitization, spent nuclear fuel trust, capital and operating leases,
pension, capitalized interest and changes in working capital. Operating earnings could differ from GAAP earnings for matters such as impairments, divestitures, or
changes in accounting principles. AEP management is not able to forecast if any of these items will occur or any amounts that may be reported for future periods.
Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance. Reflecting special items recorded through the third quarter of 2017, the
estimated earnings per share on a GAAP basis would be $3.80 to $3.93 per share.
This information is intended to enhance an investor’s overall understanding of period over period financial results and provide an indication of AEP’s baseline operating
performance by excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is
among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and
forecasting of future periods.
These non-GAAP financial measures are not a presentation defined under GAAP and may not be comparable to other companies’ presentations. AEP has provided these
non-GAAP financial measures as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. These
non-GAAP measures should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP measures provided in the materials
presented. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are provided in the appendices and supplemental schedules to this
presentation.
Investor Bette Jo Rozsa Brad Funk
Relations Managing Director Director
Investor Relations Investor Relations
Contacts 614-716-2840 614-716-3162
bjrozsa@aep.com bmfunk@aep.com
3
3rd Quarter 2017 Highlights
3rd Quarter 2017 Company Update
Earnings Update
Delivered GAAP earnings of $1.11 per share and operating
earnings of $1.10 per share for the third quarter 2017
Delivered GAAP earnings of $3.07 per share and operating
earnings of $2.82 per share for YTD September 2017
Narrowing 2017 operating earnings guidance range to
$3.55 - $3.68 per share
Board declared dividend of $0.62/share, a 5.1% increase
YTD 2017 Regulatory Update
Wind Catcher Energy Connection
Rate Case update: I&M, KPCo, PSO, SWEPCO
Ohio ESP settlement
Ohio legislative update
Refer to appendix for reconciliation between GAAP and Operating EPS 4
Regulated Returns
Twelve Months Ended 9/30/2017 Earned ROE’s (non-GAAP Operating Earnings)
AEP OH Trans
12.6% 12.7%
AEP OH * AEP TX *
11.1% 10.3%
APCo I&M*
8.4% 8.4%
PSO* SWEPCO*
6.1% 5.9%
KPCo*
4.5%
Regulated Operations ROE of 9.2%
as of September 30, 2017
*AEP Ohio adjusted for SEET items. Base rate cases pending at other operating companies.
Sphere size based on each company’s relative equity balance 5
3rd Quarter Operating Earnings Segment Detail
$0.03 ($0.07)
Weather $
$0.03
(0.11)
Investment Gain $ 0.02
Rate True-Ups $ (0.01) Weather $ (0.01) Sold Assets $ (0.13) O&M
Rate Changes $ 0.02 $ 0.01
Normal Load $ 0.02 Held Assets $ 0.02 Other
Normal Load $ (0.01) $ 0.01
O&M $ 0.02 Renewables $ 0.01
Depreciation $ (0.02) Depreciation $ (0.01)
Other $ 0.01
Eff Income Tax $ (0.01) Eff Income Tax $ (0.02)
Other $ (0.02)
2016 Vertically Integrated Transmission & AEP Transmission Generation and Corporate and 2017
Actual Utilities Distribution Utilities Holdco Marketing Other Actual
2017 Actual EPS $0.58 $0.29 $0.15 $0.07 $0.01 $1.10
Refer to appendix for additional explanation of variances by segment
6
2017 YTD Operating Earnings Segment Detail
$0.03 ($0.07)
Weather $ $0.03
(0.22) FERC 205 $ 0.09 Investment Gain $ 0.02
Rate Changes $ 0.07 Investments 0.06
Rate True-Ups $ (0.09) Rate Changes $ 0.10 JV's $ (0.01) Sold Assets $ (0.29)
Normal Load $ (0.01) Reg Prov - OH $ (0.03) Held Assets $ 0.08
Depreciation $ (0.05) Normal Load $ (0.04) Renewables $ 0.02
AFUDC $ (0.03) ERCOT Trans Rev $ 0.04 Other $ 0.04
Eff Income Tax $ (0.07) O&M $ (0.02)
Other $ (0.03) Depreciation $ (0.03)
Eff Income Tax $ (0.03)
Other $ (0.02)
2016 Vertically Integrated Transmission & AEP Transmission Generation and Corporate and 2017
Actual Utilities Distribution Utilities Holdco Marketing Other Actual
2017 Actual EPS $1.27 $0.76 $0.56 $0.25 ($0.02) $2.82
Refer to appendix for additional explanation of variances by segment
7
Weather Normalized Billed Retail Load Trends
Note: Load figures are provided on a billed basis. Charts reflect connected load and exclude firm wholesale
and Buckeye Power backup load. See Appendix for load figures on a billed plus accrued basis.
