American Electric Power Q4 2024 Earnings Report

Loews EPS Results

• Actual EPS: $1.24
• Consensus EPS: $1.24
• Beat/Miss: Met Expectations
• One Year Ago EPS: $1.23

Loews Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $4.91 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Loews Announcement Details

• Quarter: Q4 2024
• Date: 2/13/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 9:00AM ET

Loews (NYSE:L) provides commercial property and casualty insurance in the United States and internationally. The company offers specialty insurance products, such as management and professional liability, and other coverage products; surety and fidelity bonds; property insurance products that include standard and excess property, marine and boiler, and machinery coverages; and casualty insurance products, such as workers' compensation, general and product liability, and commercial auto, surplus, and umbrella coverages. It also provides loss-sensitive insurance programs; and warranty, risk management, information, and claims administration services. The company markets its insurance products and services through independent agents, brokers, and managing general underwriters. In addition, the company is involved in the transportation and storage of natural gas and natural gas liquids, and hydrocarbons through natural gas pipelines covering approximately 13,455 miles of interconnected pipelines; 855 miles of NGL pipelines in Louisiana and Texas; 14 underground storage fields with an aggregate gas capacity of approximately 199.5 billion cubic feet of natural gas; and eleven salt dome caverns and related brine infrastructure for providing brine supply services. Further, the company operates a chain of 25 hotels; and develops, manufactures, and markets a range of extrusion blow-molded and injection molded plastic containers for customers in the pharmaceutical, dairy, household chemicals, food/nutraceuticals, industrial/specialty chemicals, and water and beverage/juice industries, as well as manufactures commodity and differentiated plastic resins from recycled plastic materials. Loews Corporation was incorporated in 1969 and is headquartered in New York, New York.

Loews Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning. My name is Ladra, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power Fourth Quarter twenty twenty four Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.

[Operator]

After the speakers' remarks, there will be a question and answer session. At this time, I would like to turn the conference over to Darcy Reese, Vice President of Investor Relations. Please go ahead.

[Darcy Reese, Vice President-Investor Relations at American Electric Power Company]

Good morning, and welcome to American Electric Power's fourth quarter twenty twenty four earnings call. A live webcast of this teleconference and slide presentation are available on our website under the Events and Presentations section. We have a few members of our management team with us today, including Bill Furman, President and Chief Executive Officer Trevor Michalik, Executive Vice President and Chief Financial Officer and Kate Sturges, Senior Vice President, Controller and Chief Accounting Officer. We will be making forward looking statements during the call. Actual results may differ materially from those projected in any forward looking statement we make today.

[Darcy Reese, Vice President-Investor Relations at American Electric Power Company]

Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filings. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We will take your questions following opening remarks. With that, please turn to Slide four and let me hand the call over to Bill.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Thank you, Darcy, and good morning, everyone. Welcome to our fourth quarter twenty twenty four earnings call. Let me start by saying that after six months on the job, I continue to get more excited about the very strong and comprehensive AEP value proposition. Our future is extremely bright and we are committed to delivering on our promises to customers, regulators and investors by putting our robust capital plan to work. We are building a platform of success by focusing on execution and accountability.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

These are exciting times at AEP and I see incredible value in this company which I am confident we can further unlock by advancing our long term strategy and providing safe, affordable and reliable service across our large footprint. Before we jump into our results, I'd like to start by introducing our new CFO, Trevor Michalik, who joined AEP last month and is on the call with me today. Trevor is a proven leader and an industry veteran. He's hit the ground running and is already considered a very strong, disciplined and focused member of our senior leadership team. I've made a number of changes over the last six months to streamline our leadership structure by eliminating management layers, reorganizing and reducing the size and scope of the service corporation and improving procurement processes to drive much higher value from suppliers.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

The leadership team is coming together to make AEP a premium traded utility that is highly respected and trusted by our many stakeholders. Lastly, I'd like to take a moment to thank Chuck Zabula for his more than 25 of dedicated service to AEP. We're grateful for his steady hand during the transition and will continue to benefit from his expertise until his well earned retirement in March. In my remarks this morning, I will discuss our strategic focus and our results at a high level before passing it over to Trevor to walk through our financials in more detail. Today, we announced fourth quarter twenty twenty four operating earnings of $1.24 per share or $660,000,000 bringing our full year 2024 operating earnings to $5.62 per share.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Recall as part of our commitment of continuing to deliver value to our shareholders, last October, we increased the quarterly dividend from $0.88 to $0.93 per share. In addition, today we are reaffirming AEP's twenty twenty five operating earnings guidance range of $5.75 to $5.95 per share and affirming our long term operating earnings growth rate of 6% to 8%, all reinforced by our robust $54,000,000,000 capital plan from 2025 through 2029. As we have talked about previously, I'm committed to a strong balance sheet and I believe it is critical to funding our robust capital plan. We will responsibly finance the great opportunities ahead of us from a position of strength. Trevor will address this further in his remarks.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

We will also be disciplined around portfolio management. In fact, last month we announced the Ohio and I and M minority interest transaction on the transmission business with KKR and PSP investments for $2,820,000,000 The transaction is highly accretive at 2.3 times rate base and valued at 30.3 times price to earnings. To put this into another perspective, this is equivalent to issuing AEP common stock at $170 per share. Moreover, in the last couple of weeks, we filed for approval with FERC and we expect to close in the second half of twenty twenty five at which time we'll still retain 95% of AEP's total transmission assets. The proceeds from this transaction allow us to rotate capital into investments that benefit our customers as we enhance reliability and deliver on growing energy demand.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

