American Electric Power (AEP) risk factors: FY2025 10-K

1. AEP may not be able to recover the costs of substantial planned investment in capital improvements and additions. (Applies to all Registrants)
2. The business and capital investment plans of AEP depend, in part, on the continued growth and viability of data centers and large load customers interconnecting with the AEP System. (Applies to all Registrants)new
3. The business and capital investment plans of AEP are subject to execution risks. (Applies to all Registrants)new
4. Regulated electric revenues and earnings are dependent on federal and state regulations that may limit AEP’s ability to recover costs and other amounts. (Applies to all Registrants)reworded
5. Regulated electric revenues and earnings are subject to prudency review. (Applies to all Registrants)new
6. Regulatory bodies may not allow recovery of costs incurred on a timely basis. (Applies to all Registrants)new
7. AEP is subject to negative publicity. (Applies to all Registrants)new
8. AEP’s transmission investment strategy and execution are dependent on federal and state regulatory policy and implementation by RTOs. (Applies to all Registrants)reworded
9. Certain elements of AEP’s transmission formula rates have been challenged, which could result in lowered rates and/or refunds of amounts previously collected. (Applies to all Registrants other than AEP Texas)reworded
10. AEP faces risks related to project siting, financing, construction, permitting, governmental approvals and the negotiation of project development agreements that may impede their development and operating activities. (Applies to all Registrants)
11. Changes in technology and regulatory policies may lower the value of electric utility facilities and franchises. (Applies to all Registrants)
12. AEP is exposed to nuclear generation risk. (Applies to AEP and I&M)
13. AEP subsidiaries are exposed to risks through participation in the market and transmission structures in various regional power markets that are beyond their control. (Applies to all Registrants)
14. AEP could be subject to higher costs and/or penalties related to mandatory reliability standards. (Applies to all Registrants)
15. A substantial portion of the receivables of AEP Texas is concentrated in a small number of REPs, and any delay or default in payment could adversely affect its cash flows, financial condition and results of operations. (Applies to AEP and AEP Texas)

Read these in Item 1A · See the changes

1. AEP’s financial performance may be adversely affected if AEP is unable to successfully operate facilities or perform certain corporate functions. (Applies to all Registrants)
2. 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)Cybersecurity
3. The failure of AEP or third-party vendor information technology systems, or the failure to enhance existing information technology systems and implement new technology, could adversely affect AEP. (Applies to all Registrants)
4. The amount of taxes imposed on AEP could change. (Applies to all Registrants)
5. Changes in U.S. or foreign trade policies, including the imposition of tariffs and other protectionist trade measures, and other factors beyond AEP’s control may adversely impact future net income and cash flows and financial condition.newTariffs
6. If AEP is unable to access capital markets or insurance markets on reasonable terms, for any reason, including negative publicity, it could reduce future net income and cash flows and negatively impact financial condition. (Applies to all Registrants)reworded
7. Shareholder activism could cause AEP to incur significant expense, hinder execution of AEP’s business strategy and impact AEP’s stock price. (Applies to all Registrants)
8. Downgrades in AEP’s credit ratings could negatively affect its ability to access capital. (Applies to all Registrants)
9. AEP and AEPTCo have no income or cash flow apart from dividends paid or other payments due from their subsidiaries. (Applies to AEP and AEPTCo)
10. Volatility in the securities markets, interest rates, and other factors could substantially increase defined benefit pension and other postretirement plan costs and the costs of nuclear decommissioning. (Applies to all Registrants and to AEP and I&M with respect to the costs of nuclear decommissioning)Interest rates
11. Supply chain disruptions, tariffs and inflation could negatively impact operations and corporate strategy. (Applies to all Registrants)rewordedTariffs
12. AEP’s results of operations and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, a decline in customer demand or a recession. (Applies to all Registrants)
13. Failure to attract and retain an appropriately qualified workforce and management could harm results of operations. (Applies to all Registrants)reworded
14. Changes in the price of purchased power and commodities, the cost of procuring fuel, emission allowances for criteria pollutants and the costs of transport may increase AEP’s cost of purchasing and producing power, impacting financial performance. (Applies to all Registrants except AEP Texas, AEPTCo and OPCo)
15. AEP is subject to physical and financial risks associated with climate change. (Applies to all Registrants)
16. The occurrence of one or more wildfires could cause tremendous loss, impact the market value and credit ratings of Registrants’ securities and have a material adverse effect on Registrants’ financial condition. (Applies to all Registrants)reworded
17. The generation, transmission and distribution of electricity are dangerous and involve inherent risks of damage to private property and injury to AEP’s workforce and the general public. (Applies to all Registrants)
18. Adverse outcomes in AEP’s material legal proceedings could materially and adversely affect AEP’s results of operations and financial condition. (Applies to all Registrants)new
19. Disruptions at power generation facilities owned by third-parties could interrupt the sales of transmission and distribution services. (Applies to AEP, AEP Texas and OPCo)reworded
20. Most of the real property rights on which the assets of AEPTCo are situated result from affiliate license agreements and are dependent on the terms of the underlying easements and other rights of its affiliates. (Applies to AEPTCo)
21. Compliance with legislative and regulatory requirements may lead to increased costs and result in penalties. (Applies to all Registrants)

