2nd Quarter 2014 Earnings Release Presentation
July 25, 2014
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its
Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual
outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-
looking statements are: the economic climate, growth or contraction within and changes in market demand and demographic patterns in our service territory, inflationary
or deflationary interest rate trends, volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments
impairing our ability to finance new capital projects and refinance existing debt at attractive rates, the availability and cost of funds to finance working capital and capital
needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material, electric load, customer growth and the
impact of retail competition, weather conditions, including storms and drought conditions, and our ability to recover significant storm restoration costs, available sources
and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters, availability of necessary generation capacity and
the performance of our generation plants, our ability to recover increases in fuel and other energy costs through regulated or competitive electric rates, our ability to build
or acquire generation capacity and transmission lines and facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at
acceptable prices and terms and to recover those costs, new legislation, litigation and government regulation, including oversight of nuclear generation, energy
commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or
additional regulation of fly ash and similar combustion products that could impact the continued operation, cost recovery and/or profitability of our generation plants and
related assets, evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel, a reduction in
the federal statutory tax rate could result in an accelerated return of deferred federal income taxes to customers, timing and resolution of pending and future rate cases,
negotiations and other regulatory decisions including rate or other recovery of new investments in generation, distribution and transmission service and environmental
compliance, resolution of litigation, our ability to constrain operation and maintenance costs, our ability to develop and execute a strategy based on a view regarding
prices of electricity and other energy-related commodities, prices and demand for power that we generate and sell at wholesale, changes in technology, particularly with
respect to new, developing, alternative or distributed sources of generation, our ability to recover through rates or market prices any remaining unrecovered investment in
generation units that may be retired before the end of their previously projected useful lives, volatility and changes in markets for capacity and electricity, coal, and other
energy-related commodities, particularly changes in the price of natural gas, changes in utility regulation and the allocation of costs within regional transmission
organizations, including ERCOT, PJM and SPP, the transition to market for generation in Ohio, including the implementation of ESPs, our ability to successfully and
profitably manage our separate competitive generation assets, changes in the creditworthiness of the counterparties with whom we have contractual arrangements,
including participants in the energy trading market, actions of rating agencies, including changes in the ratings of our debt, the impact of volatility in the capital markets on
the value of the investments held by our pension, other postretirement benefit plans, captive insurance entity and nuclear decommissioning trust and the impact of such
volatility on future funding requirements, accounting pronouncements periodically issued by accounting standard-setting bodies and other risks and unforeseen events,
including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.
Investor
Relations
Contacts
Bette Jo Rozsa Managing Director Investor Relations
614-716-2840 [email protected]
Julie Sherwood Director
Investor Relations 614-716-2663
3
Second Quarter 2014 Highlights
Second Quarter 2014 Company Update
Refer to appendix for reconciliation between GAAP and Operating EPS
Earnings Update Delivered GAAP and operating earnings of $0.80 per share
for the second quarter 2014
Delivered GAAP and operating earnings of $1.95 per share for YTD June 2014
Reaffirming 2014 operating earnings guidance range of $3.35 - $3.55 per share
Financial Update Committed to delivering 4-6% earnings growth off of 2013
original guidance
Continuous improvement initiatives and O&M shifting
Transmission: Allocating an additional $100M of capital in 2014 ($76M to Transcos, $24M to Opcos); Electric Transmission Texas received a Baa1 rating from Moody’s and began paying a dividend to its owners
