SIGNIFICANT ACCOUNTING MATTERS

3 Months Ended

Mar. 31, 2026

The disclosures in this note apply to all Registrants unless indicated otherwise.

General

The unaudited condensed financial statements and footnotes were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements.

In the opinion of management, the unaudited condensed interim financial statements reflect all normal and recurring accruals and adjustments necessary for a fair statement of the net income, financial position and cash flows for the interim periods for each Registrant. Net income for the three months ended March 31, 2026 is not necessarily indicative of results that may be expected for the year ending December 31, 2026. The condensed financial statements are unaudited and should be read in conjunction with the audited 2025 financial statements and notes thereto, which are included in the 2025 Annual Reports.

Change in Presentation

In 2025, the Company changed its rounding presentation in the Registrant’s financial statements and accompanying tabular footnote disclosures to the nearest whole number in millions, except per share data. The change had no material impact on previously reported financial information, however, certain amounts reported for prior periods may differ by insignificant amounts due to the rounding presentation. In addition, historical percentages and per share amounts presented may not recalculate due to rounding. This change does not impact the comparability of the Registrant’s financial statements and related disclosures.

Earnings Per Share (EPS) (Applies to AEP)

Basic EPS is calculated by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted-average outstanding common shares, assuming conversion of all potentially dilutive securities. Dilutive securities are primarily related to forward sale of equity agreements and restricted stock units. See Note 12 - Financing Activities for more information regarding the forward sale of equity agreements.

The following table presents AEP’s basic and diluted EPS calculations included on the statements of income:


	Three Months Ended March 31,
	2026				2025
	(in millions, except per share data)
			$/share				$/share


Earnings Attributable to AEP Common Shareholders	$	874			$	800

Weighted-Average Number of Basic AEP Common Shares Outstanding	542.1		$	1.61	533.4		$	1.50
Weighted-Average Dilutive Effect	5.0		(0.01)		1.3		—
Weighted-Average Number of Diluted AEP Common Shares Outstanding	547.1		$	1.60	534.7		$	1.50

There were no antidilutive shares outstanding as of March 31, 2026 and 2025.

Restricted Cash (Applies to AEP, AEP Texas, APCo and SWEPCo)

Restricted Cash primarily includes funds held by trustees for the payment of securitization bonds.

Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following tables provide a reconciliation of Cash, Cash Equivalents and Restricted Cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows:


	March 31, 2026
	AEP		AEP Texas		APCo		SWEPCo
	(in millions)
Cash and Cash Equivalents	$	306	$	—	$	4	$	2
Restricted Cash	33		6		12		7
Total Cash, Cash Equivalents and Restricted Cash	$	339	$	6	$	16	$	9


	December 31, 2025
	AEP		AEP Texas		APCo		SWEPCo
	(in millions)
Cash and Cash Equivalents	$	197	$	—	$	5	$	2
Restricted Cash	71		14		18		15
Total Cash, Cash Equivalents and Restricted Cash	$	268	$	14	$	23	$	17

Supplementary Cash Flow Information (Applies to AEP)


	Three Months Ended March 31,
Cash Flow Information	2026		2025
	(in millions)
Cash Paid for:
Interest, Net of Capitalized Amounts	$	450	$	350


Noncash Investing and Financing Activities:
Acquisitions Under Finance Leases	24		8
Construction Expenditures Included in Current Liabilities as of March 31,	1,434		1,041
Contribution in Aid of Construction Advances in Current Assets as of March 31,	61		—


Acquisition of Nuclear Fuel Included in Current Liabilities as of March 31,	9		—