American Electric Power Co. Inc.

Overview Key strengths Key risks Mostly lower-risk electric utility holding company. Elevated capital spending program requires balanced ongoing funding and timely cost recovery. Large operational scale with a customer base of about 5.6 million, as well as solid geographic diversity with operations in 11 states in the U.S. Significant remaining coal-fired generation. Operates under generally credit-supportive and constructive regulatory frameworks. Heightened operational risk stemming from its ownership of the Cook nuclear plant. Reducing its coal-fired generation through retirements while expanding its renewable generation. Financial measures are at the lower end of our benchmark range for the significant financial risk profile category. Federal Energy Regulatory Commission (FERC) 203 approval for the transaction is in process and expected by year-end 2022. The

...We expect the sale of American Electric Power Co. Inc.'s (AEP) subsidiary Kentucky Power Co. (KPCo) to Algonquin Power and Utilities Corp. (APUC) to be completed in January 2023. Federal Energy Regulatory Commission (FERC) 203 approval for the transaction is in process and expected by year-end 2022. The purchase price was revised to $2.65 billion, with net proceeds of $1.2 billion flowing to AEP. The sale of KPCo will lead to a modest strengthening in AEP's business risk profile within the excellent category due to reduced coal generation exposure. AEP's ongoing reduction of coal-fired generation aligns with the industry's transition toward a clean energy future. To reduce environmental risk, AEP intends to retire 5,600 megawatts (MW) of coal generation in the next six years, including Rockport units 1 and 2, to achieve the company's goal of reducing its coal capacity to 19% by 2030. Given the rapid retirement of its coal plants, AEP plans to replace this capacity by investing over $9 billion...

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