Regulatory Update APCo – West Virginia Base Rate Case filed June 30, 2014 PSO – Base Rate Case settlement filed June 17, 2014
EPA Clean Power Plan
YTD 2014
4
* operating adjusts GAAP results by eliminating any material non operating items and is not weather normalized
Strong Regulated Results Twelve Months Ended 06/30/2014 Earned ROEs (Operating Earnings)
5
Operating Earnings Per Share Overview
2Q13 EPS
2Q14 EPS
YTD13 EPS
YTD14 EPS
Vertically Integrated Utilities $0.31 $0.31 $0.72 $0.88
Transmission & Distribution Utilities
0.15 0.18 0.34 0.38
AEP Transmission Holdco 0.04 0.10 0.06 0.15
Generation & Marketing 0.18 0.20 0.37 0.54
AEP River Operations (0.02) 0.01 (0.02) 0.01
Corporate & Other 0.07 0.00 0.06 (0.01)
EPS from Operating Earnings $0.73 $0.80 $1.53 $1.95
See slides 13 and 14 for items excluded from GAAP Net Income to reconcile to Operating Earnings
Favorable 2Q14 performance driven by strong regulated business growth; YTD bolstered by cold weather
Weighted average no. of shares outstanding: 486M 2Q13; 488M 2Q14; 486M YTD13; 488M YTD14
6
2Q14 Performance
Refer to appendix for additional explanation of variances by segment
Drivers Rate Changes $ 0.06 OSS 0.03 Normal Load 0.01 O&M (0.07) Depreciation (0.02) Other (0.01)
$0.00
$0.02 ($0.07)
$0.06
$0.03
Drivers Rate Changes $0.01 Trans. Rev 0.04 O&M (0.03) Other 0.01
Drivers AGR $0.01 Other 0.01
$0.03
Favorable 2Q14 performance driven by strong regulated business growth
Driver Int. Inc. ($0.06) Other ($0.01)
2Q14 EPS $0.31 $0.18 $0.10 $0.20 $0.01 $0.00
7
Normalized Load Trends
-0.1%
-1.8%
0.9%
4.4%
-1.5%
1.8%
-10%
-5%
0%
5%
2Q13 3Q13 4Q13 1Q14 2Q14 YTD14
-2.2%
1.2%0.2%
2.9%
0.4%1.6%
-10%
-5%
0%
5%
2Q13 3Q13 4Q13 1Q14 2Q14 YTD14
-5.2%
-3.8%-3.2% -2.9%
-0.5%
-1.6%
-3.0%-1.2%
1.6%2.2% 4.5%
3.4%
-10%
-5%
0%
5%
2Q13 3Q13 4Q13 1Q14 2Q14 YTD14
-2.7%-1.5%
-0.8%
1.5%
-0.5%
0.6%-1.9%
-0.7%0.9%
3.2%
1.3%2.3%
-10%
-5%
0%
5%
2Q13 3Q13 4Q13 1Q14 2Q14 YTD14
AEP Residential Normalized GWh Sales %Change vs. Prior Year
AEP Commercial Normalized GWh Sales %Change vs. Prior Year
AEP Industrial GWh Sales %Change vs. Prior Year
AEP Total Normalized GWh Sales %Change vs. Prior Year
Note: Charts reflect connected load and exclude firm wholesale load & Buckeye Power backup load.
Note: Line represents Industrial excluding Ormet Note: Line represents Retail excluding Ormet
8
Economic Data
1.6%
2.0%
2.6%
2.0%
2.5%
3.0% 2.9% 2.8% 2.8% 3.0%
0.5%
1.5%
2.5%
3.5%
4.5%
Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
Gro
wth
vs
PY
GDP Growth by Quarter
US AEP
1.7% 1.8% 1.8%
1.7% 1.7%
1.1% 1.0% 1.0%
1.1% 1.3%
0.0%
0.5%
1.0%
1.5%
2.0%
Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
Gro
wth
vs
PY
Employment Growth by Quarter US AEP
0.5%
1.5%
2.5%
3.5%
4.5%
Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
Gro
wth
vs
PY
GDP Growth by Geography US AEP-East AEP-West
0.0%
0.5%
1.0%
1.5%
2.0%
Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
Gro
wth
vs
PY
Employment Growth by Geography US AEP-East AEP-West
9
9%
17%
28% 30%
39%
-3.5% -3.8% -0.7% -1.7% -1.6%
-10%
0%
10%
20%
30%
40%
50%
Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
GW
h G
row
th v
s P
Y
AEP Industrial Sales Growth ShaleCounties
Non-ShaleCounties
Industrial Class Data
AEP Shale Gas Counties
Shale Counties in AEP service territory Non-Shale Counties in AEP service territory
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
GW
h G
row
th v
s P
Y
Industrial Sales Growth in Shale Regions
Eagle Ford (TX) Marcellus (WV)Permian (TX) Utica (OH)Woodford (OK)
*
* Excluding Ormet
Shale gas development drives industrial load growth
10
Actual Target
FFO Interest Coverage 5.0 >3.6x
FFO to Total Debt 20.3% 15%-20%
Capitalization & Liquidity
Liquidity Summary
Credit Statistics
Note: Credit statistics represent the trailing 12 months as of 06/30/2014
Total Debt / Total Capitalization
Strong balance sheet, solid credit metrics and adequate liquidity
Qualified Pension Funding
(unaudited) 06/30/2014 Actual
($ in millions) Amount Maturity
Revolving Credit Facility $1,750 Jul-17
Revolving Credit Facility $1,750 Jun-16
Total Credit Facilities $3,500
Plus
Cash & Cash Equivalents $190
Less
Commercial Paper Outstanding (732)
Letters of Credit Issued (49)
Net Available Liquidity $2,909
11 Executing on our commitments
Summary
Strong first half of 2014
Executing on our commitments Accelerating transmission investment LEAN and other continuous
improvement initiatives Cost shifting
Reaffirming 2014 Operating Earnings Guidance $3.35 - $3.55 per share
12
Appendix
13
2nd Quarter Reconciliation of GAAP to Operating Earnings
$ millions Earnings Per Share
2nd Qtr. 2013
2nd Qtr. 2014
Change 2nd Qtr.