In addition to the minority interest transaction, we also recycled almost $500,000,000 in net cash proceeds in 2024 through the sale of the New Mexico renewable development solar portfolio and distributed resources business. We continue to work with federal policymakers, state legislators and regulators across our large service footprint to determine what their goals are so we can relentlessly deliver on them. I would also like to spend some time this morning walking through ADP's future growth opportunities which are underpinned by four major drivers, large load in our service territories, including data center load that we appreciate having the chance to serve and are aggressively pursuing economic development efforts in our states investment across the system in our transmission and distribution infrastructure and new generation. Our capital plan includes customer commitments for 20 gigawatts of incremental load by 02/1930, driven by data center demand, reshoring and manufacturing and continued economic development. In fact, large load impacts are already being felt in many of AEP's service territories, especially in Ohio, Texas and Indiana.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

As demonstrated in our fourth quarter results, we experienced commercial load growth of 12.3% over the fourth quarter and 10.6% growth on the full year compared to 2023. One of the reasons we are seeing such growth now is that we have an advanced transmission system that can help support current large loads, which is significant advantage for us versus our peers. As we execute on our $54,000,000,000 capital plan to support customer needs, affordability remains top of mind and we are committed to fair cost allocations associated with large loads. We proactively filed the data center tariff in Ohio and large load tariff modifications in Indiana, Kentucky and West Virginia. And we look forward to commission decisions in Indiana and West Virginia on both states' unanimous settlements in the near future.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

The data center tariff hearing in Ohio concluded last month and we should have a commission decision by the third quarter of this year. In addition to our efforts to support load growth, our current capital plan contemplates sustained and substantial investments across our distribution infrastructure to better meet our customers' energy needs and improve customer service. Since EEP's distribution system is one of the nation's largest at approximately 225,000 distribution miles, These efforts include work to harden or replace poles, conductors, transformers and other assets as well as deploy automated technologies like AMI meters and GripSmart for enhanced operational performance. In total, we are investing more than $13,000,000,000 over the next five years in these areas to improve reliability and reduce both frequency and duration of outages. By advancing these initiatives as well as an aggressive vegetation management program, we will increase customer satisfaction, strengthen our systems resilience to weather events and reduce costs for operations and maintenance.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Demand for power is growing at a pace not seen over my forty four years in this business. As we discussed last quarter, meeting this demand could require incremental investment of up to $10,000,000,000 driven by additional transmission, distribution and generation infrastructure not included in our current $54,000,000,000 capital plan. For example, in our three primary RTOs, we see an opportunity of approximately $4,000,000,000 to $5,000,000,000 of incremental transmission awards recently approved or expected to be approved in the near term with additional upside on other initiatives. The remainder of the $10,000,000,000 of incremental capital upside is in transmission, distribution and generation infrastructure across the business. In addition, as you'll recall, in November, we announced a partnership with Bloom Energy related to fuel cells.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Our current capital plan does not include any investment in this custom solution, which will enable our large customers to quickly power their operations while the grid is built out to accommodate further demand. Once the necessary infrastructure is connected to these large customers, they can use the fuel cells as backup generation further adding resiliency to their operations. This demonstrates our commitment to finding innovative customer solutions that let them power up much quicker, allowing their business to deliver service to their customers which will generate profits much sooner than waiting for a grid connection. As a matter of fact, just this week, AEP Ohio filed with the Ohio Commission for approval of the first two customer projects using this fuel cell technology totaling 100 megawatts. Not only is AEP working to bring solutions tailored to the current power needs of our states, but we are leading efforts in the industry on the potential that small modular reactors or SMRs have to meet the growing needs of

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

the future. We're looking to

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

partner with The U. S. Department Of Energy to support the early site permit process for two potential SMR locations, one in Indiana and the other in Virginia. We are laying the groundwork to find solutions to support large loads and are fortunate for the opportunity to build these SMRs, but only with appropriate risk sharing. The tech companies are fast movers and AEP will be there to support them with whatever technology solution they want to deploy, but we need to ensure that we are protected and compensated.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Moving on to regulatory, over the last six months, I have visited 10 of our 11 states and have been actively engaged with various stakeholders, listening to their preferences as we invest more in resources at the local level. I firmly believe that by delivering for our states and the customers who live there, we can over time improve our earned ROEs and increase equity layers as states are more receptive to the need to attract capital. It is an absolute imperative that AEP listen closely to our states and then aggressively deliver on the agreed upon commitments. That's my promise to them. When I look at 2024 and review, our operating companies achieved a number of positive regulatory developments, including received constructive base rate case outcomes in Indiana, Michigan, Oklahoma, Texas and Virginia, obtained commission approval of the Ohio Electric Security Plan, updated formula rates in Arkansas and Louisiana and filed system resiliency plans in both of our operating companies in Texas.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

As we discussed on our last call, APCO filed its base case in West Virginia while offering securitization as a concept to help mitigate the proposed base rate increase. Intervener testimony in this case is set for April with rebuttal testimony following in May and a hearing set to start in mid June of this year. We look forward to working with everyone involved in this case to achieve a positive outcome for both our customers and our shareholders. Shifting now to our generation fleet, we previously filed for approval of PSO's Green Country seven ninety five megawatt natural gas facility, SWEVCO's new Hawesville Four Fifty megawatt natural gas plant, as well as SWEVCO's Welsh ten fifty three megawatt natural gas conversion project. These facilities and RFPs which are currently in progress at APCO, INM and PSO in addition to future integrated resource plan filings over the next couple of years in Arkansas, Kentucky, Indiana, Michigan, Virginia and West Virginia support our capacity obligations and will go a long way in meeting our customers' energy needs.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

In summary, we're engaged with key stakeholders on the regulatory front as we keep affordability, system reliability, resiliency and security top of mind. I'm excited to start the new year having made meaningful progress and we'll continue these important efforts as we advance on our commitment to excellence and deliver on what our states want. I'll close by thanking everyone at AUP for their hard work and dedication in 2024. I'm energized as we enter 2025 with a strong team and a more streamlined structure that are significantly driving efficiencies, reducing bureaucracy and creating a much more nimble company that can quickly execute on opportunities. We're also having our employees who have been working from home return to the office full time by June 1 to put all hands on deck with a renewed focus on execution and accountability that will serve us well as we advance our strategic priorities to enhance value for our stakeholders.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

