filings.toolsAmerican Electric Power 10-Q 2022-03-31
Filed 2022-04-28. 8 sections, 905K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period from ____ to ____
| Commission | Registrants; | I.R.S. Employer | ||||||||||||||||||||||||||||||
| File Number | Address and Telephone Number | States of Incorporation | Identification Nos. | |||||||||||||||||||||||||||||
| 1-3525 | AMERICAN ELECTRIC POWER CO INC. | New York | 13-4922640 | |||||||||||||||||||||||||||||
| 333-221643 | AEP TEXAS INC. | Delaware | 51-0007707 | |||||||||||||||||||||||||||||
| 333-217143 | AEP TRANSMISSION COMPANY, LLC | Delaware | 46-1125168 | |||||||||||||||||||||||||||||
| 1-3457 | APPALACHIAN POWER COMPANY | Virginia | 54-0124790 | |||||||||||||||||||||||||||||
| 1-3570 | INDIANA MICHIGAN POWER COMPANY | Indiana | 35-0410455 | |||||||||||||||||||||||||||||
| 1-6543 | OHIO POWER COMPANY | Ohio | 31-4271000 | |||||||||||||||||||||||||||||
| 0-343 | PUBLIC SERVICE COMPANY OF OKLAHOMA | Oklahoma | 73-0410895 | |||||||||||||||||||||||||||||
| 1-3146 | SOUTHWESTERN ELECTRIC POWER COMPANY | Delaware | 72-0323455 | |||||||||||||||||||||||||||||
| 1 Riverside Plaza, | Columbus, | Ohio | 43215-2373 | |||||||||||||||||||||||||||||
| Telephone | (614) | 716-1000 |
Securities registered pursuant to Section 12(b) of the Act:
| Registrant | Title of each class | Trading Symbol | Name of Each Exchange on Which Registered | |||||||||||||||||
| American Electric Power Company Inc. | Common Stock, $6.50 par value | AEP | The NASDAQ Stock Market LLC | |||||||||||||||||
| American Electric Power Company Inc. | 6.125% Corporate Units | AEPPZ | The NASDAQ Stock Market LLC |
| Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. | |||||||||||||||||
| Yes | x | No | ☐ |
| Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). | |||||||||||||||||
| Yes | x | No | ☐ |
| Indicate by check mark whether American Electric Power Company, Inc. is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | |||||||||||||||||||||||
| Large Accelerated filer | x | Accelerated filer | ☐ | Non-accelerated filer | ☐ | ||||||||||||||||||
| Smaller reporting company | ☐ | Emerging growth company | ☐ |
| Indicate by check mark whether AEP Texas Inc., AEP Transmission Company, LLC, Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | |||||||||||||||||||||||
| Large Accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated filer | x | ||||||||||||||||||
| Smaller reporting company | ☐ | Emerging growth company | ☐ |
| If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | |||||||||||||||||
| ☐ |
| Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). | Yes | ☐ | No | x |
AEP Texas Inc., AEP Transmission Company, LLC, Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric P
Showing the first 8K of 890K characters. Open the full section
Item 1. Legal Proceedings
For a discussion of material legal proceedings, see “Commitments, Guarantees and Contingencies,” of Note 5 incorporated herein by reference.
Item 1A. Risk Factors
The Annual Report on Form 10-K for the year ended December 31, 2021 includes a detailed discussion of risk factors. As of March 31, 2022, the risk factors appearing in AEP’s 2021 Annual Report are supplemented and updated as follows:
Supply chain disruptions and inflation could negatively impact operations and corporate strategy. (Applies to all Registrants)
AEP’s operations and business plans depend on the global supply chain to procure the equipment, materials and other resources necessary to build and provide services in a safe and reliable manner. The delivery of components, materials, equipment and other resources that are critical to AEP’s business operations and corporate strategy has been restricted by the current domestic and global supply chain upheaval. This has resulted in the shortage of critical items. International tensions, including the ramifications of regional conflict, could further exacerbate the global supply chain upheaval. These disruptions and shortages could adversely impact business operations and corporate strategy. The constraints in the supply chain could restrict the availability and delay the construction, maintenance or repair of items that are needed to support normal operations or are required to execute AEP’s corporate strategy for continued capital investment in utility equipment. These disruptions and constraints could reduce future net income and cash flows and possibly harm AEP’s financial condition.
Supply chain disruptions have contributed to higher prices of components, materials, equipment and other needed commodities and these inflationary increases may continue in the future. While inflation in the United States has been relatively low in recent years, during 2021, the economy in the United States encountered a material level of inflation. The impact of COVID-19 continues to increase uncertainty in the outlook of near-term economic activity, including whether inflation will continue and at what rate. AEP typically recovers increases in capital expenses from customers through rates in regulated jurisdictions. Failure to recover increased capital costs could reduce future net income and cash flows and possibly harm AEP’s financial condition. Increases in inflation raises costs for labor, materials and services, and failure to secure these on reasonable terms may adversely impact AEP’s financial condition.
