Q2 2024 American Electric Power Co Inc Earnings Call

Thank you for standing by. My name is J.L. and I'll be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power's second quarter 2024 earnings call.

Operator: I would like to welcome everyone to the American Electric Power second quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Unknown Executive: Time I would like to welcome everyone to the American Electric Power second quarter 2024 earnings call. All lines have been placed on me to prevent any background noise.

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

Unknown Executive: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask questions in this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question again this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again.

Operator: I would now like to turn the conference over to Darcy Reese, President of Investor Relations. You may begin. Thank you, JL.

Darcy Reese: I would now like to turn the conference over to Darcy Reese, President of Investor Relations. You may begin. Thank you, J.L. Good morning, everyone. And welcome to the second quarter 2024 earnings call for American Electric Power. We appreciate you taking time to join us today. 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. Please refer to our SEC filings for discussion of these factors.

Speaker Change: I would now like to turn the conference over to Darcy Reese, President of Investor Relations. You may begin.

Darcy Reese: Good morning, everyone, and welcome to the second quarter 2024 earnings call for American Electric Power. We appreciate you taking time to join us today. 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.

Darcy Reese: Thank you, JL. Good morning, everyone, and welcome to the second quarter 2024 earnings call for American Electric Power. We appreciate you taking time to join us today.

Speaker Change: 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. Please refer to our SEC filings for discussion of these factors.

Darcy Reese: 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.

Darcy Reese: Please refer to our SEC filings for a discussion of these factors. Joining me this morning for opening remarks are Ben Fowke, 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.

Speaker Change: Joining me this morning for opening remarks are Ben Fowke, 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.

Darcy Reese: We will take your questions following their remarks.

Ben Folk: I will now turn the call over to Ben. Good morning, and welcome to American Electric Power second quarter 2024 earnings call. Shortly, Peggy will provide a regulatory update. Follow by Chuck, who will review our financial results in more detail. The summary of our second quarter, 2024 business highlights can be found on slide six of today's presentation.

Benjamin Fowke: Good morning, and welcome to American Electric Power's second quarter 2024 earnings call. Shortly, Peggy will provide a regulatory update, followed by Chuck, who will review our financial results in more detail. A summary of our second quarter 2024 business highlights can be found on slide six of today's presentation. Before I dive into our results, I'd like to start by welcoming Bill Fuhrman to AEP as our new president and CEO, effective August 1st

Benjamin Fowke: Good morning and welcome to American Electric Power's second quarter 2024 earnings call.

Speaker Change: Shortly, Peggy will provide a regulatory update, followed by Chuck, who will review our financial results in more detail. A summary of our second quarter 2024 business highlights can be found on slide six of today's presentation.

Ben Folk: Before I dive into our results, I'd like to start by welcoming Bill Furman to AEP as our new President and CEO effective August first. Bill brings decades of utility operational leadership experience and in-depth knowledge of the energy industry, most recently serving as president and CEO of Century Holdings. And prior to that, President and CEO of Berkshire Hathaway Energy. With Bill's expertise and diverse background, you can anticipate a smooth transition and continuity of strategic direction. Expect more focus on execution, and Bill has the background to do just that, including capturing growth, listening and responding to our regulators and investors, and using innovation to mitigate inflationary pressures.

Benjamin Fowke: Bill brings decades of utility operational leadership experience and in-depth knowledge of the energy industry, most recently serving as president and CEO of Century Holdings and, prior to that, president and CEO of Berkshire Hathaway Energy. With Bill's expertise and diverse background, you can anticipate a smooth transition and continuity of strategic direction. Expect more focus on execution.

Speaker Change: Before I dive into our results, I'd like to start by welcoming Bill Fuhrman to AEP as our new President and CEO , effective August 1st.

Speaker Change: Bill brings decades of utility operational leadership experience and in-depth knowledge of the energy industry, most recently serving as President and CEO of Century Holdings, and prior to that, President and CEO of Berkshire Hathaway Energy.

Speaker Change: With Bill's expertise and diverse background, you can anticipate a smooth transition and continuity of strategic direction.

Benjamin Fowke: And Bill has the background to do just that, including capturing growth, listening and responding to our regulators and investors, and using innovation to mitigate inflationary pressure. While I will be serving as Senior Advisor for several months to ensure a smooth transition, it's been an honor to lead AEP as Interim President and CEO, and I'm proud of what the team has accomplished so far this year. Now turning to AEP's financials, today we announce second quarter 2024 operating earnings of $1.25 per share, a 12% increase over one year ago.

Speaker Change: Expect more focus on execution and Bill has the background to do just that, including capturing growth, listening and responding to our regulators and investors, and using innovation to mitigate inflationary pressures.

Ben Folk: While I will be serving as a senior vice for several months to ensure a smooth transition, it's been an honor to lead AEP as interim president and CEO, and I'm proud of what the team has accomplished so far this year.

Speaker Change: While I will be serving as Senior Advisor for several months to ensure a smooth transition, it's been an honor to lead AEP as Interim President and CEO , and I'm proud of what the team has accomplished so far this year.

Benjamin Fowke: Our operational execution through the first half of the year, combined with our efforts to efficiently manage the business, have put us well on track to achieve our target. Today, we reaffirm our 2024 full-year operating earnings guidance range of $5.53 to $5.73 and our long-term earnings growth rate of six to seven percent. Regarding data center load, we have commitments from customers for more than 15 gigawatts of incremental load by the end of this decade, mostly driven by large load opportunities. To put this in perspective, AEP's system-wide peak load at the end of last year was 35 gigawatts.

Ben Folk: Now, turning to AEP's financial results. Today, we announced second quarter 2024 operating earnings of $1.25 per share, a 12-cent increase over one year ago. Our operational execution through the first half of the year, combined with our efforts to efficiently manage the business, put us well on track to achieve our targets. Today, we reaffirm our 2024 four-year operating earnings guidance range of $5.53 to $5.73, and our long-term earnings growth rate of 6 to 7%. Regarding data center load, we have commitments from customers for more than 15 gigawatts of incremental load by the end of this decade, mostly driven by large load opportunities.

Speaker Change: Now, turning to AEP's financial results.

Speaker Change: Today we announce second quarter 2024 operating earnings of $1.25 per share, a 12% increase over one year ago. Our operational execution through the first half of the year, combined with our efforts to efficiently manage the business, have put us well on track to achieve our targets.

Speaker Change: Today, we reaffirm our 2024 full-year operating earnings guidance range from $5.53 to $5.73 and our long-term earnings growth rate of 6% to 7%.

Benjamin Fowke: We continue to work with data center customers to meet their increased demand while ensuring contracts and new initiatives are fair and beneficial for all of our customers. In the fall, we will provide an update on what this large load opportunity means for our capital spend, including generation and transmission investment, and on our plan to responsibly finance this growth initiative. While we certainly encourage innovation when it comes to meeting the energy needs of our customers, data centers included, I want to emphasize that it's critically important that costs associated with these large loads are allocated fairly, and the right investments are made for the long-term success of our grid.

Speaker Change: Regarding data center load, we have commitments from customers for more than 15 gigawatts of incremental load by the end of this decade, mostly driven by large load opportunities.

Ben Folk: To put this in perspective, AEP's system-wide peak load at the end of last year was 35 gigawatts. We continue to work with data center customers to meet their increased demand while ensuring contracts and new initiatives are fair and beneficial for all of our customers.

Speaker Change: To put this in perspective, AEP's system-wide peak load at the end of last year was 35 gigawatts.

Speaker Change: We continue to work with data center customers to meet their increased demand while ensuring contracts and new initiatives are fair and beneficial for all of our customers.

Ben Folk: In the fall, we will provide an update on what this large load opportunity means for our capital spend, including generation and transmission investment, and on our plan to responsibly finance this growth initiative. While we certainly encourage innovation when it comes to meeting the energy needs of our customers, data centers included, I want to emphasize that it's critically important that costs associated with these large loads are allocated fairly, and the right investments are made for the long-term success of our grid. For this reason, we filed new data center tariffs in Ohio, and large load tariff modifications in Indiana and West Virginia, and it's the reason why we filed a complaint with FERC related to a co-located load agreement.

Speaker Change: In the fall, we will provide an update on what this large load opportunity means for our capital spend, including generation and transmission investment, and on our plan to responsibly finance this growth initiative.

Speaker Change: While we certainly encourage innovation when it comes to meeting the energy needs of our customers, data centers included, I want to emphasize that it's critically important that costs associated with these large loads are allocated fairly and the right investments are made for the long-term success of our grid.

Benjamin Fowke: For this reason, we filed new data center tariffs in Ohio and large load tariff modifications in Indiana and West Virginia, and it's the reason why we filed a complaint with FERC related to a co-located load agreement.

Speaker Change: For this reason, we filed new data center tariffs in Ohio and large load tariff modifications in Indiana and West Virginia. And it's the reason why we filed a complaint with FERC related to a co-located load agreement. We will know soon what FERC decides, but this is the rationale we used.

Ben Folk: We will know soon what FERC decides, but this is the rationale we are going to do.

Benjamin Fowke: We will know soon what FERC decides, but this is the rationale we use. Given the co-located load agreement is an active case before FERC, I don't plan on making any further comments. I'd also like to note that large load impacts are already being felt here in AEP's service territory, primarily in Ohio and Texas.

Ben Folk: Given the co-located load agreement is an active case before FERC, I don't plan on making any further comments. I'd also like to note that large load impacts are already being filed here in AEP's service territories, primarily Ohio and Texas, as our commercial load grew an impressive 12.4% over the second quarter of last year. Looking ahead, we expect the incremental load I just mentioned to move forward in these states and others, including Indiana.

Speaker Change: Given the co-located load agreement is an active case before FERC, I don't plan on making any further comments.

Speaker Change: I'd also like to note that large load impacts are already being felt here in AEP's service territories, primarily Ohio and Texas.

Benjamin Fowke: As our commercial load grew an impressive 12.4% over the second quarter of last year, looking ahead, we expect the incremental load I just mentioned to move forward in these states and others, including Indiana. Moving to another example of capital opportunities, PSO announced an agreement at the end of June to purchase a 795 megawatt natural gas generation facility conditioned on regulatory approval. The facility, known as Green Country, is located in Jenks, Oklahoma, and will ensure PSO customers continue to benefit from reliable and affordable resources.

Speaker Change: As our commercial load grew an impressive 12.4% over the second quarter of last year. Looking ahead, we expect the incremental load I just mentioned to move forward in these states and others, including Indiana.

Ben Folk: Moving to another example of capital opportunities, PSO announced an agreement at the end of June to purchase a 795 megawatt natural gas generation facility conditioned on regulatory approval. The facility known as Green Country is located in Janks, Oklahoma, and will ensure PSO customers continue to benefit from reliable and affordable resources. For this resource adequacy driven capital, PSO plans to seek regulatory approval this fall, at which time the economics of this acquisition will be made public.

Speaker Change: Moving to another example of capital opportunities, PSO announced an agreement at the end of June to purchase a 795 megawatt natural gas generation facility conditioned on regulatory approval.

Speaker Change: The facility, known as Green Country, is located in Jenks, Oklahoma, and will ensure PSO customers continue to benefit from reliable and affordable resources.

Benjamin Fowke: For this resource adequacy-driven capital, PSO plans to seek regulatory approval this fall, at which time the economics of this acquisition will be made public. As you know, maintaining a strong balance sheet is critical to fund increased capital expenditures to support our growth initiatives. We will sensibly finance our capital needs, and we're open to incremental growth equity and equity-like tools in addition to portfolio optimization. On a similar portfolio note, the sale of AEP onsite partners remains on track to close in the third quarter following FERC approval.

Speaker Change: For this resource adequacy driven capital, PSO plans to seek regulatory approval this fall, at which time the economics of this acquisition will be made public.

Ben Folk: As you know, maintaining a strong balance sheet is critical to find increased capital spend to support our growth initiatives. We will sensibly finance our capital needs, and we're open to incremental growth equity and equity-like tools in addition to portfolio optimization.

Speaker Change: As you know, maintaining a strong balance sheet is critical to fund increased capital spend to support our growth initiatives.

Speaker Change: We will sensibly finance our capital needs, and we're open to incremental growth equity and equity-like tools, in addition to portfolio optimization.

Ben Folk: On a similar portfolio note, the sale of AEP onsite partners remains on track to close in the third quarter following FERC approval.

Speaker Change: On a similar portfolio note, the sale of AEP onsite partners remains on track to close in the third quarter following FERC approval.

Ben Folk: Now let's move on to the federal EPA's Coal Combustion Residual rule or CCR, which was finalized in the second quarter and expanded the scope of the rule to include inactive implements at existing and inactive facilities. We continue to evaluate the applicability of the rule to current and former plant sites and have developed preliminary estimates of compliance cost. While we are working with others and looking at potential legal challenges to the revised rules, as appropriate, we do plan to seek cost recovery through new and/or existing regulatory mechanisms. Chuck will have more information on this shortly.

Benjamin Fowke: Now let's move on to the Federal EPA's Coal Combustion Residual Rule, or CCR, which was finalized in the second quarter and expanded the scope of the rule to include inactive impoundments at existing and inactive facilities. We continue to evaluate the applicability of the rule to current and former plant sites and have developed preliminary estimates of compliance costs.

Speaker Change: Now let's move on to the Federal EPA's Coal Combustion Residual Rule, or CCR, which was finalized in the second quarter and expanded the scope of the rule to include inactive impoundments at existing and inactive facilities.

Speaker Change: We continue to evaluate the applicability of the rule to current and former plant sites and have developed preliminary estimates of compliance costs.

Benjamin Fowke: While we are working with others and looking at potential legal challenges to the revised rules, as appropriate, we do plan to seek cost recovery through new and or existing regulatory mechanisms. Chuck will have more information on this shortly. Before I turn it over to Peggy for additional updates, I'd like to thank all of you for your support during my time as AEP's interim CEO. It's been a privilege to serve AEP over the past five months and the board and I are confident that Bill is the right person to build on the momentum underway and to lead AEP into its next chapter.

Speaker Change: While we are working with others and looking at potential legal challenges to the revised rules, as appropriate, we do plan to seek cost recovery through new and or existing regulatory mechanisms.

