Financing Activities

3 Months Ended

Mar. 31, 2024

Financing Activities

FINANCING ACTIVITIES

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

Common Stock (Applies to AEP)

At-the-Market (ATM) Program

In 2023, AEP filed a prospectus supplement and executed an Equity Distribution Agreement, pursuant to which AEP may sell, from time to time, up to an aggregate of $1.7 billion of its common stock through an ATM offering program, including an equity forward sales component. The compensation paid to the selling agents by AEP may be up to 2% of the gross offering proceeds of the shares. There were no issuances under the ATM program for the three months ended March 31, 2024.

Long-term Debt Outstanding (Applies to AEP)

The following table details long-term debt outstanding, net of issuance costs and premiums or discounts:

Type of Debt	March 31, 2024		December 31, 2023
	(in millions)
Senior Unsecured Notes	$	34,606.1	$	33,779.4
Pollution Control Bonds	1,771.0		1,771.6
Notes Payable	163.5		193.3
Securitization Bonds	343.8		368.9
Spent Nuclear Fuel Obligation (a)	304.4		300.4
Junior Subordinated Notes	1,588.2		2,388.1
Other Long-term Debt	1,058.9		1,341.5
Total Long-term Debt Outstanding	39,835.9		40,143.2
Long-term Debt Due Within One Year	1,198.6		2,490.5
Long-term Debt	$	38,637.3	$	37,652.7

(a)Pursuant to the Nuclear Waste Policy Act of 1982, I&M, a nuclear licensee, has an obligation to the United States Department of Energy for SNF disposal. The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983. Trust fund assets related to this obligation were $355 million and $348 million as of March 31, 2024 and December 31, 2023, respectively, and are included in Spent Nuclear Fuel and Decommissioning Trusts on the balance sheets.

Long-term Debt Activity

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2024 are shown in the following tables:

		Principal		Interest
Company	Type of Debt	Amount (a)		Rate	Due Date
Issuances:		(in millions)		(%)
AEPTCo	Senior Unsecured Notes	$	450.0	5.15	2034
APCo	Senior Unsecured Notes	400.0		5.65	2034
Non-Registrant:
Transource Energy	Other Long-term Debt	18.0		Variable	2025
Total Issuances		$	868.0

(a)Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.

		Principal		Interest
Company	Type of Debt	Amount Paid		Rate	Due Date
Retirements and Principal Payments:		(in millions)		(%)
AEP	Junior Subordinated Notes	$	805.0	2.03	2024
AEP Texas	Securitization Bonds	11.9		2.06	2025
APCo	Other Long-term Debt	300.0		Variable	2024
APCo	Securitization Bonds	13.4		3.77	2028
I&M	Notes Payable	1.2		Variable	2024
I&M	Notes Payable	0.9		Variable	2025
I&M	Notes Payable	4.0		0.93	2025
I&M	Notes Payable	5.0		3.44	2026
I&M	Notes Payable	6.8		5.93	2027
I&M	Notes Payable	6.8		6.01	2028
I&M	Other Long-term Debt	0.7		6.00	2025
PSO	Other Long-term Debt	0.1		3.00	2027
Non-Registrant:
AEGCo	Notes Payable	5.0		2.43	2028
Transource Energy	Senior Unsecured Notes	1.4		2.75	2050
Total Retirements and Principal Payments		$	1,162.2

Long-term Debt Subsequent Events

In April 2024, APCo remarketed $86 million of Pollution Control Bonds.

In April 2024, I&M issued $80 million of 6.41% Notes Payable due in 2028.

In April 2024, I&M retired $8 million of Notes Payable related to DCC Fuel.

In April 2024, WPCo issued $450 million of 6.89% Notes Payable due in 2034.

In April 2024, WPCo retired $265 million of Other Long-term Debt.

Debt Covenants (Applies to AEP and AEPTCo)

Covenants in AEPTCo’s note purchase agreements and indenture limit the amount of contractually-defined priority debt (which includes a further sub-limit of $50 million of secured debt) to 10% of consolidated tangible net assets. AEPTCo’s contractually-defined priority debt was 0.2% of consolidated tangible net assets as of March 31, 2024. The method for calculating the consolidated tangible net assets is contractually-defined in the note purchase agreements.

Dividend Restrictions

Utility Subsidiaries’ Restrictions

Parent depends on its utility subsidiaries to pay dividends to shareholders. AEP utility subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the subsidiaries to transfer funds to Parent in the form of dividends.

All of the dividends declared by AEP’s utility subsidiaries that provide transmission or local distribution services are subject to a Federal Power Act requirement that prohibits the payment of dividends out of capital accounts in certain circumstances; payment of dividends is generally allowed out of retained earnings. The Federal Power Act also creates a reserve on earnings attributable to hydroelectric generation plants. Because of their ownership of such plants, this reserve applies to APCo and I&M.

Certain AEP subsidiaries have credit agreements that contain covenants that limit their debt to capitalization ratio to 67.5%. The method for calculating outstanding debt and capitalization is contractually-defined in the credit agreements.

