Q4 2023 American Electric Power Company Inc Earnings Call

In South America, and North America. This week also announced that its going to be purchasing its JV partner alumina limited.

And with that we today with US is president and CEO, Bill Oplinger, and I'll turn it over to you Bill.

Yes.

Okay.

Good.

So as Scott said, we announced a big transaction on the on Sunday night, and if I'm not careful I'm going to fall off this but that's okay.

Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the American Electric power fourth quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power fourth quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise.

So I figured probably a lot of questions in your mind around the transaction. So I talk specifically around the transaction and try to take some of the questions off the table for you and then I'll sit down and have the fireside with what's got you first of all the transaction, we announced that we're acquiring of alumina limited.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again.

He would like to ask a question during that time simply press star followed by the number one on your telephone keypad to withdraw your question price Starwood again, I would now like to turn the conference over to Darcy Reese Vice President of Investor Relations. Please go ahead.

With the transaction ratio Aleem.

Dorsey Reese: I would now like to turn the conference over to Dorsey Reese, Vice President of Investor Relations. Please go ahead. Thank you, Regina. Good morning, everyone, and welcome to the fourth quarter 2023 earnings call for American Electric Power. We appreciate you taking the time today to join us. Our earnings release, presentation slides, and related financial information are available on our website at aep.com. Today, we will be making forward-looking statements during the call. There are many factors that may cause future results to differ materially from these statements.

And with limited shareholders would own 31, 25% of the combined company the Alcoa shareholders would own 68, 75% of the combined company we will list.

Thank you Regina good morning, everyone and welcome to the fourth quarter 2023 earnings call for American Electric power. We appreciate your taking time today to join US our earnings release presentation slides and related financial information are available on our website at AEP Dot com today, we will be making forward looking statements. During the call. There are many factors that.

Our CD is in Australia, so it'll be exchange between our shares in their shares and we will have a listed CDI in Australia.

We will pick up a small amount of debt around $300 million of alumina limited debt enterprise values roughly $2.5 billion for the transaction.

And may cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of these factors. Joining me. This morning for opening remarks are Ben folk our interim President and Chief Executive Officer, Chuck The Beula, our executive Vice President and Chief Financial Officer, and Peggy Simmons, our executive Vice President of utilities.

I've been asked numerous times in the last 24 hours why now so let me let me address the wide now.

Dorsey Reese: Please refer to our SEC filings for a discussion of these factors. Joining me this morning for opening remarks are Ben Folk, our Interim President and Chief Executive Officer; Chuck Zebula, our Executive Vice President and Chief Financial Officer; and Peggy Simmons, our Executive Vice President of Utilities. We will take your questions following their remarks. I will now turn the call over to Ben. Well, thank you, Darcy. Good morning, and welcome to American Electric Power's fourth quarter 2023 earnings call. It's great to have a chance to reconnect with you, although I never thought it would be under these circumstances.

The first part.

If you understand the nature of the joint venture both of these organizations were spun out of larger organizations over time. So alumina limited was spun out of western mining back in I believe 2000 to Alcoa Corp was spun out of Alcoa, Inc. Back in 2016, the joint venture used to be.

We will take your questions. Following their remarks, I will now turn the call over to Ben.

Well. Thank you Darcy good morning, and welcome to American Electric Power's fourth quarter 2023 earnings call.

Great to have a chance to reconnect with you, although I never thought it would be under these circumstances.

A small part of a large organization called Alcoa, Inc. When we spun out of Alcoa, Inc. The joint venture became a very large part of a smaller company. We've looked at the transaction a number of times over the last seven years, both sides of have actually engaged in looking at the transaction.

Ben Folk: As you know, the AEP Board of Directors made a decision to remove Julie Sloat from her duties as Chair, President, and CEO. Taking this action was not easy, but the board believes it was in the best interest of AEP and its stakeholders to do so. On behalf of the Board and the entire AEP family, I would like to wish Julie well and thank her for all her contributions. I would also like to assure everyone that Julie's departure was not due to any unethical behavior, disagreements about financial policy, or because of any violation of AEP's Code of Conduct.

As you know the AEP board of directors made a decision to remove julie's float from her duties as chair President and CEO.

Taking this action was not easy, but the board believes it was in the best interest of AEP and its stakeholders to do so.

And essentially it comes down to a small window of opportunity to get a transaction like this done both shares have traded.

On behalf of the board and the entire AEP family I would like to wish Julie well and thank her for all her contributions.

I'd also like to assure everyone that julie's departure was not due to any ethical behavior disagreements with financial policy or because of any violation of Aep's code of conduct.

In concert over the last few years, a few months and there was an opportunity for both sets of shareholders to have value created and I'll talk about why that is but very small window to get a transaction like this done.

Now as many of you are aware after my retirement from Excel energy I joined the AEP Board in February of 2022.

Ben Folk: Now, as many of you are aware, after my retirement from Xcel Energy, I joined the AEP board in February of 2022. I was attracted to this board because I was impressed with AEP's business model, its strong asset base, and the quality of its leadership team and board. I'm even more impressed two years later. In my tenure here, I've seen the AEP team rise to meet multiple challenges. Let me give you some examples.

If I were talking to alumina limited shareholders.

I was attracted to this board because I was impressed with Aep's business model its strong asset base and the quality of its leadership team and board I'm, even more impressed two years later.

This transaction is good for alumina limited shareholders for a number of reasons first of all they get a premium on the closing price from the shares on Friday. So the exchange ratio as of Friday represented at about a 13% premium.

In my tenure here I've seen the AEP team rise to meet multiple challenges let.

The transaction is also a premium on the one year V. Wap on the exchange ratio. The two year V. Wap on the exchange ratio in addition to that they get.

Let me give you some examples starting with earnings for 14 years in a row AEP has met or exceeded earnings guidance. In 2023 is no exception. Our operating earnings came in at $5.25. That's within our guidance range. Despite 37 cents of unfavorable weather and <unk>.

Ben Folk: Starting with earnings. For 14 years in a row, AEP has met or exceeded earnings guidance, and 2023 is no exception. Our operating earnings came in at $5.25, that's within our guidance range, despite $0.37 of unfavorable weather and $0.45 of increased interest costs over the prior year. As you know, controlling O&M expenses has been a challenge for the industry.

Exposure to the entirety of the aluminum value chain, so as they look at the.

The ownership that they will have in Alcoa Corp. They will be owning 31.25% of our fully integrated upstream.

45 cents, a increased interest cost over the prior year.

Now as you know controlling O&M expense has been a challenge for the industry and AEP has met that challenge essentially keeping O&M flat for the last 10 years, while at the same time doubling its asset base.

Aluminum company so.

So it's important for them to understand that they will get that that value also.

Ben Folk: And AEP has met that challenge, essentially keeping O&M flat for the last 10 years while at the same time doubling its asset base. This team's continuous focus on O&M efficiency is nothing short of excellent. You may also recall that in early 2023, the Texas Commission denied a petition to be part of SWEPCO's 999-megawatt renewable energy project for $2.2 billion.

In addition to that they will get exposure to the new technologies that we're coming out with.

This team's continuous focus on O&M efficiency is nothing short of excellent.

In the in the metal space. So in my view, it's a good deal for the alumina limited shareholders.

You May also recall that in early 2023, the Texas Commission denied our petition to be part of <unk> 999 megawatt renewables project for $2 2 billion.

It's also a good deal for the Alcoa shareholders. What it does is it provides us alcoa exposure greater exposure to the upstream part of the business. So mining and refining we will get the economic interests associated with the with those tons that are previously alumina limited would get.

Ben Folk: But the team didn't miss a beat and put the project back on track, with Arkansas and Louisiana ultimately stepping up to move forward with the full project. As a result, and including SWEPCO, today we have commissioned approval of $6.6 billion of new renewable projects throughout AEP's service territory, representing a 70% achievement of our current five-year, $9.4 billion new generation capital plan. I hope you would agree with me that that is really solid execution.

But the team didn't Miss a beat and put the project back on track with Arkansas, and Louisiana, ultimately stepping up to move forward with the full project as a result, and including swept coal today, We have commission approval of $6 $6 billion of new renewable projects throughout Aep's service territory.

There's real synergies in the deal so theres overhead reductions, but there's also capital structure synergies in the transaction. So we will be able to generate those synergies. Once the deal is completed and then I guess lastly, and most importantly.

<unk>, representing a 70% achievement of our current five year $9 4 billion New generation capital plan I Hope you would agree with me that that is really solid execution.

It really simplifies the equity story for Alcoa Corp.

If you're buying Alcoa Corp. Today, you need to thoroughly understand the joint venture structure in the future. Once this joint venture is rolled up into Alcoa Corp. It just makes it a whole lot easier to understand our financials and our overall equity story and before I leave that so it is good for Alcoa for alumina limited.

Initiatives to simplify and Derisk, our poor portaloo are squarely in the focus of the board and the management team and we are pleased with the great progress made.

Ben Folk: Initiatives to simplify and de-risk our portfolios are focusing the board and the management, and we are pleased with the great progress made. Last year, we completed the sale of our unregulated renewables portfolio, bringing in $1.2 billion of cash proceeds. We should be closing on our New Mexico Renewable Development Solar Portfolio within the next day or two. This, in combination with the expected conclusion of our retail and distributed resources sales process in the second quarter, keeps us on schedule to achieve our 2024 asset sales target. As we move forward, AEP will continue to be a disciplined portfolio manager, and we will be willing to take action when price and the ability to execute intersect. To that end, we've made the decision to retain our ownership interests in both our Prairie Wind and Pioneer Transmission joint ventures.

Last year, we completed the sale of our unregulated renewables portfolio, bringing in $1 $2 billion of cash proceeds.

We should be closing on our new Mexico wind up renewable developments solar portfolio within the next day or two this in combination with the expected conclusion of our retail and distributed resources sales process in the second quarter keeps us on schedule to achieve our 2024 asset sales targets.

Orders, it's good for Alcoa shareholders, but in addition to that I think it's good for the stakeholders in the various communities essentially for us are doubling down in places like Western Australia and.

And Brazil and in Guinea, So we'll be able to do really good things for the stakeholders and the community a couple of points on the transaction before I move on we have a support from the largest shareholder of alumina limited. So Alan Gray has agreed to support the transaction and the alumina limited.

As we move forward AEP will continue to be a disciplined portfolio manager and we would be willing to take action when price and the ability to execute intersect.

To that end, we've made the decision to retain our ownership interest in both our Prairie wind and pioneer transmission joint ventures.

Ward is going to recommend the transaction to their shareholders. So I think we're in good shape there and if you were asked me what are the next steps next steps are will agree on a scheme of implementation.

Ben Folk: We also completed the review of TransSource and ultimately determined that owning this joint venture fits strategically within our portfolio. We like our remaining assets and will focus going forward on doubling down on our efforts to achieve constructive regulatory outcomes that will allow us to provide the quality of service our customers need and expect. Regarding ICON Capital, our recent agreement came about from a culmination of a constructive dialogue between AEP and the ICON team. Like us, the ICON team believes AEP shares are undervalued, and there's meaningful upside potential for our investors.

We also completed their review of Trans source and ultimately determined that owning this joint venture fits strategically within our portfolio.

Agreement, so that'll take us a little while she both shareholders will vote on both sides and then we expect to close probably around six months from now. So overall, we think it's great transaction for both sets of shareholders. We think it'll get done and we're really pleased so with that caught your eye will.

We like our remaining assets and will focus going forward on doubling down on our efforts to achieve constructive regulatory outcomes that will allow us to provide the quality of service our customers need and expect.