2013 2nd Qtr.
2014 Change
Reported (GAAP) Earnings
$338 $390 $52 $0.69 $0.80 $0.11
Non Operating Items:
UK Windfall Taxes (80) - 80 (0.16) - 0.16
Muskingum River Plant Unit 5 Impairment
99 - (99) 0.20 - (0.20)
Mark-to-Market Impact of Economic Hedging Activities
- - - - - -
AEP Operating Earnings $357 $390 $33 $0.73 $0.80 $0.07
Weighted average no. of shares outstanding: 486M 2Q13; 488M 2Q14
14
YTD June Reconciliation of GAAP to Operating Earnings
$ millions Earnings Per Share
YTD June 2013
YTD June 2014
Change YTD June 2013
YTD June 2014
Change
Reported (GAAP) Earnings $701 $950 $249 $1.44 $1.95 $0.51
Non Operating Items:
Restructuring Program 5 - (5) 0.01 - (0.01)
Reversal of Storm Deferral – Virginia
19 - (19) 0.04 - (0.04)
UK Windfall Taxes (80) - 80 (0.16) - 0.16
Muskingum River Plant Unit 5 Impairment
99 - (99) 0.20 - (0.20)
Mark-to-Market Impact of Economic Hedging Activities
- - - - - -
AEP Operating Earnings $744 $950 $206 $1.53 $1.95 $0.42
Weighted average no. of shares outstanding: 486M YTD13; 488M YTD14
15
YTD 2014 Performance
Drivers Rate Changes $0.14 Weather 0.07 OSS 0.14 Normal Load 0.01 O&M (0.10) Depreciation (0.04) Other (0.06)
$0.16
$0.17
($0.07)
$0.09
$0.03
Drivers Rate Changes $0.03 Weather 0.01 Trans. Rev. 0.06 Normal Load (0.01) O&M (0.05)
Drivers AGR $0.15 Other 0.02 $0.04
Favorable 2014 performance driven by strong regulated and competitive business results, bolstered by cold weather
YTD14 EPS $0.88 $0.38 $0.15 $0.54 $0.01 $(0.01)
Driver Int. Inc. ($0.06) Other ($0.01)
16
Vertically Integrated Utilities
2Q13 2Q14
$ millions (except EPS)
Operating Revenues $2,302 $2,252
Operating Expenses:
Energy Costs (1,064) (934)
Operations & Maintenance (551) (618)
Depreciation & Amortization (235) (252)
Taxes Other Than Income Taxes (93) (87)
Operating Income 360 361
Net Interest/AFUDC (118) (119)
Income Taxes (89) (88)
Other (1) (1)
Operating Earnings 152 153
Proforma Adjustments, Net of Tax - -
GAAP Net Income $152 $153
EPS from Operating Earnings $0.31 $0.31
Second Quarter EPS Summary
See slide 13 for items excluded from Net Income to reconcile to Operating Earnings
Key Drivers – 2Q14 vs. 2Q13
Rate changes: $44M from various jurisdictions
Weather: $3M unfavorable vs. prior year; $3M favorable vs. normal
Off-System Sales: $21M favorable vs. prior year due to higher power prices
Retail load: $10M favorable vs. prior year due to favorable price variance and higher industrial sales
O&M net of offsets: $52M unfavorable vs. prior year primarily due to an increase in transmission service expenses and increased plant outage and maintenance expenses
D&A: $14M unfavorable vs. prior year primarily due to higher depreciable property balances
Income Taxes: effective tax rate of 36.4% 2Q14 vs. 37.2% 2Q13
17
Vertically Integrated Utilities
YTD Jun 2013
YTD Jun 2014
$ millions (except EPS)
Operating Revenues $4,817 $4,838
Operating Expenses:
Energy Costs (2,265) (2,028)
Operations & Maintenance (1,096) (1,194)
Depreciation & Amortization (469) (515)
Taxes Other Than Income Taxes (184) (183)
