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AMERICAN ELECTRIC POWER CO INC

For the period ended Dec 31, 2024. Filed Feb 13, 2025.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2024 · Filed Feb 13, 2025

AEP$127.84-0.4%Stored close · as of Nov 10, 2026

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Appalachian Power Company and Subsidiaries:

Summary of KWh Energy Sales
Years Ended December 31,
202420232022
(in millions of KWhs)
Retail:
Residential10,48310,12611,159
Commercial5,9485,7286,066
Industrial8,6668,7108,849
Miscellaneous829804843
Total Retail25,92625,36826,917
Wholesale (a)2,2432,1911,585
Total KWhs28,16927,55928,502
Summary of Heating and Cooling Degree Days
Years Ended December 31,
202420232022
(in degree days)
Actual – Heating (a)1,7131,5372,182
Normal – Heating (b)2,1812,2082,209
Actual – Cooling (c)1,5441,1451,314
Normal – Cooling (b)1,2501,2511,238

Appalachian Power Company and Subsidiaries

Year Ended December 31, 2023$294.4
Changes in Revenues:
Retail Revenues282.1
Off-system Sales(0.9)
Transmission Revenues17.4
Other Revenues13.3
Total Change in Revenues311.9
Changes in Expenses and Other:
Purchased Electricity, Fuel and Other Consumables Used for Electric Generation29.0
Other Operation and Maintenance(107.2)
Depreciation and Amortization(30.5)
Taxes Other Than Income Taxes(14.4)
Interest Income2.3
Allowance for Equity Funds Used During Construction4.2
Non-Service Cost Components of Net Periodic Benefit Cost(5.3)
Interest Expense(1.8)
Total Change in Expenses and Other(123.7)
Income Tax Expense(60.9)
Year Ended December 31, 2024$421.7

Retail Revenues increased $282 million primarily due to the following:

A $114 million increase in rates due to the 2020-2022 Virginia Triennial Review.

A $62 million increase in fuel revenues primarily due to an increase in ENEC revenues in West Virginia.

A $58 million increase in rider revenues.

A $51 million increase in weather-related usage driven by a 35% increase in cooling degree days and an 11% increase in heating degree days.

Transmission Revenues increased $17 million primarily due to continued investment in transmission assets.

Other Revenues increased $13 million primarily due to the following:

An $8 million increase in pole attachment revenue.

A $6 million increase in sales of renewable energy credits.

Purchased Electricity, Fuel and Other Consumables Used for Electric Generation expenses decreased $29 million primarily due to prior year disallowance of under-recovered ENEC regulatory assets in West Virginia partially offset by an increase in over-recovered fuel deferrals in West Virginia primarily driven by an increase in ENEC rates and the amortization of Excess ADIT through the ENEC.

Other Operation and Maintenance expenses increased $107 million primarily due to the following:

A $55 million increase in transmission expenses primarily due to an increase in recoverable PJM expenses.

A $43 million increase indistribution expenses primarily due to the following:

An $18 million increase in vegetation management expenses approved by the Virginia SCC and recovered through base rates.

A $14 million increase in other distribution and vegetation management expenses.

An $11 million increase due to the amortization of 2020-2022 storm-related regulatory assets which began in 2024.

A $26 million increase in employee-related expensesdue to the voluntary severance program that occurred in the second quarter of 2024.

A $13 million increasedue to prior year proceeds received for insurance policy settlements.

A $25 million decrease due to the January 2024 completion of regulatory asset amortization related to under-earnings during the 2017-2019 Triennial Review.

Depreciation and Amortization expenses increased $31 million primarily due to a higher depreciable base.

Taxes Other Than Income Taxes increased $14 million due to an increase in Virginia state minimum taxes.

Non-Service Cost Components of Net Periodic Benefit Cost increased $5 million primarily due to the expiration of prior service credit amortization from previous plan changes partially offset by a lower loss amortization as the result of favorable asset returns during 2023.

Income Tax Expense increased $61 million primarily due to the following:

A $40 million increase due to an increase in pretax book income.

A $34 million increase due to a decrease in amortization of Excess ADIT.

Appalachian Power Company

We have audited the accompanying consolidated balance sheets of Appalachian Power Company and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income (loss), of changes in common shareholder's equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

As described in Notes 1 and 5 to the consolidated financial statements, the Company's consolidated financial statements reflect the actions of regulators that result in the recognition of certain revenues and expenses in different time periods than enterprises that are not rate-regulated. Regulatory assets (deferred expenses to be recovered in the future) and regulatory liabilities (deferred future revenue reductions or refunds) are recorded to reflect the economic effects of regulation in the same accounting period by matching expenses with their recovery through regulated revenues and matching income with its passage to customers in cost-based regulated rates. As of December 31, 2024, there were $1,514 million of deferred costs included in regulatory assets, $536 million of which were pending final regulatory approval, and $1,137 million of regulatory liabilities awaiting potential refund or future rate reduction, $19 million of which were pending final regulatory determination. Management reviews the probability of recovery of regulatory assets and refund of regulatory liabilities at each balance sheet date and whenever new events occur, such as changes in the regulatory environment, issuance of regulatory commission orders, or passage of new legislation.