With that, I'll now turn it over to Trevor.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Thank you, Bill, and good morning to everyone on the call. I want to start today by thanking Bill and the Board for placing their trust in me to help lead this organization into a bright and exciting future. I am honored and grateful for the opportunity to join a dynamic team that is focused on positioning the company for future success, and I'm committed to building on our momentum to create value for all of our stakeholders. As part of my transition, I have reviewed AEP's financial and capital plans and I have confidence in executing on them with this team. Today, I will walk us through the fourth quarter and full year results for 2024, expand on Bill's comments related to load growth and discuss what we expect to see in the years ahead.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

I will finish with commentary on credit metrics, liquidity and portfolio management, as well as my focus on disciplined capital allocation. Please turn to Slide seven. This slide shows the comparison of GAAP to operating earnings for the quarter and year to date periods. GAAP earnings for the fourth quarter were $1.25 per share compared to $0.64 per share in 2023. GAAP earnings for the year were $5.6 per share compared to $4.26 per share in 2023.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Detailed reconciliations of GAAP to operating earnings are shown in the appendix on Slides twenty five and twenty six. Next, I will briefly cover fourth quarter operating results before moving on to a more detailed walk through of our year to date results by segment. Fourth quarter operating earnings came in at $1.24 per share, which was $0.01 improvement versus the prior year. We saw $0.22 of incremental rate changes across multiple jurisdictions along with higher normalized retail sales at both the vertically integrated and transmission and distribution segments. Partially offsetting these favorable drivers were higher O and M and lower margins at the generation and marketing segment.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

For reference, the full details of our fourth quarter results are shown on Slide 22. Moving on to Slide eight, let's have a look at our year to date results. Operating earnings for 2024 totaled $5.62 per share compared to $5.25 per share in 2023. This was an increase of $0.37 per share or about 7% year over year, adding to AEP's long track record of delivering on its financial commitments for investors. Looking at the drivers by segment, operating earnings for vertically integrated utilities were $2.63 per share, up $0.16 from

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

a year

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

earlier. Positive drivers included rate changes across multiple jurisdictions, notable outcomes in Virginia and Indiana, and a return to relatively normal weather in 2024 compared to the mild weather experienced in 2023. These items were partially offset by higher depreciation and higher O and M as we made investments to serve our customers. The transmission and distribution utility segment earned $1.51 per share, up $0.21 from last year. Favorable drivers in this segment included increased rates in Texas and Ohio, increased transmission revenue, a favorable year over year change in weather, and higher normalized retail sales.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Partially offsetting these items were increased property taxes, depreciation, interest expense and O and M. The AEP transmission wholeco segment contributed 1.51 per share, up $0.08 from last year. Our continued investment in transmission assets as the new loads are added to our system was the main driver in this segment. Generation and marketing produced $0.48 per share, down 0.11 from last year. The reduced contribution from this segment was primarily driven by the sale of our universal scale assets in the third quarter of twenty twenty three, higher income taxes and lower retail energy margins.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

These items were partially offset by lower interest expense and higher wholesale margins. Finally, corporate and other saw benefit of $0.03 per share driven by lower income taxes and O and M, which are partially offset by higher net interest expense. As Bill mentioned earlier, we are reaffirming our operating earnings guidance range for 2025 of $5.75 to $5.95 per share. For convenience, we've included an updated waterfall bridging our actual 2024 results to the midpoint of our guidance for 2025 on Slide 20. While some variances changed due to the 2024 actual results, there is no change to our 2025 segment or overall guidance.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Turning to Slide nine, you can see more evidence of just how important load growth is to our financial story. Weather normalized sales grew 3% in 2024 and we expect that to nearly triple in the years ahead. These are exciting times in the utility industry as we incorporate this tremendous growth. As Bill mentioned, the load growth that I'm going to talk about is providing the opportunity to potentially add up to $10,000,000,000 of incremental capital over the next five years to our already sizable $54,000,000,000 plan. We are continuing to evaluate the magnitude and timing of this spend to meet the growth opportunities across our footprint.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

The gains we are seeing from the data centers and industrial customers represent a once in a generational opportunity to shape and grow the system. So before I jump into the details, I want to emphasize a few key points about our confidence in the projections you see here. First, this isn't just a future story. This is a now story. We're already seeing these loads come online across our system.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

In December of twenty twenty four, we added almost four fifty megawatts of hyperscale data center load in Ohio alone. Second, the load additions built into the forecast you see here are all backed by signed customer financial obligations demonstrating their commitment to bring these projects online. In fact, nearly all of these loads are backed by take or pay contracts and have already been accepted by certain RTOs, including PJM. This means that our customers are committed to pay for a minimum amount of power over a period of time. What's more, we've achieved tariff settlements in Indiana, Ohio and West Virginia to strengthen and lengthen those commitments even further.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Beyond those contracts, we have substantial interconnection queues waiting to sign additional commitments as well. Diving a little further into the details, you can see where the bulk of our growth is concentrated. New data centers drove double digit growth in our commercial sales in 2024, with system wide data processing load hitting a new high in December of 1,300,000 megawatt hours. The gains are expanding beyond the transmission and distribution utilities into our higher margin vertically integrated segment. Recently, we also connected the first of several hyperscale data center customers in Indiana, including AWS and Google.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Across the entire system, we're contracted to see nearly five gigawatts of data processing load come online in 2025, representing almost a 25% increase from 2024. Beyond commercial load, our industrial sales are also set to accelerate after a resilient 2024. AEP's industrial load grew by more than 402,000 megawatt hours last year. This was punctuated by growth of almost 5% in Texas, highlighting the diversity of our service territory and giving us a lot of confidence going into the new year. We expect industrial sales growth to more than double in 2025 as several new large customers are contracted to come onto the system, like Cheniere in Texas.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