Regarding Icahn capital a recent agreement came about from the culmination of a constructive dialogue between AEP and the icon teams.

Turn it over to you to ask any questions.

Okay. Thank you Bill.

If anyone has questions. Please send them through the App.

Like us the icon team believes AEP shares are undervalued and there is meaningful upside potential for our investors the.

The one I had regarding the deal on your previous on the call. You mentioned you know it will open opportunity for growth.

Ben Folk: The addition to AEP's board will bring fresh perspective as we continue to execute on strategic priorities and enhance value for our stakeholders. Looking ahead, today we are reaffirming our 2024 full-year operating earnings guidance range of $5.53 to $5.73, as well as our long-term earnings growth rate of 6% to 7%, which is underpinned by a $43 billion five-year capital plan, in addition to 14% to 15% FFO to debt target, which Chuck will expand upon shortly. You should know that I am committed to my role as interim president and CEO, and I believe I can add value while the board works to identify a permanent successor.

The addition to Aep's board will bring fresh perspective, as we continue to execute on our strategic priorities and enhance value for our stakeholders.

Can you talk a bit more about that so.

So it will.

Looking ahead today, we are reaffirming our 2020 for full year operating earnings guidance range of $5 53 to $5 73 as.

And I didn't highlight this but it gives us it gives alcoa.

Some flexibility around.

Key strategic portfolio decisions right now both parties have to agree on those portfolio decisions. So those are those portfolio decisions that has to be agreed on by both parties are curtailments closures, but also growth as I look forward into the future one of the areas.

As well as our long term earnings growth rate of 6% to 7%, which is underpinned by a 43 billion five year capital plan. In addition to 14% to 15% at the older debt target, which Chuck will expand upon shortly.

You should know that I am committed to my role as interim President and CEO and I believe I can add value while the board works to identify a permanent successor.

Is that a.

That we will be very focused on growth is in the upstream part of the upstream both in bauxite mining and refining and I think there will be growth opportunities and this is not next month, it's not next quarter. So I don't want investors to be concerned that we're rushing out to a huge growth story, but when you look at the growth of the primary aluminum business over.

Ben Folk: So, before I turn it over to Peggy for regulatory updates and Chuck for a financial review, let me also acknowledge that 2023 has been, at times, a challenging year at AEP. There have certainly been some twists and turns and a few bumps in the road, but I would encourage all of you to focus on the key opportunities that lie ahead. I have tremendous confidence in our team's ability to achieve our objectives as we work every day to deliver safe, reliable, and affordable energy to our customers. With that, I'll turn it over to Peggy.

So before I turn it over to Peggy for regulatory updates and Chuck for a financial review. Let me also acknowledged that 2023 has been at times a challenging year at AEP, There's certainly been some twists and turns in a few bumps in the road.

But I would encourage all of you to focus on the key opportunities that lie ahead, I have tremendous confidence in our team's ability to achieve our objectives. As we work every day to deliver safe reliable and affordable energy to our customer with that I'll turn it over to Peggy. Thanks.

The next 10 or 20 years, there will be opportunities for us to plant the flag on more bauxite.

And potentially grow in the refining business and this gives us the opportunity to do that.

And maybe just you know looking three to five years out how much growth do you think you could achieve.

Peggy Simmons: Thanks, Ben, and good morning, everyone. Now I'd like to turn to updates on our ongoing regulatory and legislative efforts. While we made important regulatory progress in 2023, it is clear that we can do even more to facilitate successful and constructive outcomes. Details of related activities can be found in the appendix on slides 29 through 31.

Thanks, Ben and good morning, everyone now I'd like to turn to updates on our ongoing regulatory and legislative effort.

In the near term three to five years and I consider that the near term, we're really focused on.

While we made important regulatory progress in 2023. It is clear that we can do even more to facilitate successful and constructive outcomes.

Incremental growth opportunities in the company.

Detail of related activities can be found in the appendix on slides 29 through 31.

So we have.

Two restarts on the smelting side that are ongoing the smelter restart down in Brazil, the smelter restart in Indiana, we have a incremental creep project that will add a few hundred tonnes per day down in Brazil and in the refinery we've.

Peggy Simmons: Closing the authorized versus earned ROE gap is a key area of focus for us. Our fourth-quarter ROE came in at 8.8%, a slight improvement over the third quarter. This also reflects impacts of approximately 40 basis points from mild weather conditions in 2023.

Closing the authorized ROE.

Versus earned ROE gap is a key area of focus for us.

Our fourth quarter ROE came in at eight 8% a slight improvement over the third quarter.

This also reflects impacts of approximately 40 basis points from mild weather conditions in 2023.

We've got a couple of growth projects that are small in small but important in.

Our efforts to improve and bridge. The ROE gap is supported by work we've done related to the recent passage of legislation that will help position us to provide safe and reliable service, while managing costs and reducing regulatory lag.

Peggy Simmons: Our efforts to improve and bridge the ROE gap are supported by work we've done related to the recent passage of legislation that will help position us to provide safe and reliable service while managing costs and reducing regulatory lag. Most importantly, we obtain securitization in Kentucky, a biannual distribution cost recovery factor, or DCRF, in Texas, and rate reviews every two years in Virginia. On the regulatory front, we secured several important wins over the course of 2023, including achieving constructive base rate case outcomes in Louisiana, Oklahoma, and Virginia, re-establishing formula rate plans in Arkansas and Louisiana, and reaching a settlement in our Ohio ESP-5 filing on which we're awaiting a commission order. Overall, in 2023, we secured $312 million in rate relief.

For instance, in Norway to creep the motion facility, but also in Quebec to increase our cast house capability. Those are the things that we'll be doing over the next three to five years. If I then look into the next decade and I know that's a long ways out we've got two breakthrough we've got three breakthrough technologies that will come.

Most importantly, we obtained securitization in Kentucky, a biannual distribution cost recovery factor or D. C. Our app in Texas and rate reviews every two years in Virginia.

Into existence.

Existence in the next decade, we've got a partnership with Rio Tinto on carbon free aluminum manufacturing, which is called Ellis's, we have our own.

On the regulatory front, we secured several important wins over the course of 2023.

Our breakthrough technology called Australia, which will take twitch and convert that into high purity aluminum and then we have a suite of technologies called refinery of the future that will come into play in in the 2030 and beyond timeframe.

Including achieving constructive base rate case outcome, and Louisiana, Oklahoma, and Virginia, Reestablishing Formula rate plans in Arkansas, and Louisiana, and reaching a settlement in our Ohio, ESP filing on which we're awaiting a commission order.

And maybe staying on these development projects, especially ellis's, what's the update there what are some of the next milestones. So again, it's a joint venture between.

Overall in 2023, we secured $312 million and rate relief.

We also filed new base cases in Indiana, Michigan, and Kentucky in 2023.

Peggy Simmons: We also filed new base cases in Indiana, Michigan, and Kentucky in 2023. In Indiana, we have already reached a settlement, which we filed in December, and we expect a commission decision by June of this year. In Michigan, we continue to advance through the process and currently expect a ruling in the case in July. In Kentucky, the base case and securitization application were approved by the commission earlier this year.

Alcoa, Rio Tinto and the government of Quebec, we continue to make progress.

In Indiana, we have already reached the settlement, which we filed in December and we expect a commission decision by June of this year.

We will be.

Starting commercial size sell this year.

And we've run cells that are smaller than commercial size.

In Michigan, we continue to advance through the process and currently expect a ruling in the case in July.

And so we continue to make progress we have to make sure that people understand though it's still research and development.

In Kentucky, the base case and securitization application was approved by the commission earlier this year.

We're in the process of stepping out to commercial size.

And and we continue to make progress.

Other upcoming cases include our new Oklahoma base rate case for peso, which we filed last month.

Peggy Simmons: Other upcoming cases include a new Oklahoma-based rate case for PSO, which we filed last month. Additional filings in the first quarter will include an AEP Texas-based rate case and the AFCA Virginia biannual rate review that should have the benefits of legislative changes attained in 2023. While we reached many constructive outcomes in 2023, we are disappointed in a couple disallowances recently received. First, in Texas, the commission issued a decision disallowing capitalization of AFUDC related to our church plant in mid-December 2023, and we filed a motion for reconsideration a week later. In West Virginia last month, the commission disallowed a portion of our March 2021 to February 2023 under recovered fuel, and we recently filed an appeal with the West Virginia Supreme Court on February 8.

Let's say looking out when do you think you could reach commercial commercialization. So I think the latest that the partnership has said is that there could be first hot metal in 2026.

Additional filings in the first quarter will include an AEP, Texas base rate case, and the Atco, Virginia biannual rate review that should have the benefits of legislative changes attained in 2023.

Alcoa would be looking at implementation later in the early part of the 20 <unk> of the next decade.

While we reached many constructive outcomes in 2023, we are disappointed in a couple of Disallowances recently received.

And I think in the past. It was said you wouldn't build Neil smelters unless allison's was that's is that still the case and that's still the case, we're not looking to build a new haul hero line.

First in Texas. The Commission issued a decision disallowing capitalization of a S. U D C related to our plant in mid December 2023.

We would be waiting for ellis's, we truly believe that Atlas. This is.

And we filed a motion for reconsideration reconsideration a week later.

It will be the solution for primary metal in the future.

In West Virginia last month, the commission disallowed a portion of our March 2021 to February 2023 under recovered fuel and we recently filed an appeal with the West Virginia Supreme Court on February eight.

And we do have a question from the App. Many of your peers have invested in scrap recycling versus alumina, how do you view returns and upstream businesses through the cycle.

So thats two very different questions and.

We are also disappointed with the FERC order we received in January 2024 related to treatment of accumulated deferred income taxes associated with net operating loss carryforwards or Nols.

Peggy Simmons: We are also disappointed with the FERC order we received in January 2024 related to the treatment of accumulated deferred income taxes associated with the Net Operating Loss Carry Forward, or NOLC, mostly affecting our Transmission Hold Cost segment. We just filed for rehearing on February 20th. Chuck will discuss the related unfavorable net financial impact on 2023 operating earnings. Looking ahead, we know there's more work to be done as we advance our regulatory strategies in 2024 to achieve a forecasted regulated ROE of 9.1 percent. We are well on our way this year with almost 70% of rate relief being either secured or related to mechanisms that are more administrative in nature.

We think that well if if we step back the returns in upstream aluminum have been very challenged over the last two decades, and that's really because of the emergence of the of the Chinese in the industry. The Chinese have committed to a 45 million metric ton cap, which will limit their growth. So my view is it gives.

Mostly affecting our transmission Holdco segment.

We just filed for rehearing on February 20th.

Shortly Chuck will discuss the related unfavorable net financial impact to 2023 operating earnings.

US an opportunity to earn returns in the future in the upstream primary business. The secondary business is a very different question from that.

Looking ahead, we know there's more work to be done as we advance our regulatory strategies in 2024 to achieve our forecasted regulated Roe.

We understand that the growth of primary metal.

We'll be in the 2% to 3% range over the next two decades the growth of secondary metal will be in the 3% to 4%.

Nine 1%.

We are well on our way this year with almost 70% of rate relief either secured or related to mechanisms that are more administrative in nature.

Range and so therefore secondary growth is going to be the secondary market will be a large and growing over the next couple of decades, we have yet to figure out how we enter to the secondary market in the near term.