Ben Folk: Before I turn it over to Peggy for additional updates, I'd like to thank all of you for your support, though my time is AEP's interim CEO. I've been privileged to serve AEP over the past five months, and the board and I are confident that Bill is the right person to build on the momentum underway and to lead AEP into its next chapter. On a related note, we are planning an informal meet and greet in New York City soon so analyst investors can say hello to Bill in person. We are targeting something in August, so stay tuned for more information coming your way in the next couple of days.

Chuck: Chuck will have more information on this shortly.

Chuck: Before I turn it over to Peggy for additional updates.

Peggy: I'd like to thank all of you for your support during my time as AEP's Interim CEO .

Peggy: It's been a privilege to serve AEP over the past five months and the board and I are confident that Bill is the right person to build on the momentum underway and to lead AEP into its next chapter.

Benjamin Fowke: On a related note, we are planning an informal meet and greet in New York City soon so analyst investors can say hello to Bill in person. We are targeting something in August, so stay tuned for more information coming your way in the next couple of days. Finally, I'm excited about what the future holds for AEP as we execute on our strategic priorities and enhance value for all of our stakeholders. Peggy?

Speaker Change: On a related note, we are planning an informal meet-and-greet in New York City soon so analyst investors can say hello to Bill in person. We are targeting something in August , so stay tuned for more information coming your way in the next couple of days.

Ben Folk: Finally, I'm excited about what the future holds for AEP as we execute on our strategic priorities and enhance value for all of our stakeholders.

Speaker Change: Finally, I'm excited about what the future holds for AEP as we execute on our strategic priorities and enhance value for all of our stakeholders. Peggy?

Peggy Simmons: Peggy? Thanks, Ben, and good morning everyone. Now let's turn to an update on several of AEP's ongoing regulatory initiatives. We are engaged in our regulatory and legislative areas, continuing to strengthen relationships, including implementation of our investment in more people and resources at the local level. And as the utility industry is changing, now more than ever, AEP's operating company leaders are staying increasingly engaged with regulators amidst this dynamic environment. Custom rebuild and affordability remain top of mind for AEP, in addition to system reliability and resiliency. We are focused on advancing interest in each of the states we operate, which includes economic development, work across service, our service territory to bring jobs and create billhead rooms from a larger load perspective.

Peggy I. Simmons: Thanks, Ben. And good morning, everyone. Now let's turn to an update on several of AEP's ongoing regulatory initiatives. We are engaged in our regulatory and legislative areas, continuing to strengthen relationships, including implementing our investment in more people and resources at the local level. And as the utility industry changes, now more than ever, AEP's operating company leaders are staying increasingly engaged with regulators amidst this dynamic environment. Customer bills and affordability remain top of mind for AEP in addition to system reliability and resiliency.

Peggy: Thanks, Ben. And good morning, everyone. Now let's turn to an update on several of AEP's ongoing regulatory initiatives.

Peggy: We are engaged in our regulatory and legislative areas, continuing to strengthen relationships, including implementation of our investment in more people and resources at the local level.

Speaker Change: And as the utility industry is changing, now more than ever, AEP's operating company leaders are staying increasingly engaged with regulators amidst this dynamic environment.

Speaker Change: Customer builds and affordability remain top of mind for AEP in addition to system reliability and resiliency.

Peggy I. Simmons: We are focused on advancing interests in each of the states we operate, which includes economic development, working across service or service territory to bring jobs and create bill headroom from a larger load perspective, and to ultimately achieve regulatory outcomes that are good for AEP's customers, communities, investors, and employees. We continue to work through regulatory items with the focus on our authorized versus earned ROE gap, which remains flat at 8.9% for the past 12 months as of second quarter 2024.

Speaker Change: We are focused on advancing interest in each of the states we operate, which includes economic development, work across service territory to bring jobs, and create bill headroom from a larger load perspective.

Peggy Simmons: And to ultimately achieve the regulatory outcomes that are good for AEP's customers, communities, investors, and employees. We continue to work through regulatory items with the focus on our authorized versus earned ROE gap, which remained flat at 8.9% for the past 12 months as of 2nd quarter 2024.

Speaker Change: and to ultimately achieve the regulatory outcomes that are good for AEP's customers, communities, investors, and employees.

Speaker Change: We continue to work through regulatory items with a focus on our authorized versus earned ROE gap, which remained flat at 8.9% for the past 12 months as of second quarter 2024.

Peggy Simmons: Turning to some positive rate case development, let's start with I&M. I'm pleased to report that in May, we received an order in Indiana approving all key items in our settlement, including an improved 9.85% ROE. In June, we received a constructive order in Michigan maintaining our existing 9.86% ROE, with new rates taking effect in mid July. Just last week for AEP Texas, parties filed a unanimous and unimposed comprehensive settlement with the ALJ increasing our authorized ROE to 9.76% with rates effective in early October pending Commission approval. As you know, earlier this year, we filed an APCO biennial rate review in Virginia and a base rate case for PSO in Oklahoma, where we received intervener testimony in the PSO case last evening.

Peggy I. Simmons: Turning to some positive rate case developments, let's start with I&M. I'm pleased to report that in May, we received an order in Indiana approving all key items in our settlement, including an improved 9.85% ROE. In June, we received a constructive order in Michigan maintaining our existing 9.86% ROE with new rates taking effect in mid-July. Just last week, for AEP Texas, parties filed a unanimous and unopposed comprehensive settlement with the ALJ increasing our authorized ROE to 9.76% with rates effective in early October pending commission approval.

Speaker Change: Turning to some positive rate case developments, let's start with INM. I'm pleased to report that in May we received an order in Indiana approving all key items in our settlement including an improved 9.85% ROE.

Speaker Change: In June we received a constructive order in Michigan maintaining our existing 9.86% ROE with new rates taking effect in mid-July.

Speaker Change: Just last week for AEP Texas, parties filed a unanimous and unopposed comprehensive settlement with the ALJ increasing our authorized ROE to 9.76% with rates effective in early October pending commission approval.

Peggy I. Simmons: As you know, earlier this year, we filed an APCO biennial rate review in Virginia and a base rate case for PSO in Oklahoma, where we received intervenor testimony in the PSO case last week. We're at the beginning of the procedural schedules in both cases and expect commission orders in the fourth quarter. We look forward to sharing updates on our progress in the coming month. Relative to future cases, APCO plans to file a base rate case in West Virginia within the next week.

Speaker Change: As you know, earlier this year, we filed an ABCO biennial rate review in Virginia and a base rate case for PSO in Oklahoma, where we received intervenor testimony in the PSO case last evening.

Peggy Simmons: We're at the beginning of the procedural schedules in both cases and expect commission orders in the fourth quarter. We look forward to sharing updates on our progress in the coming months.

Speaker Change: We're at the beginning of the procedural schedules in both cases and expect commission orders in the fourth quarter. We look forward to sharing updates on our progress in the coming months.

Peggy Simmons: Relative to future cases, APCO plans to file a base rate case in West Virginia in the next week. While we have many trackers in place to help mitigate regulatory lag, we have not had a rate case here in a few years and look forward to working with the parties to achieve a balanced and fair result. Looking ahead, I am proud of the progress we continue to make on the regulatory front, and I remain excited about advancing our regulatory strategies in 2024 and beyond.

Speaker Change: Relative to future cases, APCO plans to file a base rate case in West Virginia in the next week. While we have many trackers in place to help mitigate regulatory lag, we have not had a rate case here in a few years and look forward to working with the parties to achieve a balanced and fair result.

Peggy I. Simmons: While we have many trackers in place to help mitigate regulatory lag, we have not had a rate case here in a few years and look forward to working with the parties to achieve a balanced and fair result. Looking ahead, I am proud of the progress we continue to make on the regulatory front, and I remain excited about advancing our regulatory strategies in 2024 and beyond. Let's discuss AEP's recent fleet transformation activities and the progress we've made on that important initiative. In May, APCO issued requests for proposals for 800 megawatts of wind or solar-owned resources with regulatory filings anticipated in 2025.

Speaker Change: Looking ahead, I am proud of the progress we continue to make on the regulatory front, and I remain excited about advancing our regulatory strategies in 2024 and beyond.

Peggy Simmons: Let's discuss AP's recent fleet transformation activities and the progress we made on that important initiative, and may APCO issued requests for proposals for 800 megawatts of wind or solar owned resources, with regulatory filing anticipated in 2025. Finally, as Ben mentioned, PSO signed an agreement in June to purchase green countries' 795 megawatt natural gas generation facilities to help ensure resource adequacy. The agreement is conditioned on regulatory approval, and we plan to make the related filings with the Oklahoma Commission in the fall. This is an example of a proactive approach by the team and meeting ever-increasing resource needs, and we're enthusiastic about the opportunity as we advance our fleet transformation.

Speaker Change: Let's discuss AEP's recent fleet transformation activities and the progress we made on that important initiative. In May, APCO issued requests for proposals for 800 megawatts of wind or solar-owned resources with regulatory filings anticipated in 2025.

Peggy I. Simmons: Finally, as Ben mentioned, PSO signed an agreement in June to purchase Green Country's 795 megawatt natural gas generation facility to help ensure resource adequacy. The agreement is conditioned on regulatory approval, and we plan to make the related filings with the Oklahoma Commission in the fall. This is an example of a proactive approach by the team in meeting ever-increasing resource needs, and we're enthusiastic about the opportunity as we advance our fleet

Speaker Change: Finally, as Ben mentioned, PSO signed an agreement in June to purchase Green Country's 795-megawatt natural gas generation facility to help ensure resource adequacy.

Ben: The agreement is conditioned on regulatory approval, and we plan to make the related filings with the Oklahoma Commission in the fall. This is an example of a proactive approach by the team in meeting ever-increasing resource needs, and we're enthusiastic about the opportunity as we advance our fleet transformation.

Peggy Simmons: To wrap up, I'd like to thank Ben for his leadership and welcome Bill to the AEP team. This is an exciting time here at AEP, and when I think about the future, I'm motivated by the opportunities we have ahead of us, embracing large loads, advancing our regulatory strategy, and driving overall long-term success.

Peggy I. Simmons: To wrap up, I'd like to thank Ben for his leadership and welcome Bill to the AEP team. This is an exciting time here at AEP, and when I think about the future, I'm motivated by the opportunities we have ahead of us, embracing large loads, advancing our regulatory strategy, and driving overall long-term success. I'll now turn things over to Chuck, who is going to walk through the second quarter 2024 performance drivers and details supporting our financial results. Chuck?

Ben: To wrap up, I'd like to thank Ben for his leadership and welcome Bill to the AEP team.

Bill: This is an exciting time here at AEP, and when I think about the future, I'm motivated by the opportunities we have ahead of us.

Bill: Embracing Large Loads, Advancing Our Regulatory Strategy, and Driving Overall Long-Term Success. I'll now turn things over to Chuck, who is going to walk through second quarter 2024 performance drivers and details supporting our financial results. Chuck?

Chuck Zebula: I'll now turn things over to Chuck, who is going to walk through 2nd quarter 2024 performance drivers and details supporting our financial results. Chuck? Thank you, Peggy, and good morning, everyone. Let's jump right into our 2nd quarter results. Slide 7 shows the comparison of gap to operating earnings for the quarter and year-to-date periods. Gap earnings for the 2nd quarter were 64 cents per share compared to $1.1 per share in 2023. Year-to-date gap earnings are $255 per share for this year versus $178 per share last year. There's a detailed reconciliation of GAAP to operating earnings for the 2nd quarter and year-to-date results on pages 13 and 14, respectively.

Charles E. Zebula: Thank you, Peggy. And good morning, everyone. Let's jump right into our second quarter results. Slide 7 shows the comparison of GAAP to operating earnings for the quarter and year-to-date period. GAAP earnings for the second quarter were $0.64 per share compared to $1.01 per share in 2023. Year-to-date GAAP earnings are $2.55 per share for this year versus $1.78 per share last. There's a detailed reconciliation of GAAP earnings to operating earnings for the second quarter and year to date results on pages 13 and 14, respectively. Let's briefly highlight a few of the non-operating items for the quarter that mostly make up the difference between GAAP and operating earnings.

Chuck: Thank you, Peggy, and good morning, everyone. Let's jump right into our second quarter results.

Chuck: Slide 7 shows the comparison of GAAP to operating earnings for the quarter and year-to-date periods.

Chuck: GAAP earnings for the second quarter were $0.64 per share compared to $1.01 per share in 2023. Year-to-date GAAP earnings are $2.55 per share for this year versus $1.78 per share last year.

Chuck: There's a detailed reconciliation of gap-to-operating earnings for the second quarter and year-to-date results on pages 13 and 14, respectively.

Chuck Zebula: Let's briefly highlight a few of the non-operating items for the quarter that mostly make up the difference between GAAP and operating earnings.

Chuck: Let's briefly highlight a few of the non-operating items for the quarter that mostly make up the difference between GAAP and operating earnings.

Chuck Zebula: First, as disclosed in an AK in May, an after-tax provision of 126 million for customer refunds was recorded based on recent developments in the remand proceeding related to the cost cap associated with the Turk plant that has been debated over the last decade. Secondly, we incurred a $94 million expense associated with a voluntary 7th program that we completed in the 2nd quarter. And finally, as Ben mentioned, the final revised EPA CCR rule became effective in May. We recorded a $111 million accrual for a compliance cost largely related to our Ohio properties where generation is deregulated.

Charles E. Zebula: First, as disclosed in an 8K in May, an after-tax provision of $126 million for customer refunds was recorded based on recent developments in the remand proceeding related to the cost cap associated with the Turk plant that has been debated over the last decade. Secondly, we incurred a $94 million expense associated with a voluntary severance program that we completed in the second quarter. And finally, as Ben mentioned, the final revised EPA CCR rule became effective in May.

Chuck: First, as disclosed in an 8K in May, an after-tax provision of $126 million for customer refunds

Chuck: was recorded based on recent developments in the remand proceeding related to the cost cap associated with the Turk plant that has been debated over the last decade.

Chuck: Secondly, we incurred a $94 million expense associated with a voluntary severance program that we completed in the second quarter.

Charles E. Zebula: We recorded a $111 million accrual for compliance costs, largely related to our Ohio property, where generation is deregulated. We also updated our asset retirement obligations for sites in our regulated entities where we intend to seek cost recovery. Let's walk through our quarterly operating earnings performance by segment on slide eight. Operating earnings for the second quarter totaled $125 per share, or $662 million, compared to $113 per share, or $582 million in 2023. This results in an increase of $80 million, or $0.12 per share, which is a 10.6% increase over last year. Operating earnings for vertically integrated utilities were $0.46 per share, down $0.05.