Read these in Item 1A · See the changes

1. Costs of compliance with existing and evolving environmental laws are significant. (Applies to all Registrants except AEPTCo)
2. Regulation of GHG emissions could materially increase costs to AEP and its customers or cause some electric generating units to be uneconomical to operate or maintain. (Applies to all Registrants except AEP Texas, AEPTCo and OPCo)reworded
3. AEP may be unable to procure or construct generation capacity when needed or to recover the costs of such generation capacity. (Applies to all Registrants except AEP Texas, AEPTCo and OPCo)
4. Courts adjudicating nuisance and other similar claims in the future may order AEP to pay damages or to limit or reduce emissions. (Applies to all Registrants except AEP Texas and AEPTCo)
5. Commodity trading and marketing activities are subject to inherent risks which can be reduced and controlled but not eliminated. (Applies to all Registrants except AEP Texas, AEPTCo and OPCo)
6. Parties with whom AEP has contracts may fail to perform their obligations, which could harm AEP’s results of operations. (Applies to all Registrants)
7. AEP relies on electric transmission facilities that AEP does not own or control. If these facilities do not provide AEP with adequate transmission capacity, AEP may not be able to deliver wholesale electric power to the purchasers of AEP’s power. (Applies to all Registrants)
8. OVEC may require additional liquidity and other capital support. (Applies to AEP, APCo, I&M and OPCo)

Read these in Item 1A · See the changes

Headings in the FY2024 10-K with no match this year.

1. AEP may not recover costs incurred to begin construction on projects that are canceled. (Applies to all Registrants)
2. Our financial position may be adversely impacted if announced dispositions do not occur as planned. (Applies to AEP)
3. AEP’s operating results may fluctuate on a seasonal or quarterly basis and with general economic and weather conditions. (Applies to all Registrants)
4. Management cannot predict the outcome of the legal proceedings relating to AEP’s business activities. (Applies to all Registrants)
5. Management is unable to predict the course, results or impact, if any, of current or future litigation or investigations relating to the severe winter weather in Texas in February 2021. (Applies to AEP and AEP Texas)
6. Hazards associated with high-voltage electricity transmission may result in suspension of AEP’s operations or the imposition of civil or criminal penalties. (Applies to all Registrants)
7. AEPTCo depends on AEP affiliates for a substantial portion of its revenues. (Applies to AEPTCo)
8. New climate disclosure rules proposed by the U.S. Securities and Exchange Commission may increase our costs of compliance and adversely impact our business. (Applies to all Registrants)