AEP

Restricted access to capital or insurance markets and/or increased borrowing costs or insurance premiums could reduce future net income and cash flows and negatively 24 impact financial condition

• Escalation of various cost elements (including, but not limited to, general inflation and the cost of energy)

These risks include delays, supply chain disruption and the unavailability of materials, cost overruns, inflation, the cost and availability of capital, labor disputes or shortages and other factors that could cause the total cost and timing of any project to exceed estimates

Volatility, increased interest rates and reduced liquidity in the financial markets could affect AEP’s ability to raise capital on reasonable terms to fund capital needs, including construction costs and refinancing maturing indebtedness

Volatility, increased interest rates and reduced liquidity in the financial markets could affect AEP’s ability to raise capital on reasonable terms to fund capital needs, including construction costs and refinancing maturing indebtedness

• Escalation of various cost elements (including, but not limited to, general inflation and the cost of energy)

of required facilities, impair AEP’s ability to serve its customers, and adversely affect future net income, cash flows and financial condition. Regulated electric revenues and earnings are dependent on federal and state regulations that may limit AEP’s ability to recover costs and other amounts. (Applies to all Registrants) The rates customers pay to AEP regulated utility businesses are subject to approval by the FERC and the respective state utility commissions of Arkansas, Indiana, Kentucky, Louisian

9.65% ROE effective February 2026. See “2025 Arkansas Base Rate Case” section of Note 4 for additional information. 2 CLASSES OF SERVICE AEP and subsidiaries recognize revenues from customers for retail and wholesale electricity sales and electricity transmission and distribution delivery services. AEP’s subsidiaries within the Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco and Generation & Marketing segments derive revenue from the following sources: Retai

9.65% ROE effective February 2026. See “2025 Arkansas Base Rate Case” section of Note 4 for additional information. 2 CLASSES OF SERVICE AEP and subsidiaries recognize revenues from customers for retail and wholesale electricity sales and electricity transmission and distribution delivery services. AEP’s subsidiaries within the Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco and Generation & Marketing segments derive revenue from the following sources: Retai

of required facilities, impair AEP’s ability to serve its customers, and adversely affect future net income, cash flows and financial condition. Regulated electric revenues and earnings are dependent on federal and state regulations that may limit AEP’s ability to recover costs and other amounts. (Applies to all Registrants) The rates customers pay to AEP regulated utility businesses are subject to approval by the FERC and the respective state utility commissions of Arkansas, Indiana, Kentucky, Louisian

Regulated electric revenues and earnings are dependent on federal and state regulations that may limit AEP’s ability to recover costs and other amounts

ENVIRONMENTAL AND OTHER MATTERS AEP subsidiaries are currently subject to regulation by federal, state and local authorities with regard to air and water-quality control, solid and hazardous waste disposal and other environmental matters, and are subject to zoning and other regulation by local authorities

ENVIRONMENTAL AND OTHER MATTERS AEP subsidiaries are currently subject to regulation by federal, state and local authorities with regard to air and water-quality control, solid and hazardous waste disposal and other environmental matters, and are subject to zoning and other regulation by local authorities

Regulated electric revenues and earnings are dependent on federal and state regulations that may limit AEP’s ability to recover costs and other amounts

Advancements in artificial intelligence and other emerging technologies may require significant changes to the size, skills, and composition of AEP’s workforce, and the inability to adapt to these evolving talent needs could exacerbate existing workforce challenges and adve

Advancements in artificial intelligence and other emerging technologies may require significant changes to the size, skills, and composition of AEP’s workforce, and the inability to adapt to these evolving talent needs could exacerbate existing workforce challenges and adve

Electric Utility Companies X X X X X X Rural Electric Cooperatives X X X Municipalities X X X X X Other Market Participants X X X X X X (a) Primarily includes data centers and cryptocurrency operations

financial condition. AEP’s results of operations and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, a decline in customer demand or a recession. (Applies to all Registrants) Growth in customer accounts and growth of customer usage each directly influence demand for electricity and the need for additional power generation and delivery facilities. Customer growth and customer usage are affected by a number of factors outside the control of AEP, such as econ

financial condition. AEP’s results of operations and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, a decline in customer demand or a recession. (Applies to all Registrants) Growth in customer accounts and growth of customer usage each directly influence demand for electricity and the need for additional power generation and delivery facilities. Customer growth and customer usage are affected by a number of factors outside the control of AEP, such as econ