Chuck Zebula: We also updated our asset retirement obligations for sites in our regulated entities where we intend to seek cost recovery.

Chuck: We also updated our asset retirement obligations for sites in our regulated entities where we intend to seek cost recovery.

Chuck Zebula: Let's walk through our quarterly operating earnings performance by segment on slide 8. Operating earnings for the 2nd quarter totaled 125 per share or 662 million, compared to 113 per share or 582 million in 2023. This results in an increase of $80 million, or 12 cents per share, which is a 10.6 percent increase over last year. Operating earnings for vertically integrated utilities or 46 cents per share, down 5 cents. Positive drivers included favorable year-over-year weather and rate changes across multiple jurisdictions, with the 2022 PSO base case and the 2023 Virginia proceeding being the most significant. Inc.

Charles E. Zebula: Negative drivers included favorable year-over-year weather and rate changes across multiple jurisdictions, with the 2022 PSO base case and the 2023 Virginia proceeding being the most significant. However, these items were offset by higher income taxes, which are largely a reversal of favorable income taxes in the first quarter. Lower normalized retail sales and higher depreciation. Note the year-to-date results in this segment consolidate the income tax loss that is shown in this quarter, resulting in an immaterial year-to-date income tax variance versus last year. The transmission and distribution utility segment earned $0.41 per share, up $0.11 compared to last year.

Chuck: Let's walk through our quarterly operating earnings performance by segment on slide 8.

Chuck: Operating earnings for the second quarter totaled $125 per share, or $662 million, compared to $113 per share, or $582 million in 2023.

Chuck: Positive drivers included favorable year-over-year weather and rate changes across multiple jurisdictions, with the 2022 PSO base case and the 2023 Virginia proceeding being the most significant.

Chuck Zebula: These items were offset by higher income taxes, which are largely a reversal of favorable income taxes in the first quarter; lower normalized retail sales; and higher depreciation. Note, the year-to-date results in this segment consolidate the income tax loss that is shown in this quarter, resulting in an immaterial year-to-date income tax variance versus last year. The transmission and distribution utility segment earned 41 cents per share, up 11 cents compared to last year. Positive drivers in this segment included favorable weather, increased transmission revenue, rate changes primarily from the distribution cost recovery factor in Texas, and higher normalized retail sales.

Chuck: These items were offset by higher income taxes, which are largely a reversal of favorable income taxes in the first quarter, lower normalized retail sales, and higher depreciation.

Chuck: Note, the year-to-date results in this segment consolidate the income tax loss that is shown in this quarter, resulting in an immaterial year-to-date income tax variance versus last year.

Charles E. Zebula: Negative drivers in this segment included favorable weather, increased transmission revenue, rate changes primarily from the distribution cost recovery factor in Texas, and Higher Normalized Retail Sales. These items were partially offset by increased property taxes and depreciation.

Chuck: Positive drivers in this segment included favorable weather, increased transmission revenue, rate changes primarily from the distribution cost recovery factor in Texas, and higher normalized retail sales.

Chuck Zebula: These items were partially offset by increased property taxes and depreciation. The AEP transmission hold co-segment contributed 39 cents per share, up a penny compared to last year, primarily driven by investment growth. Generation and marketing produced 12 cents per share, down a penny from last year.

Chuck: These items were partially offset by increased property taxes and depreciation.

Charles E. Zebula: The AEP Transmission Holdco Segment contributed $0.39 per share, up a penny compared to last year, primarily driven by investment. Generation and Marketing produced 12 cents per share, down a penny from last year. We call that AEP Renewables was sold in the third quarter last year, which had two impacts, a negative earnings variance due to the business being sold and removal of the interest costs for financing these. Additional drivers were lower retail margins, offset by higher generation margins, and lower taxes.

Chuck: The AEP Transmission Holdco Segment contributed $0.39 per share, up a penny compared to last year, primarily driven by investment growth.

Chuck: Generation and Marketing produced $0.12 per share, down a penny from last year.

Chuck Zebula: We call that AEP Renewables was sold in the third quarter last year, which has two impacts and negative earnings variance due to the business being sold and removal of the interest costs for financing these assets. Additional drivers were lower retail margins, offset by higher generation margins and lower taxes. Finally, corporate and other was up 6 cents compared to the prior year, primarily driven by lower income taxes and increased other operating income related to timing in the prior year. These items were partially offset by higher interest expense and lower interest income from the GNM segment.

Chuck: We call that AEP Renewables was sold in the third quarter last year, which has two impacts. A negative earnings variance due to the business being sold and removal of the interest costs for financing these assets.

Chuck: Additional drivers were lower retail margins, offset by higher generation margins, and lower taxes.

Charles E. Zebula: Finally, corporate and other was up six cents compared to the prior year, primarily driven by lower income taxes and increased other operating income related to timing in the prior year. These items were partially offset by higher interest expense and lower interest income from the GNM segment.

Chuck: Finally, Corporate and Other was up $0.06 compared to the prior year, primarily driven by lower income taxes and increased other operating income related to timing in the prior year.

Chuck: These items were partially offset by higher interest expense and lower interest income from the GNM segment.

Chuck Zebula: Let's turn to slide 9, which shows weatherized, weather normalized retail sales of 4% in the quarter from a year ago. Headlined by a double-digit 12.4% increase in commercial sales, which is where our data processing customers are classified. I'll note that in our T and D segment, the increase in commercial load was over 20% for the quarter. This is a trend that will continue over the coming years based on already signed customer commitments. Our operating footprint and robust transmission system position us perfectly to grow along ASA AI and other technologies and industries in need of access to affordable and reliable power.

Charles E. Zebula: Let's turn to slide nine, which shows weatherized weather normalized retail sales of 4% in the quarter from a year ago, headlined by a double-digit 12.4% increase in commercial sales, which is where our data processing customers are classified. I'll note that in our T&D segment, the increase in commercial load was over 20% for the quarter. This is a trend that will continue over the coming years based on already signed customer commitments.

Chuck: Let's turn to slide 9, which shows weather normalized retail sales of 4% in the quarter from a year ago.

Chuck: Headlined by a double-digit 12.4% increase in commercial sales, which is where our data processing customers are classified.

Chuck: I'll note that in our T&D segment, the increase in commercial load was over 20% for the quarter. This is a trend that will continue over the coming years based on already signed customer commitments.

Charles E. Zebula: Our operating footprint and robust transmission system position us perfectly to grow alongside AI and other technologies and industries in need of access to affordable and reliable power. Through the remainder of this year, data processing gains will remain mostly concentrated in Ohio and Texas.

Chuck: Our operating footprint and robust transmission system position us perfectly to grow along AI and other technologies and industries in need of access to affordable and reliable power.

Chuck Zebula: Through the remainder of this year, data processing gains will remain mostly concentrated in Ohio and Texas. But beyond this year, we are seeing strong commitments from new customers looking to connect at some of our vertically integrated companies as well. Outside of data processors, our industrial sales have remained resilient in the face of a slowing economy.

Chuck: Through the remainder of this year, data processing gains will remain mostly concentrated in Ohio and Texas.

Charles E. Zebula: But beyond this year, we are seeing strong commitments from new customers looking to connect at some of our vertically integrated companies, such as Outside of data processors, our industrial sales have remained resilient in the face of a slowing economy. Industrial sales were strongest in Texas, driven by an influx of new customers, mainly in the energy industry. Thanks to our success over the past few years on the economic development front, we expect to see our industrial sales continue to be resilient in the next few years as several new large customers in steel, energy, renewable energy, and semiconductors come online across our footprint. In the residential segment, we continue to see growth in customer count and load in Texas. But residential load remains weak in most of our territories, likely due to the cumulative effects of inflation.

Chuck: But beyond this year, we are seeing strong commitments from new customers looking to connect at some of our vertically integrated companies as well.

Chuck: Outside of data processors, our industrial sales have remained resilient in the face of a slowing economy.

Chuck Zebula: Benjamin. Industrial details were strongest in Texas, driven by an influx of new customers, mainly in the energy industry. Thanks to our success over the past few years on the economic development front, we expect to see our industrial sales continue to be resilient in the next few years as several new large customers in steel, energy, renewable energy, and semi-conductors come online across our footprint. In the residential segment, we continue to see growth in customer count and load in Texas, but residential load remains weak in most of our territories, likely due to the cumulative effects of inflation.

Chuck: Industrial sales were strongest in Texas, driven by an influx of new customers, mainly in the energy industry.

Chuck: Thanks to our success over the past few years on the economic development front.

Chuck: We expect to see our industrial sales continue to be resilient in the next few years as several new large customers in steel, energy, renewable energy, and semiconductors come online across our footprint.

Chuck: In the residential segment, we continue to see growth in customer count and load in Texas, but residential load remains weak in most of our territories, likely due to the cumulative effects of inflation.

Chuck Zebula: Bottom line, the amount of demand from new large loads we're seeing across our system is unprecedented. We are excited, challenged, and poised to embrace this opportunity.

Charles E. Zebula: Bottom line, the amount of demand from new large loads we're seeing across our system is unprecedented. We are excited, challenged, and poised to embrace this opportunity. Now, let's move on to slides.

Chuck: Bottom line, the amount of demand from new large loads we're seeing across our system is unprecedented. We are excited, challenged, and poised to embrace this opportunity.

Chuck Zebula: Let's move on to slide 10. In the top left table, you can see the FFO to debt metrics stands at 14.6% for the 12 months ended June 30, which is a 40 basis point increase from the prior quarter. Our debt to cap decreased slightly from last quarter and was 62.6% at quarter end. We took credit supportive financing actions in the second quarter by issuing 400 million of equity under our at-the-market program and by issuing 1 billion in junior subordinated notes at the parent, which qualified for 50% equity credit at all three rating agencies. In the lower left part of this slide, you can see our liquidity summary, which remains strong at 5.4 billion and is supported by 6 billion in credit facilities.

Charles E. Zebula: In the top left table, you can see the FFO to debt metric stands at 14.6% for the 12 months ended June 30th, which is a 40 basis point increase from the prior quarter. Our debt-to-capital decreased slightly from last quarter and was 62.6% at quarter end. We took credit-supportive financing actions in the second quarter by issuing $400 million of equity under our At-The-Market program and by issuing $1 billion in junior subordinated notes at the parent, which qualified for 50% equity credit at all three rating agencies.

Chuck: Let's move on to slide 10.

Speaker Change: In the top left table, you can see the FFO to debt metric stands at 14.6% for the 12 months ended June 30th.

Speaker Change: which is a 40 basis point increase from the prior quarter. Our debt-to-cap decreased slightly from last quarter and was 62.6% at quarter end.

Speaker Change: We took credit-supportive financing actions in the second quarter.

Speaker Change: By issuing $400 million of equity under our At the Market program, and by issuing $1 billion in junior subordinated notes at the parent, which qualify for 50% equity credit at all three rating agencies.

Charles E. Zebula: In the lower left part of this slide, you can see our liquidity summary, which remains strong at $5.4 billion and is supported by $6 billion in credit facilities. Lastly, on the qualified pension front, our funding status is near 99%. In summary, our second quarter results provide additional momentum this year, bringing year-to-date earnings up to $2.52 per share, an increase of $0.28, or 12.5%, compared to the same period last year. We reaffirm our operating earnings guidance range of 553 to 573 and remain committed to our long-term growth rate of six to seven percent.

Speaker Change: In the lower left part of this slide, you can see our liquidity summary, which remains strong at $5.4 billion and is supported by $6 billion in credit facilities.

Chuck Zebula: Lastly, on the qualified pension front, our funding status is near 99%. In summary, our second quarter results provide additional momentum this year, bringing year-to-date earnings up to $252 per share, an increase of $0.28 or 12.5% compared to the same period last year. We reaffirm our operating earnings guidance range of 553-573 and remain committed to our long-term growth rate of 6-7%. As we move through the balance of the year, our focus is on providing reliable and affordable service to our customers, executing our plan, and embracing the growth opportunities that we have ahead of us.

Speaker Change: Lastly, on the Qualified Pension Front, our funding status is near 99%.

Speaker Change: In summary, our second quarter results provide additional momentum this year, bringing year-to-date earnings up to $2.52 per share, an increase of $0.28, or 12.5% compared to the same period last year.

Speaker Change: We reaffirm our operating earnings guidance range of $553 to $573 and remain committed to our long-term growth rate of 6% to 7%.

Charles E. Zebula: And as we move through the balance of the year, our focus is on providing reliable and affordable service to our customers, executing our plan, and embracing the growth opportunities that we have ahead of us. Also, a quick update on the sale of AAP on-site parts. We expect the transaction to close in the third quarter and result in approximately $315 million in net proceeds to the company. I'd be remiss if I didn't acknowledge the skilled leadership of Ben Fowke during this time of transition at AEP and then tell you that this company would not be neutral during the transition. And I can say that that is absolutely true.

Speaker Change: And as we move through the balance of the year, our focus is on providing reliable and affordable service to our customers, executing our plan, and embracing the growth opportunities that we have ahead of us.

Chuck Zebula: Also, a quick update on the sale of AP onsite partners. We expect a transaction to close in the third quarter and result in approximately $315 million in net proceeds to the company. I'd be remiss if I didn't acknowledge the skilled leadership of Venfo during this time of transition at AP. Ven told you that this company would not be in neutral during the transition. And I can say that that is absolutely true. Ben, well I know you'll still be engaged as an advisor and board role going forward. I want you to know that the AEP team appreciates your engagement and contributions over the past five months.

Speaker Change: Also, a quick update on the sale of AEP onsite partners. We expect the transaction to close in the third quarter and result in approximately $315 million in net proceeds to the company.

Speaker Change: I'd be remiss if I didn't acknowledge the skilled leadership of Ben Fowke during this time of transition at AEP. Ben told you that this company would not be in neutral during the transition.

Charles E. Zebula: Ben, while I know you'll still be engaged as an advisor and board role going forward, I want you to know that the AEP team appreciates your engagement and contributions over the past five months. Finally, the AEP team looks forward to the arrival of our new CEO and president, Bill Furman. We all look forward to Bill bringing his accomplished leadership to AEP and working with him as we take on the exciting opportunities that we have before us.