Operating Income 803 918
Net Interest/AFUDC (242) (240)
Income Taxes (206) (245)
Other (1) (1)
Operating Earnings 354 432
Proforma Adjustments, Net of Tax (22) -
GAAP Net Income $332 $432
EPS from Operating Earnings $0.72 $0.88
YTD EPS Summary
See slide 14 for items excluded from Net Income to reconcile to Operating Earnings
Key Drivers – YTD14 vs.YTD13
Rate changes: $107M from various jurisdictions
Weather: $52M favorable vs. prior year; $69M favorable vs. normal
Off-System Sales: $106M favorable vs. prior year due to higher power prices and increased volumes
O&M net of offsets: $77M unfavorable vs. prior year primarily due to an increase in transmission service expenses and a favorable agreement reached to settle an insurance claim in 1Q13
Depreciation: $33M unfavorable vs. prior year primarily due to higher depreciable property balances
Income Taxes: effective tax rate of 36.2% YTD14 vs. 36.9% YTD13
18
Transmission & Distribution Utilities
2Q13 2Q14
$ millions (except EPS)
Operating Revenues $1,064 $1,134
Operating Expenses:
Energy Costs (405) (368)
Operations & Maintenance (219) (298)
Depreciation & Amortization (151) (156)
Taxes Other Than Income Taxes (105) (108)
Operating Income 184 204
Net Interest/AFUDC (68) (60)
Income Taxes (41) (54)
Operating Earnings 75 90
Proforma Adjustments, Net of Tax - -
GAAP Net Income $75 $90
EPS from Operating Earnings $0.15 $0.18
Second Quarter EPS Summary
See slide 13 for items excluded from Net Income to reconcile to Operating Earnings
Key Drivers – 2Q14 vs. 2Q13
Rate changes: $11M from Ohio
Weather: $2M unfavorable vs. prior year; $1M unfavorable vs. normal
Transmission Revenue: $33M favorable vs. prior year primarily due to increased transmission investment, revenues from Ohio customers who have switched to alternative CRES providers and rate increases for customers in the PJM region
O&M net of offsets: $24M unfavorable vs.
prior year primarily due to higher transmission service expenses and storm-related expenses in Ohio
Income Taxes: effective tax rate of 37.7% 2Q14 vs. 35.6% 2Q13
19
Transmission & Distribution Utilities
YTD Jun 2013
YTD Jun 2014
$ millions (except EPS)
Operating Revenues $2,198 $2,349
Operating Expenses:
Energy Costs (854) (802)
Operations & Maintenance (465) (591)
Depreciation & Amortization (284) (317)
Taxes Other Than Income Taxes (209) (227)
Operating Income 386 412
Net Interest/AFUDC (137) (117)
Income Taxes (88) (108)
Operating Earnings 161 187
Proforma Adjustments, Net of Tax 1 -
GAAP Net Income $162 $187
EPS from Operating Earnings $0.34 $0.38
YTD EPS Summary
See slide 14 for items excluded from Net Income to reconcile to Operating Earnings
Key Drivers – YTD14 vs.YTD13
Rate changes: $17M from Ohio
Weather: $7M favorable vs. prior year; $5M favorable vs. normal
Transmission Revenue: $47M favorable vs. prior year primarily due to increased transmission investment, revenues from Ohio customers who have switched to alternative CRES providers and rate increases for customers in the PJM region
O&M net of offsets: $36M unfavorable vs.