We also have several other large and well publicized industrial projects set to come online in 2026 and 2027. More detailed load projections by class can be found on Slide 13. As a reminder, we have more than 20 gigawatts of commercial and industrial load additions contracted to come onto our system through the end of the decade. Roughly half of those are in ERCOT and the other half are spread across our PJM companies. As a result, we expect these quarterly sales numbers to continue their rapid growth for several years to come.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Let's move on to Slide 10 to discuss the company's capitalization and liquidity. Our financial performance and strong balance sheet provided good credit metrics for the last twelve months. Our debt to capitalization remained largely consistent with our historical range. Our FFO to debt metrics stood at 14% for the twelve months ended December 31, which was within our target range and well above our downgrade threshold of 13%. Available liquidity remained very strong at $4,600,000,000 and is supported by $6,000,000,000 in credit facilities.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Our strong balance sheet and credit metric results, coupled with ample liquidity and the outcome of the minority interest transaction expected to close in the second half of this year, have enhanced our financial flexibility. We can efficiently access the capital markets to support the capital needs in front of us. We are committed to maintaining a strong balance sheet and credit metrics as we evaluate the upcoming capital spend opportunities and match them with optimal financing instruments. On a similar note, last week I spoke directly with all three rating agencies and conveyed this leadership team's commitment to a strong balance sheet, focused on executing the regulatory and financing plans, as well as disciplined allocation of O and M and capital to our companies. Finally, let's move on to Slide 11.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Before we take your questions, I wanted to summarize what you heard from us today. First, you heard we had a strong year over year performance in 2024, growing our earnings roughly 7% with operating earnings coming in at $5.62 per share. We reinforced our commitments to stakeholders and built solid momentum heading into 2025. Second, you heard that we are absolutely focused on execution in 2025 to support one of the great load growth stories in our industry. We're executing on strategic investments and delivering on our regulatory strategy, giving us confidence in our financing plans.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Third, you heard we have $10,000,000,000 of incremental growth capital that we are currently evaluating. And fourth, you heard that the $2,820,000,000 pending minority interest transaction on the transmission assets is an exceptional value proposition to our shareholders. The transaction further boosts our earnings and credit profiles and helps to reduce near term equity needs. Recall that the value we transacted on this is comparable to issuing equity at $170 per share, and we still retain 95% of AEP's total transmission asset post close. These components are key to our future success and reinforce our confidence in reaffirming our commitments, including our 2025 guidance range of $5.75 to $5.95 per share, our long term growth rate of 6% to 8% while targeting FFO to debt of 14% to 15%.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

We really appreciate your time and attention today. I'm going to ask the operator to open the call so we can answer any of your questions that you may have. Thank

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

you.

[Operator]

Thank you. We will now begin the question and answer session. We'll take our first question from Shar Pourreza at Guggenheim Partners.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Hey guys, good morning.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Good morning,

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Shar.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Good morning. Just on the balance sheet, the 40 to 60 basis points of FFO improvement, you highlight that kind of on the slides as a near term target. Can you sustain that over the plan? And then on equity, any sense on the means of issuing the remaining $2,500,000,000 Is it juniors?

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Is it asset optimization, a block? I mean, I know Bill, in your comments, you did highlight portfolio management in your prepared remarks. So just want to get a sense on that remaining equity as well.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes, Sharish. So here's Trevor. Appreciate the question. We are targeting FFO to debt in that 14% to 15% range. And again, from our perspective, that is a target that we're looking at.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

I will note that we are going to have a revision to the way that Moody's calculates the deferred fuel. So, we will drop down probably 40 bps, 50 bps, 60 bps, depending on where things go with that which I think it's going to happen. But again, that's going to be above the 13% threshold and again from our perspective both Bill and I are very focused on issuing or executing on the $54,000,000,000 capital plan with a strong balance sheet. So, I think what you'll see is this will dip down a little bit in the current year and then really the deferred fuel issue kind of rolls off by 2026. And so from that perspective, we're really focused on getting that in that 14% to 15% range in the near term.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Then getting to your financing question, again, like you said, we put out that $5,350,000,000 of equity needs last year and kind of talked about that at EEI. The good news is with this transaction, the $2,800,000,000 goes a long way to solving that. So that really leaves then like you said the $2,500,000,000 of which there's call it $500,000,000 over the five year period or $100,000,000 a year on the DRIP. So then it's a very manageable $2,000,000,000 And then looking at various things that we have here to solve for that, there's potential securitization that we're continuing to work on in some of our locations. But we'll also utilize hybrids or other equity like instruments.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

And then if we need to issue equity, we could do that and I'm not opposed to issuing equity for growth and we have a growth plan that is incredible here, especially articulating around that incremental $10,000,000,000 but we want to be very judicious with issuing equity. But we think there's a lot of different levers that we can pull securitization, hybrids and then potentially over the longer term if we had to issue incremental equity we would consider that. But again very focused on FFO to debt and also executing on this kind of historic 54,000,000,000 growth plan.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Perfect. And then just lastly, obviously, a

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

lot of load growth and

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

you guys have that new CapEx upside disclosures. Specifically on the 20 gigs of load you're leaning on, just want to get a sense on how much of that is Ohio? And on the dual tariff settlements that are out there, can the differences be bridged and what if the commission's order swings against your settlement? I know Bill you've been very active on the stakeholder engagement side, just want to get a sense there. Thanks.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

So we're very obviously focused on the rate case and on the tariff filing for data centers. A lot of discussion going on. We're clearly looking to try and find a solution for bringing these folks into our system and bringing the economic development opportunities with us. And so we're continuing to look, if you think about the data center story that we have in December alone, AAP Ohio added nearly four fifty megawatts of data center load from AWS and Meta, so very strong. Looking ahead, we anticipate adding similar amounts of load almost every month through '25.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

We've got over 4.7 gigawatts a day of processing load contracted to begin service this year. And then while most of this load to your point is concentrated in Ohio and actually Texas, we also have nearly a gigawatt contracted to come online in Indiana. So that's extending our growth into the vertical integrated utility segment as well. So, I would note that both Google and AWS have recently begun service in Indiana. So that's a very positive for us and they're going to continue to ramp up progressively over the next several years.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

So this growth certainly underscores our commitment to economic development and highlights the significant opportunities ahead. But clearly we're going to make sure that this doesn't fall on the shoulders of our existing customers and make sure that the appropriate parties who are driving the incremental cost will pay for the incremental cost.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Perfect. Trevor, big congrats to you and the AEP team. I know you're going to do really fantastic there. So big congrats on Phase two.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Sure. I really appreciate it. Excited to be here. This is an incredible story and quite the team here. So thank you.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Great. Thanks guys.