Speaker Change: And I can say that that is absolutely true. Ben, while I know you'll still be engaged as an advisor and board role going forward, I want you to know that the AEP team appreciates your engagement and contributions over the past five months.

Chuck Zebula: Finally, the AEP team looks forward to the arrival of our new CEO and President, Bill Ferman. We all look forward to build bringing his accomplished leadership to AEP and working with him as we take on the exciting opportunities that we have before us. Thank you for your interest in American Electric Power.

Speaker Change: Finally, the AEP team looks forward to the arrival of our new CEO and President, Bill Fuhrman.

Speaker Change: We all look forward to Bill bringing his accomplished leadership to AEP and working with him as we take on the exciting opportunities that we have before us.

Charles E. Zebula: Thank you for your interest in American electric power. Operator, can you open the call so we can address your questions? Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via a loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Unknown Executive: Operator, can you open the call so we can address your questions? Thank you. The floor is now open for questions. If you have dialed in and would like to ask questions, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker Change: Thank you for your interest in American Electric Power. Operator, can you open the call so we can address your questions? Thank you.

Speaker Change: Thank you. The floor is now open for questions.

Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Unknown Executive: If you are called upon to ask a question and are listening via the speaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Speaker Change: If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Shahriar Pourreza: Your first question comes from the line of Shah Pourreza of Guggenheim Partners. Your line is open.

Operator: Your first question comes from the line of Shahriar Pourreza of Guggenheim Partners. Your line is open. Hey guys, good morning.

Speaker Change: Your first question comes from the line of Shahriar Pourreza of Guggenheim Partners. Your line is open.

Unknown Executive: Hey guys, good morning. Good morning. Just firstly, obviously you guys highlighted in the deck the direction and strategy kind of remain on track.

Shahriar Pourreza: Morning, just firstly, obviously, you guys highlighted in the deck that the direction and strategy kind of remain on track. I guess how much latitude will Bill have to make the kind of strategic changes that need to be made to create value? Or is this the plan kind of plan, and any kind of changes you expect will likely be more on the fringe, given your and the board's comfort level with the trajectory, with obviously the latter kind of being a similar situation to, you know, one of your other Ohio peers in the state when they had an incoming CEO. Thank you. Yeah, I think that was a lot different circumstance, Shahriar.

Charles E. Zebula: Hey guys, good morning.

Char Corzine: [inaudible]

Charles E. Zebula: Morning, just firstly, obviously, you guys highlighted in the deck, and quote unquote, the direction and strategy kind of remain on track.

Unknown Executive: I guess how much latitude will Bill have to make kind of strategic changes that need to be the agreed value? Or is the plan kind of the plan, and any kind of changes you expect will likely be more in the fringe given your and the board's comfort level with the trajectory? With obviously a lot of kind of being a similar situation to one of the other Ohio peers in the state when they had an incoming CEO.

Charles E. Zebula: I guess how much latitude will Bill have to make kind of strategic changes if need be to create value?

Charles E. Zebula: or is the plan kind of the plan and any kind of changes you expect will likely be more on the fringe given your and the board's comfort level with the trajectory with obviously the latter kind of being a similar situation to You know one of your other Ohio peers in the state when they had an incoming CEO . Thanks

Ben Folk: Thanks. Yeah, I think there was a lot of different circumstance. But Bill is very familiar with our strategy. We clearly had conversations with Bill about our strategy. So I think we are on the right strategic direction. I do think Bill is going to come in and focus very much on execution. He's got a ton of experience, as we mentioned, and so I mean he'll take some time to assess where we are, and I'm sure he's going to make some changes, but I don't see significant changes in the strategic direction. It's not like we gave him a plan to do this, and you do all these things.

Benjamin Fowke: But Bill's very familiar with our strategy. We clearly had conversations with Bill about our strategy. So I think it's, you know, I think we're on the right strategic direction. I do think Bill's going to come in and focus very much on execution. He's got a ton of experience, as we mentioned.

Unknown Executive: Yeah, I think that was a lot different circumstance, Shahriar, but Bill's very familiar with our strategy. We clearly had conversations with Bill about our strategy.

Unknown Executive: So I think it's, you know, I think we're all in the right strategic direction.

Speaker Change: I do think Bill is going to come in and focus very much on execution.

Benjamin Fowke: And so, I mean, he'll take some time, assess where we are, and I'm sure he's going to make some changes, but I don't see significant changes in the strategic direction. It's not like we gave him a plan, a to-do list, and you do all these things. He's going to be a dynamic leader, but, you know, the path we're on is... I think we're all in agreement that this is the right path and we need to, Okay, perfect.

Speaker Change: He's got a...

Speaker Change: Ton of experience as we mentioned and so I mean he'll take some time assess where we are and I'm sure he's going to make

Speaker Change: Some changes, but I don't see significant changes in the strategic direction. It's not like we gave him a plan, a to-do list, and you do all these things. He's going to be a dynamic leader. But, you know, the path we're on is...

Ben Folk: He's going to be a dynamic leader, but you know the path one is, I think we're all in agreement it's the right path, and we need to execute on it.

Speaker Change: I think we're all in agreement it's the right path and we need to execute on it.

Benjamin Fowke: And then last time, obviously, we've talked about higher CapEx coming, driven by customer growth, data centers, etc. But as we're kind of thinking about that incremental CapEx, potentially with a 3Q update and the funding source, the balance sheet doesn't have a material amount of capacity. You touched on this a little bit in your preparedness, but maybe you can elaborate on how you're kind of thinking about incremental equity versus asset sales. And with asset sales, how you're thinking about distribution versus transmission.

Unknown Executive: Okay, perfect.

Ben Folk: And then last time obviously we've talked about you know higher capEx coming driven by customer growth, data centers, etc. As we're kind of thinking about that incremental capEx potentially with a 3Q update and the funding source. The balance sheet doesn't have a material amount of capacity.

Speaker Change: Okay, perfect. And then last thing, obviously, we've talked about, you know, higher CapEx coming, driven by customer growth, data centers, etc. As we're kind of thinking about that incremental CapEx, potentially with a 3Q update and the funding source,

Ben Folk: You touched on this a little bit on your prepared, but maybe you can elaborate on how you're kind of thinking about incremental equity versus asset sales, and with asset sales. How you're thinking about distribution versus transmission. Thanks, guys. Yeah, I mean how clearly we're going to have an update in the fall either at or right before EI that incorporates you know what it means to CapEx to fund this low growth both in generation and transmission. And of course what it means to make sure the balance sheet is strong in terms of equity and equity-like products, including portfolio optimization.

Speaker Change: The balance sheet doesn't have a material amount of capacity. You touched on this a little bit on your preparedness, but maybe you can elaborate on how you're kind of thinking about incremental equity versus asset sales, and with asset sales, how you're thinking about distribution versus transmission. Thanks, guys.

Benjamin Fowke: Thanks, guys. Clearly, we're going to have an update in the fall, either at or right before EEI that incorporates, you know, what it means for CapEx to fund this low growth, both in generation and transmission, and, of course, what it means to make sure the balance sheet is strong in terms of equity and equity-like products, including portfolio optimization. Regarding portfolio optimization, you've heard me say it before; we're always open to it. But price has to be there, and the ability to execute has to be there.

Speaker Change: Yeah, I mean, I'll

Speaker Change: Clearly, we're going to have an update in the fall, either at or right before EEI, that incorporates, you know, what it means to CapEx to fund this low growth, both in generation and transmission.

Speaker Change: And of course, what it needs to make sure the balance sheet is strong in terms of equity and equity like.

Chuck Zebula: Regarding portfolio optimization, you heard me say it before: we're always open to it, but price has to be there, and the ability to execute has to be there. And in the regulated utility spaces, those are two hard things to put together at the same time. But we're open to it.

Speaker Change: Products including portfolio optimization. Regarding portfolio optimization, you've heard me say it before, we're always open to it, but price has to be there and the ability to execute has to be there. And the regulated utility spaces, those are two hard things to put together at the same time, but we're open to it.

Benjamin Fowke: And in regulated utility spaces, those are two hard things to put together at the same time, but we're open to it. Chuck, I don't know if you want to add anything to it.

Chuck Zebula: Chuck, I don't know if you want to add anything. Then the only thing I would add is, right, it's so important as we, you know, are a regulated utility and have significant capital needs not only today but going forward, right, to maintain investment credit ratings, and we will defend that. Right in our plan. Got it. Perfect. Thank you.

Charles E. Zebula: Ben, the only thing I would add is, right, it's so important as we, you know, are a regulated utility and have significant capital needs, not only today, but going forward, right, to maintain investment credit ratings, and we will defend that. Got it. Perfect. Thank you. And, by the way, just a real big congratulations on Bill. He's one of the best hires.

Speaker Change: Chuck, I don't know if you want to add anything to it. Ben, the only thing I would add is, right, it's so important as we...

Chuck: you know, are a regulated utility and have significant capital needs, not only today, but going forward, right to maintain investment credit, credit ratings, and we will defend that right in our plan.

Unknown Executive: And by the way, we'll be congrats on Bill. He's one of the best tires. Thanks, guys. Thanks. He did mention.

Chuck: Got it. Perfect. Thank you. And by the way, just real big congrats on Bill. He's one of the best hires. Thanks, guys. Transcribed by https://otter.ai

Shahriar Pourreza: Thanks, guys. Thanks. Shahriar asked about the mix between distribution and transmission.

Unknown Executive: Shah asked the next between distribution and transmission. So, you know, it's going to, there's obviously going to be a lot of transmission. You need to be built as well as distribution.

Chuck: Thanks.

Speaker Change: We did mention, Shahriar asked the mix between distribution and transmission, so, you know, it's going to, there's obviously going to be a lot of transmission needing to be built as well as distribution.

Benjamin Fowke: There's obviously going to be a lot of build as well. Thank you. Your next question comes from the line of Jeremy Tonet of JP Morgan. Your line is open. Hi, good morning. Hey, Jeremy.

Jeremy Tonet: Your next question comes from line of Jeremy Tonet of JP Morgan. Your line is open.

Speaker Change: Thank you. Your next question comes from the line of Jeremy Tonet of JP Morgan. Your line is open.

Jeremy Tonet: Hi, good morning. Hey, Jeremy. I know you're not going to give us the full details here, but I was just wondering if there's any way you could help us think through the size and shaping of this incremental catbacks, as you talked about with the incremental wires needs here. It just seems like everything is materializing quicker than expected. And so just wondering if you could comment, I guess, any shaping there that would be helpful. Yeah, well, as I mentioned that it's with Sharer's comment, I mean, you're definitely going to see a lot of increase in transmission spent.

Jeremy Bryan Tonet: Hey, I know you're not going to give us the full details here, but I was just wondering if there's any way you could help us think through the size and shaping of this incremental capex, as you talked about with the incremental wires needs here. With the incremental wire needs here, it just seems like everything is materializing quicker than expected, and so just wondering if you could comment on, I guess, any shaping there that would be helpful. Yeah, well, as I mentioned with Shahr's comment, you're definitely going to see a lot of increases in transmissions.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Hey, Jeremy.

Jeremy Bryan Tonet: Hey, I know you're not going to give us the full details here, but I was just wondering if there's any way you could help us think through size and shaping of this incremental capex as you talked about with

Jeremy Bryan Tonet: With the incremental wires needs here, it just seems like everything is materializing quicker than expected, and so just wondering if you could comment, I guess, any shaping there that would be helpful.

Charles E. Zebula: Yeah, well, as I mentioned with Shahriar's comment, I mean, you're definitely going to see a lot of increase in transmission spend.

Ben Folk: There's got to be something to plug into. So we're going to have generation as well. And we recognize the need to make sure we have a reliable distribution grid. So I think, you know, if I had to rate it, it would be transmission increases, followed by generation, followed by distribution. Jeremy, I would, I would say you'll note, you know, in our materials that we raised our capex this year, you know, already by 500 million; that largely is in T and D, right? It's for reliability span. And also customer hookups and an Storm related capital. So, you know, the shape of it, right, is going to be as these customer additions, you know, come online.

Jeremy Bryan Tonet: There's got to be something to plug into, so we're going to have generation as well. And we recognize the need to make sure we have reliable distribution. So I think, you know, if I had to rate it, it would be transmission increases, followed by generation, followed by... Jeremy, I would say you'll note, you know, in our materials that we raised our capex this year by 500 million, which is largely in T&D, right? It's for reliability spend, also customer hookups, and storm-related capital.

Speaker Change: There's got to be something to plug into, so we're going to have generation as well. And we recognize the need to make sure we have reliable distribution grids. So I think, you know, if I had to rate it, it would be transmission increases, followed by generation, followed by distribution.

Speaker Change: Jeremy, I would I would say you'll note, you know, in our materials that we raised our CapEx this year, you know, already by 500 million.

Jeremy Bryan Tonet: That largely is in T&D, right? It's for reliability span.

Speaker Change: Also, customer hookups and storm-related capital.

Benjamin Fowke: So, you know, the shape of it, right, is going to be as these customer additions come online. And again, as Ben mentioned, we'll be laying all that out. Got it.

Jeremy Bryan Tonet: You know, the shape of it, right, is, is going to be as these customer additions.

Ben Folk: And again, as Ben mentioned, you know, we'll be laying all that out in the fall. Got it. So it sounds like there's an opportunity for more near term, as opposed to just later dated at this point, if I understand correctly. I think that that's true.

Jeremy Bryan Tonet: You know, come online. And again, as Ben mentioned, you know, we'll be laying all that out in the fall.

Jeremy Bryan Tonet: So it sounds like there's an opportunity for more near-term as opposed to just later data at this point, if I understand correctly. I think that that's true.

Speaker Change: Got it. So it sounds like there's an opportunity for more near-term as opposed to just later data at this point, if I understand correctly.

Speaker Change: and many more.

Ben Folk: Got it. I was just wondering if you could talk a bit more on PSOs, not a gas generation purchase. There to what extent do you see the need for incremental gas generation, you know, across Oklahoma, other service territories? Just wondering if you expect to see more of this. So I would say this is tagging. I would say with the increased reserve margins that we're seeing from the RTOs and the additional load that we're starting to see across our system, we are going to need some additional generation, and this was a very proactive approach that the team took, as I mentioned in my comments earlier, to go out and find some affordable assets that we could bring on to the system, and we plan to make that filing at the commission later this fall.