Peggy Simmons: We look forward to continuing to engage constructively with our regulators and strengthening relationships at all levels. As Ben mentioned, this year AEP continued to advance our five-year, $9.4 billion regulated renewables capital plan, and now we have a total of $6.6 billion approved by various state commissions. More detail of resource additions can be viewed in the appendix on slides 32 through 34. As previously disclosed, we received approval for APCO's 143 megawatts of wind generation, totaling more than $400 million of investment. This is in addition to the previously approved 209 megawatts of solar and wind projects for approximately $500 million. In 2023, INM also received commission approval in both Indiana and Michigan for 469 megawatts of solar projects representing 1 billion dollars of investment. PSO's 995.5 megawatt renewables portfolio for $2.5 billion, and SWEPCO's 999 megawatt renewables for $2.2 billion.

We look forward to continuing to engage constructively with our regulators and strengthening relationships at all levels.

As Ben mentioned this year AEP continued to advance our five year $9 $4 billion regulated renewables capital plan and now have a total of $6 $6 billion approved by various state commissions.

<unk> are able to generate returns that our shareholders would expect over the long term the secondary entry for us is Australia.

Australia allows us to process post consumer scrap.

More detail of resource additions can be viewed in the appendix on slide 32 to 34.

And create a very high purity aluminum and it would be our ability to get in with a technological advantage that may allow us to generate.

As previously disclosed we received approval for <unk> 143 megawatts of wind generation totaling more than $400 million of investment.

Excess returns in the industry, but on the secondary market. We you know we've looked at it for a long time and it's just hard to figure out how to generate.

This is in addition to the previously approved 209 megawatts of solar and wind projects for approximately $500 million.

Good returns not not saying that we won't get into it but we're evaluating.

In 2023, we also received commission approval in both Indiana, and Michigan for INR 469 megawatts of solar projects, representing $1 billion of investment.

And then maybe staying more near term you you're taking a couple of actions to improve your EBITDA.

Combined we are expecting to reach $645 million by the end of 'twenty five maybe starting with some of those actions, especially on the raw material side do you expect to reach over $300 million can you update us on how's that progressing so we outlined.

<unk> 995, five megawatt renewable renewables portfolio for $2 $5 billion and swap code 999 megawatt renewables for $2 2 billion.

In <unk>.

Our fleet transformation goals are aligned with and supported by our integrated resource plan, we have pending request for proposals for a diverse set of additional generation resources and I am in Kentucky P. S O and sweat Koh with more to come from other operating companies, including Atco.

Peggy Simmons: Our fleet transformation goals are aligned with and supported by our integrated resource. We have pending requests for proposals for a diverse set of additional generation resources at I&M in Kentucky, PSO, and SWEPCO, with more to come from other operating companies, including APCO. These generation investments are an integral part of our broader capital program, which is 100% focused on regulated assets, and the production tax credits that are generated from our renewable energy projects are passed along to and provide great value to our customers. In addition to these projects, AEP is advancing an additional $27 billion in investment in our transmission and distribution systems to support reliability and resilience.

<unk>, we outlined a half a dozen actions that should add over $600 million. So our EBITDA, we use a basis of 2023, where we made a little over $500 million and EBITDA first the first action is around raw material costs, we talked about $310 million of raw material improvement about.

These generation investments are an integral part of our broader capital program, which is 100% focused on regulated asset and the production tax credits that are generated from our renewable energy projects are passing along to and provide great value to our customers.

A third of that was already locked in when we made the announcement based on the lags that was based on our view of where the year would go on raw material costs and sitting here today that hasn't necessarily changed.

And so we have in my view very good line of sight to making that $300 million.

In addition to these projects AEP is advanced advancing an additional $27 billion and investment in our transmission and distribution system to support reliability and resiliency.

We announced something called advancing competitiveness, which is $100 million takeout of overall cost structure.

It represents a 5% decrease in controllable costs.

Charles E. Zebula: These combined investments underpin our 67% EPS growth commitment while mitigating customer bill impact. With that, I'll pass it over to Chuck to walk through the performance drivers in detail supporting our financial commitment. Thanks, Peggy, and good morning to everyone on the call.

These combined investments underpin, our 67% EPS growth commitment, while mitigating customer bill impacts with that I'll pass it over to Chad to walk through the performance drivers in detail supporting our financial commitment.

This is the first step toward making alcoa more competitive in the future.

And we are really trying to change the culture within alcoa to be extremely laser focused on our competitiveness at the plant level at the department level and and this is the first step so it's across the organization each plant each department knows what their targets are and they're flying on it.

Yeah.

Thanks, Peggy and good morning to everyone on the call I'll walk us through the fourth quarter and full year results for 2023 share some updates on our service territory load our outlook for this year and finished with commentary on credit metrics and liquidity.

Charles E. Zebula: I'll walk us through the fourth quarter and full year results for 2023, share some updates on our service territory load, our outlook for this year, and finish with commentary on credit metrics and liquidity. Let's go to slide 9, which shows the comparison of GAAP earnings to operating earnings for the quarter and year-to-date period. GAAP earnings for the fourth quarter were $0.64 per share compared to $0.75 per share in 2022.

And they'll get that $100 million on a run rate basis by the end of 'twenty 'twenty four.

In addition to that we outlined improvements at work and so work we are ramping up. In addition, we are looking at trying to get.

Go to slide nine which shows the comparison of GAAP to operating earnings for the quarter and year to date periods.

GAAP earnings for the fourth quarter were 64 per share compared to 75 cents per share in 2022.

Additional.

Forty-five X savings from the U S government. So that was the war difference.

Charles E. Zebula: For the year, GAAP earnings were $4.26 compared to $4.51 in 2022. As we have highlighted throughout 2023, our year-to-date comparison of GAAP to operating earnings reflects the gain or loss related to the sale of certain businesses, regulatory outcomes, as well as our typical mark-to-market adjustments as non-operating. Our team is committed to minimizing the variances between GAAP and operating earnings as we go forward. Detailed reconciliations of gap-to-operating earnings are shown on slides 16 and 17 of the presentation today. Let's quickly cover the fourth quarter.

For the year GAAP earnings were $4 26, compared to $4 51 in 2022.

On top of that we're looking at the improvement coming out of the restart and al you more and so as al you more restarts that tonnage will be incremental tonnage incremental EBITDA.

As we have highlighted throughout 2023, our year to date comparison of GAAP to operating earnings reflects the gain or loss related to the sale of certain businesses regulatory outcomes as well as our typical mark to market adjustments as non operating our team is committed to minimizing the variances.

And I know I'm going through all the all the items off top my head, but the Winona curtailment will occur at the end of the second quarter of this year. So that provides economic benefits and then there are benefits associated with improvements at San Cypriot given that the sand cibrian situation is.

Between GAAP and operating earnings as we go forward.

Reconciliations of GAAP to operating earnings are shown on slides 16, and 17 of the presentation today.

Difficult to determine exactly where it will end, we did not quantify that in the near term.

Let's quickly cover the fourth quarter, our fourth quarter earnings came in at $1 23 per share, which was an 18% improvement over the same period in 2020 to note that we had 25 cents a favorable O&M and strong performance in our generation and marketing segment.

And maybe just a couple of follow ups on the Warrick Youre restarting potline.

Charles E. Zebula: Our fourth-quarter earnings came in at $1.23 per share, which was an $0.18 improvement over the same period in 2022. Note that we had $0.25 of favorable O&M and strong performance in our generation and marketing segment, partially offset by $0.06 of unfavorable weather, $0.09 of higher interest costs, and lower performance in transmission hold costs. December weather, in particular, was the 28th warmest out of the last 30 years.

How is that progressing right now.

It's progressing very well so when I can compare that versus some of the other restarts that we said we had anticipated that we would be halfway through that restart.

Partially offset by <unk> <unk> of unfavorable weather <unk> <unk> of higher interest costs and lower performance in transmission Holdco <unk>.

At the end of the fourth quarter, we met that milestone we did it in a way that was safe and efficient as we got into the first part of January we saw an uptick in some of our safety incidents in the in the plant nothing serious no fsrus fatal or serious injuries.

December weather in particular was the 28th warmest out of the last 30 years for reference the full details of our fourth quarter results are shown on slide 15 of the presentation.

Charles E. Zebula: For reference, the full details of our fourth quarter results are shown on slide 15 of the presentation. Let's have a look at our full year results for 2023 on slide 10. Operating earnings were $5.25 per share compared to $5.09 per share in 2022. Looking at the drivers by segment, operating earnings for vertically integrated utilities were $2.47 per share, down $0.09, mostly due to unfavorable weather, higher interest expense, and higher income

But we said, let's pause it for a little while and restart delay.

Delay the restart by a couple of weeks we're back on the track of the restart is going extremely well I really commend the team in work first of all for having taken the action to say, let's slow down for a little while while we while we make sure the safety cultures right and now Theyre progressing further so that's going very well.

Let's have a look at our full year results for 2023 on slide 10.

Operating earnings were $5 25 per share compared to 509 per share in 2022.

Looking at the drivers by segment operating earnings for vertically integrated utilities were $2 47 per share down nine cents, mostly due to unfavorable weather.

Then when we look at the U S market and we see the Midwest premium continues to drift lower and.

We are bringing incremental capacity is there is this the right time to bring capacity.

The capacity that we're bringing online is economic for us and so we look at it and say hey, it helps to dilute the fixed costs.

Interest expense and higher income taxes. These items were partially offset by rate changes across <unk>.

Charles E. Zebula: These items were partially offset by rate changes across various operating companies, increased transmission revenue, higher normalized retail load, favorable depreciation, and lower O&M. Once again, depreciation is favorable at the vertically integrated segment, primarily due to the expiration of the Rockport Unit 2 lease in December 2022. The transmission and distribution utility segment earned $1.30 per share, up 14 cents from last year. Positive drivers in this segment included increased transmission revenue, rate changes in Texas and Ohio, and lower O&M. Partially offsetting these items were unfavorable weather, higher depreciation, and higher interest expense.

And work the incremental tons are EBITDA positive. So that's that's why we're doing it.

Various operating companies increased transmission revenue higher normalized retail load favorable depreciation and lower O&M.

And maybe on the Alomar smelter restart had some issues in the past how's that progressing right now it's moving forward on a measured pace and so we're taking it slowly as I reflect on the al Jamar restart very different than for instance, the warrick restart the ward line that were.

Once again depreciation is favorable at the vertically integrated segment, primarily due to the exploration of the Rockport unit two lease in December 2022.

The transmission and distribution utilities segment earned $1 30 per share up <unk> 14 from last year.

Restarting had been down for maybe a year the al Jamar smelter had been down for I believe eight years.

I think we fundamentally underestimate at three key components to the RMR restart the first was the condition of the equipment.

Positive drivers in this segment included increased transmission revenue rate changes in Texas, and Ohio, and lower O&M, partially offsetting these items were unfavorable weather higher depreciation and higher interest expense.

In that part of the World If a plant has doesn't have heat in it.

In more of a state of deterioration than we had probably anticipated secondly was the availability of clean Bath and we've resolved that issue, but probably most importantly recently is the availability and knowledge of the workforce. We had lost a good deal of the workforce.

The AEP transmission Holdco segment contributed $1 43 per share up <unk> 11 from last year positive investment growth of nine cents and favorable income taxes of five.

Charles E. Zebula: The AEP Transmission Hold Go segment contributed $1.43 per share, up $0.11 from last year. Positive investment growth of $0.09 and favorable income taxes of $0.05 were the main drivers in this segment. As Peggy mentioned, we received the FERC NOLC order in January, resulting in an unfavorable net impact to consolidated earnings of $0.07 per share, with the majority of that impact occurring at the Transmission Hold Go. The impact of this order on our 2024 plan is approximately three cents per share. Generation and marketing produced $0.59 per share, up $0.09 from last year. The positive variance here is primarily due to improved retail and wholesale power margins, the sale of renewable development sites, and favorable impacts associated with the contracted renewable sale in August. These items were partially offset by higher interest expense and unfavorable income tax.

