American Electric Power Company, Inc.

Thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Electric Power first quarter 2025 earnings call. 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 during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Darcy Reese, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to American Electric Power's first quarter 2025 earnings call. A live webcast of this teleconference and slide presentation are available on our website under the events and presentation section. Joining me today are Bill Furman, President and Chief Executive Officer, and Trevor Mahalik, Executive Vice President and Chief Financial Officer. In addition, we have other members of our management team in the room to answer questions, if needed, including Kate Sturgis, Senior Vice President and Chief Accounting Officer. We will be making forward-looking statements during the call. Actual results may differ materially from those projected in any forward-looking statement we make today. Factors that could cause our actual results to differ materially are discussed in the company's most recent SEC filing. Please refer to the presentation slides that accompany this call for reconciliation to gap measures. We will take your questions following opening remarks. With that, please turn to slide four and let me hand the call over to Bill.

Thank you, Darcy, and good morning, everyone. Welcome to American Electric Power's first quarter 2025 earnings call. We are off to an exceptional start to the year where we delivered strong results and have advanced our long-term strategy to drive robust growth, enhance the customer experience, and achieve positive regulatory outcomes. We remain committed to investing $54 billion of capital over the next five years, an impressive amount close in size to our current market capitalization to meet the needs of 5.6 million customers across 11 states. We are actively managing our supply chain to ensure we deliver on our commitments. Specifically related to current plan tariffs, we estimate that the direct tariff exposure on our $54 billion base capital plan for 2025 to 2029 is minimal at approximately 0.3%. We have a sizable generation portfolio and one of the largest transmission and distribution businesses in the nation. In fact, AEP owns and operates more 765KV transmission lines than all other utilities in the United States combined, and we were recently awarded construction to build one of the first 765KV lines in Texas. We are enabling extraordinary economic development in high growth states like Indiana, Ohio, Oklahoma, and Texas, and stand to benefit from these once in a lifetime opportunities presented by the associated low growth. Trevor will go into this in more detail shortly. Our story continues to be one of consistency and commitment to delivering for our customers, states, regulators, and investors as we center on execution and accountability. And we offer a compelling value proposition to our investors shareholder return. We have a lot of exciting ground to cover today. I'll begin with a recap of our financial results at a high level before turning to strategic growth opportunities ahead and our recent regulatory and legislative successes. I'll then hand the call over to Trevor to walk through our financial results in more detail. Please refer to today's presentation for our quarterly business highlights and achievements starting on slide five. This morning we announced first quarter 2025 operating earnings of $1.54 per share, or $823 million. With this strong performance, we are reaffirming our 2025 operating earnings guidance range of $5.75 to $5.95 per share, and long-term operating earnings growth rate of 6% to 8%. This guidance is reinforced by a balanced and flexible $54 billion five-year capital plan with the potential for incremental investments of up to $10 billion over that same period. As we have communicated in the past, maintaining a strong balance sheet is vital to funding these capital spending needs. Later in the call, we'll go into more detail about AEP's commitment to credit quality and proactive actions we have taken in the first three months of 2025 to address AEP's equity needs. As we move forward, we will remain disciplined in sourcing efficient forms of capital to manage our needs in support of incremental investment opportunities. We remain excited about the significant growth opportunities ahead, including the load growth in many parts of our service territory. This growth is not a show-me story. It is happening. AEP's total retail load growth has already been favorable over the past few years, primarily driven by commercial customers. In the first quarter of 2025, our commercial load grew 12.3% compared to the first quarter of last year. As we look ahead, ADP is extremely well positioned to participate in future growth across our footprint. We see opportunities to invest in critically needed infrastructure to support increasing electric demand. Our current capital plan includes customer commitments for over 20 gigawatts of incremental load by 2030. driven by data center demand, reshoring, manufacturing, and continued economic development. This incremental 20 gigawatts is about a 55% increase over 2024 system-wide summer peak load. As we have consistently said, we are absolutely committed to fair cost allocation associated with this large load growth. To that end, we proactively filed the data center tariff in Ohio and large load tariff modifications in Indiana, Kentucky, Virginia, and West Virginia. In the first quarter, we received commission approvals in Indiana, Kentucky, and West Virginia related to large load tariffs. The data center tariff hearing in Ohio also concluded in January, and we expect to have a commission decision in the second half of this year. These are all strong indications of our state's continuing commitment to attracting large loads with their economic impacts on local communities while also protecting our existing customer base. As we have previously