AES Ohio ESP Appeal - From November 1, 2017 through December 18, 2019, AES Ohio operated pursuant to an approved ESP plan, which was initially approved on October 20, 2017 (“ESP 3”). On December 18, 2019, the PUCO approved AES Ohio's Notice of Withdrawal of ESP 3 and reversion to its prior rate plan (“ESP 1”). Among other items, the PUCO Order approving the ESP 1 rate plan included reinstating the non-bypassable RSC Rider, which provided annual revenue of approximately $79.0 million. The OCC has appealed to the Ohio Supreme Court the PUCO’s decision approving the reversion to ESP 1 as well as argued for a refund of the RSC revenue dating back to August 2021. Oral arguments regarding this appeal were held on April 22, 2025, and a court decision is pending.

Smart Grid Comprehensive Settlement - On October 23, 2020, AES Ohio entered into a Stipulation and Recommendation with the staff of the PUCO, various customers and organizations representing customers of AES Ohio and certain other parties with respect to, among other matters, AES Ohio's applications for (i) approval of AES

Ohio's plan to modernize its distribution grid (“Smart Grid Phase 1”), (ii) findings that AES Ohio passed the SEET for 2018 and 2019, and (iii) findings that AES Ohio's ESP 1 satisfies the SEET and the more favorable in the aggregate (“MFA”) regulatory test. On June 16, 2021, the PUCO issued their opinion and order accepting the stipulation as filed. The OCC appealed the final PUCO order with respect to the 2018 and 2019 SEET to the Ohio Supreme Court on December 6, 2021. Oral arguments regarding this appeal were held on April 2, 2025. The Ohio Supreme Court reversed the PUCO's opinion and order with respect to the methodology used by the PUCO to support its findings related to the 2018 and 2019 SEET, and remanded the case to the PUCO to conduct further analysis of the SEET for those years. In the proceeding on remand, AES Ohio filed testimony proposing a refund of $1.6 million based on methodologies sponsored by its external financial consultant. The PUCO held an evidentiary hearing on this issue on October 28 and 29, 2025, and a PUCO decision is pending.

On April 10, 2023, AES Ohio entered into a Stipulation and Recommendation with the PUCO Staff and seventeen parties (the “ESP 4 Settlement”) with respect to AES Ohio’s ESP 4 application, and, on August 9, 2023, the PUCO issued their opinion and order accepting the ESP 4 Settlement as filed. AES Ohio is currently operating under this ESP 4 until its expiration, which was extended to May 31, 2027 based on House Bill 15, unless superseded by a Commission-approved Three-Year Rate Plan and MRO.

2024 Distribution Rate Case - On November 29, 2024, AES Ohio filed a new distribution rate case with the PUCO. The investments reflected in this distribution rate case include investments to enhance the safety, reliability, and resilience of the distribution system. The application is based on a date certain of September 30, 2024 and a test period of June 1, 2024 - May 31, 2025.

On June 27, 2025, the PUCO Staff submitted their Report and Recommendations. On August 13, 2025, AES Ohio entered into an unopposed Stipulation and Recommendation (the “2024 DRC Settlement”) with various intervening parties and the Staff of the PUCO and on November 5, 2025 the PUCO issued their opinion and order accepting the 2024 DRC Settlement as filed. Updated customer rates and charges became effective on November 6, 2025. The 2024 DRC Settlement provides for updated base rates for electric distribution service customers in AES Ohio's service territory and, among other matters, includes:

Ohio Energy Legislation and Three-Year Rate Plan - On April 30, 2025, the Ohio legislature passed new energy legislation (“House Bill 15”) that was signed by the Governor and became effective August 14, 2025. The legislation allows Ohio’s electric utilities to file three-year forecasted base distribution rate cases, which would replace ESPs and associated recovery riders. AES Ohio currently anticipates that remaining recovery rider balances would be included in future base rates. Among other provisions, the legislation eliminated as of its effective date, the LGR, which previously allowed for recovery of net OVEC costs and revenues. Changes to the regulatory framework from this legislation, including the recovery of future net OVEC costs and revenues or remaining recovery rider balances, could be material to our results of operations, financial condition and cash flows.

To comply with House Bill 15, AES Ohio filed an application with the PUCO on November 10, 2025 to establish a Three-Year Rate Plan. This plan describes the investments necessary to strengthen and modernize AES Ohio's infrastructure and expand support for its customers. To enable these ongoing investments, the application also proposes rates for future electric distribution service in 2027, 2028, and 2029. The PUCO has set the evidentiary hearing to begin August 4, 2026, and a Commission Order is anticipated by the end of 2026.

As a result of the TCJA and the resulting decrease of the federal corporate income tax rate, AES Ohio established a Tax Savings Credit Rider (“TSCR”) for the purpose of returning certain benefits of the TCJA to customers, which was approved by the PUCO in 2018 as part of a stipulation adopted by the PUCO in AES Ohio’s 2015 distribution rate case. In November 2024, AES Ohio filed an application to update the TSCR to address an inadvertent normalization violation identified by the Company. On July 9, 2025, the PUCO approved AES Ohio’s application to update its TSCR to correct the inadvertent normalization violation through collection of $13.6 million from customers over twelve months, which became effective in August 2025.