[Operator]

We'll move next to Ross Fowler at Bank of America.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

Good morning. Trevor, welcome to AP.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Thanks, Russ.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

So I just want to dig into maybe the data center tariffs. You talked about sort of protecting yourself around sort of stranded cost risk or minimum take risk.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

So in that tariff, have you disclosed what that rate is versus maybe other industrial commercial rates? Is it like a minimum power take requirement that's in there? And what kind of

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

terms are you looking at

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

in those tariffs that you filed?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

So the tariffs are really driven by the cost of the incremental project. And so there's not a specific say price in the tariff unless until we understand what the cost of the incremental load is going to be or the incremental transmission is going to be to serve that load. And so it really is a case for us to protect the existing customer base and that the driver behind the data center cost will be covered essentially by the company that's requiring it. So we feel very good about where we sit. I would say there are a couple of differences in the tariffs if you look across the states.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

For instance in Ohio, that tariff is very much focused on data centers. Whereas if you look at the similar proposal in Indiana that is a broader tariff that would apply to any and all large loads that are similar to a data center. So some minor differences across the states, but generally the same purpose holds which is make the customer who's driving the incremental cost pay for the incremental cost and put it in place for a longer period of time so that we know as we're building out this incredible investment that if the customer goes away in year six or seven, we still have coverage for some of those costs and it's not stranded and placed on the shoulders of our existing customers. So very positive outcome for us. I think it sets us up and I don't think that it's been a detriment to the economic growth we have if you look at the overall increases that are already signed up.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

We have significant growth in accordance with these tariffs. So very strong interest still even though these tariffs are going into place.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

That's great Bill. Thank you. And then Trevor maybe one for you. You mentioned securitization as an avenue for maybe some of that equity need. Do you have a scaling of that versus the

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

$2,000,000,000 need in

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

the current plan or have

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

you sort of not walked through all of that yet?

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes, we're still working through that with the various states, Ross. But honestly, I think you could look at it and securitization could, if successful, could potentially be a big chunk of that remaining $2,000,000,000 So right now with you the way I think of it is we kind of laid out the $5,350,000,000 over a 5 year period. The $2,800,000,000 from the sale transaction really takes care of a big chunk of that in the immediate term here and then we have a lot of other levers to pull over the remaining four years of the plan to solve for that two billion dollars But securitization could be if successful a real win because it could help the customers with regards to rates, but it can also help us with regards to the need for the cash that would fill that gap on the $54,000,000,000 plan that we laid out.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

Perfect. Thank you. And then if I could squeeze one more in back to Tecky, Bill. You mentioned FMRs and kind of how you're trying to very early stages looking at that, but under the right risk structure. In other states, you sort of seen like this idea where the offtaker would put in a significant portion of the capital and take more of the risk into that project.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

Are you thinking about similar structures there? Or how far have you kind

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

of walked down the thought process of what that structure would look like or might look like?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Yes, thanks for that question. Obviously, very interested in SMRs as a technology and that's really driven by the fact that our major customers are also interested in that as a solution. And as we noted, we've started with the early site permit work in Indiana and Virginia and have signed MOUs with various parties to support that type of work. We did put in our Tier one application with the DOE for one of the sites and the Tier two application for the other site to try and get some support for those. At a broader look with regards to how we would think about this.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Clearly, I'm not going to put the company at risk in any type of a move as a first of a kind type of technology. And so as we've been talking with the potential customers, we haven't got to any specific arrangements or how this might look at this stage. But certainly there's discussions ongoing to see if there's a way to do this. Clearly the SMR technology providers, somebody needs to be first and somebody needs to step up and figure out how they're going to deliver their product and back it. I mean this is one of those situations where to me I'm buying a technology from somebody and it should work and it should be at a price that is very understandable and protected.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

And so I'm very excited about where we sit with regards to discussions, but I would say we're quite a ways away from having anything firmed up or really any firm structure at this point. But whatever we ultimately end up with, we'll be very principled and disciplined on our side of this to make sure that our shareholders and our customers are protected from any significant types of negative outcomes.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

That's great. Thank you. And Trevor, congratulations again on the new growth. Wish you nothing but Really

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

appreciate it, Ross. Thank you.

[Operator]

We'll go next to Steve Fleishman at Wolfe Research.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Hi, good morning.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Hi, Steve.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Congrats Trevor as well. Let me echo that. So just on the I guess on the upside to the capital plan and particularly the transmission.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

So for example, there's these PJM transmission, the joint venture that you have and the like that's being decided in the next month or so. Is that that would be upside to the plan that's not in the plan to things like that?

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes, Steve, that's right. That would be upside to the plan. So here again, what we've got is the $54,000,000,000 plan that has very definitive things in it and we really aren't putting things into the plan that aren't for sure. And so then when you look at this $10,000,000,000 a lot of this is coming to fruition over the next kind of months here. And so we're going to be pretty excited about rolling out kind of in a normal cadence on the third quarter call a revision to the $54,000,000,000 plan.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

But yes, that would be upside.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

And Steve, just to add to that, just to add a little bit specifically to PJM, you probably know we've announced the joint planning agreements with Dominion and FirstEnergy to propose those projects through the regional transmission expansion plan. We expect PJM approval in the first quarter on those projects. And so again, as Trevor noted, all of those if they would come to fruition would be upside.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Okay. And then you might have answered this Trevor and I missed it, but just in the event that you see that capital plan come up, how should we think about funding for incremental capital?