The principal considerations for our determination that performing procedures relating to the accounting for the effects of cost-based regulation is a critical audit matter are (i) the significant judgment by management in assessing probability of the recovery of regulatory assets and refund of regulatory liabilities and (ii) a high degree of auditor judgment, subjectivity, and

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's evaluation of new events, such as changes in the regulatory environment, issuance of regulatory commission orders, or passage of new legislation, including controls over the probability of recovery of regulatory assets and refund of regulatory liabilities. These procedures also included, among others (i) evaluating the reasonableness of management's assessment of probability of future recovery for regulatory assets and refund of regulatory liabilities; (ii) testing, on a sample basis, the regulatory assets and liabilities, including those subject to pending rate cases and regulatory proceedings, by considering (a) the provisions and formulas outlined in rate orders; (b) other regulatory correspondence; and (c) application of relevant regulatory precedents.

As described in Notes 1 and 6 to the consolidated financial statements, in April 2024, the Federal EPA finalized revisions to the CCR Rule to expand the scope of the rule to include inactive impoundments at inactive facilities (“legacy CCR surface impoundments”) as well as to establish requirements for currently exempt solid waste management units that involve the direct placement of CCR on the land (“CCR management units”). The Federal EPA is requiring that owners and operators of legacy surface impoundments comply with all of the existing CCR Rule requirements applicable to inactive CCR surface impoundments at active facilities, except for the location restrictions and liner design criteria. Management evaluated the applicability of the rule to current and former plant sites and recorded incremental asset retirement obligations (AROs) based on initial cost estimates primarily reflecting compliance with the rule through closure in place and future groundwater monitoring requirements pursuant to the revised CCR Rule. As disclosed by management, accounting for the incremental ARO arising from the revised CCR Rule requires significant judgment by management due to the significant measurement uncertainty in estimating the incremental liability. As further groundwater monitoring and other analysis is performed, management expects to refine the assumptions and underlying cost estimates used in recording the incremental ARO arising from the revised CCR Rule. The estimated liability can significantly change if there are changes in the impacted coal ash site acreage inputs or if refinements in the assumptions over the remediation costs for legacy CCR surface impoundments and CCR management units, including assumptions over future groundwater monitoring requirements vary from the initial estimates. As a result of the rule, the Company recorded an incremental ARO of $312 million in the second quarter of 2024.

The principal considerations for our determination that performing procedures relating to the incremental ARO arising from the revised CCR Rule is a critical audit matter are (i) the significant judgment by management when developing the estimate of the incremental ARO; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the impacted coal ash site acreage and management’s assumptions over the remediation costs for legacy CCR surface impoundments and CCR management units, including assumptions over future groundwater monitoring requirements (collectively “management’s assumptions”); and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of the incremental ARO arising from the revised CCR Rule, including controls over the impacted coal ash site acreage and management’s assumptions used in the estimate of the incremental ARO. These procedures also included, among others, (i) testing the completeness and accuracy of data used, including the impacted coal ash site acreage, in the estimate of the incremental ARO; (ii) testing management’s process for determining estimate of the incremental ARO , and (iii) the involvement of professionals with specialized skill and knowledge to assist in (a) assessing the adequacy of the cost assessment of the incremental ARO in accordance with the remediation requirements outlined in the Federal EPA’s revised CCR rule, (b) evaluating the reasonableness of management’s process over measuring coal ash site acreage and (c) evaluating the reasonableness of management’s assumptions used in the estimate.

The management of Appalachian Power Company and Subsidiaries (APCo) is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. APCo’s internal control is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of APCo’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on management’s assessment, management concluded APCo’s internal control over financial reporting was effective as of December 31, 2024.

This annual report does not include an audit report from PricewaterhouseCoopers LLP, APCo’s registered public accounting firm regarding internal control over financial reporting pursuant to the Securities and Exchange Commission rules that permit APCo to provide only management’s report in this annual report.