Peggy I. Simmons: I was just wondering if you could talk a bit more about PSO's natural gas generation purchase there. To what extent do you see the need for incremental gas generation, you know, across Oklahoma, and other service territories? Just wondering if you expect to see more.

Ben: I think that that's true.

Speaker Change: Got it. I was just wondering if you could talk a bit more on PSO's natural gas generation purchase there. To what extent do you see the need for incremental gas generation, you know, across Oklahoma, other service territories? Just wondering if you expect to see more of this.

Peggy I. Simmons: So I would say, this is Peggy, and I would say with the increased reserve margins that we're seeing from the RTOs and the additional load that we're starting to see across our system, we are going to need some additional generation. And this was a very proactive approach that the team took, as I mentioned in my comments earlier, to go out and find some affordable assets that we can bring onto the system, and we plan to make that filing at the commission later this fall. Yeah, Peggy mentioned being proactive. It was really, I think, was creative.

Speaker Change: So I would say, this is Peggy, and I would say with the increased reserve margins that we're seeing from the RTOs and the additional load that we're starting to see across our system, we are going to need some additional generation, and this was a very proactive approach that the team took, as I mentioned in my comments earlier, to go out and find some affordable

Speaker Change: assets that we can bring onto the system. And we plan to make that filing at the commission later this fall. Yeah, Peggy mentioned proactive. It really, I think, was creative. It was outside of the RFP process, but we have an RFP process to compare the pricing to, and it's

Ben Folk: Yeah, taking mention proactive that really I think was created. It was outside of the RFP process, but we have an RFP process to compare the pricing to, and it's clearly very favorable. So we're really excited about it. I think it'll be great for our customers. Got it.

Benjamin Fowke: It was outside of the RFP process, but we have an RFP process to compare the pricing, which was clearly very favorable, so we're really excited about it. I think it'll be great for our customers.

Peggy: Clearly very favorable, so we're really excited about it.

Speaker Change: I think it will be great for our customers.

Speaker Change: Got it. Thank you for that.

Steven Fleishman: Your next question comes from the line of Steve Fleischman of Wolf Research. Your line is open.

Steven Isaac Fleishman: Thank you for that. Your next question comes from the line of Steve Fleishman of Wolf Research. Your line is open. Hey, good morning.

Speaker Change: Your next question comes from the line of Steve Fleishman of Wolf Research. Your line is open.

Steven Fleishman: Hey, good morning. Sorry, I've got several questions on data center or data processing, as you called it. So, first of all, just in the quarter, you know, you had the very strong commercial sales growth, but then your normalized sales growth between the two subs, I think was actually down four cents. When you kind of look at both vertical and TND, could you just talk to how we should think about that? Yeah, in TND, normalized sales were up two cents. Right. But then the vertical was down six cents, I think. So, I guess just thinking, you know, when I look at the whole picture, you know, it's not kind of, at least in that line item, doesn't seem to be showing up as a benefit.

Steven Isaac Fleishman: Sorry, I've got several questions on data center, or data processing, as you called it. So first of all, just in the quarter, you had very strong commercial sales growth, but then your normalized sales growth between the two subs, I think was actually down four cents. When you kind of look at both vertical and T&D, could you just talk to me about how we should think about that? And TND, Steve. Normalized sales are up two cents. Right. But then the vertical was down six cents, I think.

Steven Isaac Fleishman: Hey Steve.

Steven Isaac Fleishman: Hey, good morning. Sorry, I've got several questions on data center.

Steven Isaac Fleishman: Our data processing, as you called it. So, first of all, just in the quarter,

Speaker Change: You know, you had the very strong commercial sales growth, but then...

Speaker Change: Your normalized sales growth between the two subs, I think, was actually down four cents.

Speaker Change: When you kind of look at both vertical and...

Speaker Change: T&D, could you just talk to...

Speaker Change: How we should think about that.

Speaker Change: Yeah, in T&D, Steve, normalized sales are up two cents.

Steven Isaac Fleishman: So I guess, just thinking, you know, when I look at the whole picture, it doesn't seem like at least in that line item doesn't seem to be showing up as a benefit. Yeah, so let me comment on the negative six cents in vertically integrated. That's largely due to vertically integrated, we had a in the quarter but a 4.9% decrease over last Q2 in residential. And that's largely what drove that number.

Speaker Change: Right.

Speaker Change: But then the vertical was down 6 cents, I think. So I guess, just thinking, you know, when I look at the whole picture...

Speaker Change: You know it's not kind of, at least in that line item, doesn't seem to be showing up as a benefit.

Chuck Zebula: Yeah, so let me comment on the negative six cents in vertically integrated. That's largely due to vertically integrated; we had in the quarter, but a 4.9% decrease over last Q2 in residential sales. And that's largely what drove that number. In our sweat code territory, we had in kind of mid to late May into early June, we had a number of repeated storm activity, tournatic activity that took, you know, large swaths of customers out for significant amounts of times that drove that number down. We've seen, we've seen that start to normalize back in June and July.

Speaker Change: Yes, so let me comment on the negative six cents in vertically integrated. That's largely due to, in vertically integrated, we had a, in the quarter.

Speaker Change: But a 4.9% decrease over last Q2 in residential sales, and that's largely what drove that number.

Charles E. Zebula: In our SWEPCO territory, we had, in kind of mid to late May into early June, a number of repeated storm activity, tornadoes that took, you know, large swaths of customers out for significant amounts of time that drove that number. We've seen that start to normalize back in June and July, so I expect that to return to a more normal state. [inaudible] Thanks, and then on to the 15 gigawatts of committed data center.

Speaker Change: In our SWEPCO territory, we had in kind of mid to late May into early June , we had a number of repeated

Speaker Change: Storm activity, tornadic activity that took, you know, large swaths of customers out for significant amounts of times that what that drove that number down.

Speaker Change: We've seen that start to normalize back in June and July , so I expect that to return to a more normal state.

Chuck Zebula: So I expect that to be to return to a more normal state. Okay.

Chuck Zebula: Thanks. And then on the 15 gigawatts of committed data center sales to 2030, could you just maybe better define what committed means? When you, when you get that data point. Yeah, I mean, it basically means that we have a letter of agreement, and those letter of agreement. You start the clock running, if you will, for us to do work that pretty quickly can go into the millions, which that customer who signed a letter of agreement is required to pay. So that's how we define it. You know, we, as we look forward, we look at a number of filtering criteria, ownership of sites, et cetera, that we use.

Speaker Change: Okay.

Speaker Change: Thanks. And then on the 15 gigawatts of committed data center...

Charles E. Zebula: Sales to 2030. Could you maybe better define what committed means when you give that data point? Yeah, I mean, it basically means that we have a letter of agreement, and those letters of agreement start the clock running, if you will, for us to do work that pretty quickly can go into the millions, which that customer who signed the letter of agreement is required to pay. So that's how we define it. You know, we've, as we look forward, we look at a number of filtering criteria, ownership of sites, etc. that we use.

Speaker Change: Sales to 2030. Could you just maybe better define what committed means when you when you give that data point?

Speaker Change: Yeah, I mean, it basically means that we have a letter of agreement, and those letter of agreement, Steve, start the clock running, if you will, for us to do work that pretty quickly can go into the millions.

Speaker Change: which that customer who signed the letter of agreement is required to pay. So that's how we define it. You know, we've, as we look forward, we look at a number of filtering criteria, ownership of sites, etc, that we use. So

Chuck Zebula: So it's these are far from just inquiries. These are, you know, serious customers that want to get on the grid and are willing to financially commit to do what it takes to get on the grid. Okay.

Benjamin Fowke: These are far from just inquiries. These are, you know, serious customers that want to get on the grid and are willing to financially commit to do what it takes to get on. Okay, and are those customers kind of committing to these new tariffs you filed? Or are we not at the point where they've already committed?

Speaker Change: These are far from just inquiries. These are, you know, serious customers that want to get on the grid and are willing to financially commit to do what it takes to get on the grid.

Chuck Zebula: And are, are those customers kind of committing to these new tariffs? You filed, are we not at the point where they've, they've made the agreement that those tariffs work for them when they've kind of done it. That will be going; those tariffs, as you know, they haven't been approved yet, but they will. They will need to be; depends where they are in the signing process, whether or not. They will be held to those tariffs or not, but going forward, customers, if the proof will all be required to. I'm going to step up to the tariffs.

Speaker Change: Okay and are are those customers kind of committing to these new tariffs you filed or are we not at the point where they've...

Benjamin Fowke: They've made the agreement that those tariffs work for them. When they've commented on this, but that will be what will be going. Those tariffs, as you know, haven't been approved yet, but they will need to be. It depends where they are in the signing process as to whether or not they would be held to those tariffs or not, but going forward, customers, if approved, will all be required to step up to the tariff.

Speaker Change: They've made the agreement that those tariffs work for them.

Speaker Change: When they've commented on this, that will be going, those tariffs, as you know, they haven't been approved yet, but they will, they will need, you know, to the

Speaker Change: Depends where they are in the signing process as to whether or not they would be held to those tariffs or not, but going forward, customers, if approved, will all be required to step up to the tariffs.

Benjamin Fowke: Okay. And then, yeah. Well, Steve, I was just going to say it's just really important. You know, we're going to see more growth than we've seen in maybe generations. And it's going to be really important that that growth is beneficial for all customers and, at worst case, at least neutral. And that's exactly why we're trying to, um, that's exactly why we're so keenly focused on making sure that we have these tariffs and the modifications I mentioned. Indiana, West Virginia, and it's just, we have got to get it right.

Chuck Zebula: Okay. As you know. Yeah.

Ben Folk: Well, as Steve was just going to say, it's just really important. You know, we're going to see more growth than we've seen in maybe generations. And it's going to be really important that growth is beneficial for all customers and, at the worst case, at least neutral. And that's exactly why we're trying to. That's exactly why we're so keenly focused. They'll make sure that we have these tariffs and the modifications I mentioned in Indiana, West Virginia. And it's just we got to get it right. Okay.

Speaker Change: Okay, and then, yeah, well, I was just going to say it's just really important, you know, we're going to see more growth than we've seen in maybe generations. And it's going to be really important that that growth is.

Speaker Change: beneficial for all customers and at the worst case at least neutral and that's exactly why we're trying to that's exactly why we're so keenly focused on making sure that we have these tariffs and the modifications I mentioned and

Speaker Change: Indiana and West Virginia and it's just we got to get it right.

Benjamin Fowke: Okay, and then maybe just in terms of helping to frame the capital needs, just can you give us some rough sense of that 15 gigawatts? How much might be related to the vertically integrated parts of AEP versus the transmission only parts? Yes, Steve, so the way to think about it is, you know, think of it as a 50-50 split between Texas and PJM, you know, 50% or, of course, Texas, right, is our wires company.

Chuck Zebula: And then maybe just in terms of helping to frame the capital needs, just can you give us some rough sense of that 15-year-olds? How much might be related to vertically integrated parts of AP versus the transmission-only parts? Yeah, Steve. So the way to think about it is, you know, think of it as a 50-50 split between Texas and PJM. You know, 50% or of course, Texas, right, is our wires company. And PJM takes that 50% and basically splits it 50-50 between I and M, which is vertically integrated, and AP Ohio, right, which is wires only.

Speaker Change: Okay, and then maybe just in terms of helping to frame the capital needs, just can you give us some rough sense of that 15 gigawatts, how much might be related to vertically integrated parts of AEP versus...

Benjamin Fowke: And PJM, take that 50% and basically split it 50-50 between INM, which is vertically integrated, and AP Ohio, right, which is Warzone. Okay, so that would be kind of 75-25, I guess, roughly. I think, yeah. Okay, I think I've, yeah.

Speaker Change: Transmission Only Parts

Speaker Change: Yes, Steve, so the way to think about it is, you know, think of it as a 50-50 split between Texas and PJM.

Speaker Change: You know, 50% or of course, Texas, right, is our wires company.

Speaker Change: And PJM, take that 50% and basically split it 50-50 between I&M, which is vertically integrated, and AP Ohio, right, which is wires only.

Chuck Zebula: Okay. So that would be kind of 75-25, I guess, probably. Thank you. Yeah. Okay. I think I, yeah. Yeah.

Speaker Change: Okay, so that would be kind of 75-25, I guess.

Speaker Change: roughly I think yeah okay I think I've yeah yeah we are seeing additional you know interest amongst other vertically integrated utilities but that interest is not as firm yet

Charles E. Zebula: Yeah, we are seeing additional, you know, interest amongst other vertically integrated utilities, but that interest is not as firm yet among some of your other vertically integrated utilities. Yeah, that's correct. Okay. Great. I'll leave it there. Thank you very much.

Chuck Zebula: We are seeing additional, you know, interest amongst other vertically integrated utilities, but that interest is not as firm yet. Among some of your other vertically integrated. Yeah. That's correct. Yeah. Okay.

Speaker Change: Among some of your other vertically integrated.

Unknown Executive: Great. I'll leave it there. Thank you very much. Thanks, Steve.

Speaker Change: Yeah, that's correct. Yeah.

Speaker Change: Great. I'll leave it there. Thank you very much.

Nick Campanella: Your next question comes from line of Nick Campanella of AEP. Your line is open.

Steven Isaac Fleishman: Your next question comes from the line of Nick Campanella of AEP. Your line is open. Nick Campanella, from Barclays, here.

Steven Isaac Fleishman: Thanks, Steve.

Steven Isaac Fleishman: Your next question comes from the line of Nick Campanella of AEP. Your line is open.

Nicholas Joseph Campanella: Thanks for the time. Did we just hire Nick? I never got the call.

Nick Campanella: Nick Campanella, Barclays, here. Thanks for the time. Did we just hire Nick? I never got the call. I never got the call, but thanks for the time. You know, a lot of my questions have been answered, but I just, you know, curious. I guess as we kind of try to think about the magnitude of capital that the plan can handle here. I know that there's financing considerations, but there's also kind of bill growth considerations. Just how high do you think your rate-based growth can get before you have to start thinking about customer bill impact, especially as some of this load should be able to supplement that.

Steven Isaac Fleishman: Nick Campanella, Barclays here. Thanks for the time.