8
Industrial Growth Drivers Source: Moody’s analytics and company records 9
Economic Data – AEP Service Territory Source – Moody’s Analytics 10
Capitalization & Liquidity
Total Debt / Total Capitalization Credit Statistics
Actual Target
FFO to Total Debt 17.4% 15%-20%
Represents the trailing 12 months as of 9/30/2017
See Appendix for reconciliation to GAAP
Liquidity Summary
(unaudited) 9/30/2017 Actual
($ in millions) Amount Maturity
Revolving Credit Facility $3,000 Jun-21
Plus
Qualified Pension Funding
Cash & Cash Equivalents 344
Less
Commercial Paper Outstanding (295)
Letters of Credit Issued -
Net Available Liquidity $3,049
Strong balance sheet, credit metrics, and liquidity 11Summary
Narrowed 2017 operating earnings guidance range to $3.55 - $3.68 per share
Primary driver of fourth quarter 2017 will be significantly favorable year over
year O&M
Reaffirming 2018 operating earnings guidance range of $3.75 - $3.95 per
share and 5% - 7% growth rate
EEI expectations: detail behind 2018 guidance, 2018 financing detail, cap-ex
and cash flow detail
12Appendix
133rd Quarter Reconciliation of GAAP to Operating Earnings
$ millions Earnings Per Share
Q3-16 Q3-17 Change Q3-16 Q3-17 Change
Reported GAAP Earnings (Loss) ($766) $545 $1,311 ($1.56) $1.11 $2.67
Non Operating Items:
Mark-to-Market Impact of Commodity
2 - (2) - - -
Hedging Activities (a)
Disposition of Commercial Barge
(17) - 17 (0.03) - 0.03
Operations (b)
Capital Loss Valuation Adj (c) (44) - 44 (0.09) - 0.09
Impairment of Certain Merchant
1,465 (2) (1,467) 2.98 (0.01) (2.99)
Generation Assets (d)
AEP Operating Earnings $640 $543 ($97) $1.30 $1.10 ($0.20)
(a) Items recorded in Generation and Marketing segment
(b) Items recorded in Corporate and Other segment
(c) Items recorded in Generation and Marketing segment and Corporate and Other segment
(d) Items recorded in Generation and Marketing segment and Vertically Integrated Utilities segment
Weighted average no. of shares outstanding: 492M Q3-16 and 492M Q3-17 14YTD September Reconciliation of GAAP to Operating Earnings
$ millions Earnings Per Share
YTD-16 YTD-17 Change YTD-16 YTD-17 Change
Reported GAAP Earnings (Loss) $238 $1,512 $1,274 $0.48 $3.07 $2.59
Non Operating Items:
Mark-to-Market Impact of Commodity
(2) 3 5 - 0.01 0.01
Hedging Activities (a)
Gain from Competitive Generation
- (129) (129) - (0.26) (0.26)
Asset Sale (a)
Disposition of Commercial Barge
5 - (5) 0.01 - (0.01)
Operations (b)
Federal Tax Audit Settlement (b) (55) - 55 (0.11) - 0.11
Capital Loss Valuation Adj (c) (44) - 44 (0.09) - 0.09
Impairment of Certain Merchant
1,465 2 (1,463) 2.98 - (2.98)
Generation Assets (d)
AEP Operating Earnings $1,607 $1,388 ($219) $3.27 $2.82 ($0.45)
(a) Items recorded in Generation and Marketing segment
(b) Items recorded in Corporate and Other segment
(c) Items recorded in Generation and Marketing segment and Corporate and Other segment
(d) Items recorded in Generation and Marketing segment and Vertically Integrated Utilities segment
Weighted average no. of shares outstanding: 491M YTD-16 and 492M YTD-17 15Vertically Integrated Utilities
3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16
Q3-16 Q3-17
Rate changes: $18M of rate decreases at PSO in
$ millions (except EPS)
addition to $5M of wholesale rate decreases
Operating Revenues $2,556 $2,482 driven by formula rate true-ups partially offset
Operating Expenses: by $16M of rate increases at SWEPCO, I&M and
Kingsport
Energy Costs (858) (869)
Operations & Maintenance (673) (659) Weather: $80M unfavorable vs. prior year;
Depreciation & Amortization (278) (289)
$23M unfavorable vs. normal
Taxes Other Than Income Taxes (99) (105) Normalized Retail load: $11M favorable vs.