On March 3, 2020, AES Ohio filed an application before the FERC seeking to change its stated transmission rates to formula transmission rates that would be updated each calendar year. An uncontested settlement was filed December 10, 2020 and approved April 15, 2021. Among other things, the settlement established new depreciation rates for AES Ohio’s transmission assets, an authorized return on equity of 9.85%, and started an amortization process to return excess deferred taxes created by the TCJA. Pursuant to the approved mechanisms and formula, transmission rates are adjusted each calendar year to reflect projected costs, adjusted to a true-up of actual revenue and costs incurred in the prior year.

Regulatory assets and liabilities represent deferred costs or credits that have been included as allowable costs or credits for ratemaking purposes. AES Ohio has recorded regulatory assets or liabilities relating to certain costs or credits as authorized by the PUCO or established regulatory practices in accordance with ASC 980. See Note 1. Overview and Summary of Significant Accounting Policies for accounting policies regarding Regulatory Assets and Liabilities.


	Type of Recovery	Recovery Period	December 31,
$ in millions			2025		2024
Regulatory assets, current:
Undercollections to be collected through rate riders	A/B	2026	$	52.2	$	63.4
Costs being recovered through basic rates and charges	B	2026	7.2		4.8
Transmission formula rate debits	A	2026	1.7		13.8
Total regulatory assets, current			61.1		82.0

Regulatory assets, non-current:
Pension benefits	A	Ongoing	49.8		58.8
Undercollections to be collected through rate riders	A/B/C	Various	60.4		65.9
Costs being recovered through basic rates and charges	B	2030	17.0		13.6
Unamortized loss on reacquired debt	B	Ongoing	—		0.5
Transmission formula rate debits	A	2027	10.2		1.2
Total regulatory assets, non-current			137.4		140.0

Total regulatory assets			$	198.5	$	222.0

Regulatory liabilities, current:
Overcollection and other credits being passed:
to customers through rate riders	A	2026	0.2		9.3
to customers through transmission rates	A	2026	1.6		1.0
Total regulatory liabilities, current			1.8		10.3

Regulatory liabilities, non-current:
ARO and accrued asset removal costs		Not Applicable	139.9		131.0
Deferred income taxes payable to customers through rates		Ongoing	44.4		35.0
Overcollection and other credits being passed:
to customers through rate riders	B	2027	2.3		—
to customers through transmission rates	A	2026	—		1.5
Other non-current regulatory liabilities	B/C	Ongoing	2.9		1.9
Total regulatory liabilities, non-current			189.5		169.4

Total regulatory liabilities			$	191.3	$	179.7

Current undercollections to be collected through rate riders include: (i) the TCJA regulatory asset, (ii) the TCRR, (iii) the SCRR, (iv) the SOR, (v) the IIR, (vi) the RCR, (vii) the PRO, (viii) the DIR, (ix) the LGR, and (x) the EER. Current regulatory assets also include the current portion of certain deferred costs to be collected through base rates, which include: (i) vegetation management costs, (ii) distribution rate case costs, and (iii) one-time costs supporting the implementation of AES Ohio's customer billing system upgrade. Costs recovered through base rates do not earn a return on investment.

Non-current regulatory assets primarily represent costs that are being recovered per specific rate orders; recovery for the remaining costs is probable, but not certain. Non-current undercollections to be collected through rate riders include: (i) the SCRR, (ii) the EER, (iii) the IIR, (iv) the PRO, (v) the RCR, and (vi) the CPR. It also includes the non-current portion of certain deferred costs to be collected through base rates, which include: (i) vegetation management costs, (ii) distribution rate case costs, (iii) distribution investment costs, and (iv) one-time costs supporting the implementation of AES Ohio's customer billing system upgrade. Costs recovered through base rates do not earn a return on investment.

Pension benefits represent the qualifying ASC 715 costs of our regulated operations that for ratemaking purposes are deferred for future recovery. We recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status, and recognize, as a component of OCI, the changes in the funded status of the plan that arise during the year that are not recognized as a component of net periodic benefit cost. This regulatory asset represents the regulated portion that would otherwise be charged as a loss to OCI. As per PUCO and FERC precedents, these costs are probable of future rate recovery.

Transmission formula rate assets and liabilities represent the amounts due from/to customers as a result of the implementation of transmission formula rates, which are adjusted each year based on actual revenue and costs from a previous year, as described above under “FERC Transmission Rates”.

Deferred income taxes payable through rates represent deferred income tax liabilities recognized from the normalization of flow-through items as the result of taxes previously charged to customers. A deferred income tax asset or liability is created from a difference in income recognition between tax laws and accounting methods. As a regulated utility, AES Ohio includes in ratemaking the impacts of current income taxes and changes in deferred income tax liabilities or assets. Accordingly, this liability reflects the estimated deferred taxes AES Ohio expects to return to customers in future periods.