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. So again, Steve, I think on the incremental capital side, we really do have a lot of positives here. Again, with the $2,800,000,000 coming in this year, that's going to set us up really well for, call it roughly half of the equity needs that we laid out before. And then with securitization and other things that's really going to kind of take us a long way to filling that gap. At the end of the day, I'm not opposed to issuing equity for growth and this kind of growth.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

I think that really makes sense. But at the end of the day, there's a lot of other things that we're working on internally as we right size this organization to get costs in line with where this is going as well as other opportunities we're looking at that I want to be somewhat careful here in how we say it. But there is capital allocation internally looking to support this growth plan and equity, we take equity very seriously here. We know it's very precious, but we're not opposed to issuing equity for growth purposes.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Yes. Okay. And then, I guess, two questions on data centers. First, just a high level, curious after the deep sea kind of freak out, just what kind of color are you getting from your customers on their plans? Has anything changed good or bad in terms of the commentary and plans by the customers?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Really no change in plan for us at all. It's been full speed ahead. And when the DeepSeq came out, we had conversations with a number of our customers and none of those individuals spoke in any way that we would be seeing a change. And so, I think at least for us, I can't speak for others obviously, but it continues to be full speed ahead.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Okay. And then lastly on the Bloom partnership and the like, just I think you had made a firm order for the 100 megawatts and it sounds like you have customers for that. Just how are you feeling about the likelihood to get into that full gigawatt or is it too early to kind of say?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Well, first I'm really excited about the customers that we have that have taken up the first one hundred megawatts that we announced when we talked about the supply agreement with Bloom last November. I feel very good about where we're at with those customers. It's obviously proven that it's a viable opportunity for others to use in order to speed their ability to build their data centers and get online significantly sooner than waiting for perhaps five to seven years for a grid interconnect. And so, I like where we're at with this technology. We're obviously on the leading edge from an innovation perspective.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

AUP is solving problems for these data centers that while others are maybe just issuing press releases, we're actually getting to solutions for these folks. And so, I'll keep we'll keep you updated obviously as our agreement with Bloom allows for further expansions up to the one gigawatt mark. And keep in mind, I would note also that this potential capital outlay is also not included in the current $54,000,000,000 capital plan as we've talked about, but it is part of the $10,000,000,000 incremental investment opportunity that we're currently evaluating. And so obviously if more of that comes on, we'll have more updates for you. But overall, again, the feedback on this innovation and solution for customers has been extremely positive.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Yes. Great. Thank you. Appreciate it.

[Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America]

Thanks, Steve.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Thanks, Steve.

[Operator]

We'll move next to Jeremy Twinnett at JPMorgan.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Hi, good morning.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Good morning.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

And Trevor, congratulations as well.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Jeremy, I appreciate it.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Just want to start off, I guess, picking up with the custom solutions as you outlined there, being kind of bridge solutions. Just wondering if you could provide a bit more detail what it means from the AP side potentially, just if we could frame what that could look like from CapEx or any other way to kind of think about that potential and specifically just wires or other elements as well as it relates to AP?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Sure. Well, first and foremost, again, in the spirit of protecting our existing customers for these deals, all costs for the fuel cell projects will be covered by the large customers that are under standalone contracts with AEP. And these are very customer specific and they'll need state commission approval. And so we're very excited about how this is rolling out and the fact that each of these individual customers again will cover the costs that are associated with the project. As far as the capital side, Trevor maybe you add a little bit on that or how we're thinking about it.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. And what I'd like to do on that, Jeremy, is roll that out if and when that comes to fruition, but that's all kind of part of that $10,000,000,000 upside. So we haven't really disclosed specifics around that, but expect more of that to come in the normal cadence. The only thing I would also add, Bill, is that I think AEP has had a rich history of being an innovator in this industry. Whether it's being the first to kind of have seven sixty five kV lines, all the way to this solution to help our commercial industrial load come on with this Bloom solution.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

But as Bill said, we're going to do it in a very disciplined way, and it kind of talks to what AEP has done over the years to be a leader.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. Thank you for that. And just pivoting here to West Virginia, if you could. Just wondering if you could provide any incremental color stakeholder relationships in the state at this point and how that has evolved over time?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

I really appreciate that question. I've been very focused on West Virginia since I joined AUP last August. I have spent a considerable amount of time in the state and talking with key stakeholders including the prior administration as well as members of the current administration. I would say that right now we were very innovative again in the filing that we put in. We corrected the deficiencies that we had and put in a very robust filing.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

But inside of that filing, we also offered the commission a separate solution for them to consider. As I noted in my remarks, the hearing is in June and we expect the commission decision in the third quarter. We'll obviously see progress as the intervener testimony is due in April, rebuttal testimony is due in May. And the proposed securitization option that we have on the table is not in our current financial plans. So again, if it does come to pass that would be a good adjustment.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

But we did include it in the filing as an option affordability. This option is a very strong option that helps reduce the cost to customers. And so we really look forward to collaborating with all of the stakeholders there and achieving a favorable outcome for really all parties. And I think that so far as the process has gone through, we've gotten positive feedback on how we approach this.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. Thank you for that.

[Operator]

We'll go next to Durgesh Chopra at Evercore ISI.

[Durgesh Chopra, Managing Director at Evercore]

Hey, team. Good morning. Trevor, welcome. I look forward. Listen, I just had two clarification questions, lot of discussions on the topics I'm going to ask you on.