prior year primarily due to increased transmission and distribution expenses and storm-related expenses in Ohio
Taxes Other Than Income Taxes: $18M unfavorable vs. prior year primarily due to increased property taxes
Income Taxes: effective tax rate of 36.7% YTD14 vs. 35.5% YTD13
20
AEP Transmission Holdco
2Q13 2Q14
$ millions (except EPS)
Operating Revenues $18 $58
Operating Expenses:
Operations & Maintenance (4) (6)
Depreciation & Amortization (2) (5)
Taxes Other Than Income Taxes (5) (8)
Operating Income 7 39
Net Interest/AFUDC 5 6
Income Taxes (7) (20)
Equity Earnings 14 23
Operating & GAAP Earnings $19 $48
EPS from Operating Earnings $0.04 $0.10
Second Quarter EPS Summary Key Drivers – 2Q14 vs. 2Q13
Increased revenues and expenses primarily due to increased capital investment by the wholly-owned Transcos
Equity earnings from Joint Ventures - $9M favorable vs. prior year; primarily related to Electric Transmission Texas
21
AEP Transmission Holdco
YTD Jun 2013
YTD Jun 2014
$ millions (except EPS)
Operating Revenues $27 $85
Operating Expenses:
Operations & Maintenance (5) (11)
Depreciation & Amortization (4) (10)
Taxes Other Than Income Taxes (10) (14)
Operating Income 8 50
Net Interest/AFUDC 8 10
Income Taxes (12) (29)
Equity Earnings 27 40
Operating & GAAP Earnings $31 $71
EPS from Operating Earnings $0.06 $0.15
YTD EPS Summary Key Drivers – YTD14 vs.YTD13
Increased revenues and expenses due to increased capital investment by the wholly-owned Transcos
Equity earnings from Joint Ventures - $13M favorable vs. prior year; primarily related to Electric Transmission Texas
22
Generation & Marketing
2Q13 2Q14
$ millions (except EPS)
Operating Revenues $892 $913
Operating Expenses:
Energy Costs (548) (561)
Operations & Maintenance (112) (125)
Depreciation & Amortization (62) (56)
Taxes Other Than Income Taxes (16) (12)
Operating Income 154 159
Net Interest/AFUDC (13) (10)
Income Taxes (51) (51)
Operating Earnings 90 98
Proforma Adjustments, Net of Tax (99) -
GAAP Net Income (Loss) $(9) $98
EPS from Operating Earnings $0.18 $0.20
Second Quarter EPS Summary
See slide 13 for items excluded from Net Income to reconcile to Operating Earnings
Key Drivers – 2Q14 vs. 2Q13
2013 reflects Ohio Generation in regulated
power pool vs. 2014 corporately separated
Generation increased 739 GWh (7%) 2014 vs. 2013
AEP Dayton ATC liquidations up 11%: $40.32/MWh in 2014 vs. $36.35/MWh in 2013
O&M net of offsets: $17M unfavorable vs. prior year primarily due to increased plant maintenance expenses
Income Taxes: effective tax rate of 34.2% 2Q14 vs. 36.3% 2Q13
23
Generation & Marketing
YTD Jun 2013
YTD Jun 2014
$ millions (except EPS)
Operating Revenues $1,812 $2,163
Operating Expenses:
Energy Costs (1,116) (1,365)
Operations & Maintenance (230) (241)
Depreciation & Amortization (124) (112)
Taxes Other Than Income Taxes (32) (25)
Operating Income 310 420
Net Interest/AFUDC (32) (21)
Income Taxes (99) (138)
Operating Earnings 179 261
Proforma Adjustments, Net of Tax (103) -
GAAP Net Income $76 $261
EPS from Operating Earnings $0.37 $0.54
YTD EPS Summary
See slide 14 for items excluded from Net Income to reconcile to Operating Earnings
Key Drivers – YTD14 vs.YTD13
2013 reflects Ohio Generation in regulated power pool vs. 2014 corporately separated
Generation increased 3,094 GWh (14%) 2014 vs. 2013
AEP Dayton ATC liquidations up 54%: $54.12/MWh in 2014 vs. $35.21/MWh in 2013
O&M, net of offsets: $21M unfavorable vs. prior year primarily due to increased plant maintenance expenses
D&A: $12M favorable vs. prior year primarily due to the cessation of depreciation on Muskingum River Unit 5 in June 2013
Income Taxes: effective tax rate of 34.6% YTD14 vs. 35.7% YTD13
24
Rate Changes, net of offsets (in millions)
2Q14 vs. 2Q13
APCo/WPCo $22
I&M ($11)
KPCo $13
PSO $0
SWEPCO $20
Kingsport $0
TOTAL $44
Impact on EPS
Retail Rate Performance
May not foot due to rounding
$0.06
Rate Changes, net of offsets (in millions)
2Q14 vs. 2Q13
Ohio Power $11