Years Ended December 31,
202420232022
REVENUES
Electric Generation, Transmission and Distribution$3,769.3$3,464.1$3,245.5
Sales to AEP Affiliates247.4239.3256.1
Other Revenues15.917.318.3
TOTAL REVENUES4,032.63,720.73,519.9
EXPENSES
Purchased Electricity, Fuel and Other Consumables Used for Electric Generation1,405.61,434.61,173.9
Other Operation804.7748.4724.1
Maintenance322.6271.7297.8
Asset Impairments and Other Related Charges - Coal Fired Generation——24.9
Establishment of 2017-2019 Virginia Triennial Review Regulatory Asset——(37.0)
Depreciation and Amortization602.4571.9575.9
Taxes Other Than Income Taxes177.5163.1158.2
TOTAL EXPENSES3,312.83,189.72,917.8
OPERATING INCOME719.8531.0602.1
Other Income (Expense):
Interest Income5.12.83.5
Allowance for Equity Funds Used During Construction16.111.911.7
Non-Service Cost Components of Net Periodic Benefit Cost27.232.529.0
Interest Expense(271.4)(269.6)(233.9)
INCOME BEFORE INCOME TAX EXPENSE496.8308.6412.4
Income Tax Expense75.114.218.2
NET INCOME$421.7$294.4$394.2
The common stock of APCo is wholly-owned by Parent.
See Notes to Financial Statements of Registrants beginning on page 177.
Years Ended December 31,
202420232022
Net Income$421.7$294.4$394.2
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Cash Flow Hedges, Net of Tax of $(0.2), $(0.2) and $(0.2) in 2024, 2023 and 2022, Respectively(0.8)(0.8)(0.8)
Amortization of Pension and OPEB Deferred Costs, Net of Tax of $(0.3), $(0.8) and $(1.1) in 2024, 2023 and 2022, Respectively(1.1)(3.0)(4.3)
Pension and OPEB Funded Status, Net of Tax of $4.5, $1.3 and $(6.4) in 2024, 2023 and 2022, Respectively16.94.9(24.1)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)15.01.1(29.2)
TOTAL COMPREHENSIVE INCOME$436.7$295.5$365.0
See Notes to Financial Statements of Registrants beginning on page 177.
CommonStock · Paid-inCapital · RetainedEarnings · AccumulatedOtherComprehensiveIncome (Loss) · Total
TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2021$260.4$1,828.7$2,534.4$24.4$4,647.9
Common Stock Dividends(37.5)(37.5)
Net Income394.2394.2
Other Comprehensive Loss(29.2)(29.2)
TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2022260.41,828.72,891.1(4.8)4,975.4
Capital Contribution from Parent6.56.5
Return of Capital to Parent(0.7)(0.7)
Net Income294.4294.4
Other Comprehensive Income1.11.1
TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2023260.41,834.53,185.5(3.7)5,276.7
Capital Contribution from Parent114.1114.1
Return of Capital to Parent(4.5)(4.5)
Common Stock Dividends(75.0)(75.0)
Net Income421.7421.7
Other Comprehensive Income15.015.0
TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2024$260.4$1,944.1$3,532.2$11.3$5,748.0
See Notes to Financial Statements of Registrants beginning on page 177.