[Durgesh Chopra, Managing Director at Evercore]

But just to clarify, Bill, I think you discussed the large load tariff in Ohio and decision in Q3 by the commission. As I understand it, the data center customers are not part of that settlement or the technology customers are not part of that settlement. Is that completely off the table or can they could you still work in agreement with them? I guess what I'm trying to get at with this is, is there an active dialogue conversations happening with them or is it just now in the hands of the commission?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

So you're correct. There's actually two settlements that were being discussed. There was a settlement amongst the data centers themselves that they filed and then there was a second settlement that was ourselves plus the commission staff plus some other large load entities that was filed. Both of those went through the hearing process. And then as I said, there's basically now in the rebuttal and hearing excuse me, intervener testimony rebuttal process.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

I would say that there is continuing discussions going on as always as you go through these processes. But at this point, I would say we're really into waiting for the commission to issue their ruling and we'll see what happens. Again, we're very open. These are our customers. We want to work with our customers.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

We want to find solutions for them just like we did with the Bloom Energy deal. And so we'll always try to find a way forward, but we do have certain principles that we want to make sure stay in place, which is good protection for our existing for our existing customer base.

[Durgesh Chopra, Managing Director at Evercore]

That's very helpful color, Bill. Thank you. And then, George, back to you just a little bit more color on the 2025 financing plans. Obviously, congrats on the asset sale. That's a big bite at the apple from the overall equity in the plant.

[Durgesh Chopra, Managing Director at Evercore]

And then your commentary about the deferred fuel balance while taking your effort for Odette down, but still keeping you comfortably above the downgrade threshold. Should we take all that to mean that from an equity standpoint you're done for 2025? Or could you still kind of punch in more equity as you think about just focus on 2025? I'm not sure if you can answer that or not, but just thinking about whether you're done for 2025 or not?

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. So I think, Durgaesh, the thing that I look at is the $2,800,000,000 of cash coming in the door when we close that transaction will really go a long way to getting what our needs are right now because really when we laid out that 5.35 that was over a five year period, so over half of that is coming in year one. That being said, again, we are really focused on this growth of the $10,000,000,000 and seeing how we can get that into our plan as quickly as possible. And then there's other things we're dealing with as well with as Bill just mentioned the potential securitizations. So, a lot moving around right now, but I think we're in that great position with this transaction that I kind of got the benefit of stepping into after Chuck and Bill had kind of solved that issue that it really takes a lot of the pressure off of '25 right now.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

But again, my commitment is to be in a situation certainly where we would be above our downgrade thresholds and this plan fortunately as we've got it right now with the $2,800,000,000 even with a deferred fuel adjustment mechanism keeps us above the 13% and it puts us in a good position going forward. But again, a lot of moving parts around the growth and that's what we're excited about right now is this incremental growth opportunity.

[Durgesh Chopra, Managing Director at Evercore]

Got it. Appreciate that discussion there. Thanks. Thanks, Doug.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Thanks, Togesh.

[Operator]

We'll move next to Nick Campanella at Barclays.

[Nicholas Campanella, Director at Barclays]

Hey, good morning and congrats to Trevor. Welcome to Columbus. And Chuck, if you're in the room, congrats on your retirement too. So, hey, I just wanted to just a couple of follow ups. When you announced the transmission sale, you kind of said it's 1.7% accretive like on average to the plan.

[Nicholas Campanella, Director at Barclays]

And can you just talk about the flexibility that that offers you as you work to kind of add this capital to the plan and strengthen the balance sheet? And I guess where I'm heading is like when we get to the end of this year, like is this transaction lengthening the 6% to 8% or do you expect kind of a step higher at the 1.7 level? Thanks.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. So Nick, to kind of convert that into an EPS, that's roughly $0.11 or $0.12 on a full year basis that this transaction is accretive. But again, it depends on the timing of when we close it during the year. And so that will kind of you have to take that into consideration as it gets towards the end of the year on what that really does. My view is I think we put out the range of $5.75 to $5.95 and we'll be at this point in that range with the transaction and in a good shape with regards to credit.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

So again, it probably the later it goes into the year, the less impact it has on '25 with regards to the accretion. But it more really does help with where we're going to be on the credit metrics.

[Nicholas Campanella, Director at Barclays]

Right. Okay. And then just

[Nicholas Campanella, Director at Barclays]

how are you kind

[Nicholas Campanella, Director at Barclays]

of thinking about further portfolio management at this point? I mean, the transmission sale is a great data point and I definitely note like kind of the clear focus here on Indiana, Ohio and Texas. And just do you guys still see opportunity to kind of prune things in the portfolio if it's accretive to your plan?

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. Again, I think on any type of M and A, we wouldn't really speak to it. But I tell you the thing that we're most excited about is investing $54,000,000,000 at one times rate base. And if you think about that, that's basically the size of our market cap right now with a potential upside of an additional $10,000,000,000 So, our view is we want to get scale and scope and we believe we're growing this business and we think we've got great footprints over a large area that helps us to mitigate risk. And so from the at the end of the day, I look across the portfolio and believe we've got a really good fit footprint relative to our competitors.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

And so, I'm very, very positive about what I've stepped into here and feel that this is really good. But Bill, I'm not sure if you want to add anything on this.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

I think again as Trevor noted, we've got a tremendous opportunity in front of us and as a company we are going to drive ourselves to be the biggest and the best energy infrastructure company in this country. I mean, again, it's in our name. We're American Electric Power. We're going to power America. And as Trevor noted, the opportunity and is almost unlimited for us going forward and I have very strong confidence that we're going to be able to deliver and execute.

[Nicholas Campanella, Director at Barclays]

All right. That's great. Excited to see it and have a great day. Thank you.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Thank you.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Thanks, Dick.

[Operator]

We'll move next to Carly Davenport at Goldman Sachs.

[Carly Davenport, Vice President, Equity Research at Goldman Sachs]

Hey, good morning. Thanks for squeezing me in. Maybe just one quick one for me. Just as you think about the generation needs across the portfolio to accommodate this load growth, I know you referenced some of the gas filings at PSO and Swepco in the opening comments.