Operating Income 648 560 prior year primarily due to favorable retail price
variances partially offset by lower east
Net Interest/AFUDC (125) (124)
residential sales
Income Taxes (176) (139)
Other 2 (11) O&M: $16M favorable (net of offsets) vs. prior
year primarily due to decreased employee-
Operating Earnings $349 $286
related expenses and decreased transmission
Proforma Adjustments, Net of Tax (7) - services
GAAP Earnings $342 $286
Income Taxes: effective tax rate of 32.7% Q3-17
EPS from Operating Earnings $0.71 $0.58 vs. 33.3% Q3-16
See slide 14 for items excluded from Net Income to reconcile to Operating Earnings
16Vertically Integrated Utilities
YTD Summary Key Drivers: YTD-17 vs. YTD-16
YTD-16 YTD-17
Rate changes: $65M of rate increases across
$ millions (except EPS)
multiple jurisdictions offset by $14M of rate
Operating Revenues $6,928 $6,893 decreases at PSO, $42M of wholesale rate
Operating Expenses: decreases driven by formula rate true-ups and a
prior year recognition of deferred WV rate billings
Energy Costs (2,300) (2,369)
of $25M
Operations & Maintenance (1,927) (2,024)
Depreciation & Amortization (815) (845) Weather: $164M unfavorable vs. prior year;
$117M unfavorable vs. normal
Taxes Other Than Income Taxes (295) (306)
Operating Income 1,591 1,349 Normalized Retail load: $5M unfavorable vs.
prior year primarily due to lower east residential,
Net Interest/AFUDC (354) (370)
industrial and commercial sales partially offset by
Income Taxes (402) (335) favorable retail price variances
Other 1 (17)
O&M: $6M favorable (net of offsets) vs. prior
Operating Earnings $836 $627
year primarily due to decreased employee-
Proforma Adjustments, Net of Tax (7) - related expenses partially offset by increased
GAAP Earnings $829 $627 forestry expenses
EPS from Operating Earnings $1.70 $1.27 Income Taxes: effective tax rate of 35.0% YTD-17
See slide 15 for items excluded from Net Income to reconcile to Operating Earnings vs. 32.3% YTD-16
17Transmission & Distribution Utilities
3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16
Q3-16 Q3-17
Rate changes: $16M favorable primarily from
$ millions (except EPS) the Texas Distribution Cost Recovery Factor and
Operating Revenues $1,276 $1,173 the Ohio DIR
Operating Expenses:
Weather: $7M unfavorable vs. prior year; $1M
Energy Costs (254) (216) favorable vs. normal
Amortization of Generation Deferrals (66) (59)
Normalized Retail Load: $7M unfavorable
Operations & Maintenance (358) (303) primarily due to lower residential sales
Depreciation & Amortization (181) (182)
Income Taxes: effective tax rate of 35.0% Q3-17
Taxes Other Than Income Taxes (132) (134) vs. 31.0% Q3-16
Operating Income 285 279
Net Interest/AFUDC (59) (58)
Income Taxes (70) (77)
Operating & GAAP Earnings $156 $144
EPS from Operating Earnings $0.32 $0.29
18Transmission & Distribution Utilities
YTD Summary Key Drivers: YTD-17 vs. YTD-16
YTD-16 YTD-17 Rate changes: $79M primarily from the Texas
$ millions (except EPS) Distribution Cost Recovery Factor and the Ohio
DIR and RSR
Operating Revenues $3,468 $3,313
Operating Expenses: OH Regulatory Provision: $21M unfavorable due
Energy Costs (662) (626) to prior year reversal of provision
Amortization of Generation Deferrals (173) (173) Normalized Retail Load: $30M unfavorable
Operations & Maintenance (1,008) (883) primarily due to unfavorable prices and lower
residential sales
Depreciation & Amortization (505) (502)
Taxes Other Than Income Taxes (373) (387) ERCOT Transmission Revenue: $27M favorable
due to recovery of increased transmission
Operating Income 747 742
investment
Net Interest/AFUDC (177) (168)
Income Taxes (182) (200) O&M: $16M unfavorable (net of offsets)
primarily due to increased transmission services
Operating & GAAP Earnings $388 $374 and forestry expenses partially offset by
EPS from Operating Earnings $0.79 $0.76 decreased employee-related expenses