After being curtailed for eight eight years and bringing in an entirely new workforce is has meant that we've had to go slower than what we anticipated that's not the case and work and work we had a workforce that was ready to go.

Were the main drivers in this segment as Peggy mentioned, we received the FERC NOL see order in January resulting in an unfavorable net impact to consolidated earnings of seven cents per share with the majority of that impact occurring at the transmission holdco.

And then on San Cyprian, you mentioned.

It's been a challenge.

What's the discussion how are the discussions with.

The impact of this order to our 2024 plan is approximately <unk> <unk> per share.

Stakeholders are progressing so the discussions are ongoing with the various stakeholders and in this case the key stakeholders are the union.

Generation and marketing produced 59 per share up nine from last year.

Really the employees, but also the governments both the local and the federal governments. So those those discussions are ongoing.

Positive variance here is primarily due to improved retail and wholesale power margins the sale of renewable development sites and favorable favorable impacts associated with the contracted renewable sale in August these items were partially offset by higher interest.

One thing that I have made it clear is that our coal will not be putting more cash into that entity.

That cash has around 200, I'm, sorry that entity has around $200 million of cash left in it.

Spence and unfavorable income taxes.

And we will be going through a process with our stakeholders for them to understand the situation that the facility is in we're going to do everything that is within our control to make that facility a viable facility, but we will need support from the union and the government to do so.

Charles E. Zebula: Finally, corporate and other was down nine cents per share, driven by higher interest expense, partially offset by a favorable year-over-year change in investment gains, largely due to investment losses that occurred in the fourth quarter of 2022. As we mentioned earlier, we are reaffirming our guidance range for 2024. For convenience, we've included an updated waterfall bridging, our actual 2023 results, to the midpoint of our guidance this year on slide 24. While some variances change due to last year's actual results, there is no change to our segments or overall guidance. Turning to slide 11, I'll provide an update on weather-normalized load performance. Overall retail load grew two and a half percent in 2023.

Finally, corporate and other was down <unk> nine per share driven by higher interest expense, partially offset by a favorable year over year change in investment gains largely due to investment losses that occurred in the fourth quarter of 2022.

But we are clear that we won't be putting more money into the facility over time.

As we mentioned earlier, we are reaffirming our guidance range for 2024.

The energy prices in Europe have been cut.

Coming lower does that help.

Lower gas price helps a refinery in gas pricing has come down long term electricity pricing, which you know for the viability of a smelter you need long term LOE.

For convenience we have included an updated waterfall bridging our actual 2023 results to the midpoint of our guidance this year in slide 24.

Sustainable energy.

While some very interesting change due to last year's actual results. There is no change to our segments or overall guidance.

That has not come down nearly as much as the gas prices and at this point, we don't view that smelter as being long term viable.

Buyable with the current electricity price.

Turning to slide 11, I'll provide an update on whether normalized load performance overall.

Have any timeline when you expect to the conversations our solution.

Overall retail load grew two 5% in 2023 this was stronger than the 7% in our original guidance. Thanks to an acceleration in data center growth and our commitment to economic development across our service territory. This.

The it's ongoing.

It will take some time, but we're really working against the fact that the cash flow is negative at this point.

Charles E. Zebula: This was stronger than the 0.7 percent in our original guidance thanks to an acceleration in data center growth and our commitment to economic development across our service territory. This is most apparent when looking at the incredible expansion in commercial load, shown in the upper right-hand quadrant of the slide. Commercial sales grew 7.8% for the year and were again dominated by data centers.

And the cash outflow will really vary depending on market rates metal prices, but more probably more and more importantly, alumina prices and and.

Most apparent when looking at the incredible expansion and commercial load shown in the upper right hand quadrant of the slide.

Raw material costs.

I have another question from the App is aluminum is contribution to the energy transition understood yeah.

Commercial sales grew seven 8% for the year and were again dominated by data centers.

No.

How about that.

Charles E. Zebula: We are encouraged that the games are becoming more geographically diverse. New projects have come online in Michigan, Kentucky, and Oklahoma to supplement the development of what we see in Ohio and Texas. This is a trend we expect to continue over the next several years as the global demand for data storage and processing accelerates through the growth of AI and other technologies. We expect Commercial Load to continue to grow from its new higher base this year as projects work their way through the queue, and commitments for 2025 are exceptionally robust. I believe that some of the 2025 load is going to accelerate and bleed into this year. Industrial sales grew by 1.6%, which you can see in the lower left-hand quadrant of the slide.

We are encouraged that the gains are becoming more geographically diverse.

Uh huh.

Hey, you know.

Theres a lot of talk about.

New projects have come online in Michigan, Kentucky, and Oklahoma to supplement the development of what we see in Ohio and Texas.

The energy transition minerals.

And.

One of the things that I think doesn't get enough focus is the importance of aluminum and energy transition you look at the aluminum intensity in usage and in wind energy solar energy is massive amounts of increasing consumption.

This is a trend we expect to continue over the next several years as the global demand for data storage and processing accelerates through the growth of the AI and other technologies.

We expect commercial load to continue to grow from its new higher base. This year as projects work their way through the queue and commitments for 2025 are exceptionally robust I believe that some of the 2025 load is going to accelerate and bleed into this year.

<unk> of aluminum associated with those one of the biggest market increases that we're seeing in 'twenty 'twenty four is around electric cabling. So as I look at the markets and the regions around in 2024, probably the largest growth area is in electric cabling.

<unk>.

I'm sure that many of you have heard that the.

Industrial sales grew at one 6%, which you can see in the lower left hand quadrant of the slide. This is mostly a trip attributable to a number of large industrial loads. We've recently added across our service territories, which are more than offsetting any economic challenges seen by.

The electric vehicles use about 100 kilograms per car more than an internal combustion engine vehicle. So as we see greater penetration of electric vehicles, we will see greater growth in aluminum. So a lot of times I think we get forgotten in the discussion around the energy transition around the world.

Charles E. Zebula: This is mostly attributable to a number of large industrial loads we've recently added across our service territories, which are more than offsetting any economic challenges seen by our existing customers. We expect industrial load growth to continue to reflect the softness in manufacturing nationally with only a modest increase this year. However, growth in industrial sales beyond this year should accelerate as borrowing costs moderate and several large loads currently under construction come online. In the upper left-hand corner of the slide, you'll see that residential load declined slightly in 2023. Usage per residential customer has declined for the past two years as homes have become more energy efficient and workers spend more time in an office instead of at home. The negative impact of inflation on household budgets may be influencing usage as well.

Our existing customers we.

We expect industrial load growth to continue to reflect the softness in manufacturing nationally with only a modest increase this year. However.

But our metal will be critical to the transition.

And we have another one how quickly could you bring gallium to marketing in the U S government, who wants to ask for it.

However growth in industrial sales beyond this year should accelerate as borrowing costs moderate and several large loads currently under construction come online.

It's a great question.

There is in in our.

Residue deposit areas, there's a good deal of gallium.

In the upper left hand corner of the slide you'll see that residential load declined slightly in 2023.

However, we have not yet figured out a way to economically extract that from the residue deposit areas. So I think that there's something like 100 years of gallium and our residue deposit areas compared to the current market size of gallium, but it has to be economically processed and.

Usage per residential customer has declined for the past two years as homes have become more energy efficient and workers spend more time in an office instead of at home.

The negative impact of inflation on household budgets may be influencing usage as well.

And at this point, it's not a not one of our priorities.

And I'm, assuming that would require incremental capex incremental capex, but there's got to be a technological solution that makes it economic to extract it.

Charles E. Zebula: On a positive note, we've seen our residential customer base grow consistently in certain regions. In 2023, we added almost 31,000 net new residential customers across our footprint, resulting in a positive offset to this segment. Overall, we're optimistic about the positive trends in load over the next several years, especially from a commercial and industrial perspective. Our conservative approach to estimating large loads gives us a lot of confidence in the growth we forecast. In our next update, however, I would expect to see some upside in this area. Let's move on to slide 12 to discuss the company's capitalization and liquidity position. In the top left table, you can see the FFO to debt metric stands at 13.2% for 2023. Positive changes in FFO were as outlined in the third quarter call and included favorable changes in cash collateral, fuel recovery, and other various drivers. These positive changes were somewhat offset by an $830 million increase in debt during the quarter, primarily due to the issuance of long-term debt to pre-fund our March 2024 AEP Parent Maturity.

On a positive note we've seen our residential customer base grow consistently and certain regions. In 2023, we added almost 31000 net new residential customers across our footprint.

I look forward 50 years from now there will be value in our residue deposit areas. There's gallium theres other minerals, there's rutile, there will be value there, but it has to be economically extracted and.

Zoning and a positive offset to this segment.

Overall, we're optimistic about the positive trends in load over the next several years, especially from a commercial and industrial perspective, our conservative approach to estimating large loads gives us a lot of confidence in the growth we forecasted in our next update however, I would.

And that will come with as part of the refinery of the future where we have a work stream. That's very focused on not only current byproducts, but harvesting the materials that are in the rdas, but it's so it's in the future.

And then maybe can you provide any update on the current quarter. How it's progressing what are some of the puts and takes there. So the current you know we were given a qualitative outlook in January.

Spec to see some upside in this area.

Let's move on to slide 12 to discuss the company's capitalization and liquidity position and.

In the top left table you can see the <unk> to debt metric stands at 13, 2% for 2023.

Based on that qualitative outlook, we're seeing.

Not a lot of changes in the first quarter I would tell you our order book.

Positive changes in <unk>, where as outlined on the third quarter call and included favorable changes in cash collateral fuel recovery and other various drivers. These positive changes were somewhat offset by an $830 million increase in debt.

For value added products as maybe coming in it's in line, maybe a little bit better than what we had anticipated our costs as we outlined in some of the some of the improvements cost are coming in line.

Overall taxes may be a little bit higher than what we had anticipated because of the change in jurisdictions around profitability between alumina and aluminum, but overall the quarters coming in very similar to how we had outlined it in January.

During the quarter, primarily due to the issuances issuance of long term debt to pre fund our March 2020 for AAP parent maturity.

Charles E. Zebula: We are pleased that the team has overcome strong financial headwinds due to unfavorable weather and an unprecedented increase in interest rates to end the year above Moody's downgrade threshold of 13 percent. We expect our FFO to debt metric to continue to improve throughout 2024 as we progress towards our targeted range of 14 to 15 percent. This continued positive trend assumes normal weather for 2024 and continued growth in our cash flows through various regulatory activities, including recovery of our deferred fuel balances of approximately $425 million. Our debt-to-capital increased from the prior quarter by 60 basis points to 63 percent, and our parent debt-to-total debt is approximately 21.7 percent.

We are pleased that the team has overcome a strong financial headwinds due to unfavorable weather and an unprecedented increase in interest rates to end the year above Moody's downgrade threshold of 13%, we expect our <unk> to debt metric to continue to improve throughout 2000.

And then maybe shifting gears quickly to the permitting in western Australia, especially for a new mining regions, how is that progressing and does.

Does it change change in any way.

Or when you acquired alumina limited so I'll take the second question first.

Really no impact on the acquisition of alumina limited on day to day operations in a whack so.

<unk> 24, as we progress towards our targeted range of 14% to 15%. This continued positive trend assumes normal weather for 2024 and continued growth in our cash flows through various regulatory activities, including recovery of our deferred fueled ban.

