Item 2. PROPERTIES

GENERATION FACILITIES

The tables below summarize the net maximum capacity of AEP's owned generation plants as of December 31, 2025. AEP subsidiaries serve customer electricity needs from these facilities and from purchased power in the PJM and SPP markets based on demand and other economic conditions. AEP's regulated subsidiaries have approved recovery mechanisms in retail jurisdictions that recover the cost of prudently incurred fuel, purchased power and other expenses.

Vertically Integrated Utilities Segment

(a)AEGCo owns a 50% interest in the Rockport Plant units. I&M owns the remaining 50%. Figures presented reflect only the portion owned by AEGCo.

NA Not applicable.

(a)I&M owns a 50% interest in the Rockport Plant units. AEGCo owns the remaining 50%. Figures presented reflect only the portion owned by I&M.

NA Not applicable.

(a)KPCo owns a 50% interest in the Mitchell Plant units. WPCo owns the remaining 50%. Figures presented reflect only the portion owned by KPCo.

(a)Northeastern, Unit 3 operated on coal up through December 2025 and began to operate on natural gas beginning in January 2026.

(b)PSO owns a 45.5% interest and SWEPCo owns the remaining 54.5% interest in Sundance, Maverick and Traverse. Figures presented reflect only the portion owned by PSO.

NA Not applicable.

(a)Jointly-owned with nonaffiliated entities. Figures presented reflect only the portion owned by SWEPCo. The Arkansas jurisdictional portion of SWEPCo’s interest in Turk Plant is not in rate base.

(b)In November 2020, management announced it will cease using coal at the Welsh Plant in 2028. In December 2024, SWEPCo filed an application for a CCN with the APSC, LPSC and PUCT to convert Welsh Plant, Units 1 and 3 to natural gas in 2028 and 2027, respectively.

(c)SWEPCo owns a 54.5% interest and PSO owns the remaining 45.5% interest in Sundance, Maverick and Traverse. Figures presented reflect only the portion owned by SWEPCo.

NA Not applicable.

(a)WPCo owns a 50% in the Mitchell Plant units. KPCo owns the remaining 50%. Figures presented reflect only the portion owned by WPCo.

TRANSMISSION AND DISTRIBUTION FACILITIES

The AEP System has significant investments in transmission and distribution lines across its Vertically Integrated Utilities, Transmission and Distribution Utilities and AEP Transmission Holdco Segments.

TITLE TO PROPERTY

The AEP System’s generating facilities are generally located on AEP owned property. The greater portion of the transmission and distribution lines of the AEP System has been constructed over property owned by third parties pursuant to easements or along public highways and streets pursuant to appropriate statutory authority. The rights of AEP’s public utility subsidiaries in the realty on which their facilities are located are considered adequate for use in the conduct of their business. Minor defects and irregularities customarily found in title to properties of like size and character may exist, but such defects and irregularities do not materially impair the use of the properties. AEP’s public utility subsidiaries generally have the right of eminent domain which permits them, if necessary, to acquire, perfect or secure titles to or easements on privately held lands used or to be used in their utility operations.

SYSTEM TRANSMISSION LINES AND FACILITY SITING

Laws in the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Tennessee, Texas, Virginia and West Virginia require prior approval of sites of generating facilities and/or routes of high-voltage transmission lines. AEP has experienced delays and additional costs in constructing facilities as a result of proceedings conducted pursuant to such statutes and in proceedings in which AEP’s operating companies have sought to acquire rights-of-way through condemnation. These proceedings may result in additional delays and costs in future years.

CONSTRUCTION PROGRAM

With input from its state utility commissions, AEP subsidiaries regularly assess the adequacy of their transmission, distribution, generation and other facilities to plan and provide for the reliable supply of electric power and energy to its customers. In this assessment process, assumptions are being reviewed as new information becomes available and assessments and plans are modified, as appropriate. AEP forecasts approximately $12.2 billion of construction expenditures for 2026. Estimated construction expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, supply chain issues, weather, legal reviews, technology advancements, inflation and the ability to access capital. See the “Budgeted Capital Expenditures” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

POTENTIAL UNINSURED LOSSES

Some potential losses or liabilities may not be insurable or the amount of insurance carried may not be sufficient to meet potential losses and liabilities, including liabilities relating to damage to AEP’s generation plants and costs of replacement power. Unless allowed to be recovered through rates, future losses or liabilities which are not completely insured could reduce net income and impact the financial conditions of AEP and subsidiaries. For risks related to owning a nuclear generating unit, see the “Nuclear Contingencies” section of Note 6 - Commitments, Guarantees and Contingencies for additional information.