Income Taxes: effective tax rate of 34.9% YTD-17
vs. 31.9% YTD-16
19AEP Transmission Holdco
3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16
Q3-16 Q3-17
$21M favorable Operating Income primarily
$ millions (except EPS) due to increased revenues and expenses
Operating Revenues $132 $179 driven by increased capital investment in the
Operating Expenses: wholly owned Transcos
Operations & Maintenance (12) (23)
Depreciation & Amortization (17) (26)
Taxes Other Than Income Taxes (23) (29)
Operating Income 80 101
Net Interest/AFUDC 1 (6)
Income Taxes (35) (39)
Equity Earnings 23 21
Other - (1)
Operating & GAAP Earnings $69 $76
EPS from Operating Earnings $0.14 $0.15
20AEP Transmission Holdco
YTD Summary Key Drivers: YTD-17 vs. YTD-16
YTD-16 YTD-17
$132M favorable Operating Income primarily
$ millions (except EPS) due to the impact of the 205/206 filings and
Operating Revenues $383 $582 also due to increased revenues and expenses
Operating Expenses: driven by increased capital investment in the
wholly owned Transcos
Operations & Maintenance (33) (54)
Depreciation & Amortization (48) (75)
Taxes Other Than Income Taxes (66) (85)
Operating Income 236 368
Net Interest/AFUDC 4 (16)
Income Taxes (103) (142)
Equity Earnings 73 69
Other (2) (3)
Operating & GAAP Earnings $208 $276
EPS from Operating Earnings $0.42 $0.56
21Generation & Marketing
3rd Quarter Summary Key Drivers: Q3-17 vs. Q3-16
Q3-16 Q3-17
$ millions (except EPS)
Generation decreased 8,843 GWh (78%) Q3-17
vs. Q3-16 primarily due to sale of plants in
Operating Revenues $863 $466 January
Operating Expenses:
Energy Costs (567) (355) AEP Dayton ATC liquidations down 4%:
$29.39/MWh in Q3-17 vs. $30.56/MWh in Q3-16
Operations & Maintenance (96) (57)
Depreciation & Amortization (51) (6) Depreciation & Amortization: $45M favorable
Taxes Other Than Income Taxes (9) (3) vs. prior year primarily due to decreased
Operating Income 140 45
depreciation resulting from the Q3-16 asset
impairment and plants being sold
Net Interest/AFUDC (9) (1)
Income Taxes (50) (12) Income Taxes: effective tax rate of 26.7% Q3-17
Operating Earnings 81 32 vs. 38.2% Q3-16
Proforma Adjustments, Net of Tax (1,450) 2
GAAP Earnings ($1,369) $34
EPS from Operating Earnings $0.16 $0.07
See slide 14 for items excluded from Net Income to reconcile to Operating Earnings
22Generation & Marketing
YTD Summary Key Drivers: YTD-17 vs. YTD-16
YTD-16 YTD-17
Generation decreased 19,969 GWh (68%) YTD-
$ millions (except EPS) 17 vs. YTD-16 primarily due to sale of plants in
Operating Revenues $2,289 $1,472 January
Operating Expenses:
AEP Dayton ATC liquidations up 6%:
Energy Costs (1,491) (1,063)
$28.88/MWh in YTD-17 vs. $27.35/MWh in YTD-
Operations & Maintenance (290) (211) 16
Depreciation & Amortization (150) (18)
Depreciation & Amortization: $132M favorable
Taxes Other Than Income Taxes (29) (9)
vs. prior year primarily due to decreased
Operating Income 329 171 depreciation resulting from the Q3-16 asset
Net Interest/AFUDC (26) (7) impairment and plants being sold
Income Taxes (106) (42)
Income Taxes: effective tax rate of 25.7% YTD-17
Operating Earnings 197 122
vs. 34.8% YTD-16. Current year reflects positive
Proforma Adjustments, Net of Tax (1,446) 124 impact of solar investment tax credits being
GAAP Earnings ($1,249) $246 recognized on an amortized basis
EPS from Operating Earnings $0.40 $0.25
See slide 15 for items excluded from Net Income to reconcile to Operating Earnings
233rd Quarter Retail Rate Performance
Vertically Integrated Utilities Transmission & Distribution Utilities
Rate Changes*, net of Rate Changes, net of
offsets (in millions) offsets (in millions)
Q3-17 vs. Q3-16 Q3-17 vs. Q3-16
APCo/WPCo - AEP Ohio $2
I&M ($2)
AEP Texas $14
KPCo -
TOTAL $16
PSO ($18)
SWEPCO $11
Impact on EPS $0.02
Kingsport $2
TOTAL ($7)
Impact on EPS $0.01
* Includes rate true-ups.