Meeting the significant increase in electricity demand from new data centers and other large‑load customers will require substantial investment in new generation and transmission facilities

AEP’s reportable segments. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In some areas, power demand peaks during the cold winter months. The pattern of this fluctuation may change due to the nature and location of AEP’s facilities and the terms of power sale contracts into which AEP enters. In addition, AEP has historically sold and delivered less power, and consequently earned less income, when weather conditions are milder. U

and customer usage are affected by a number of factors outside the control of AEP, such as economic and demographic conditions, population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. Some or all of these factors could impact the demand for electricity. Failure to attract and retain an appropriately qualified workforce and management could harm results of operations. (Applies to all Registrants) Certain events, such as an aging workforce witho

and customer usage are affected by a number of factors outside the control of AEP, such as economic and demographic conditions, population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. Some or all of these factors could impact the demand for electricity. Failure to attract and retain an appropriately qualified workforce and management could harm results of operations. (Applies to all Registrants) Certain events, such as an aging workforce witho

in resource mix and price changes in one or more fuel commodity sources relative to the pricing of other fuel commodity sources

• Fuel costs and related requirements triggered by financial stress in the coal industry

The principal factors of impact are electricity and fuel prices, new market entrants, construction or retirement of generating assets by others and technological advances in power generation

could trigger increased regulatory scrutiny to authorizing cost recovery, especially in a rising cost environment, whether due to inflation, tariffs, high fuel prices or otherwise, and/or in periods of economic decline or hardship

1,392 WPCo 229 Other (a) 344 Total AEP (b) 17,581 (a) Primarily relates to AEP Energy employees. (b) Approximately 24% of AEP’s total workforce was represented by labor unions. Safety Safety is integral to culture and is one of AEP’s core values. AEP is dedicated to the safety of employees, contractors, customers and the communities AEP serves. AEP has policies, procedures, programs, training and initiatives in place to help provide a safety conscious work environment. AEP is committed to fundamentally embed

and the overall level of economic activity. Some or all of these factors could impact the demand for electricity. Failure to attract and retain an appropriately qualified workforce and management could harm results of operations. (Applies to all Registrants) Certain events, such as an aging workforce without appropriate replacements, mismatch of skillset or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include potential hi

1,392 WPCo 229 Other (a) 344 Total AEP (b) 17,581 (a) Primarily relates to AEP Energy employees. (b) Approximately 24% of AEP’s total workforce was represented by labor unions. Safety Safety is integral to culture and is one of AEP’s core values. AEP is dedicated to the safety of employees, contractors, customers and the communities AEP serves. AEP has policies, procedures, programs, training and initiatives in place to help provide a safety conscious work environment. AEP is committed to fundamentally embed

and the overall level of economic activity. Some or all of these factors could impact the demand for electricity. Failure to attract and retain an appropriately qualified workforce and management could harm results of operations. (Applies to all Registrants) Certain events, such as an aging workforce without appropriate replacements, mismatch of skillset or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include potential hi

2025 2024 2023 Coal and Lignite 43% 40% 37% Nuclear 19% 22% 22% Natural Gas 22% 22% 22% Renewables 16% 16% 19% An increase/decrease in one or more generation types relative to previous years reflects changes in resource mix and price changes in one or more fuel commodity sources relative to the pricing of other fuel commod

• AEP is exposed to changes in the price and availability of fuel, including coal, natural gas and uranium, as existing contracts for the supply of such fuel end or are not honored

• AEP is exposed to changes in the price and availability of fuel, including coal, natural gas and uranium, as existing contracts for the supply of such fuel end or are not honored