[Carly Davenport, Vice President, Equity Research at Goldman Sachs]

Can you just talk about the status of procurement of key equipment like turbines to execute on those plans?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Sure. I appreciate the question. We have a very strong generation plan that has been developed within AEP and a bit of it also predated me with regards to looking at strategies around procuring turbines, procuring transformers and other key equipment. I'm very confident in the plan that the team has. Our procurement strategy is strong and we have a lot of activity out in the market right now.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

We're doing RFPs for a number of our states. We have significant IRP activity going on And obviously there's a growing energy demand out there, which is really why we're leading the efforts in the industry to try to find solutions for them like in the near term bloom and in the longer term SMRs. And so we'll be all over this. I'm confident in our team and I'm confident in the fact that we're going to deliver what our states want from a generation plan. And clearly as the year goes on, we'll be providing more updates in that area.

[Carly Davenport, Vice President, Equity Research at Goldman Sachs]

Great. Thanks so much for the color. I'll leave it there.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Thanks, Carly.

[Operator]

And we have time for one more question. And that question comes from Julien Dumoulin Smith at Jefferies.

[James Ward, Vice President at Jefferies]

Hi, team. It's James Ward on for Julian. How are you?

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Yes, good. Good morning.

[James Ward, Vice President at Jefferies]

Good morning. Yes, thanks for fitting us in here at the end. Very thorough Q and A, covered pretty much all the questions that we had. Did have one that was remaining,

[James Ward, Vice President at Jefferies]

which is just on the ATM that you filed.

[James Ward, Vice President at Jefferies]

You mentioned that $400,000,000 had been already issued. In combination with the $2,800,000,000 of net cash proceeds that we'd expect to receive to see receive in the second half of the year, do those two meet your 2025 equity needs? Or should we assume any further usage of the ATM in 2025? Or is it just a 2026 and beyond tool? Thank you.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. Look, as I said, James, we're continuing to evaluate all of that. The good news is we do have access to the $1,300,000,000 that's remaining under the ATM and we can always hit that if we need to. But again, right now, I think we've got a very positive situation that we will be getting the $2,800,000,000 coming in later this year. And then as we look to the $10,000,000,000 growth opportunities here, we will continue to evaluate that.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

But I think largely you've got it right with the ATM in place and what we're doing with the DRIP program and the cash coming in and the securitizations that potentially could come to fruition by the end of this year, we're in good shape.

[James Ward, Vice President at Jefferies]

Got you. Really quick follow-up there. I guess the from the $2,550,000,000 that you had less $500,000,000 or so for the DRIP, $100,000,000 per year, the $1,700,000,000 for the ATM, that $350,000,000 it would seem kind of perfect for a JSN or some sort of equity content or equity linked security. So I guess that kind of fits with what you've described. Is that a reasonable way to think about it?

[James Ward, Vice President at Jefferies]

And then I just had one more on the $10,000,000,000

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. No, I think absolutely you're thinking about it correctly. There's a lot of levers for us to use here as we continue to look at things. And so again, it's a very positive with the $2,800,000,000 and then securitizations and other equity like instruments are all very positive. And then if need be, we do have that $1,300,000,000 ATM.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

But again, we're in good shape here.

[James Ward, Vice President at Jefferies]

Terrific. And the last one I'll leave you with. I know that you've answered one or two questions already on the 10. Just wondered if there was a rule of thumb. A couple of years ago at EEI, the talk was all about 30% or 50% or whatever percent of incremental CapEx.

[James Ward, Vice President at Jefferies]

And I get there are certain thresholds. If you get $1,000,000,000 of the 10, it's a different scenario than if you get all 10 of the 10. But any rule of thumb you can give us on high level thinking about the amount of equity or equity like portion that you'd be looking to finance of that incremental CapEx versus debt financing?

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Yes. The biggest thing that I would say is we're excited to roll that out in a normal cadence on our third quarter call. And again, there's a lot of moving parts that we're managing here. And we were going to finance it in the most efficient way possible to ensure we can continue to meet the needs of our customers, but also to deliver on value to our shareholders. And that's what we're very focused on.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

Thank you so much.

[Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC]

Appreciate it.

[Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company]

I appreciate it.

[Operator]

And that concludes our Q and A session. I will now turn the conference back over to Bill Furman for closing remarks.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Yes. Thank you. We appreciate everyone joining us on the call today. I'd like to close with just a few summary remarks. First, very exciting times are ahead for AEP as we put our robust capital plan to work as you've heard and continue to grow the business while delivering shareholder value.

[William “Bill” Fehrman, President & CEO at American Electric Power Company]

Second, I'm very confident we can unlock the incredible value in this company by advancing our long term strategy and providing safe, affordable and reliable service across our large footprint. And then third, Trevor and Darcy will be hitting the road actually in March, meeting with many of you and discussing AEP's very strong and comprehensive value proposition. And finally, if there are any follow-up items, please reach out to our IR team with your questions. So thank you again for joining us today. This concludes our call.

[Operator]

And again, this concludes today's conference call. You may access the replay for today's conference by dialing 2030 and entering the conference ID of 1336080 followed by pound. The replay will be available until Thursday, February 2025 at 11:59PM eastern time. Thank you for your participation. You may now disconnect.

Participants

Analysts

• Darcy Reese, Vice President-Investor Relations at American Electric Power Company
• William “Bill” Fehrman, President & CEO at American Electric Power Company
• Trevor Mihalik, Executive Vice President & CFO at American Electric Power Company
• Shar Pourreza, Senior Managing Director at Guggenheim Partners
• Ross Fowler, Head - North America Power & Utilities Equity Research at Bank of America
• Steve Fleishman, Managing Director and Senior Analyst at Wolfe Research LLC
• Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan
• Durgesh Chopra, Managing Director at Evercore
• Nicholas Campanella, Director at Barclays
• Carly Davenport, Vice President, Equity Research at Goldman Sachs
• James Ward, Vice President at Jefferies