Texas Central $0
Texas North $0
TOTAL $11
Impact on EPS $0.01
Transmission & Distribution Utilities Vertically Integrated Utilities
25
Rate Changes, net of offsets (in millions)
YTD14 vs. YTD13
APCo/WPCo $35
I&M $5
KPCo $24
PSO $0
SWEPCO $43
Kingsport $0
TOTAL $107
Impact on EPS
Retail Rate Performance
May not foot due to rounding
$0.14
Rate Changes, net of offsets (in millions)
YTD14 vs. YTD13
Ohio Power $17
Texas Central $0
Texas North $0
TOTAL $17
Impact on EPS $0.03
Transmission & Distribution Utilities Vertically Integrated Utilities
26
Retail Load*
(weather
normalized)
2Q14 vs. 2Q13
Ohio Power -4.8%
Texas Central 0.4%
Texas North 7.2%
TOTAL -2.2%
Impact on EPS $0.00
Retail Load*
(weather
normalized)
2Q14 vs. 2Q13
APCo/WPCo 2.1%
I&M 1.7%
KPCo 1.4%
PSO 1.9%
SWEPCO -3.1%
Kingsport 1.7%
TOTAL 0.9%
Impact on EPS
Retail Load Performance
*Excludes Firm Wholesale Load
Transmission & Distribution Utilities Vertically Integrated Utilities
$0.01
27
Retail Load*
(weather
normalized)
YTD14 vs. YTD13
Ohio Power -3.7%
Texas Central 2.8%
Texas North 13.1%
TOTAL -0.5%
Impact on EPS
Retail Load*
(weather
normalized)
YTD14 vs. YTD13
APCo/WPCo 0.6%
I&M 1.0%
KPCo 1.1%
PSO 2.5%
SWEPCO 2.1%
Kingsport 3.1%
TOTAL 1.4%
Impact on EPS
Retail Load Performance
*Excludes Firm Wholesale Load
Transmission & Distribution Utilities Vertically Integrated Utilities
$0.01
$0.01
28
Weather Impact
(in millions)
2Q14 vs. 2Q13
APCo/WPCo $1
I&M $2
KPCo ($2)
PSO ($1)
SWEPCO ($3)
Kingsport $0
TOTAL ($3)
Impact on EPS $0.00
Weather Impact
Weather Impact
(in millions)
2Q14 vs. 2Q13
Ohio Power $0
Texas Central ($2)
Texas North $0
TOTAL ($2)
Impact on EPS $0.00
Transmission & Distribution Utilities Vertically Integrated Utilities
29
Weather Impact
(in millions)
YTD14 vs. YTD13
APCo/WPCo $28
I&M $15
KPCo $4
PSO $1
SWEPCO $4
Kingsport $0
TOTAL $52
Impact on EPS
Weather Impact
$0.07
Weather Impact
(in millions)
YTD14 vs. YTD13
Ohio Power $0
Texas Central $6
Texas North $1
TOTAL $7
Impact on EPS $0.01
Transmission & Distribution Utilities Vertically Integrated Utilities
30
Vertically Integrated Utilities Off System Sales Gross Margin Detail
Physical off-system sales margins increased from prior year by $36M
Sharing with customers increased from prior year by $10M
AEP/Dayton Hub ATC pricing: 11% increase in liquidation prices
Second Quarter
2Q14
GWh $ in
millions
Physical Off-System Sales 5,704 $57
Trading & Marketing 6
Pre-Sharing Gross Margin 63
Margin Shared with Customers (25)
Net Off-System Sales $38
YTD June
Physical off-system sales margins increased from prior year by $181M
Sharing with customers increased from prior year by $67M
AEP/Dayton Hub ATC pricing: 54% increase in liquidation prices
YTD June 2014
GWh $ in
millions
Physical Off-System Sales 12,328 $225
Trading & Marketing 13
Pre-Sharing Gross Margin 238
Margin Shared with Customers (99)
Net Off-System Sales $139
31
AEP Generation Resources
Volumes Generated by Source (in million MWh)
Percentage Volumes Sold by Channel
Short-term/Spot Wholesale Retail Ohio Power & Wheeling Power PPAs
Cost-competitive fleet captured significant spot opportunities
QTD Power prices up 11% Natural gas prices up 14% Volumes up 7% Capacity Factor up 3%
Hydro Natural Gas Coal
YTD Power prices up 54% Natural gas prices up 28% Volumes up 14% Capacity Factor up 6%
32
$0.38
$0.45
$0.57
$0.67
$0.30
$0.16
$0.80
$0.39
$0.67
$0.51
AEP Transmission Holdco
4 types of projects: Regional projects for retirements,
renewables, economic and market efficiencies
Local reliability plans Aging infrastructure Customer-driven projects
Cumulative Base Case Capital Investment
High Case Incremental Capital Investment
EPS High Case Contribution
$/share
EPS Base Case Contribution
$/share
Non-firm joint venture projects not included; high case investment is strictly related to the Transcos (no assumption for securing
competitive opportunities); no projects included above subject to loss due to FERC Order 1000 right of first refusal