Engagement with customers was employees with.

Various stakeholders is not going to change.

If I bifurcate the permitting issue between what we went through last year and what process, we're going to be going through for the part for.

<unk> of approximately $425 million.

We ended up getting our permits at the end of 2023 for continuing operations as part of that we had to make a number of agreements with stakeholders around improvements in our processes. Those have begun immediately so we agreed to limiting the amount of open areas inner.

Our debt to cap increased from the prior quarter by 60 basis points to 63% and our parent debt to total debt is approximately 21, 7%.

Charles E. Zebula: In the lower left quadrant of this slide, you can see our liquidity summary, which remains strong at $3.4 billion and is supported by our bank revolver and credit facility. Lastly, on the Qualified Pension Front, our funding status remains unchanged from the prior quarter to end the year at just over 100%. While falling interest rates increased the liability during the quarter, this increase was offset by positive asset returns.

In the lower left quadrant of this slide you can see our liquidity summary, which remains strong at $3 $4 billion and is supported by our bank revolver and credit facility.

Pits. So we were implementing that now we agreed to stepping back from key water supply areas. We've done that we've agreed to a number of monitoring protocols and where we've done that also so.

Lastly on the qualified pension front, our funding status remains unchanged from the prior quarter to end the year at just over 100%.

We feel good about where we got to you at the end of 2023 as we then transition to the part for requirements that will have for the next mining areas.

While falling interest rates increased the liability during the quarter. This increase was offset by positive asset returns.

We don't anticipate being in those mining areas before 2027, and we continue to make progress on those part for permits.

Charles E. Zebula: Turning to slide 13, I'll give a quick recap of today's message. We delivered on our commitments for 2023, despite the significant challenges we faced. Weather was one of the most mild years on record for the AEP system in the past 30 years, resulting in a negative $0.37 impact year over year and $0.21 versus normal weather.

Turning to slide 13, I'll give a quick recap of today's message.

And feel comfortable with where we're at by.

We delivered on our commitments for 2023, despite the significant challenges we faced.

When do you have to receive the new permits to be able to move or get to the new mining areas by 27, we anticipate getting the new permits by the end of 2025 that gives US a couple of years to get to.

Weather was one of the most mild years on record for the AEP system in the past 30 years, resulting in a negative 37 impact year over year, and 21 cents versus normal weather.

To those new mining areas.

You mentioned you had to take some concessions on getting the current approvals is there risk that you will have to take incremental concessions finding new mining areas.

Charles E. Zebula: To put a little more context on those numbers, our heating degree days were down 36% compared to normal across the system. Also, interest expense was a $0.45 hurdle to overcome versus 2022 results. We work diligently throughout the year to reprioritize and balance our plan by adjusting the timing of discretionary spend while staying focused on meeting our core business needs. While admittingly facing some challenges on the regulatory front, we secured many rate outcomes that were critical in supporting our objectives to provide reliable service to our customers. Looking ahead to this year, we are optimistic about the opportunities and prepared to face any challenges ahead of us. We reaffirm our guidance for 2024 of $553 to $573 per share, our long-term growth rate of 6% to 7%, and an improved balance sheet while continuing to implement our capital program, taking care of the customer, earning our authorized return, and executing on our strategic priorities. I would like to take a moment and thank Julie Sloat for her 23 years with AEP. Julie has made a positive impact on AEP and will be missed by many.

A little more context to those numbers, our heating degree days were down 36% compared to normal across the system.

I wouldn't rule out incremental concessions. However, what I would tell you is that the process that we went through last year.

Interest expense was a 45% hurdle to overcome versus 2022 results.

Really made us understand what stakeholder expectations are today and how we work within that new set of stakeholder expectations I think we probably understand permitting in western Australia as well as any company in the world now and we will be able to apply those learnings as we go through the.

We worked diligently throughout the year to re prioritize and balance our plan by adjusting the timing of discretionary spend while staying focused on meeting our core business needs, while admittedly facing some challenges on the regulatory front, we have secured many rate outcomes that.

Part four process.

Perfect So where.

We're close to our time. Thank you very much. Thank you Beth and thank you for attending.

Were critical in supporting our objectives to provide reliable service.

Sure.

Service to our customers.

Looking into this year, we are optimistic about the opportunities and prepared to face any challenges ahead of us we reaffirm our guidance for 2024 of $5 53 to $5 73 per share our long term growth rate of 6% to 7% and an improved balance sheet.

<unk>, while continuing to implement our capital program, taking care of the customer, earning our authorized return in executing on our strategic priorities.

I would like to take a moment and thank Julie slow for her 23 years with AEP.

Julie has made a positive impact on AEP and will be missed by many.

Charles E. Zebula: Ben, we welcome you to the AEP management team. Your leadership in the industry is well-respected, and you will be embraced by the employees of AEP. The entire management team looks forward to working with you and the board as we look to enhance value for all AEP stakeholders. Thank you for your time today. Operator, can you open up the call for questions? At this time, I'd like to remind everyone that in order to ask a question, simply press the star followed by the number one on your telephone keypad. Our first question will come from the line of Char Peraza with Guggenheim Partners. Please go ahead. Hey guys, good morning. Good morning.

Ben We welcome you to the AAP management team <unk>.

Our leadership in the industry is well respected and you will be embraced by the employees of AEP the <unk>.

Entire management team looks forward to working with you and the board as we look to enhance value for all AEP stakeholders.

Thank you for your time today, operator can you open up the call for questions.

At this time I would like to remind everyone in order to ask a question simply press star followed by the number one on your telephone keypad. Our first question will come from the line of sharp <unk> with Guggenheim Partners. Please go ahead.

Hey, guys good morning.

Good morning.

Good morning morning, So obviously the slides are leaning on the successes of AEP have reiterated your earnings guidance and balance sheet targets growth rate Capex numbers, I guess outside of some management shuffling.

Ben Folk: Morning, morning. So obviously, the slides are, you know, leaning on the successes of AEP. You've reiterated your earnings guidance, balance sheet targets, growth rate, CapEx numbers, I guess, outside of some management shuffling. What do you see as broken? I guess what's the goal of the review? What's on the table? What's off the table? Well, this is Ben. And I can tell you that I don't think I would use the word broken.

What do you see is broken I guess, what's the goal of the review of what's on the table what's off the table.

Well this is Ben.

And.

I don't think I would use the word broken.

There's areas, where we can do better.

Ben Folk: I think there are areas where we can do better. I think, you know, and I think we showed you in the script many of the accomplishments we made. We also recognize that we can do better in getting constructive regulatory outcomes. So, strategically, our priorities remain the same. We have completed, as we mentioned, a review of Transource.

I think you know and I think we showed you.

Script, many of the accomplishments we made but we also recognize that we can do better on getting constructive regulatory outcomes. So strategically our priorities remain the same.

We have completed as we mentioned of review of Trans source, we want to keep that asset.

Ben Folk: We want to keep that asset. We think it's a great asset. And I think given the various changes that FERC is looking at, I think it gives us a lot of optionality. We'll continue to be very disciplined portfolio managers. I said it in my scripted remarks, but always willing to transact where price and the ability to execute intersect. And that's a key point.

We think it's a <unk>.

Great asset and I think given the various changes that FERC is looking at I think it gives us a lot of Optionality. We will continue to be very disciplined portfolio managers I've said it on my scripted remarks, but always willing to transact where price and the ability to execute intersect and that's a key point.

Ben Folk: And finally, though, if you step back, I think one of the ways you add value in this industry long-term is by placing CapEx at one time's book, investing in CapEx at one time's book, and getting constructive recovery of that. And again, we've done pretty well on that, but we can do better. So we're going to look at the people, the process, and the planning that goes into that, those constructive outcomes. And we're going to do it through the lens of what's important to our local leaders and stakeholders, that we keenly listen to what they want and what they need at a local level. And I think you can translate that then into a much better chance of success. And then you get into that virtuous circle where invested capital is not only good for customers and the community but good for shareholders as well. So that's the plan going forward. And do you believe, Sarban, there are some jurisdictions that AEP currently operates where you may not be able to hit those sort of targets as you're thinking about people, process, etc. ?

Finally, though if you step back I think one of the ways.

You add value in this industry long term.

Bye bye.

By placing capex at one times book investing in Capex at one times book and getting constructive recovery of that.

Again, we've done pretty good on that but we can do better, but we're going to look at the people the process and the planning that goes into that those constructive outcomes and we're going to do it through the lens of what's important to our local leaders and stakeholders. It's extremely important that we keenly listen to what they want and what they need at a local level and I think you can transfer.

That then to a much better chance for success and then you get into that virtuous circle, where invested capital not only is good for customers and communities, but good for shareholders as well. So that's the plan going forward.

And do you believe sovereign.

Do you believe theres some jurisdictions that AEP currently operates where you may not be able to hit those sort of targets as we're thinking about people process et cetera.

Well I think theres areas, where we have improvement, but I will turn it over to Peggy <unk> Chuck to elaborate on that.

Peggy Simmons: Well, I think there are areas where we have improvement, but I will turn it over to Peggy Endor-Chuck to elaborate on that. I think, as far as regulatory matters are concerned, I do think what we're going to do is continue to build on the constructive legislative and regulatory outcomes that we have had. We're going to further strengthen our regulatory relationships, and we're really going to be keenly focused on execution. I think that some of the disappointments that we had in 2023, we're going to learn from them, and we're going to go back out and focus on execution from that standpoint. Okay, perfect. And then, just lastly, for me, just as Ben and you and the board are sort of thinking about where AEP stands today, I guess, what are you looking for in the next CEO? Are you kind of looking for a former CEO, the president of an opco, someone with a finance background, regulatory background, internal, external? I guess, can you just maybe specify exactly what you're looking for in the next successor? Definitely an external search.

I think as it relates from a regulatory perspective I do think what we're going to do is continue to build on the constructive legislative and regulatory outcomes that we have had we're going to further strengthen our regulatory relationships and we're really going to be keenly focused on execution.

I think that some of the.

Disappointments that we had in 2023, we're going to learn from them and we're gonna go back out and focus on execution from that standpoint.

Okay Perfect and then just lastly for me just as you and the board are sort of thinking about where AEP stands today I guess what are you looking for in the next CEO are you kind of looking for a prior CEO or president of an opco someone with a finance background regulatory background internal external I guess.

Can you just maybe specify exactly what youre looking for in the next successor.

Well, it's definitely an external search I'll start with that and I.

Ben Folk: I'll start with that. And, you know, I don't want to narrow it down to any specific background, but, you know, ideally, and by the way, I think we're going to get a very robust list of candidates. AEP is a great company with great assets, and I think it's going to be an attractive destination for many, many talented people. So I think it's going to be great to pick from that talent. Ideally, you get somebody that is a seasoned executive in the utility industry and is well known in the investor community.

I don't want to narrow down to any specific background, but ideally and I and by the way I think we're going to get a very robust.

List of candidates for AEP is a great company with great assets and I think it's going to be an attractive destination for many many talented people. So I think it's going to be great to pick from that talent ideally you get somebody that is a seasoned executive in the utility industry is well known.

And in the Investor community I think that's extremely important as great leadership qualities.

Ben Folk: I think that's extremely important, and has great leadership qualities. We've got a lot of talent at AEP, and we want to develop that talent. Ultimately, it would be ideal if they had multi-jurisdictional experience and the ability to achieve regulatory success. That's a big wish list, but again, I think we're going to get a lot of great candidates.