ASSETS

December 31,
20242023
CURRENT ASSETS
Cash and Cash Equivalents$3.9$5.0
Restricted Cash for Securitized Funding16.214.9
Advances to Affiliates17.718.9
Accounts Receivable:
Customers185.7170.3
Affiliated Companies110.598.8
Accrued Unbilled Revenues93.170.8
Miscellaneous0.30.6
Allowance for Credit Losses(2.0)(2.0)
Total Accounts Receivable387.6338.5
Fuel308.0315.0
Materials and Supplies131.7148.4
Risk Management Assets35.722.4
Regulatory Asset for Under-Recovered Fuel Costs148.1155.4
Prepayments and Other Current Assets46.040.5
TOTAL CURRENT ASSETS1,094.91,059.0
PROPERTY, PLANT AND EQUIPMENT
Electric:
Generation7,272.67,041.3
Transmission5,001.54,711.8
Distribution5,568.55,176.6
Other Property, Plant and Equipment1,062.9981.3
Construction Work in Progress742.6709.2
Total Property, Plant and Equipment19,648.118,620.2
Accumulated Depreciation and Amortization6,035.65,688.7
TOTAL PROPERTY, PLANT AND EQUIPMENT – NET13,612.512,931.5
OTHER NONCURRENT ASSETS
Regulatory Assets1,366.01,155.1
Securitized Assets106.2133.4
Employee Benefits and Pension Assets203.9171.7
Operating Lease Assets67.073.7
Deferred Charges and Other Noncurrent Assets215.4187.5
TOTAL OTHER NONCURRENT ASSETS1,958.51,721.4
TOTAL ASSETS$16,665.9$15,711.9
See Notes to Financial Statements of Registrants beginning on page 177.
December 31,
20242023
(in millions)
CURRENT LIABILITIES
Advances from Affiliates$95.0$339.6
Accounts Payable:
General427.2280.4
Affiliated Companies205.9121.3
Long-term Debt Due Within One Year - Nonaffiliated798.6538.8
Customer Deposits86.680.0
Accrued Taxes168.8117.6
Obligations Under Operating Leases13.714.6
Other Current Liabilities229.7193.6
TOTAL CURRENT LIABILITIES2,025.51,685.9
NONCURRENT LIABILITIES
Long-term Debt – Nonaffiliated4,861.75,049.5
Deferred Income Taxes2,033.52,011.9
Regulatory Liabilities and Deferred Investment Tax Credits1,115.81,081.9
Asset Retirement Obligations767.4442.5
Employee Benefits and Pension Obligations29.632.8
Obligations Under Operating Leases54.059.8
Deferred Credits and Other Noncurrent Liabilities30.470.9
TOTAL NONCURRENT LIABILITIES8,892.48,749.3
TOTAL LIABILITIES10,917.910,435.2
Rate Matters (Note 4)
Commitments and Contingencies (Note 6)
COMMON SHAREHOLDER’S EQUITY
Common Stock – No Par Value:
Authorized – 30,000,000 Shares
Outstanding – 13,499,500 Shares260.4260.4
Paid-in Capital1,944.11,834.5
Retained Earnings3,532.23,185.5
Accumulated Other Comprehensive Income (Loss)11.3(3.7)
TOTAL COMMON SHAREHOLDER’S EQUITY5,748.05,276.7
TOTAL LIABILITIES AND COMMON SHAREHOLDER’S EQUITY$16,665.9$15,711.9
See Notes to Financial Statements of Registrants beginning on page 177.
Years Ended December 31,
202420232022
OPERATING ACTIVITIES
Net Income$421.7$294.4$394.2
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization602.4571.9575.9
Deferred Income Taxes(17.4)(54.3)79.6
Asset Impairments and Other Related Charges - Coal Fired Generation——24.9
Allowance for Equity Funds Used During Construction(16.1)(11.9)(11.7)
Mark-to-Market of Risk Management Contracts(35.0)65.6(24.4)
Deferred Fuel Over/Under-Recovery, Net136.1279.7(501.8)
Change in Regulatory Assets(114.9)(19.9)(34.4)
Establishment of 2017-2019 Virginia Triennial Review Regulatory Asset——(37.0)
Change in Other Noncurrent Assets(46.8)(95.4)(40.8)
Change in Other Noncurrent Liabilities11.9(1.9)31.4
Changes in Certain Components of Working Capital:
Accounts Receivable, Net(45.9)17.5(8.5)
Fuel, Materials and Supplies23.7(173.9)(113.5)
Margin Deposits(1.4)(16.1)64.4
Accounts Payable166.2(125.9)190.1
Accrued Taxes, Net50.825.26.7
Other Current Assets(3.3)0.40.2
Other Current Liabilities11.7(32.3)5.9
Net Cash Flows from Operating Activities1,143.7723.1601.2
INVESTING ACTIVITIES
Construction Expenditures(1,009.4)(1,053.0)(1,048.6)
Change in Advances to Affiliates, Net1.20.91.0
Other Investing Activities15.5(2.8)42.4
Net Cash Flows Used for Investing Activities(992.7)(1,054.9)(1,005.2)
FINANCING ACTIVITIES
Capital Contribution from Parent114.16.5—
Return of Capital to Parent(4.5)(0.7)—
Issuance of Long-term Debt – Nonaffiliated480.8200.0698.0
Change in Advances from Affiliates, Net(244.6)157.4(17.1)
Retirement of Long-term Debt – Nonaffiliated(413.5)(26.6)(230.4)
Principal Payments for Finance Lease Obligations(8.7)(8.3)(7.9)
Dividends Paid on Common Stock(75.0)—(37.5)
Other Financing Activities0.61.50.7
Net Cash Flows from (Used for) Financing Activities(150.8)329.8405.8
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash for Securitized Funding0.2(2.0)1.8
Cash, Cash Equivalents and Restricted Cash for Securitized Funding at Beginning of Period19.921.920.1
Cash, Cash Equivalents and Restricted Cash for Securitized Funding at End of Period$20.1$19.9$21.9
SUPPLEMENTARY INFORMATION
Cash Paid for Interest, Net of Capitalized Amounts$256.9$259.7$215.1
Net Cash Paid (Received) for Income Taxes47.847.4(88.6)
Noncash Acquisitions Under Finance Leases1.85.01.6
Construction Expenditures Included in Current Liabilities as of December 31,159.2100.7164.6
See Notes to Financial Statements of Registrants beginning on page 177.
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