Speaker Change: Did we just hire Nick? I never got the call. I never got the call, but...

Benjamin Fowke: But thanks for the time. You know, a lot of my questions have been answered. But I'm just, you know, curious, as we kind of try to think about the magnitude of capital that the plan can handle here. I know that there are financing considerations, but there's also kind of bill growth considerations.

Nicholas Joseph Campanella: Thanks for the time, you know, a lot of my questions have been answered, but I just...

Speaker Change: I'm curious, as we kind of try to think about the magnitude of capital that the plan can handle here, I know that there's financing considerations, but there's also kind of bill growth considerations. Thank you.

Nicholas Joseph Campanella: Just how high do you think your rate-based growth can get before you have to start thinking about customer bill impact, especially as some of this load should be able to supplement that, but just trying to see where this rate-based CAGR could go at the end of the day. Thank you. Yeah, I think the incremental CapEx will be driven to support new load growth. And that's why we're just so keenly focused on making sure we get the rules right.

Speaker Change: How high do you think your rate-based growth can get before you have to start thinking about customer bill impact? Especially as some of this load should be able to supplement that. But just trying to see where this rate-based CAGR could go at the end of the day. Thank you.

Nick Campanella: But just trying to see, you know, where this rate-based Kager could go at the end of the day.

Ben Folk: Thank you. Yeah, I think the incremental cat backs will be driven to support new load growth. And that's why we're just so keenly focused on making sure we get the rules right. And our modeling suggests that it will be good for all customers. And that's, I mean, that's, that's what makes me so excited about this is that, you know, everybody can benefit loads. Good for all. And it's going to, you know, there are certainly pressures. on the grid and the resiliency and things like that. But I think the load is going to be beneficial to mitigate cost increases.

Speaker Change: Yeah, I think the incremental CapEx will be driven to support new load growth. And that's why we're just so keenly focused on making sure we get the rules right. And our modeling suggests that it will be good for all customers.

Benjamin Fowke: And our modeling suggests that it will be good for all customers. And that's, I mean, that's what makes me so excited about this is that, you know, everybody can benefit, load good for all. And it's going to, you know, there's certainly pressures on the grid and the resiliency and things like that. But I think the load is going to be beneficial to mitigate costs. Okay, thanks.

Speaker Change: And that's, I mean, that's what makes me so excited about this is that, you know, everybody can benefit, loads good for all, and it's going to, you know, there's certainly pressures, you know,

Speaker Change: on the grid and the resiliency and things like that. But I think the load is going to be beneficial to mitigate cost increases.

Ben Folk: Okay, thanks. And then I guess, you know, since you've kind of taken over, you have kind of pulled some strings on this involuntary, this voluntary severance program. Just where are there other opportunities in the plan to cut costs today or are just things that maybe we're not thinking about that could be incremental to the positive. You know, again, as I mentioned, you know, get Bill Firm and coming in, he's got a track record of innovation. The companies in the Berkshire halfway portfolio were extremely well run; Bill is extremely well respected, so I think he's going to bring a lot of great ideas.

Nicholas Joseph Campanella: And then I guess, you know, since you've kind of taken over, you have kind of pulled some strings on this involuntary, this voluntary severance program. Just, Where are there other opportunities in the plan to cut costs today or just things that maybe we're not thinking about that could be incremental to the positive? Um, you know, again, as I mentioned, I think, you know, you've got Bill Furman coming in. He's got a track record of innovation, the companies in the Berkshire Hathaway portfolio were extremely well run, and Bill is extremely well respected.

Speaker Change: Okay, thanks. And then I guess just, you know, since you've kind of taken over, you have kind of pulled some strings on this involuntary, this voluntary severance program, just.

Speaker Change: Where are there other opportunities in the plan to cut costs today or just things that maybe we're not thinking about that could be incremental to the positive?

Nicholas Joseph Campanella: So I think he's going to bring a lot of great ideas. You know, it's a lot of blocking and tackling, and also taking advantage of innovation, smart technologies, etc. that'll get us there. But, you know, the team has done a really good job, if you look back, keeping O&M in check.

Unknown Executive: You know, again, as I mentioned, you know, you've got Bill Furman coming in, he's got a track record of innovation, the companies in the Berkshire Hathaway portfolio were extremely well run, Bill is extremely well respected, so I think he's going to bring a lot of great ideas.

Ben Folk: You know, it's, it's, it's a lot of blocking and tackling, and also taking advantage of innovation, smart technologies, et cetera, that'll get us there. But, you know, the team has done a really good job; if you look back in keeping O and M in check. So again, I think the biggest way we keep costs down to our customers is to bring this new load on and bring it on when and ways and rules and tariffs that are fair to all.

Unknown Executive: You know, it's a lot of blocking and tackling.

Unknown Executive: and also taking advantage of innovation, smart technologies.

Unknown Executive: etc that'll get us there but you know the team has done a really good job if you look back in keeping O&M in check.

Benjamin Fowke: So, again, I think the biggest way we keep costs down for our customers is to bring this new load on and bring it on when it weighs with rules and tariffs that are fair at all. Thank you. Your next question comes from the line of Carly Davenport of Goldman Sachs. Your line is open. Hey, good morning.

Speaker Change: So, again, I think the biggest way we keep costs down on our customers is to bring this new load on and bring it on in ways and rules and tariffs that are fair to all.

Unknown Executive: Thank you.

Carly Davenport: Your next question comes from the line of Carly Devonport of Goldman Sachs. The line is open.

Speaker Change: Thank you.

Speaker Change: Thanks.

Speaker Change: Your next question comes from the line of Carly Davenport of Goldman Sachs. Your line is open.

Carly S. Davenport: Thanks much for your time. Just a couple of clarification questions. First, on the 15 gigawatts of incremental load by the end of the decade, could you just clarify, is all of that related to data centers, or is there anything else in there? And then, is there anything you can provide on how to think about the cadence of that load materializing from a timing perspective?

Carly Davenport: Thanks so much.

Carly Davenport: Just a couple clarification questions if I could first just on the 15 gigawatts of incremental load by the end of the decade, could you just clarify is all of that related to data centers or is there anything else in there and then is there anything you can provide on how to think about the cadence of that load materializing from a timing perspective. Yeah, the 15 gigawatts refers to all data centers, and we're not announcing the cadence of that at this time. But it's already, as you could see, it's already showing up in our numbers. So we are looking up, you know, folks.

Carly S. Davenport: Hey, good morning. Thanks for your time. Just a couple of clarification questions, if I could. First, just on the 15 gigawatts of incremental load by the end of the decade, could you just clarify, is all of that related to data centers, or is there anything else in there? And then, is there anything you can provide on how to think about the cadence of that load materializing from a timing perspective?

Benjamin Fowke: 15 gigawatts refers to all data centers. And we're not announcing the cadence of that at this. It's already, as you can see, it's already showing up in our numbers, so we are hooking up, you know, folks. And you'll see continued increases, you know, over the next several years. Great, thank you for that. And then just a follow-up question is just on the earned versus authorized ROE gap. I know you mentioned that earned ROE is sort of flat at 8.9% on a trailing 12 month basis. Do you have that comparable weather normalized number similar to what you've provided in previous quarters? Oh, we're looking forward to being at 9-1 for this year.

Carly S. Davenport: Yeah, the 15 gigawatts refers to all data centers.

Speaker Change: and we're not announcing the cadence of that at this time but it's already as you could see it's already showing up in our numbers so we are hooking up you know folks and you'll see continued increases you know over the next several years

Carly Davenport: And you'll see continued increases, you know, over the next several years.

Carly Davenport: Great. Thank you for that.

Chuck Zebula: And then just the follow-up is just on the earned versus authorized ROE gap. And now you mentioned that earned are we sort of flat at that 8.9% on a trailing 12 month basis. Do you have that comparable weather normalize numbers similar to what you've provided in previous quarters? Oh, we're looking forward to be at 9.1 for this year. As I mentioned over the last 12 months, I mean on a rolling average right now, we're at 8.9, which is flat to where we were last quarter, but. Continue to make progress on that front. Got it.

Speaker Change: Great, thank you for that. And then just a follow-up is just on the earned versus authorized ROE gap. I know you mentioned the earned ROE sort of flatted at 8.9% on a trailing 12-month basis. Do you have that comparable weather normalized number similar to what you've provided in previous quarters?

Speaker Change: We're looking forward to be at 9-1 for this year. As I mentioned, over the past 12 months, I mean, on a rolling average right now, we're at 8-9, which is flat to where we were last quarter.

Peggy I. Simmons: As I mentioned, over the past 12 months, I mean, on a rolling average right now, we're at 8-9, which is flat to where we were last quarter, but we continue to make progress on that front. Got it. Great. Thanks so much for your time.

Speaker Change: continue to make progress on that front.

Carly Davenport: Great. Thanks so much for the time.

Speaker Change: Got it. Great. Thanks so much for the time.

Carly S. Davenport: Your next question comes from Andrew Weisel of Scotiabank. Your line is open. Morning. Hi, good morning.

Andrew Weisel: Custom line is Andrew Waisel. Squish a bank.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Andrew Weisel of Scotiabank. Your line is open.

Andrew Weisel: Your line is open. Good morning.

Ben Folk: Hi, good morning. First, a quick governance question. Can you please talk about the outlook for the board and specifically what roles will Ben and Bill each have? Who will be chair of the board and will it be executive or non-executive?

Speaker Change: Morning.

Andrew Marc Weisel: First, a quick governance question. Can you please talk about the outlook for the board? And specifically, what roles will Ben and Bill each have? Who will be chair of the board? And will it be executive or non-executive?

Andrew Marc Weisel: Hi, good morning.

Andrew Marc Weisel: First, a quick governance question. Can you please talk about the outlook for the board and specifically what roles will Ben and Bill each have, who will be chair of the board, and will it be executive or non-executive, and how large will the board ultimately be?

Ben Folk: Leslie Beatty. Okay, well, I will go back after my time as advisor. I'll go back to being a board member, and I will keep my independence. Bill obviously will be on the board. He'll be a non-independent director. Sarah Tucker Martinez, or Sarah Martinez Tucker, will be the chair, and she will remain chair, and she's independent. Size of the board, you know, we're we are, we are basically at full size, and so that, you know, there won't be any change to the size of the board. I don't know. Did I get all those questions? Yep, that's great.

Benjamin Fowke: And how large will the board ultimately be? Okay, well, I will go back after my time as advisor. I'll go back to being a board member, and I will keep my independence. Bill obviously will be on the board, he'll be a non-independent director, Sara Tucker-Martinez or Sara Martinez-Tucker will be the chairperson, and she will remain chairperson, and she's independent. Size of the board, you know, we're we we are, we are basically at full size. And so that, you know, there won't be any change to the size of the board.

Ben: Okay, well, I will go back after my time as advisor, I'll go back to being a board member and I will keep my independence.

Speaker Change: Bill, obviously, will be on the board. He'll be a non-independent director. Sara Tucker-Martinez, or Sara Martinez-Tucker will be the chair, and she will remain chair. And she's independent.

Speaker Change: Size of the board, you know, we are basically at full size and so that, you know, there won't be any change to the size of the board. I don't know, did I get all those questions?

Benjamin Fowke: I'm, I don't know, did I get all those questions? Yes, that's great. Thank you very much. And then just a quick question on the cash flow slide, page 22. Some moving parts in 24 have led to slightly higher equity needs this year by about $100 million. Can you elaborate a little bit on that? And then looking to 25 and beyond, I see no changes.

Ben Folk: Thank you very much.

Chuck Zebula: And then just a quick question on the cash flow slide, age 22. Some moving parts in 24 had led to slightly higher equity this year by about 100 million. Can you elaborate a little bit on that? And then looking to 25 and beyond, I see no changes.

Speaker Change: Yep, that's great. Thank you very much.

Speaker Change: And then just a quick question on the cash flow slide, page 22.

Speaker Change: Some moving parts in 24 has led to slightly higher equity needs this year by about $100 million. Can you elaborate a little bit on that? And then looking to 25 and beyond, I see no changes. Would I be right to assume that's sort of just waiting for the update in three months?

Chuck Zebula: Would I be right to assume that sort of just waiting for the update in three months? And just to clarify your comments on the equity-like tools. Are you referring to the junior subordinates, or could there be something else in there, like equity units perhaps?

Speaker Change: And just to clarify your comment on the equity-like tools, are you referring to the junior subordinates or could there be something else in there like equity units, perhaps?

Andrew Marc Weisel: Would I be right to assume that's sort of just waiting for the update in three months? And just to clarify your comment on the equity-like tools, are you referring to the junior subordinates, or could there be something else in there like equity units, perhaps? So, Andrew, first question: you also note in 2024, right, we had a $500 million increase in CapEx and, versus our plan for the year, right, we had additional asset sales that were part of the original plan that ended up changing through the year.

Chuck Zebula: So Andrew, first question. You also note in 2024, right, we had a 500 million dollar increase in CAPEX and versus our plan for the year, right, we had additional asset sales, right, that were part of the original plan that ended up changing through the year. So, you know, we in our financing, right, in our cash, right, we received less proceeds because of that change in plan. So that those two things basically drove the opportunity, right, for the increase in equity. And, you know, just being opportunistic in the market as well, you're right going forward.

Speaker Change: So, Andrew, first question. You also note in 2024, right, we had a

Andrew Marc Weisel: $500 million increase in CapEx and versus our plan for the year, right? We had additional asset sales

Speaker Change: Right that were part of the original plan that ended up changing through the years So, you know we in our financing right in our cash, right? We received less proceeds because of that change in plan

Andrew Marc Weisel: So, you know, in our financing, right in our cash, right, we received less proceeds because of that change. So those two things basically drove the opportunity for the increase in equity and just being opportunistic in the market as well. You're right, going forward. We have not updated those cash flows yet for our, You know, annual update, which we'll do with them. Okay, that equity thing. Was that just referring to the genius subordinated? Or was there more to it?

Speaker Change: So those two things basically drove the opportunity for the increase in equity and just being opportunistic in the market as well.

Chuck Zebula: We have not updated those cash flows yet for our annual update, which we'll do at the EI. Okay, did the equity link, was that just referring to the junior subordinates? It was there more to it. Yeah, that refers to the notes that we issued in June. But we would look at, you know, various forms of equity alternatives and be holistic in our approach. Very good.