discussed, Meeting this incredible demand could require incremental investments of up to $10 billion, underpinned by four major drivers, large load in some of our bigger service territories, continued economic development in our states, investment across the system in our transmission and distribution infrastructure, and new generation. One of the reasons we are seeing such growth now is due to investments we made over the past decade to build an advanced 40,000-mile transmission system that can help support current large loads. Our transmission system also includes the nation's largest network of 765 and 345 KV lines. These ultra-high voltage lines position us exceedingly well in attracting hyperscalers to our system who need consistent large load bulk power. We also continue to invest in our distribution system, which is one of the nation's largest at approximately 225,000 miles. This includes work to harden infrastructure, build or rebuild poles, conductors, transformers, and other assets, as well as deploy automated technologies for enhanced operational performance. These efforts will help to increase customer satisfaction, strengthen our system's resilience to weather events, and enhance the efficiency of our operations. As our generation needs increase to meet growing demand, we are engaging with key stakeholders and making thoughtful investments in new generation to align with their needs and state policies. Our team has worked diligently to develop creative energy solutions that keep our customers' needs top of mind. We have already shared our plans to begin the early site permit process in Indiana and Virginia for small modular reactors, or SMRs, that can generate clean, reliable energy to support significant load growth in our service territory. And we recently filed integrated resource plans, or IRPs, in both Arkansas and Indiana. These IRPs, in addition to other planned IRP filings over the next year in Kentucky, Michigan, Virginia, and West Virginia, will help meet our customers' energy needs and support AEP's generating capacity obligations, reinforcing our incredible growth. The fact is that demand for power is growing at a pace not seen in decades, and our expansive footprint enables us to significantly participate in this electric infrastructure super cycle. Now let's pivot to some traditional regulatory and legislative updates. In my nine months here at ADP, I have been actively engaged with stakeholders to underscore the importance of our customers and communities and how we work to meet their needs. Building on our meaningful progress in achieving positive regulatory developments in the second half of 2024, we're off to a great start in 2025 with approximately 80% of our rate-related revenue already secured for this year. In fact, ADP's first quarter earned ROE for our regulated businesses was 9.3%, up from 9.05% at year end. As a reminder, some recent regulatory successes include a recent commission decision approving construction in ERCOP's Permian Basin for one of the first 765 kV transmission lines in Texas, opening up tremendous investment opportunities for ADP Texas. PJM transmission system upgrades awarded to AEP affiliates, including Transource Energy and our transmission companies. System resiliency plans approved at AEP Texas and a unanimous settlement reached at SWEPCO Texas. Base cases approved in Oklahoma and Virginia, and recovery of annual transmission expense approved in Kentucky. In late March, we also filed a new base case in Arkansas, requesting a rate increase of $114 million. This ask is primarily to align regulatory recovery of certain wind projects, including rate implementation of the diversion and wagon wheel projects. Our application includes an ROE request of 10.9%, and SWEPCO anticipates an order and new rates effective in the first quarter of 2026. Previously, APCO filed its base case in West Virginia while offering securitization of up to $2.4 billion as a tool to mitigate the bill impact of a proposed $250 million base rate increase. The procedural schedule just kicked off last month with intervener testimony and rebuttal testimony will follow later this month. The hearing is set to start in mid-June. We look forward to working with everyone in this case to achieve a positive and balanced outcome later this year. We are intently focused on reducing regulatory lag and have made a number of other timely filings so far in 2025. including the AEP Texas TCAS and DCRF by annual filings, as well as SWEPCO's annual formula rate plan in Louisiana. For I&M, the team recently filed to acquire an 870 megawatt natural gas plant in 2026, which is located in Oregon, Ohio. That will help I&M customers continue to benefit from reliable and affordable resources. We are also working diligently at the legislative level in a number of jurisdictions to advance policy changes to improve both recovery and customer affordability. For example, in Ohio, the recent passage of House Bill 15 positively results in multi-year forward-looking test years for future rate cases and includes grandfathering language for two behind-the-meter fuel cell contracts. Trevor will go into further detail on the OVEC-related impacts. And in Virginia, we supported securitization legislation that will both reduce customer bills and support critical investments in the system. You can expect to see us continue to work with federal policymakers, regulators, and state legislators as we further modernize our energy grid. We firmly believe that the best way to create value for investors is by delivering safe, affordable, and reliable energy to our customers and communities, and we are engaging with stakeholders to support efforts to do just that. I'm increasingly confident in our exciting growth potential as opportunities come into focus, and I look forward to building on our track record of value creation in the months and years ahead. With that, I'll turn it over to Trevor, who will walk us through AP's first quarter performance drivers and other financial information.