We've got a lot of talented AEP and we want to develop that talent and ultimately it would be ideal if they have multi jurisdictional experience and the ability to achieve regulatory success.

Those are that's a big wishlist, but again I think we I think we're going to get a lot of great candidates.

Ben Folk: Got it. Terrific. Thank you guys. I'll pass it to someone else and good luck on stage two.

Got it terrific. Thank you guys I'll pass it to someone else and good luck in phase II appreciate it.

Charles E. Zebula: I appreciate it. Thank you. Your next question comes from the line of Jeremy Tonet with J.P. Morgan. Please go ahead. Hey, Jeremy. Jeremy, your line might be on mute.

Thank you.

Your next question comes from the line of Jeremy Tonet with J P. Morgan. Please go ahead.

Jeremy.

Jeremie your line might be on mute.

Hi, good morning.

Ben Folk: Hi, good morning. Good morning. I just want to kind of continue along these lines if I could, and I was wondering if you were able to comment, I guess, on the recent agreement AEP announced with ICON Capital and kind of how that ties into the change at the top here, given the relatively short tenure, and just wondering if there's anything else we should be expecting, I guess, along these lines looking forward to ICON's recent announcement. Yeah, I really just will I mean, you know, the additional ICON board members came after discussions with the ICOD team and the AEP team. You know, we actually welcome their perspective.

Good morning.

Just wanted to kind of continue along these lines, if I could and I was wondering.

If you're able to comment I guess on the recent agreement AEP announced icahn capital and kind of how that ties into.

The change at the top here given the relatively short tenure.

And just wondering if there's anything else, we should be expecting I guess, along these lines looking forward.

Icons recent announcement.

Yeah, I really just we're probably just rehash, what we've said in the press release and in our scripted remarks I mean.

The icon.

Additional board members came after.

Discussions with the icon team in AEP team.

We actually welcome their perspective, they share the opinion as we do that AEP shares are undervalued and we want to work together to unleash shareholder value.

Ben Folk: They share the opinion, as we do, that AEP shares are undervalued, and we want to work together to unleash shareholder value. Regarding Julie's departure, I mean, I really can't go into any more details than what we've already said. It was a full board decision after discussions with Julie, and we decided that the best path forward is to transition to a new CEO.

Regarding julie's departure, I mean, I really can't go into any more details than what we've already said it was a full board decision after discussions with jewelry and we decided that the best path forward is to transition to our new CEO.

Ben Folk: We're going to continue to work hard to deliver shareholder value. I think the ICON board members will give us a fresh perspective as we pursue these.

We're going to continue to work hard to deliver shareholder value.

The icon Board members will give us a fresh perspective as we pursue those goals.

Ben Folk: That's very helpful. And just as we think about the strategic path going forward at this juncture, are all options on the table, or are some options off the table? Just want to kind of see the parameters of what we could expect going forward. Well, you know, we really like the assets we have. Okay, we've completed the strategic reviews. But I mean, you know, the price. We're going to continue to look for opportunities to do the right thing for our shareholders. But I think we're in an enviable position that the assets we have can also achieve our strategic goals. And Chuck mentioned where we are with FFO to debt and those targets. So I think we're in a pretty good position, quite honestly.

Got it that's very helpful and just as we think about the strategic path going forward at this juncture.

Are all options on the table or any options off the table just wanted to kind of see the parameters of what we could expect going forward.

Well, we really like the assets we have okay. We've completed the strategic reviews, but I mean, you know that.

Price.

We're going to continue to look for opportunities to do the right thing for our shareholders, but I think we're in an enviable position that the assets. We have can also achieve our strategic goals and and.

And Chuck mentioned, where we are with <unk> to debt and those targets. So I think we're in a pretty good position quite honestly. So again as I said before that to be redundant, but I guess it will be we'll be good portfolio managers and we will continue to be open to transactions. If the price is right and the ability to execute is viable.

Ben Folk: So again, as I said before, not to be redundant, but I guess it will be, we'll be good portfolio managers, and we'll continue to be open to transactions if the price is right, and the ability to execute is viable. But in the meantime, we're going to do the blocking and tackling that, in the long term, will get you the results that you're going to want to see. Wonderful! Very helpful. Thank you for that. Welcome. Your next question will come from the line of Nick Campanella with Barclays. Please go ahead. Hey, good morning, everyone.

But in the meantime, we're going to do the blocking and tackling that in the long term gets you. The result that your results if youre going to want to see.

Wonderful very helpful. Thank you for that.

Welcome.

Your next question will come from the line of Nick Campanella with Barclays. Please go ahead.

Hey, good morning, everyone and thanks for the prepared remarks, and taking my questions. Good morning.

Charles E. Zebula: Thanks for the prepared remarks and taking my questions. Good morning. So I guess, you know, you acknowledged in your remarks, there's been some twists and turns and some regulatory volatility in 23. You have some headwinds that you highlighted from the FERC order on taxes, you know, the Oklahoma rate order, among a few other items. But just the six of seven has been pretty resilient and unchanged this entire time. So can you maybe help us all understand just what's kind of allowing AEP to absorb these issues and where the offsets have been in the five-year plan that allows you to continue to reaffirm? Well, I mean, I'll, I'll kick it over to Chuck in a minute.

So I guess you acknowledged in your remarks, there has been some twists and turns.

And some regulatory volatility in 'twenty three.

You have some headwinds that you highlighted from the FERC order on taxes, the Oklahoma rate order.

Among a few other items, but just the six to seven has been pretty resilient and unchanged. This entire time. So can you just maybe help us all understand just whats kind of allowing AEP to absorb these issues and where are the offsets have been kind of in the.

The five year plan that allows you to continue to reaffirm.

Well I mean.

I'll kick it over to Chuck in a minute but.

Ben Folk: But, you know, the $43 billion in a five-year capital plan underpins the six to 7%. And, you know, in the years where we might have unfavorable weather or other things like that, that's the resiliency of this AEP management team that I talked about. And, you know, it's not just one year; it's a look back, I mentioned 14 years of doing what we said we were going to do.

The $43 billion on our five year capital plan underpins, the 6% to 7%.

In the years, where we might have unfavorable weather or other things like that that's the resiliency of this AEP management team that I talked about.

And it's not just one year look back I mentioned 14 years of hitting what we said we were going to do.

Charles E. Zebula: Yeah, sometimes you get regulatory bumps in the road, and other things that might happen. But, you know, if you look back historically, and we look forward, we produce, I mean, we're in 11 jurisdictions, we're going to file rate cases. But if you look at history, we generally do pretty well.

Yes, sometimes you get regulatory bumps in the road and other things that might happen, but.

If you look back historically and we look forward.

We produce I mean, we're in 11 jurisdictions, we're going to file rate cases, but if you look at history.

We generally do pretty well and when we have a bump in the road, we figure out how to absorb it.

Charles E. Zebula: And when we have a bump in the road, we figure out how to absorb it and what we need to do better going forward. Chuck, I don't know if you want to add to that.

And what we need to do better going forward Chuck I don't know if you want to add to that but yes, no bad as you said.

Charles E. Zebula: Yeah, no, Ben, as you said, it is underpinned by a $43 billion five-year capital plan. You know, I also point to Ben's observation as a board member and in his opening remarks about our O&M. There's a chart in our deck that you can refer to, right, we've doubled the rate base of this company while basically keeping O&M flat over that entire 10 year period. I think that's a remarkable accomplishment.

Underpinned by the 43 billion five year capital plan.

Also I'd point to.

What been made.

Observation as a board member.

And in his opening remarks.

About our O&M.

A chart in our deck.

You can refer to right we've doubled the rates rate base of this company, while basically keeping O&M flat over that entire 10 year period.

That's a remarkable accomplishment and that's our plan going forward as we continue to grow this company and basically.

Charles E. Zebula: And that's our plan going forward, as we continue to grow this company and basically repurpose and reallocate O&M. I also talked in my remarks about the load opportunities. I tend, you know, to kind of take a measured approach to this. But, you know, we really are optimistic about the opportunities that we're seeing there. As I said, the commercial load growth is just amazing.

<unk> and reallocate O&M.

Also talked in my remarks about the load opportunities.

I tend to.

<unk> to kind of take a measured approach to this but.

We really are optimistic about the opportunities that we're seeing there.

As I said the commercial low growth is just amazing.

Charles E. Zebula: And we're seeing some good opportunities for economic development activities in industrials as well. And then, of course, underpinning that plan is improved returns, right? We are not earning where we need to earn, and we need to have regulatory execution and prudency review to make sure, right, that we are hitting the mark there. So I think, all in all, you know, that kind of underpins the plan going forward. I got it.

We're seeing some good opportunities and economic development activities.

In industrial as well and then lastly of course underpinning that plan is improved returns right. We are not earning where we need to earn and we need to.

I have the regulatory execution.

And Prudency review to make sure that we are hitting the mark there. So I think all in all.

That kind of underpins the plan going forward.

Got it and definitely appreciate the comments on diversification and the size of the overall plan as well as the O&M. Thank you for that.

Ben Folk: And definitely appreciate the comments on diversification and, you know, the size of the overall plan, as well as the O&M. Thank you. And then I guess just, I guess, just sticking with this six to seven CAGR. Is there any kind of shaping to that over the five-year plan? You know, is there anywhere that you kind of see yourself in that range right now?

And then I guess, just I guess just sticking with this the six to seven CAGR is there any kind of shaping to that over the five year plan is there any way that you kind of see yourself in that range right now and then as we kind of think about a new CEO coming in you know.

Ben Folk: And then as we kind of think about a new CEO coming in, you know, hopefully in the back half of this year, is it your expectation that they would come in and embrace that plan, or would they have more say in where they're taking the company? Thank you. Yes, I'll take the first question. You know, our five-year plan is really based off the midpoint of the current year's guidance, and our plan is to grow basically on that midpoint between the 6 to 7 percent range with no real kind of ups and downs identified through that. I'll let Ben answer that. Yeah, I mean, I think, first of all, we'll take our time, and we'll find the absolute best successor, a permanent successor that we can.

Hopefully in the back half of this year is it your expectation that they would come into embraced that plan or where they have more say in where they're taking the company. Thank you.

Yes, I'll take the first question.

No.

Our five year plan is really based off the midpoint.

Of the of the current unit guidance and.

Our plan is to grow basically on that midpoint between the 6% to 7% range with no real kind of ups and downs identified through there I'll let.

<unk> been answered it.

I think first of all we'll take our time and we will find the absolute best.

Successor.

Permanent successor that we can I think as part of that process.

Ben Folk: I think as part of that process, we obviously will have strategic discussions. I mean, I think the board is very comfortable with our strategy and our strategic priorities. I suspect that the ultimate permanent successor CEO will also be comfortable with those strategies and perhaps can figure out a better way to execute on them. That would be the goal, but we're not looking at a complete re-dismantling of our strategic priorities. Thanks a lot for answering the questions today. I appreciate it. You're welcome.

Obviously, we will.

The strategic discussions I mean, I think the board is very comfortable with our strategy and our strategic priorities I suspect that.

The ultimate permanent.

Successor, CEO will also be comfortable with those strategies.

We can figure out a better way to execute on them that would be the goal but.

We're not looking at a.

A complete redesign of our strategic priorities.

Thanks, a lot for answering the questions today I appreciate it.

Youre welcome. Thank you.

Our next question will come from the line of Carly Davenport with Goldman Sachs. Please go ahead.

Ben Folk: Our next question will come from the line of Carly Davenport with Goldman Sachs. Please go ahead. Hey, good morning.

Hey, good morning, Thank you for taking the questions.