24YTD Retail Rate Performance
Vertically Integrated Utilities Transmission & Distribution Utilities
Rate Changes*, net of Rate Changes, net of
offsets (in millions) offsets (in millions)
YTD-17 vs. YTD-16 YTD-17 vs. YTD-16
APCo/WPCo ($8) AEP Ohio $39
I&M ($22)
AEP Texas $40
KPCo $4
TOTAL $79
PSO ($14)
SWEPCO $18
Impact on EPS $0.10
Kingsport $6
TOTAL ($16)
Impact on EPS $0.02
* Includes rate true-ups.
253rd Quarter Retail Load Performance
Vertically Integrated Utilities Transmission & Distribution Utilities
Retail Load* Retail Load*
(weather (weather
normalized) normalized)
Q3-17 vs. Q3-16 Q3-17 vs. Q3-16
APCo/WPCo 0.5% AEP Ohio -1.2%
I&M -1.4% AEP Texas -0.6%
KPCo -0.1% TOTAL -0.9%
PSO -0.7%
SWEPCO 2.5% Impact on $0.01
EPS**
Kingsport -1.9%
TOTAL 0.2%
Impact on
$0.02
EPS**
* Includes load on a billed basis only. Excludes Firm Wholesale Load and accrued sales.
** Includes EPS impact of accrued revenues.
26YTD Retail Load Performance
Vertically Integrated Utilities Transmission & Distribution Utilities
Retail Load* Retail Load*
(weather (weather
normalized) normalized)
YTD-17 vs. YTD-16 YTD-17 vs. YTD-16
APCo/WPCo -0.8% AEP Ohio -0.1%
I&M -1.2% AEP Texas 0.8%
KPCo -1.8%
TOTAL 0.3%
PSO 0.4%
SWEPCO 0.4% Impact on $0.04
EPS**
Kingsport -1.9%
TOTAL -0.5%
Impact on $0.01
EPS** * Includes load on a billed basis only. Excludes Firm Wholesale Load and accrued sales.
** Includes EPS impact of accrued revenues.
27Normalized Retail Load Trends (Billed & Accrued)
Note: Load figures are provided on a billed and accrued basis. Charts reflect
connected load and exclude firm wholesale and Buckeye Power backup load.
283rd Quarter Weather Impact
Vertically Integrated Utilities Transmission & Distribution Utilities
Weather Impact Weather Impact
(in millions) (in millions)
Q3-17 vs. Q3-17 vs. Q3-17 vs. Q3-17 vs.
Q3-16 Normal Q3-16 Normal
APCo/WPCo ($25) - AEP Ohio - -
I&M ($18) ($6) AEP Texas ($7) $1
KPCo ($7) ($2)
TOTAL ($7) $1
PSO ($11) ($4)
SWEPCO ($18) ($11) Impact on
$0.01 -
EPS
Kingsport ($1) -
TOTAL ($80) ($23)
Impact on $0.11 $0.03
EPS
29YTD Weather Impact
Vertically Integrated Utilities Transmission & Distribution Utilities
Weather Impact Weather Impact
(in millions) (in millions)
Q3-17 vs. Q3-17 vs. Q3-17 vs. Q3-17 vs.