Speaker Change: You're right going forward we have not updated those cash flows yet for our

Speaker Change: You know, annual update, which we'll do at EEI.

Speaker Change #100: Okay, the equity like, was that just referring to the junior subordinates or was there more to it?

Charles E. Zebula: Yeah, that refers to the notes that we issued in June, but we would look at, you know, various forms of equity alternatives and be holistic in our program. Very good. I appreciate the details.

Speaker Change #101: Yeah, that that refers to the notes that that we issued in June , but we would look at, you know, various forms of equity alternatives and be a holistic in our approach.

Chuck Zebula: Appreciate the detail. Thank you.

Speaker Change #103: Very good. Appreciate the details. Thank you.

Durgesh Chopra: Your next question comes from the line of Durgis Chopra of Evercore ISI. Your line is open.

Andrew Marc Weisel: Thank you. Your next question comes from the line of Durgesh Chopra of Evercore ISI. Your line is open. Hey team.

Speaker Change #105: Your next question comes from the line of Durgesh Chopra of Evercore ISI. Your line is open.

Durgesh Chopra: Good morning. Good morning, Ben. Andrew actually asked my question on the financing slide, Chuck, maybe a little sort of more color. There were kind of more negatives to positives in that.

Chuck Zebula: Hey team, good morning, good morning, Ben. Andrew actually asked my question on the financing slide. Chuck, maybe a little sort of more color. There were kind of more negatives to positives in that in that cash flow slide. I mean, the asset sale proceeds were lower, right, and the cap X is higher. If assuming normal weather for the rest of the year, are you going to be below 14, 6 where you can't be said, or should we kind of think about 14, 6, you know, you know, as strong as is going into the end of the year.

Durgesh Chopra: Hey team, good morning, good morning Ben. Andrew actually asked my question on the financing slide. Chuck, maybe a little sort of more color, there were kind of more negatives to positives in that

Durgesh Chopra: In that cash flow slide, I mean, the asset sale proceeds were lower, right, and the capex is higher. If you assume normal weather for the rest of the year, are you going to be below 14.6, where you currently sit? Or should we kind of think about 14.6, you know, as strong as going into the end of the year? Yeah, our plan is to be in the 14 to 15% range. I'll just note, right, that we're well above the 13% downgrade threshold.

Speaker Change #104: In that cash flow slide, I mean, the asset sale proceeds were lower, right, and the CapEx is higher.

Speaker Change #106: If, assuming normal weather for the rest of the year, are you going to be below 14.6 where you currently sit, or should we kind of think about 14.6 as strong as going into the end of the year?

Chuck Zebula: Yeah, our plan is to be in the 14 to 15% range. I'll just note, right, that we're well above the 13% found grade threshold. So, yeah, we plan to be in that range.

Speaker Change #107: Yeah, our plan is to be in the 14 to 15 percent range. I'll just note, right, that we're well above the 13 percent downgrade threshold. So, yeah, we plan to be in that range.

Unknown Executive: Okay, thank you. I appreciate the time.

Speaker Change #108: Okay. Thank you. I appreciate the time.

Sophie Karp: Your next question comes from a line of Sophie Karp of Key Bank Capital Markets. Your line is open.

Durgesh Chopra: So, yeah, we plan to be in that range. Okay, thank you. Appreciate your time. Your next question comes from the line of Sophie Karp of KeyBank Capital Markets. Your line is open. Hi, good morning. Thank you for squeezing me in. If I could quickly go back to the 15 gigawatts of data center load, could you please provide some color on how much of that can be connected without any incremental investment in your system versus how much would they require incremental investments to facilitate that?

Speaker Change #109: Your next question comes from the line of Sophie Karp of KeyBank Capital Markets. Your line is open.

Ben Folk: Hi, good morning. Thank you for squeezing me in. If I could quickly go back to the 15 gigawatts of data center load. I guess, could you provide some color on how much of that can be connected without an incremental investment in your system versus how much would they require incremental lessons to facilitate that. Right now, none of that can be connected at this point in time. But as we look at our L.O.A. process, that's why we are looking at any initial initial upgrades that are needed as we prepare to plan the system to connect this load over that period of time.

Sophie Ksenia Karp: Hi, good morning and thank you for squeezing me in.

Sophie Ksenia Karp: If I could quickly go back to the 15 gigawatts of data center load, could you provide some color on how much of that can be connected without any incremental investment in your system versus how much would they require incremental investments to facilitate that?

Peggy I. Simmons: Right now, none of that can be connected at this point in time, but as we look at our LOA process, that's why we are looking at any initial initial upgrades that are needed as we prepare to plan the system to connect this load over that period. Got it, got it.

Speaker Change #111: Right now, none of that can be connected at this point in time, but as we look at our LOA process, that's why we are looking at any initial upgrades that are needed as we prepare to plan the system to connect this load over that period of time.

Ben Folk: Got it, got it. Thank you.

Sophie Ksenia Karp: And then maybe a little bit more of an open ended question. Your current outstanding RFPs don't have any gas in them.

Ben Folk: And then maybe a little bit more of an open ended question. Your current out there is these don't have any gas in them. It's mostly new both. And I'm just curious of how you think about the cadence of needing to add a dispatchable generation there. And when it comes to gas, will you continue to have a bias towards acquiring existing assets, or will we see some new builds potentially? So our RFPs are all source RFPs. So we're evaluating all technologies that come in. And we do believe that the dispatchable resources are needed to be added to the grid as well.

Speaker Change #112: Got it, got it, thank you.

Speaker Change #113: And then maybe a little bit more of an open-ended question, your current outstanding RFPs don't have any gas in them, it's mostly renewables, and I'm just curious of how you think about the cadence of needing to add dispatchable generation there, and when it comes to gas.

Speaker Change #114: Will you continue to have a bias towards acquiring existing assets or will we see some new builds potentially?

Speaker Change #115: So our RFPs are all-source RFPs, so we're evaluating all technologies that come in.

Peggy I. Simmons: It's mostly renewables, and I'm just curious about the cadence of needing to add dispatchable generation there. And when it comes to gas, will you continue to have a bias toward acquiring existing assets? Or will we see some new builds, potentially?

Speaker Change #116: And we do believe that dispatchable resources are needed to be added to the grid as well, and they will be part of the plan.

Ben Folk: And they will be part of the plan. Okay. Thank you.

Sophie Ksenia Karp: So our RFPs are all-source RFPs, so we're evaluating all technologies that come in. And we do believe that dispatchable resources are needed to be added to the grid as well, and they will be part of the plan. Okay, thank you. Your next question comes to the line of Bill Appicelli of UBS. Your line is open. Morning. Hi, good morning.

Speaker Change #117: Okay, thank you.

Bill Tele: Your next question comes to line up bill of the tele of UBS UN is open. Good morning.

Speaker Change #118: You're welcome.

Speaker Change #119: Your next question comes from the line of Bill Apicelli of UBS. Your line is open.

Bill Tele: Hi. Good morning.

William Appicelli: Thanks for taking my questions. I just want to dig into a little bit more on the sales growth trends. So on the residential side, you know, you commented that, you know, Texas looks strong, but that, you know, more broadly, the cumulative effects of inflation have been weighing on it. So any more color there, you know, are you expecting an improvement in the second half of the year? Yeah, so, you know, Bill and I are in Texas.

Bill Tele: Thanks for taking my questions. Just want to dig into a little bit more on the sales growth trends. So on the residential side, you know, it's been you commented that Texas looks strong, but that's more broadly in a cumulative effects of inflation and weighing on.

Speaker Change #119: Morning.

Unknown Executive: Hi, good morning. Thanks for taking my questions. Just want to dig into a little bit more on the sales growth trends. So on the residential side, you know, it's been you commented that, you know, Texas looks strong, but that's

Chuck Zebula: So, any more color there, you know, are you expecting improvement in the second half of the year? Yeah. So, you know, Bill, in Texas, right, there are customer growth as well as, you know, increase in use or, as a result, increase in usage in vertically integrated. Year to date, residential is down 1.3%. And T and D is actually up 0.3% largely due to Texas.

Speaker Change #120: You know, more broadly, the cumulative effects of inflation has been weighing on, so any more color there, you know, are you expecting an improvement in the second half of the year?

Speaker Change #120: Yeah, so, you know, Bill, in Texas...

Charles E. Zebula: Right, there is customer growth as well as, you know, increased, in use or as a result of increased usage in Vertically integrated year to date residential is down 1.3%, and T&D is actually up 0.3%, largely due to tech. So, you know, we are seeing, I think, in Appalachian Power, in Kentucky Power, in SWEPCO in particular, and I mentioned some of the weather occurrences that we had in the SWEPCO area, weaker residential sales in those areas, in particular.

Speaker Change #121: Right, there is customer growth as well as, you know, increase in use, or as a result increase in usage. In vertically integrated year-to-date residential is down 1.3%.

Speaker Change #121: And T&D is actually up 0.3% largely due to Texas.

Chuck Zebula: So, you know, we are seeing, I think, in app latch and power, in Kentucky Power, in SWEPCO in particular, and I mentioned, you know, some of the weather occurrences that we had in the SWEPCO area, you know, weaker residential sales in those areas in particular. Okay.

Speaker Change #122: So, you know, we are seeing, I think, in Appalachian Power, in Kentucky Power, in SWEPCO in particular, and I mentioned, you know, some of the weather occurrences that we had in the SWEPCO area.

Speaker Change #122: you know, weaker residential sales in those areas in particular.

Charles E. Zebula: Okay, I mean, we think about the activities here, right? Because you've got, you know, tremendous growth on the commercial side, right, tracking well above plan, but that's going to be lower margin volumes. And then maybe on the residential side, you know, going back sort of four of the last five quarters, you know, sort of as a negative, you know, and that's obviously a bit of a higher margin, but, you know, smaller overall change. And we sort of reconcile that a little bit as we think about UPS. I mean, clearly, the residential sales are higher-margin.

Chuck Zebula: I mean, yes, we think about the yes, it's easier, right, because you've got the, you know, the tremendous growth in the commercial size, right, tracking well about plans, but that's going to be lower margin volumes. And then maybe on the residential side, you know, going back sort of four or five quarters, you know, sort of a negative. You know, and that's obviously a bit of a higher margin, but it's, you know, smaller overall change. What, you know, we sort of reconcile that a little bit about we think about the you get. Yeah, I mean, clearly the residential sales are higher margin, but, you know, again, I think it's, you know, in particular, the effects of inflation.

Speaker Change #123: Okay. I mean, I guess we think about the ESP activities here, right, because you've got the, you know, tremendous growth in the commercial size, right, tracking well above plan, but that's going to be lower margin volumes.

Speaker Change #123: And then maybe on the residential side,

Speaker Change #124: And that's obviously a bit of a higher margin, but smaller overall change. What can we sort of reconcile that a little bit as we think about the U.S. impacts?

William Appicelli: But, you know, again, I think it's, you know, in particular, the effects of inflation. So if inflation comes in tame, you know, tamer, as we begin to, as we've begun to see, if wage growth, you know, continues to close that gap. And as Ben mentioned, right, the opportunity to bring on large loads to spread fixed costs over a much larger denominator should mitigate some of those customer rate impacts as well. You know, so the combination of those things should begin to, you know, slow that decline. But, you know, clearly, the effects of inflation have hit home for a lot of people.

Speaker Change #125: Yeah, I mean, clearly the residential sales are higher margin.

Speaker Change #125: But, you know, again, I think it's...

Chuck Zebula: So if inflation comes in team, you know, tamer, as we begin to, as we've begun to see if wage growth, you know, continues to close that gap. And as Ben mentioned, right, the opportunity to bring on large loads to spread fixed costs, right, over a much larger denominator, right, should mitigate, right, some of those customer rate impacts as well. You know, so the combination of those things, right, should begin to, you know, slow that decline. But, you know, clearly, you know, the effects of inflation have hit home for a lot of customers.

Speaker Change #126: You know, in particular, the effects of inflation, so if inflation comes in.

Ben: TAMER, as we've begun to see if wage growth continues to close that gap. And as Ben mentioned, the opportunity to bring on large loads to spread fixed costs.

Ben: Right over a much larger denominator right should mitigate right some of those customer rate impacts as well

Ben: You know, so the combination of those things, right, should begin to, you know, slow that decline. But, you know, you know, clearly, you know, the effects of inflation have hit home for a lot of customers.

Chuck Zebula: Right, okay.

Charles E. Zebula: Okay. And then I guess the other question is, you know, it's come up a little bit, but on the episode of debt, under, I guess, Moody's methodology, Do you know what that number would be? 14.6 on their move. Oh, it doesn't move.

Chuck Zebula: And then I guess the other question is, you know, it's come up a little bit, but on the episode of Debt Under, I guess the mood is methodology. Do you know what that number would be? Yeah, 14.6 under Movies. Oh, it's under Movies, okay.

Speaker Change #127: Do you know what that number would be?

Speaker Change #128: Yeah, it's 14.6 on their movies.

Chuck Zebula: All right, thank you very much.

Speaker Change #129: Oh, it's out of movies. Okay. All right. Thank you very much.

Julien Dumoulin: Your next question comes from a line of Julian Jumele Smith of Jeffries. Your line is open.

William Appicelli: Okay. All right. Thank you very much. Your next question comes from the line of Julien Dumoulin-Smith of Jefferies. Your line is open. Hey, good morning team.

Speaker Change #130: Your next question comes from the line of Julien Dumoulin-Smith of Jeffreys. Your line is open.

Julien Patrick Dumoulin: Thank you guys very much for your time. I appreciate it. Thank you very much.

Julien Dumoulin: Hey, good morning, Team. Thank you guys very much for the time. I appreciate it. You're all going back. Thank you very much. I appreciate it.

Julien Patrick Dumoulin: Hey, good morning team. Thank you guys very much for the time. I appreciate it.

Julien Patrick Dumoulin: Appreciate it. Maybe going back to some of the conversation on the layoffs and severance bit, I just want to understand the extent to which this process is finalized, right? You've given very specific jurisdictional level details.

Ben Folk: Maybe going back to some of the conversation on the layoffs and severance bet. I just want to understand the extent to which of this process is finalized, right? You've given very specific jurisdictional level details, and given that, how are you thinking about rebuilding and devolving some decision making power and some of the roles to the local op-cos? Can you speak to perhaps what seems like perhaps a strategic shift in looking at local level decision making? And really what level or what quantity of the roles of let in terms of overall layoffs will actually be ultimately recreated if you will at the local level here.