Peggy Simmons: Thank you for taking the questions. A bit of a shift on the asset sale program, I guess, in terms of the decision to retain the transmission JV. So could you just talk a little bit about the rationale there and how we should think about your view on transmission as part of the portfolio or potentially as an area of sort of value monetization going forward? Well, I mean, and I'll let Chuck, this is Ben, augment what I'm going to say, which is pretty much what I said before. Transmission is a great asset.

A bit of a shift on the asset sale program I guess in terms of the decision to retain the transmission JV. So could you just talk a little bit about the rationale there and how we should think about your view on transmission as part of the portfolio or potentially as an area of sort of value monetization going forward.

Well I mean I'll, let Chuck this is Ben I'll, let Chuck.

Augment what I'm going to say, which is pretty much what I said before transfer.

Transmission is a great asset.

And we are obviously the largest transmission provider in the United States and we like that position.

Ben Folk: We are obviously the largest transmission provider in the United States, and we like that position. We will be open to things that make sense, would do even better for shareholders, but we don't feel compelled. We don't have to do anything. Chuck, I don't know if you want to add to that.

We will be open.

Two things.

Things that makes sense that you know.

Would do even better for shareholders.

But we don't feel compelled we have to do anything so I think that puts us in a better position as we move forward.

Chuck I don't know if you want to add to that but yeah. I think you were.

Charles E. Zebula: Yeah, I think we're also referring maybe to Pioneer and Prairie Wind and our decision to keep those assets. The reality is, these contributed earnings to AEP. They're attractive returns. And overall, it was really insignificant to our overall financing plan if we were planning on selling those assets.

Also referring maybe to pioneer them.

When in our decision to.

To keep those assets.

The reality is right these contribute to contribute to earnings.

To AEP.

They're they're attractive returns.

And overall it was really insignificant right to our overall financing plan. If we were planning on selling those assets. So it really it goes back to the root of Ben.

Charles E. Zebula: So it really goes back to the root of what Ben said. As we reviewed the opportunities before us in competitive transmission and then looked at other transmission assets that we have, we're embracing them. It's time for us as the leader in transmission to continue to lead that space, and that's what we plan to do.

<unk> said as we reviewed the opportunities before us in competitive transmission and then looked at other transmission assets that we have.

We're embracing it.

It's time for us.

As the leader in transmission.

To continue to lead that space and that's what we plan to do.

That's helpful. I appreciate that and then Chuck probably for you just a little bit of a shift in tone around the asa flow to debt metrics as well for 24 can you just talk about what we should expect relative to that 14% to 15% range for 2020 for an episode of that and what the moving pieces are that you are kind of watching that could move you outside of that range.

Charles E. Zebula: Appreciate that. And then Chuck, probably for you, just a little bit of a shift in tone around the FFO to debt metrics as well for 24. Can you just talk about what we should expect relative to that 14 to 15% range for 2024 on FFO to debt and what the moving pieces are that you're kind of watching that could move you outside of that range? Yeah, so I thank you for that question, you know, and our message has changed a bit on the timing, but what I would tell you is really timing is not what is most important, you know, it's really the trend that we're So let me comment on a couple of things. We said we would be above 13% by year end, and we were. And we didn't make any excuses for the soft weather that happened in 2023.

Yeah. So I think thank you for that question.

Our message has changed a bit.

On the timing, but what I would tell you is really kind of timing is not what is most important.

It's really the trend that we're on and then it's hitting the mark of 14% and its the sustainability on staying in that range as we go through the five year plan. So let me kind of comment on a couple of things right. We said, we would be above 13% by year end and we were and we.

You didn't make any excuses for the soft weather that happened in 2023.

Note also that 13% is the downgrade threshold at Moody's and.

Charles E. Zebula: Note also that 13% is the downgrade threshold at Moody. And second, the trend is very positive, right? This quarter, we're going to have another roll-off of cash collateral in Q1. I think the number is around $390 million that will come out of the 12-month average.

And second right. The trend is very positive right. This quarter, we're going to have another roll off of cash collateral in Q1. The number is around $390 million that will come out of the 12 month average and also we are working on.

Charles E. Zebula: And also, we are working on or down our deferred fuel balance. And then lastly, we clearly show our models and review those with the agencies. Those models indicate that we will be in the range this year and will be in the range over the longer term. That's what's most important, right, hitting the mark, trending in that positive direction, and staying in the range. So again, the timing, which month or which quarter, is not important.

Down our deferred fuel balances.

And then lastly, right, we clearly show our models and review those with the agencies.

Those models indicate that we will be in the range this year and be in the range over the longer term. That's what's most important right hitting them are trending in a positive direction and staying in the range. So again, the timing, which month or which quarter is not important its the three things that I.

Charles E. Zebula: It's the three things that I mentioned earlier. Got it. Thanks very much for your time.

I mentioned earlier.

Got it thanks very much for your time.

Your next question comes from the line of Ryan Levine with Citi. Please go ahead.

Peggy Simmons: Your next question comes from the line of Ryan Levine with Citi. Please go ahead. Good morning.

Good morning.

Good morning, given the folks given them focus on people and processes. How long do you view the company's review of its regulatory strategy to take and in that context, how does the new reviewed different from how AEP has reviewed its regulatory strategy historically.

Ben Folk: Given the focus on people and processes, how long do you view the company's review of its regulatory strategy taking? And in that context, how is the new review different from how AEP has reviewed its regulatory strategy? Well, I'm going to turn it over to Peggy, who's the point on that.

Well I'm going to turn it over to Peggy who's the point on that but.

Peggy Simmons: But this isn't like this is something we're just initiating. This is something that, you know, I've heard discussed that, as a board member at the board level, it's something I'm going to get very involved in with Peggy. We've got a good team, but we're going to have to, you know, we'll make sure that we do what we need to do to get better outcomes in the future. And I mean, there's a lot of behind-the-scenes stuff that goes into the actual processing, executing, and planning of a rate case. And it's, you know, it gets really down in the weeds pretty quickly, but those things add up.

This isn't like this is something we're just initiating this is something that I've heard discussed that as a board member at the board level.

Something I'm going to get very much involved in with Peggy.

We've got a good team, but we're going to have to we will make sure that we do what we need to do to get better outcomes in the future and.

I mean, theres, a lot of blocking and tackling that really behind the scenes stuff that goes into the actual processing executing and planning of a rate case and it's it gets really down in the weeds pretty quickly, but those those things add up but Peggy I'll turn it over to you Yeah I would just add and are looking forward to working with Ben and.

Peggy Simmons: So, Peggy, I'll turn it over to you. Yeah, I would just add that I'm looking forward to working with Ben and talking through the regulatory strategy. We've had positive regulatory outcomes in 2023, and when we shared some of those earlier, there were some disappointments that we highlighted. But I would bring forward the legislative work that we have done, and that's going to help address lag. We've done work that's going to help to remove some of the lag in Virginia with our biennial rate review for Virginia, where it was three years before.

Talking through the regulatory strategy.

We've had positive regulatory outcomes in 2023, and when we shared some of those earlier there was some disappointment that we highlight it but I would bring forth. The legislative work that we have done and that's going to help to address lag. We've done work that's going to help too.

Remove some of the lag in Virginia with our biannual rate review for Virginia, where it was three years before.

Peggy Simmons: We're going to also look at improving on, we said with Kentucky, that it was going to be a two-step process. And we very much believe that we had a constructive outcome in the order that we received earlier in January with the securitization. So, we're going to continue to build upon that. I agree that we do have a talented team, and we're just going to keep moving forward.

We're going to.

Also look at improving on.

We sit with Kentucky that it was going to be a two step process and we very much view that we had a constructive outcome in the order that we received earlier in January with the securitization. So we're going to continue to build upon that Ah I agree. We do have a talented team and we're just going to keep moving forward and I look forward again as I said to working with ban on.

Peggy Simmons: And I look forward again, as I said, to working with Ben on ways we can continue to improve there. And then, unrelated, where do you see the biggest opportunities to benefit from the data center built out in your service territory? For more stories, visit nyseagrant.org. Reservations or concerns around The biggest opportunities so far have been in Ohio and Texas, and in our forecast for our five-year plan, we have included the capital needed to serve those customers.

On ways, we can continue to improve them.

Great and then unrelated, but where do you see the biggest opportunities too.

But from the data center build out in your service territory.

And given your balance sheet constraints do you have any reservations or concerns around that opportunity.

The biggest opportunity so far has been in Ohio and Texas.

And.

In our forecasts.

For our five year plan, we have included.

The capital needed.

To serve those customers.

Peggy Simmons: If there is incremental growth beyond that, it would be an opportunity that we'd have to evaluate and figure out how we would smartly meet the generation needs that come with it. Your next question comes from the line of Anthony Cridale with Mizzouho. Please go ahead. Hey, good morning, Ben. Good morning, Chuck.

If there is incremental growth beyond that.

It would be an opportunity that we have to evaluate and and figure out how we would smartly finance it.

Great, Thanks, and meet the generation needs that come with it.

Your next question comes from the line of Anthony <unk> with Mizuho. Please go ahead.

Hey, good morning, Ben.

Good morning Cherilyn.

Ben Folk: And just hopefully, two easy ones, one for you, Ben, one for Chuck. Just, Ben, I don't know what kind of insight you could provide, but just if I think about the one percent, one percent position, one percent, excuse me, one percent position that I kind of took. And it seems that there's been some major changes in the board. But I didn't think that would be a big position yet. I think two voting seats and then a non-advisory seat. Just thoughts on what a change on the board that may be to expand the board. Well, I mean, you're right. There are like, I think there are 5.3 million shares or something like that that ICON holds.

Hopefully two easy ones one for you Ben one for Chuck just been I don't know.

What kind of insight you can provide but just trying to think about.

1%, 1% position, 1% excuse me, 1% position that I kind of taken and it seems that theres been some major changes in the board Board I didn't think that would be.

Big position that yet I think to voting seats and then a non advisory seat just thoughts on what.

Change and avoid that maybe to expand the board.

Well I mean, you're right. There is like I think there's five 3 million shares that something like that that icon holds.

Ben Folk: And, you know, we had discussions with ICON, and we settled on the two incremental board seats and the advisory position. I think, back to Julie, I'll just repeat what I said. This was a full board decision after discussions with Julie and the board, and we determined it was best for AEP to transition to a new CEO. So, you can read what you want into that, but I think I'm just going to keep it as it is. It's a full board decision, and you need the full board to make a decision to remove a CEO.

We had discussions with icon and.

We settled on the <unk>.

<unk>.

Incremental board seats.

And the advisory position.

I think.

Back to Julia I'll, just repeat what I said this was a full board decision after discussions with Julie and the board and we determined it was best for AEP to transition to our new CEO. So.

You can read what you wanted to that but I think I'm disappointed.

Keep it as it is it's a full board decision and you need the full board to make a decision to remove the CEO.

Charles E. Zebula: Great, and then Chuck, two quick ones. It looks like the equity timing has moved. I understand your questions to Carly earlier on. You know, you are targeting, you know, 14 to 15, but above the 13 threshold, but I think equity maybe has slid off in the near term. And then lastly, on earned returns, what type of improvement could we expect each year?

Great and then Chuck too.

Two quick ones it looks like the equity timing had moved I understand your questions to Carly earlier on you are targeting <unk>.

14 to 15, but above the 13 threshold, but I think the equity maybe slip off of the near term and then lastly on earned returns what type of improvement could we expect could we expect each year and I'll leave it there.