The Federal Power Act restriction does not limit the ability of the AEP subsidiaries to pay dividends out of retained earnings.

Parent Restrictions (Applies to AEP)

The holders of AEP’s common stock are entitled to receive the dividends declared by the Board of Directors provided funds are legally available for such dividends. Parent’s income primarily derives from common stock equity in the earnings of its utility subsidiaries.

Pursuant to the leverage restrictions in credit agreements, AEP must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. The method for calculating outstanding debt and capitalization is contractually-defined in the credit agreements.

Corporate Borrowing Program (Applies to all Registrant Subsidiaries)

AEP subsidiaries use a corporate borrowing program to meet their short-term borrowing needs. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries; a Nonutility Money Pool, which funds certain AEP nonutility subsidiaries; and direct borrowing from AEP. The AEP Utility Money Pool operates in accordance with the terms and conditions of its agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of March 31, 2024 and December 31, 2023 are included in Advances to Affiliates and Advances from Affiliates, respectively, on the Registrant Subsidiaries’ balance sheets. The Utility Money Pool participants’ money pool activity and corresponding authorized borrowing limits for the three months ended March 31, 2024 are described in the following table:

	Maximum				Average				Net Loans to
	Borrowings		Maximum		Borrowings		Average		(Borrowings from)		Authorized
	from the		Loans to the		from the		Loans to the		the Utility Money		Short-term
	Utility		Utility		Utility		Utility		Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		March 31, 2024		Limit
	(in millions)
AEP Texas	$	267.9	$	—	$	191.2	$	—	$	(267.9)	$	600.0
AEPTCo	313.3		298.0		178.5		75.3		272.9		820.0		(a)
APCo	399.5		51.1		205.5		20.3		37.4		750.0
I&M	125.5		—		60.2		—		(73.2)		500.0
OPCo	295.2		—		143.4		—		(295.2)		500.0
PSO	264.6		—		128.8		—		(264.6)		750.0
SWEPCo	254.5		—		161.1		—		(254.5)		750.0

(a)    Amount represents the combined authorized short-term borrowing limit the State Transcos have from FERC or state regulatory commissions.

The activity in the above table does not include short-term lending activity of certain AEP nonutility subsidiaries. AEP Texas’ wholly-owned subsidiary, AEP Texas North Generation Company, LLC and SWEPCo’s wholly-owned subsidiary, Mutual Energy SWEPCo, LLC participate in the Nonutility Money Pool. The amounts of outstanding loans to the Nonutility Money Pool as of March 31, 2024 and December 31, 2023 are included in Advances to Affiliates on the subsidiaries’ balance sheets. The Nonutility Money Pool participants’ activity for the three months ended March 31, 2024 is described in the following table:

		Maximum Loans		Average Loans		Loans to the Nonutility
		to the Nonutility		to the Nonutility		Money Pool as of
Company		Money Pool		Money Pool		March 31, 2024
	(in millions)
AEP Texas		$	7.1	$	7.0	$	7.0
SWEPCo		2.3		2.2		2.3

AEP has a direct financing relationship with AEPTCo to meet its short-term borrowing needs. The amounts of borrowings from AEP as of March 31, 2024 and December 31, 2023 are included in Advances from Affiliates on AEPTCo’s balance sheets. AEPTCo’s direct financing activities with AEP and corresponding authorized borrowing limit for the three months ended March 31, 2024 are described in the following table:

Maximum

Maximum

Average

Average

Borrowings from

Loans to

Authorized

Borrowings

Loans

Borrowings

Loans

AEP as of

AEP as of

Short-term

from AEP

to AEP

from AEP

to AEP

March 31, 2024

March 31, 2024

Borrowing Limit

(in millions)

$

44.4

$

148.5

$

4.4

$

72.9

$

3.7

$

—

$

50.0

(a)

(a)    Amount represents the authorized short-term borrowing limit from FERC or state regulatory agencies not otherwise included in the utility money pool above.

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool are summarized in the following table:

	Three Months Ended March 31,
	2024		2023
Maximum Interest Rate	5.79	%	5.42	%
Minimum Interest Rate	5.66	%	4.66	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool are summarized in the following table:

	Average Interest Rate for Funds				Average Interest Rate for Funds
	Borrowed from the Utility Money Pool				Loaned to the Utility Money Pool
	for Three Months Ended March 31,				for Three Months Ended March 31,
Company	2024		2023		2024		2023
AEP Texas	5.71	%	5.18	%	—	%	—	%
AEPTCo	5.72	%	5.09	%	5.70	%	5.29	%
APCo	5.74	%	5.14	%	5.72	%	5.12	%
I&M	5.73	%	5.12	%	—	%	5.16	%
OPCo	5.71	%	5.17	%	—	%	—	%
PSO	5.71	%	4.84	%	—	%	5.11	%
SWEPCo	5.71	%	5.12	%	—	%	—	%

Maximum, minimum and average interest rates for funds loaned to the Nonutility Money Pool are summarized in the following table:

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

Maximum

Minimum

Average

Maximum

Minimum

Average

Interest Rate

Interest Rate

Interest Rate

Interest Rate

Interest Rate

Interest Rate

for Funds

for Funds

for Funds

for Funds

for Funds

for Funds

Loaned to

Loaned to

Loaned to

Loaned to

Loaned to

Loaned to

the Nonutility

the Nonutility

the Nonutility

the Nonutility

the Nonutility

the Nonutility

Company

Money Pool

Money Pool

Money Pool

Money Pool

Money Pool

Money Pool

AEP Texas

5.79

%

5.66

%

5.72

%

5.42

%

4.66

%

5.12

%

SWEPCo

5.79

%

5.66

%

5.72

%

5.42

%

4.66

%

5.13

%

AEPTCo’s maximum, minimum and average interest rates for funds either borrowed from or loaned to AEP are summarized in the following table:

	Maximum		Minimum		Maximum		Minimum		Average		Average
	Interest Rate		Interest Rate		Interest Rate		Interest Rate		Interest Rate		Interest Rate
Three Months	for Funds		for Funds		for Funds		for Funds		for Funds		for Funds
Ended	Borrowed		Borrowed		Loaned		Loaned		Borrowed		Loaned
March 31,	from AEP		from AEP		to AEP		to AEP		from AEP		to AEP
2024	5.79	%	5.66	%	5.79	%	5.66	%	5.74	%	5.71	%
2023	5.38	%	4.53	%	5.38	%	4.53	%	5.03	%	5.15	%

Short-term Debt (Applies to AEP and SWEPCo)

Outstanding short-term debt was as follows:

		March 31, 2024				December 31, 2023
		Outstanding		Interest		Outstanding		Interest
Company	Type of Debt	Amount		Rate (a)		Amount		Rate (a)
		(dollars in millions)
AEP	Securitized Debt for Receivables (b)	$	900.0	5.54	%	$	888.0	5.65	%
AEP	Commercial Paper	2,832.2		5.61	%	1,937.9		5.69	%
SWEPCo	Notes Payable	5.4		7.68	%	4.3		7.71	%
	Total Short-term Debt	$	3,737.6			$	2,830.2

(a)Weighted-average rate as of March 31, 2024 and December 31, 2023, respectively.

(b)Amount of securitized debt for receivables as accounted for under the “Transfers and Servicing” accounting guidance.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 5.

Securitized Accounts Receivables – AEP Credit (Applies to AEP)

AEP Credit has a receivables securitization agreement with bank conduits. Under the securitization agreement, AEP Credit receives financing from the bank conduits for the interest in the receivables AEP Credit acquires from affiliated utility subsidiaries. These securitized transactions allow AEP Credit to repay its outstanding debt obligations, continue to purchase the operating companies’ receivables and accelerate AEP Credit’s cash collections.

AEP Credit’s receivables securitization agreement provides a commitment of $900 million from bank conduits to purchase receivables and expires in September 2025. As of March 31, 2024, the affiliated utility subsidiaries were in compliance with all requirements under the agreement.

Accounts receivable information for AEP Credit was as follows:

	Three Months Ended March 31,
	2024			2023
	(dollars in millions)
Effective Interest Rates on Securitization of Accounts Receivable	5.61		%	4.86		%
Net Uncollectible Accounts Receivable Written-Off	$	8.1		$	6.9

	March 31, 2024		December 31, 2023
	(in millions)
Accounts Receivable Retained Interest and Pledged as Collateral Less Uncollectible Accounts	$	1,164.2	$	1,207.4
Short-term – Securitized Debt of Receivables	900.0		888.0
Delinquent Securitized Accounts Receivable	58.2		52.2
Bad Debt Reserves Related to Securitization	42.6		42.0
Unbilled Receivables Related to Securitization	336.9		409.8

AEP Credit’s delinquent customer accounts receivable represent accounts greater than 30 days past due.

Securitized Accounts Receivables – AEP Credit (Applies to all Registrant Subsidiaries except AEP Texas and AEPTCo)

Under this sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit’s financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary’s receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries’ statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable, which are sold to AEP Credit. AEP Credit securitizes the eligible receivables for the operating companies and retains the remainder.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreements were:

Company	March 31, 2024		December 31, 2023
	(in millions)
APCo	$	196.5	$	184.6
I&M	167.0		156.4
OPCo	536.0		541.7
PSO	96.3		134.6
SWEPCo	144.2		168.3

The fees paid to AEP Credit for customer accounts receivable sold were:

		Three Months Ended March 31,
Company		2024		2023
	(in millions)
APCo		$	4.2	$	4.9
I&M		4.1		3.9
OPCo		7.4		7.3
PSO		3.4		3.2
SWEPCo		4.8		4.3

The proceeds on the sale of receivables to AEP Credit were:

		Three Months Ended March 31,
Company		2024		2023
	(in millions)
APCo		$	536.0	$	506.2
I&M		529.7		525.4
OPCo		845.7		884.4
PSO		361.6		416.3
SWEPCo		425.4		437.6