Q4 2022 Financial Highlights

AEP refined our financial and operations focus in 2022. Our message of active management and investing in renewables and infrastructure went over well with Wall Street. We grew our earnings in the fourth quarter of 2022 and for the year overall.

What Julie is saying: “Our focus on building a safe, reliable and cleaner energy system for the future while keeping rates affordable and attracting new business is delivering benefits for our customers, communities and investors.”

2022 highlights: The theme for last year was that we delivered on our commitments to stakeholders. Here’s how we did that:

• Strong earnings: We generated strong earnings, with operating earnings coming in at $5.09 per share.
  • In 2022, we raised and narrowed our operating earnings guidance range to $4.97 to $5.07 per share. We also increased our long-term growth rate to 6% to 7%.
• Regulated renewables: In March, the North Central Energy Facilities wind project was completed. North Central is an important step in our commitment to transform our generation fleet. Successfully bringing one of the largest wind projects online shows investors we’re making progress on our strategy.
• Load growth: We saw load growth in all the states where we operate. Increased growth in commercial and industrial sales helped increase our overall growth, even though residential growth was flat.
• Wins from economic development: We experienced strong growth in 2021 and 2022. Much of this success can be traced back to our long-term economic development efforts. Work done several years ago to help attract new businesses to our service territory is now generating benefits for us and communities as these companies begin operations. Growth and new jobs helps keep rates affordable for customers.

The plan for 2023: There’s a lot going on in the U.S. economy – inflation, high interest rates and higher energy costs. This is top of mind for investors and for our customers. Even though we’ll likely face continued economic challenges this year, we have a plan to keep ourselves on track:

• Keep projects in our capital plan moving: Our 2023-2027 capital investment plan is $40 billion with an emphasis on wires and renewables.
  • Any issue getting critical supplies has the potential to impact our strategy. In 2022, we were able to navigate the supply chain crisis better than most companies, which allowed us to keep our plans on track.
  • Our Procurement and Supply Chain teams have been working with other business units, the federal government and other utilities to address this continuing challenge. They also expanded our supplier network for critical items like distribution transformers and voltage regulators.
• Focus on regulatory activity and legislative initiatives: Getting favorable regulatory outcomes is critical to the financial health of our company. We’re working across our service territory on base rate cases and approvals for our regulated renewables.
• Continue to be mindful of costs. Affordability is a key issue as customers are managing higher fuel and other costs. We all need to be mindful of costs and challenge ourselves to operate as efficiently and effectively as possible.
• Make progress on our efforts to de-risk the business: Investors are looking for us to close on the sale of Kentucky Power to Liberty and on the sale of our unregulated contracted renewables. We also expect to complete our strategic review of the AEP Retail business in the first half of this year.