2025 2024 2023 Coal and Lignite 43% 40% 37% Nuclear 19% 22% 22% Natural Gas 22% 22% 22% Renewables 16% 16% 19% An increase/decrease in one or more generation types relative to previous years reflects changes in resource mix and price changes in one or more fuel commodity sources relative to the pricing of other fuel commod

Transmission Coordination Agreement and Open Access Transmission Tariff PSO, SWEPCo and AEPSC are parties to the TCA

in spending could trigger increased regulatory scrutiny to authorizing cost recovery, especially in a rising cost environment, whether due to inflation, tariffs, high fuel prices or otherwise, and/or in periods of economic decline or hardship

in spending could trigger increased regulatory scrutiny to authorizing cost recovery, especially in a rising cost environment, whether due to inflation, tariffs, high fuel prices or otherwise, and/or in periods of economic decline or hardship

Transmission Coordination Agreement and Open Access Transmission Tariff PSO, SWEPCo and AEPSC are parties to the TCA

and the terms of power sale contracts into which AEP enters. In addition, AEP has historically sold and delivered less power, and consequently earned less income, when weather conditions are milder. Unusually mild weather in the future could diminish AEP’s results of operations. Conversely, unusually extreme weather temperatures could increase AEP’s results of operations. VERTICALLY INTEGRATED UTILITIES GENERAL The Vertically Integrated Utilities operations are engaged in the generation, transmission and

or adverse publicity focused on issues including the operation and maintenance of their assets and infrastructure, their preparedness for major storms or other extreme weather events and/or the time it takes to restore service after such events, or the quality of their service or the reasonableness of the cost of their service. In addition, the public holds diverse and often conflicting views on the use of fossil fuels which can subject AEP to adverse publicity in connection with its use of fossil fuels. Crit

and the terms of power sale contracts into which AEP enters. In addition, AEP has historically sold and delivered less power, and consequently earned less income, when weather conditions are milder. Unusually mild weather in the future could diminish AEP’s results of operations. Conversely, unusually extreme weather temperatures could increase AEP’s results of operations. VERTICALLY INTEGRATED UTILITIES GENERAL The Vertically Integrated Utilities operations are engaged in the generation, transmission and

or adverse publicity focused on issues including the operation and maintenance of their assets and infrastructure, their preparedness for major storms or other extreme weather events and/or the time it takes to restore service after such events, or the quality of their service or the reasonableness of the cost of their service. In addition, the public holds diverse and often conflicting views on the use of fossil fuels which can subject AEP to adverse publicity in connection with its use of fossil fuels. Crit

These risks include delays, supply chain disruption and the unavailability of materials, cost overruns, inflation, the cost and availability of capital, labor disputes or shortages and other factors that could cause the total cost and timing of any project to exceed estimates

(b) OPCo purchases energy and capacity at auction to serve generation service customers who have not switched to a competitive generation supplier

(b) OPCo purchases energy and capacity at auction to serve generation service customers who have not switched to a competitive generation supplier

These risks include delays, supply chain disruption and the unavailability of materials, cost overruns, inflation, the cost and availability of capital, labor disputes or shortages and other factors that could cause the total cost and timing of any project to exceed estimates

are subject to increasing risks of physical attacks, ransomware attacks and cybersecurity threats, and that the risks may escalate during periods of heightened geopolitical tensions

are subject to increasing risks of physical attacks, ransomware attacks and cybersecurity threats, and that the risks may escalate during periods of heightened geopolitical tensions

promulgated by the NERC, with the approval of the FERC, which standards protect the nation’s bulk power system against potential disruptions from cyber and physical security breaches. The FERC oversees RTOs, entities created to operate, plan and control utility transmission assets. AEGCo, APCo, I&M, KGPCo, KPCo and WPCo are members of PJM. PSO and SWEPCo are members of SPP. The FERC has jurisdiction over certain issuances of securities of most of AEP’s public utility subsidiaries, the acquisition of secu

• Compliance with mandatory reliability standards, including mandatory cybersecurity standards

Companies X X X X X X Rural Electric Cooperatives X X X Municipalities X X X X X Other Market Participants X X X X X X (a) Primarily includes data centers and cryptocurrency operations