Peggy Simmons: And I'll leave it there. Okay, thanks, Anthony. Our equity needs haven't changed since EI. You may be referring, you know, to maybe an older forecast we had, you know, some months back, but it, but what you're seeing in our deck today is consistent, right with what we showed at EI. I'll let Peggy go ahead, Mark, talk about the return.

Okay. Thanks Anthony.

Our equity needs haven't changed since <unk>, you may be referring to maybe an older forecast we had.

No.

Some months back, but but what youre seeing in our deck today is consistent with what we've shown at EI.

Let Peggy go ahead, Mark talk about the returns.

Charles E. Zebula: Yeah, as it relates to 2024, our ROE, we're projecting a 9.1% for our regulated segments. And we're going to continue to work on closing the gap. A lot of what I've already said earlier, just kind of building off of some of those legislative successes that we were able to have, reducing some of the lag, from that perspective. Great. Thanks for taking my questions. Appreciate it.

Yeah as it relates to for 2024, our Roe.

We're projecting a nine 1%.

For our regulated segments.

And we're going to continue to work on closing the gap a lot of what I've already said earlier, just kind of building off of some of those legislative successes.

Successes that we're able to have reducing some of the lag.

From that perspective.

Great. Thanks for taking my questions I appreciate it.

Thank you.

Charles E. Zebula: Thank you. Our next question comes from the line of Sophie Karp with KeyBank. Please go ahead. Hi. Good morning.

Our next question comes from the line of Sophie Karp with Keybanc. Please go ahead.

Hi, good morning.

Ben Folk: Thank you for taking my question. Just a quick one for me. I guess, like, when you think about your jurisdictions, right, and the ones where you've got constructive outcomes, regulatory, and the ones where you've got non-constructive outcomes, and how should we think about you allocating this increase in capital across these jurisdictions? Like, is there a strategy there to proactively reduce capital allocations to jurisdictions where your earned ROE just doesn't meet a hurdle for, you know, what's I'm going to turn it over to Peggy and Chuck in a minute, Sophie, but I mean, we're always going to look to put capital where we can get the best returns. There's a baseline amount of capital that you need to do to make sure that you never compromise. Resiliency, reliability, or safety.

And my question.

Just a quick one from me I guess like when you think about your jurisdictions right and.

The ones we've got.

Constructive outcomes regulatory Lee and nuance, where you've got non constructive outcomes and how should we think about your allocating this increase in capital.

Across these jurisdictions like is there a strategy there to proactively reduce capital allocations to jurisdictions, where you are.

Or you just don't meet the hurdle for what's attractive.

Okay.

Im going to turn it over to Peggy and Chuck in a minutes, okay, but I mean, we're always going to look to put capital where we can get the best returns there is baseline.

Capital that you need to do to make sure that you never compromise.

Resiliency reliability or safety.

Peggy Simmons: So, you know, but apart from that, I think it gets back to what I said. It's listening to what those local jurisdictions really want and need, and that can also shape your capital needs because, quite frankly, it can shape your regulatory outcomes. So. I turn it over to the team if they have anything to add to that. And do you want to add anything?

But.

From that I think it gets back to what I said.

It's listening to what those local jurisdictions really want and need.

And that can also shape your capital needs because quite frankly, it can shape your regulatory outcomes. So.

I turn it over to the team that they have anything to add to that.

And do you want.

Peggy Simmons: I would just say, yeah, I echo Ben's comments there on what there is a certain amount of capital we need to continue to be resilient and meet the reliability needs of our customers, and as well as from a safety perspective, those where we have really constructive outcomes. Clearly, we know in I&M, we have the forward-looking test years; we're able to continue to have that capital disallocated there to meet what those needs are, and we continue to look at what our outcomes are by jurisdiction. Okay, and then maybe I'm going back to data centers, right? Do you see more attractive opportunities around incremental generation to support those customers or T&D investment? Yeah, in Ohio and Texas, right, those are deregulated states. In our Indiana and Michigan territory, clearly, there would be opportunities for generations there to serve those customs.

It's a yeah I echo Ben's comments, there on where theres a certain amount of capital we need to continue to be resilient and meet the reliability needs of our customers.

And as well as from a safety perspective.

Those where we have a really constructive outcomes clearly we know an item where you have the forward looking test years, and we're able to.

Continue to have that capital gets allocated there to meet what those needs are and we just continue to look at what our outcomes are and by.

Fiction.

Okay.

Then maybe I'll turn back to data centers rich do you see more attractive opportunities around incremental generation to support those customers or <unk> investment.

Yeah in Ohio, and Texas, right, where those are deregulated states.

In our Indiana, Michigan territory, clearly there would be opportunities for generation there.

To serve those customers.

Peggy Simmons: Okay, thank you. Thank you. Our next question comes from the line of Paul Fremont with Ledenburg. Please go ahead. Thank you very much. I guess the first question would be on the line for guidance. Does that?

Yeah.

Okay. Thank you.

Thank you.

Our next question comes from the line of Paul Fremont with Ladenburg. Please go ahead.

Okay.

Thank you very much I guess first question would be on the 24 guidance does that continue.

To include a contribution from that.

Charles E. Zebula: Yeah, our, our, EI guidance, right? We kind of change the waterfall based on the actual, right? But what's in or out hasn't changed. You know, Paul, as Ben mentioned, we're in the process that we plan to conclude here in the next several months with retail and distributed businesses. He also mentioned that we're closing on NMRD today, so there'll be a benefit, you know, from that sale coming through. But, you know, everything is on your pin.

Retail in the distributed resources.

<unk> sort of outlined at EI.

Yeah.

Our <unk> guidance.

We kind of <unk>.

<unk> the waterfall based on the actual right, but what in or out Hasnt changed.

Paul.

As Ben mentioned, we're in the process.

We plan to conclude here.

In the next several months on our retail and distributed.

Businesses.

He also mentioned that we closed were closing.

On NMS.

<unk> today.

Which there'll be a benefit from that sale.

Coming through.

But no everything is underpinned remember too when you look at the waterfall.

Charles E. Zebula: Remember too, when you look at the waterfall, you know, we took the generation of marketing segment revenue down to, you know, what we call much more normal contributions. I'm not concerned, you know, about the ability to take the proceeds, use them as appropriate to get that accretion as we go forward, but you know, no, it's still, if you will, the same plan if you will as we put out at EEOC. And then Chuck mentioned that the FERC decision is expected to have a 3 cent negative impact on the price of electricity. Is that going to be treated as an operating EPS, or is that a No, it's an operating. And then, I guess the last question I have is... Currently, there's a proceeding in Kentucky where I guess there are recommendations for potential disallowance of Fuel and Purchase Power Costs. I think there's also a fuel review that could take place. Louisiana, give us.

We took to generation and marketing segment.

<unk> two.

We would call much more normal contributions.

I'm not concerned you know that.

Hum.

About the ability to.

Take the proceeds.

Use them as appropriate.

To get that accretion as we go forward, but.

No. It's still it's still the same plan if you will as we put out at EI.

And then Chuck mentioned that the FERC decision is expected to have a negative impact on 24 is that going to be treated as operating.

Operating EPS or is that going to be excluded as nonrecurring.

No it's operating.

Okay.

And then just last question I have is currently there's a proceeding in Kentucky.

Where I guess theres recommendations for potential disallowance of fuel and purchase power costs.

Theres also a fuel review that that could take place or may be taking place in Louisiana can you give us.

Charles E. Zebula: I guess an update, what your expectations are. What's happened? Yes, in Kentucky, we do have a two-year fuel review that has been underway, and we're awaiting the outcome as it relates to that. We had a hearing earlier this month, actually. And then, excuse me, what was your other question? Was it related to SWEPCO?

An update on on what your expectations are in <unk>.

What's happening in those proceedings.

Yes in Kentucky, we do have a two year fuel review that has been underway and we are waiting the outcome as it relates to that we had a hearing earlier.

This month actually.

And then.

Excuse me what was your other question was related to swap out.

Yes, I think as part of that settlement on the renewables there was I guess the ability of.

Peggy Simmons: Yeah, I think as part of the settlement on the renewables... guests, staff. Thank you. Yes, that was part of, excuse me, sorry, go ahead, finish your question. No, that's it. Yeah, that was part of the review. And that is ongoing as well.

Staff to do.

A review of the fuel.

Yes that was part excuse me sorry go ahead finish your question no thats it.

Yes that was a that was part of the review and that is ongoing as well so but darcy can definitely give you some more information on that if that wasn't clear enough.

Peggy Simmons: So, but Darcy can definitely give you some more information on that, if that wasn't clear. And last question for me, in terms of the 9.1% that you're targeting for this year. What type of an improvement do you see as being necessary, in the past, talked about, the earned ROE? Part of hitting your target is

And last question from me in terms of the nine 1% that you're targeting for this year I think.

What type of an improvement do you see as being necessary in order to hit the six to eight I think in the past you've talked about.

Needing to improve the Alaska.

The earned ROE.

As part of hitting your targeted growth rate.

Peggy Simmons: Yeah, so you know, over our five-year plan, we look to be typically in a 9.5% range. So what we're looking to do is increase by 10 basis points each year. And we think that that's achievable, and we continue to work through our regulatory outcomes to be able to close that gap. Again, for any questions, press star 1, and your next question will come from the line of Paul Patterson with Glenrock. Please go ahead. Hey, good morning. How are you?

Yeah, so over our five year plan, we look to be typically to be in the nine 5% range. So what we're looking to do with increased by 10 basis points each year, and we think that that's achievable and we continue to work through our regulatory outcomes to be able to close that gap.

Great.

Again for any questions Press Star one on your next question will come from the line of Paul Patterson with Glen Rock. Please go ahead.

Hey, good morning.

How are you.

Ben Folk: So, Just, it doesn't sound to me like there really is much of a change in strategy with the new chapter and the managerial change that you're looking at. Am I thinking about this correctly?

Yes.

So.

Just it does it sounds to me like it really is much of a change in strategy with a new chapter in the.

Uh huh.

Managerial change that Youre looking at am I thinking about this correctly.

Ben Folk: Yeah, I think so. The strategy is great. We just have to execute, and that's what we're keenly focused on, Paul. Okay, I just want to make sure I'm hearing this right. And then the second thing that I guess, and I think this was asked before, but is there any timing that we should be thinking about in terms of when a new CEO would be in place? Well, let me just say I'm committed to staying as long as it takes. So, no shortcuts. But you know, I can't see it being shorter than six months, and, hopefully, it won't take more than a year, but again, the process will take the time it needs to take to get the absolute right candidate in place. Okay. And then, finally, when we're talking about regulatory desires and goals, having watched the various jurisdictions, there are a number of jurisdictions that I get the sense, and this isn't going to surprise you, Ben, they want lower prices. And I'm just wondering, is there any sort of new or innovative way you're looking at the regulatory environment?

Yeah, I think so it's the strategy is great. We just have to execute and that's what we're keenly focused on Paul.

Okay, just want to make sure I'm hearing this.

Second thing that I guess.

This was asked before but is there any timing that we should be thinking about in terms of win.

A new CEO would be in place.

Well, let me just say I am committed to stay as long as it takes so no shortcuts.

But I can't see it being shorter than six months.

Hopefully it doesn't take more than a year, but again, it's going to.

The process will take time it needs to take to get the absolute right candidate in place.

Okay.

And then finally, when we when we're talking about regulatory desires and goals.

We watch this.

Various jurisdictions there are a number of jurisdictions that I get the sense and this isn't a surprise you Ben.

But lower prices.

And I'm just wondering is there any sort of newer innovative way.

Youre looking at the regulatory.