Julien Patrick Dumoulin: Thank you very much. Appreciate it. Maybe going back to some of the conversation on the layoffs and severance bit.

Julien Patrick Dumoulin: And given that, how are you thinking about rebuilding and devolving some decision-making power and some of the roles to the local OPCOs? Can you speak to what seems like perhaps a strategic shift in looking at local level decision-making? And really, what level or what quantity of the roles in terms of overall layoffs will actually be ultimately recreated, if you will, at the local level here? So both the financial question in terms of what's the sort of ongoing net savings and, B, how do you think about this fitting within the strategic question of devolution?

Speaker Change #132: I just want to understand the extent to which this process is finalized, right? You've given very specific jurisdictional level details, and given that, how are you thinking about rebuilding and devolving some decision-making power and some of the roles

Speaker Change #133: to the local OPCOs. Can you speak to perhaps, what seems like perhaps a strategic shift in looking at local level decision making? And really, what level or what quantity of the roles of, in terms of overall layoffs will actually be ultimately

Ben Folk: So both the financial question in terms of what's the sort of on doing that savings and be, how do you think about this fitting within the strategic question of devolving it?

Speaker Change #133: recreated, if you will, at the local level here. So both a financial question in terms of what's the sort of ongoing net savings? And B, how do you think about this fitting within the strategic question of devolvement?

Ben Folk: Yeah, I want to turn it over to Peggy in a second, but just as a recap, we did hit our targets that we laid out under that voluntary severance program. You know, those, and we planned to hold as much of those gains as possible. Probably have to do some hiring back, but try to keep that minimized. The remember, there was two problem approach for this. One, we wanted to mitigate some of the inflationary pressures that we were seeing; you know, higher interest rates, just overall increase in supply chain, et cetera. And take a portion of that.

Benjamin Fowke: Yeah, I'm going to turn it over to Peggy in a second. But just as a recap, we did hit our targets that we laid out under that voluntary severance program. You know, those, and we plan to hold as much of those gains as possible, probably have to do some hiring back, but try to keep that minimized. Then remember, there was a two-prong approach for this one; we wanted to mitigate some of the inflationary pressures that we were seeing, you know, higher interest rates, just overall increase in supply chain, etc.

Speaker Change #133: Yeah, I'm going to turn it over to Peggy in a second, but just as a recap, we did hit our targets that we laid out under that voluntary severance program, you know,

Peggy: Those and we plan to hold as much of those gains as possible probably have to do some hiring back, but Try to keep that minimized

Peggy: Remember, there was a two-pronged approach for this. One, we wanted to mitigate some of the inflationary pressures that we were seeing, higher interest rates, just overall increase in supply chain, etc., and take a portion of that, albeit a smaller portion.

Benjamin Fowke: And take a portion of that, a smaller portion, and start putting some of those resources, some of that money back into our local communities with more boots on the ground, if you will, more community leadership positions and that sort of thing. So, Peggy, do you want to? Yeah, yeah, Ben.

Peggy Simmons: I'll be a smaller portion and start putting those, some of those resources, some of that money back into our local communities with more boots on the ground, if you will, more community leadership positions and that sort of things. Yeah, yeah. So, yeah, that's exactly a join what we're looking to do. We are some of those positions; we're leadership positions that report to some of our presidents. We are making sure that we are getting those filled, and we're adding additional resources in the regulatory and legislative space because we know that as dynamic as our industry is and as much change is occurring, we want to make sure that we have that enhanced engagement at those levels.

Peggy: and start putting those.

Peggy: some of that money back into our local communities with more boots on the ground, if you will, more community leadership positions and that sort of thing. So Peggy, you wanna?

Peggy I. Simmons: So yeah, that's exactly what we're looking to do, Julian. We are, some of those positions were leadership positions that reported to some of our presidents; we are making sure that we are getting those filled, and we're adding additional resources in the regulatory and legislative space because we know that as dynamic as our industry is and as much change as is occurring, we want to make sure that we have that enhanced engagement at those levels. So you'll see more of that.

Peggy: Yeah, Ben. So yeah, that's exactly, Julien, what we're looking to do. We are some of those positions were leadership positions that report to some of our presidents, we are making sure that we are getting those filled. And we're adding additional resources in the regulatory and legislative space, because we know that as dynamic as our industry is, and as much change as is occurring, we want to make sure that we have that enhanced engagement at those levels. So you'll see more of that.

Ben Folk: So you'll see more of that. Excellent. All right, looking forward to that.

Julien Patrick Dumoulin: Excellent. All right, looking forward to that. And then related, you talk about the staggering levels of the 15 gigawatts of firm commitments at this point.

Ben Folk: And then related, you talk about the staggering levels of the 15 gigawatts of firm commitments at this point. How do you think about that marrying up especially in your wires businesses against an effort to address generation needs? I know this has been an ongoing mention, but given what it seems like yet an accelerating backdrop of generation needs, how do you think about your utility, especially in the virus-only businesses potentially re-engaging in that narrative? In what ways? Well, I mean, I think that would take legislation clearly in Ohio. I guess it would take it in Texas, too, but I don't see that happening.

Speaker Change #134: Excellent. All right, looking forward to that. And then related, you talk about these staggering levels of the 15 gigawatts of firm commitments at this point. How do you think about that marrying up, especially in your wires businesses, against an effort to address generation needs? I know this has been an ongoing tension, but given what seems like yet an accelerating backdrop of generation needs,

Benjamin Fowke: How do you think about that marrying up, especially in your wires businesses, against an effort to address generation needs? I know this has been an ongoing tension, but given what seems like yet another accelerating backdrop of generation needs, how do you think about your utilities, especially in the wires-only businesses, potentially reengaging in that narrative? and in what ways?

Speaker Change #134: How do you think about your utilities, especially in the buyers-only businesses, potentially re-engaging in that narrative?

Benjamin Fowke: Well, I mean, I think that would require clear legislation in Ohio. I guess it would require it in Texas, too, but I don't see that happening. I think it's probably a long shot in Ohio as well.

Speaker Change #135: And in what ways?

Speaker Change #136: Well, I mean, I think that would take legislation clearly in Ohio.

Ben Folk: I think it's probably a long shot in Ohio as well. So, you know, we are going to have to rely on the market. But, you know, our vertically integrated utilities are all going to need generation. And, you know, in different, different timeframes, but I think Peggy mentioned, you know, we've got, we do have more with the changes in the reserve margin requirements, for example, an SBB; it creates a resource need. And we're developing our plans to fill that, which will require increased gap backs, which I think is a good thing. And we're really again excited about Green Country.

Speaker Change #136: I guess you would take it in Texas, too, but I don't see that happening. I think it's probably a long shot in Ohio as well. So, you know, we are going to have to rely on the market. But, you know, our vertically integrated utilities are all going to need generation.

Benjamin Fowke: So, you know, we are going to have to rely on the market. But you know, our vertically integrated utilities are all going to need generation, and, you know, different timeframes. But I think Peggy mentioned, you know, we've got more. With the changes in the reserve margin requirements, for example, on SPP, it creates a resource, and we're developing our plans to fill that, which will require increased CapEx, which I think is a good thing. And we're really, again, excited about Green Country. You know, the load is tremendous, and it's primarily data centers.

Speaker Change #136: and, you know, and different.

Speaker Change #136: Different time frames, but I think Peggy mentioned, you know, we've got, we do have more with the changes in the reserve margin requirements, for example, in SPP, it creates a resource need.

Peggy: And we're developing our plans to fill that which will...

Speaker Change #137: require increased gap X, which I think is a good thing. And we're really again excited about green country. You know, the load is tremendous. And it's primarily data centers. But of course, we'd be remiss if we didn't mention we've seen industrial load in Texas as well.

Ben Folk: You know, the load is tremendous, and it's primarily data centers, but of course, we'd be remiss if we didn't mention we're seeing industrial load in Texas as well. And I think when we think about economic development, we're going to continue to look for opportunities to bring industry back on shore. And, you know, I'm right here in Columbus today, and Intel has just been an enormous success. And we're going to keep looking for opportunities for our communities. And again, all customers benefit from that.

Benjamin Fowke: But of course, we'd be remiss if we didn't mention we're seeing industrial load in Texas as well. And I think when we think about economic development, we're going to continue to look for opportunities to bring industry back to shore. And, you know, I'm right here in Columbus today, and Intel has just been an enormous success.

Speaker Change #137: And I think when we think about economic development, we're going to continue to look for opportunities to bring industry back on shore.

Speaker Change #138: I'm right here in Columbus today, and Intel has just been an enormous success, and we're going to keep looking for opportunities for our communities, and again, all customers benefit from that.

Benjamin Fowke: We're going to keep looking for opportunities for our communities, and again, all customers benefit. All right, guys. Thank you very much.

Unknown Executive: All right, guys. Thank you very much. We appreciate it.

Speaker Change #139: All right, guys. Thank you very much. We appreciate it.

Paul Patterson: Your last question comes from the line of Paul Patterson of Glen Rock. Your line is open.

Julien Patrick Dumoulin: I appreciate it. Your last question comes from the line of Paul Patterson of Glen Rock. Your line is open. Good morning.

Speaker Change #140: Thank you.

Paul Patterson: Good morning. How are you doing? I'm doing good.

Paul Patterson: How are you doing? I'm doing good. Great. So, I asked this question some time ago about Chevron. And we now have a Supreme Court decision, and I'm just wondering how you guys see it potentially impacting either EPA or FERPA, regulation, or anything else you might, if you think it has any potential impact on AEP, I guess. I think it's early, but yeah, I think it could potentially be helpful as courts have more discretion not to have to rely on the, you know, the agencies, which is what the whole point of that. And, you know, I just think it doesn't bind the courts as much as it probably did in the past.

Speaker Change #141: Good morning. How are you doing?

Ben Folk: Great. So I asked this question some time ago about Chevron. And we now have a Supreme Court decision. And I'm just wondering how you guys see if potentially impacting either EPA or for regulation or anything else you might have. If you think it has any potential impact on EPA, I guess. I think it's early, but yeah, I think it could potentially be helpful as courts have more discretion not to have to rely on the, you know, the agencies, which that was the whole point of that. And, you know, I just think it doesn't bind the courts as much as it probably did in the past now.

Speaker Change #141: I'm doing good.

Speaker Change #143: Great. So, I asked this question some time ago about Chevron.

Speaker Change #143: And we now have a...

Speaker Change #142: I'm just wondering how you guys see it potentially impacting either EPA or FERC regulation or anything else you might...if you think it has any potential impact on AEP, I guess.

Speaker Change #144: I think it's early, but yeah, I think it could potentially be helpful as courts have more discretion not to have to rely on the, you know, the agencies, which that was the whole thing.

Speaker Change #145: I just think it doesn't bind the courts as much as it probably did in the past now, whether or not...

Ben Folk: Whether that's how the courts interpret it, what, you know, what the rowings are, we'll have to wait and see, but Paul, I think in general, it's going to be helpful. And we are going to challenge a lot of these EPA rules, as you know, the CCR rule, the ELG rule, the 111 rules. I guess all of the rules that have come out. We're going to challenge, and for good reason.

Benjamin Fowke: Now, whether or not, how the courts interpret it, what, you know, what the rulings are, we'll have to wait and see. But Paul, I think in general, it's going to be helpful. And we are going to challenge a lot of these EPA rules, as you know, the CCR rule, the ELG rule, the 111 rules, I guess all of the rules that have been we're going to challenge and for good

Speaker Change #146: How the courts interpret it, what the rulings are, we'll have to wait and see. But Paul, I think in general it's going to be helpful. And we are going to challenge a lot of these EPA rules, as you know. The CCR rule, the ELG rule, the 111 rules, I guess all of the rules that have come out.

Benjamin Fowke: Okay, great. And then just on PERC, do you see anything happening there, maybe? I don't, I don't know. I think there's some, but I'm not convinced it will, so I think that remains to be seen.

Ben Folk: Okay, great. And then just on purpose, do you see anything happening there, maybe? I don't know.

Speaker Change #146: We're going to challenge, and for good reason.

Paul: Okay, great. And then just on PERC, do you see anything happening there, maybe?

Ben Folk: I think there's some thought that it would, but I think that really, I'm not convinced it will, so I think that remains in between.

Speaker Change #148: I don't, I don't know. I think, I know there's some,

Speaker Change #149: There's some thought that it would, but I think that really, I'm not convinced it will, so I think that remains to be seen.

Paul Patterson: Okay, the rest of my questions have been answered. Thanks so much. Have a great day.

Unknown Executive: Okay, the rest of my questions have been answered. Thanks so much. Have a great one. All right, Paul. Thank you.

Speaker Change #148: Okay, the rest of my questions have been answered. Thanks so much. Have a great one. All right, Paul. Thank you.

Unknown Executive: That concludes it. As always, the IR team will be available to answer any additional questions you may have.

Operator: Thank you for joining us on today's call. As always, the IR team will be available to answer any additional questions you may have. JL, would you please give the replay information?

Paul: Thank you for joining us on today's call.

Speaker Change #148: As always, the IR team will be available to answer any additional questions you may have. JL, would you please give the replay information?

Unknown Executive: JL, would you please give the replay information? Certainly, echo replay will be available in two hours until August 6 at 1-800-770-2030. That's 1 800 770 2030.

Operator: Echo replay will be available for two hours until August 6th at 1-800-770-2030. That's 1-800-770-2030 using playback ID 6645529. That's replay playback ID 6645529, followed by the pound key. This concludes today's conference call; you may now disconnect.

Speaker Change #148: Certainly.

JL: Echo Replay will be available in two hours until August 6th at 1-800-633-9000.

JL: 770

JL: That's 1-800-770-2030 using playback ID 6-6-4-5-5-2-9. That's replay playback ID 6-6-4-5-5-2-9 followed by the pound key.

Unknown Executive: We'll be back ID 6645529. That's replay playback ID 6645529, followed by the pound key.

Unknown Executive: This concludes today's conference call. You may now disconnect.

JL: This concludes today's conference call. You may now disconnect.

Speaker Change #151: and many more. I hope you enjoyed this video. If you did, please like, share, and subscribe. I'll see you in the next video.