Q3-16 Normal Q3-16 Normal
APCo/WPCo ($72) ($44) AEP Ohio - -
I&M ($29) ($22) AEP Texas ($2) $1
KPCo ($17) ($12)
TOTAL ($2) $1
PSO ($15) ($10)
SWEPCO ($29) ($30) Impact on
- -
EPS
Kingsport ($2) $1
TOTAL ($164) ($117)
Impact on $0.22 $0.16
EPS
30Weather Impact 2017 vs 2016
For the quarter, weather was unfavorable to normal by $22M which is $87M worse than last year. Year to date the impact of weather is 31
unfavorable to normal by $116M which is approximately $166M worse than last year.Wind Catcher Procedural Schedules
2,000 MW wind farm and dedicated ~350-mile 765kV gen-tie line
~$4.5 billion: $2.9B-Wind; $1.6B gen-tie
SWEPCO (70%) & PSO (30%)
Target Completion: Q4 2020
Total Customer Savings net of costs (over 25-years):
$7.6B (including PTC); $2.5 billion over first 10-years
SWEPCO – Arkansas
SWEPCO – Texas Staff /Intervenor Direct Testimony 12/05/2017
SWEPCO rebuttal 01/09/2018
Intervenor Testimony 12/04/2017
Staff and Intervenor Surrebuttal 01/30/2018
Staff Testimony 12/11/2017
SWEPCO Sur-Surrebuttal 02/06/2018
Rebuttal/Cross Rebuttal 01/04/2018
Settlement deadline 02/20/2018
Hearing begins 01/16/2018 Hearing begins 03/01/2018
PSO – Oklahoma
Intervenor/ Staff testimony 12/04/2017 SWEPCO – Louisiana
Rebuttal testimony 12/22/2017 Intervenor Testimony 01/22/2018
Hearing begins 01/08/2018 SWEPCO rebuttal testimony 02/06/2018
Pre-hearing Briefs 02/16/2018
Note: FERC filing with respect to wholesale customers: 4Q 2017 Hearing begins 02/22/2018
*Oklahoma has a 240-day statutory timeline for issuing an order,
bringing the requested approval date to March 31, 2018
32
Requesting State Approvals by April 30, 2018*Pending Base Rate Cases Summary
I&M – Indiana PSO – Oklahoma
Requested Increase: $263M, ($89M increased D&A) Requested Increase: $156M
Requested ROE: 10.6% Requested ROE: 10.0%
Key dates: Key dates:
OUCC/Intervenors 11/07/2017 Hearing 10/30/2017
I&M Rebuttal 12/06/2017 ALJ report 12/11/2017
Evidentiary hearing 01/16-29/2018 Interim rates 01/13/2018
Expected order 07/01/2018
I&M – Michigan SWEPCO – Texas
Requested Increase: $51.7M, ($23M increased D&A) Requested Increase: $69M
Requested ROE: 10.6% Requested ROE: 10.0%
Key dates: Status: Waiting on order; will be
Rebuttal Testimony 10/30/2017 retroactive to May 2017
Hearing 11/15-22/2017
Initial Briefs 12/18/2017
Reply Briefs 01/04/2018
Proposal for Decision (PFD) 02/09/2018
Expected order 04/12/2018
KYP – Kentucky
Requested Increase: $63.3M
Requested ROE: 10.31%
Key dates:
KY Rebuttal Testimony 11/03/2017
Hearing 12/06/2017
Expected order 01/18/2018
33GAAP to Non-GAAP Reconciliations & Ratios
Adjusted FFO Calculation Adjusted Total Debt Calculation
12 Months As of
Ended 9/30/17 9/30/17
$ millions $ millions
Cash Flow From Operations $4,229 GAAP Total Debt (incl. current maturities) $21,781
Adjustments: Less:
Changes in Working Capital (281) Securitization Bonds (1,458)
Capitalized Interest (45) Spent Nuclear Fuel Trust (268)
Securitization Amortization (293) Add:
Lease Payments 161
Capital Lease Obligations 300
Adjusted Funds from Operations (FFO) $3,771
Pension 259
Off-balance Sheet Leases 1,038
Adjusted Total Debt (Non-GAAP) $21,652
Adjusted Funds from Operations (FFO) $3,771
FFO to Total Debt Ratio Adjusted Total Debt (Non-GAAP) = $21,652 = 17.4%
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