Physical attacks or hostile cyber intrusions could severely impair operations, lead to the disclosure of confidential information and damage AEP’s reputation. (Applies to all Registrants)
AEP and its regulated utility businesses face physical security and cybersecurity risks as the owner-operators of generation, transmission and/or distribution facilities and as participants in commodities trading. AEP and its regulated utility businesses own assets deemed as critical infrastructure, the operation of which is dependent on information technology systems. Further, the computer systems that run these facilities are not completely isolated from external networks. Parties that wish to disrupt the U.S. bulk power system or AEP operations could view these computer systems, software or networks as targets for cyber-attack. The Federal government has notified the owners and operators of critical infrastructure, such as AEP, that the conflict between Russia and Ukraine has increased the likelihood of a cyber-attack on such systems. In addition, the electric utility business requires the collection of sensitive customer data, as well as confidential employee and shareholder information, which is subject to electronic theft or loss.
A security breach of AEP or its regulated utility businesses’ physical assets or information systems, interconnected entities in RTOs, or regulators could impact the operation of the generation fleet and/or reliability of the transmission and distribution system. AEP and its regulated utility businesses could be subject to financial harm associated with ransomware theft or inappropriate release of certain types of information, including sensitive customer, vendor, employee, trading or other confidential data. A successful cyber-attack on the systems that control generation, transmission, distribution or other assets could severely disrupt business operations, preventing service to customers or collection of revenues. The breach of certain business systems could affect the ability to correctly record, process and report financial information. A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to AEP’s reputation. In addition, the misappropriation, corruption or loss of personally identifiable information and other confidential data could lead to significant breach notification expenses and mitigation expenses such as credit monitoring. AEP and its third-party vendors have been subject, and will likely continue to be subject, to attempts to gain unauthorized access to their technology systems and confidential data or to attempts to disrupt utility and related business operations. While there have been immaterial incidents of phishing, unauthorized access to technology systems, financial fraud, and disruption of remote access across the AEP System, there has been no material impact on business or operations from these attacks. However, the AEP cannot guarantee that security efforts will detect or prevent breaches, operational incidents, or other breakdowns of technology systems and network infrastructure and cannot provide any assurance that such incidents will not have a material adverse effect in the future.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
The Federal Mine Safety and Health Act of 1977 (Mine Act) imposes stringent health and safety standards on various mining operations. The Mine Act and its related regulations affect numerous aspects of mining operations, including training of mine personnel, mining procedures, equipment used in mine emergency procedures, mine plans and other matters. SWEPCo, through its ownership of DHLC, a wholly-owned lignite mining subsidiary of SWEPCo, is subject to the provisions of the Mine Act.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires companies that operate mines to include in their periodic reports filed with the SEC, certain mine safety information covered by the Mine Act. Exhibit 95 “Mine Safety Disclosure Exhibit” contains the notices of violation and proposed assessments received by DHLC under the Mine Act for the quarter ended March 31, 2022.
Item 5. Other Information
None.
Item 6. Exhibits
The exhibits designated with an (X) in the table below are being filed on behalf of the Registrants.
| Exhibit | Description | AEP | AEP Texas | AEPTCo | APCo | I&M | OPCo | PSO | SWEPCo | |||||||||||||||||||||||||||||||||||||||||||||||
| 4(a) | April 7, 2022 Amendment and extension to $4,000,000,000 Credit Agreement dated March 31, 2021 among the Company, Initial Lenders and Wells Fargo Bank National Association as Administrative Agent | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4(b) | April 7, 2022 Amendment and extension to $1,000,000,000 Credit Agreement dated March 31, 2021 among the Company, Initial Lenders and Wells Fargo Bank National Association as Administrative Agent | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4(c) | April 19, 2022 Amendment and extension to $500,000,000 Credit Agreement dated January 19, 2021 among the Company, Initial Lenders and Sumitomo Mitsui Banking Corporation as Administrative Agent | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 31(a) | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 31(b) | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 32(a) | Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 32(b) | Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 95 | Mine Safety Disclosures | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.INS | XBRL Instance Document | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File | Formatted as Inline XBRL and contained in Exhibit 101. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
AMERICAN ELECTRIC POWER COMPANY, INC.
By: /s/ Joseph M. Buonaiuto
Joseph M. Buonaiuto
Controller and Chief Accounting Officer
AEP TEXAS INC.
AEP TRANSMISSION COMPANY, LLC
APPALACHIAN POWER COMPANY
INDIANA MICHIGAN POWER COMPANY
OHIO POWER COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
By: /s/ Joseph M. Buonaiuto
Joseph M. Buonaiuto
Controller and Chief Accounting Officer
Date: April 28, 2022