American Electric Power Company, Inc. · NASDAQ:AEP
American Electric Power — Investor Presentation (April 2017)
32 slides from American Electric Power's investor presentation, April 2017
Slide 1: April Investor Meetings
APRIL INVESTOR MEETINGS April 2017
Slide 2: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are
Slide 3: The Premier Regulated Energy Company
THE PREMIER REGULATED ENERGY COMPANY 2
Slide 4: Doing What We Said
DOING WHAT WE SAID Completed strategic Reinvesting Growing review of proceeds regulated competitive wisely businesses assets 3
Slide 5: AEP Going Forward
AEP GOING FORWARD Well positioned Growing Earnings as a regulated dividend growth rate business consistent 5-7% with earnings 4
Slide 6: Organic Investment Opportunity Equals Increased Growth
ORGANIC INVESTMENT OPPORTUNITY EQUALS INCREASED GROWTH 2017 RESET OF BASE: $4.50 2016 Original Guidance for Regulated $3.30 4%-6% Growth Rate 0.17 2017 Regulated Earnings $3.47 Earnings from remaining G&M business 0.09 $4.25 Earnings from assets sold through Q1 2017 0.09 Midpoint of 2017 guidance $3
Slide 7: Capital Forecast
CAPITAL FORECAST $17.3B Cap-ex from 2017-2019 Contracted Renewables $1.0B | 6% Regulated Renewables $0.5B | 3% Regulated Environmental Generation 100% $1.0B | 6% Regulated AEP Transmission Fossil & Hydro Generation $0.9B | 5% Holdco $4.7B | 27% of capital allocated to Nuclear Generation regulated bu
Slide 8: 7.7% CAGR in Rate Base
7.7% CAGR IN RATE BASE CUMULATIVE CHANGE FROM 2015 BASE 2015 Rate Base Proxy Vertically Integrated Utilities $21.9B $11.4B T&D Utilities $7.8B Transcos/Transource $3.1B Total $32.8B $8.3B $4.8 $3.4 $5.1B $3.4 $2.2 $2.4 $2.6B $1.0 $1.5 $3.2 $0.8 $2.5 $0.8 $1.4 2016A 2017E 2018E 2019E Vertically Integ
Slide 9: Regulated Returns
REGULATED RETURNS 12 MONTHS ENDED 12/31/2016 EARNED ROE (NON-GAAP OPERATING EARNINGS) Regulated Totals 2014-2016 Avg: 9.8% 2017 Forecast: 9.9% 2017-2019 Avg: 10.0% Sphere size based on each company’s relative equity balance * Transco ROE 11.2% 8
Slide 10: Capitalization and Liquidity
CAPITALIZATION AND LIQUIDITY * * Commercial paper was paid down subsequent to 1/30/2017 closing on sale of non-PPA plants. 9
Slide 11: Solid Credit Metrics
SOLID CREDIT METRICS AEP Consolidated Cash Flows and Financial Metrics $ in millions 2016A 2017E 2018E 2019E Cash from Operations 4,500 4,400 4,800 5,000 Capital & JV Equity Contributions (4,900) (5,700) (6,000) (5,600) Other Investing Activities * (100) 1,800 (200) (200) Common Dividends ** (1,100)
Slide 12: Capital Forecast 2017-2019 by Subsidiary
CAPITAL FORECAST 2017-2019 BY SUBSIDIARY $ in millions (excluding AFUDC) 2017E 2018E 2019E Total Appalachian Power Company $780 $1,130 $693 $2,603 Wheeling Power Company $44 $63 $68 $175 Indiana Michigan Power Company $604 $508 $502 $1,614 Kentucky Power Company $96 $130 $162 $388 AEP Ohio $515 $503
Slide 13: AEP Credit Ratings
AEP CREDIT RATINGS Moody’s S&P Senior Senior Company Unsecured Outlook Unsecured Outlook American Electric Power Company, Inc. Baa1 S BBB+ S AEP, Inc. Short Term Rating P2 S A2 S AEP Texas Baa1 S A- S Appalachian Power Company Baa1 S A- S Indiana Michigan Power Company Baa1 S A- S Kentucky Power Com
Slide 14: Debt Maturity Profile
DEBT MATURITY PROFILE ($ in millions) Year 2017 2018 2019 2020 2021 2022 AEP, Inc. $550.0 $0.0 $0.0 $0.0 $0.0 $300.0 AEP Generating Company $45.0 $125.0 $0.0 $0.0 $0.0 $104.0 AEP Generation Resources $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 AEP Texas* $40.9 $30.0 $250.0 $50.6 $0.0 $25.0 AEP Transmission Compan
Slide 15: Continuous Improvement Enables O&M Discipline
CONTINUOUS IMPROVEMENT ENABLES O&M DISCIPLINE Proven Track Record of O&M Discipline (Amounts exclude River Operations and items recovered in riders/trackers) $ in billions 14
Slide 16: Normalized Load Trends
NORMALIZED LOAD TRENDS AEP Residential Normalized GWh Sales AEP Commercial Normalized GWh Sales % Change vs. Prior Year % Change vs. Prior Year 5% 5% 2.6% 0.5% 3.9% 5% 5% Q41S — QAAG Q21G AS-AG 4-16 YTD-1G 2017 E Q4-15 Q1-16 Q216 Q3-16 Q4-16 YTD-16 2017E AEP Total Normalized GWh Sales % Change vs. P
Slide 17: Strong, Consistent Dividend Growth
STRONG, CONSISTENT DIVIDEND GROWTH $2.50 $2.36 $2.27 $2.00 $2.15 $2.03 $1.95 $1.50 $1.00 $0.50 $0.00 2013 2014 2015 2016 2017* EPS Growth + Dividend Yield = 9% to 11% Annual Return Opportunity * Subject to Board approval 16
Slide 18: Pending Rate Case SWEPCO - Texas
PENDING RATE CASE SWEPCO - TEXAS Base rate case filed December 16, 2016 • Docket #: 46449 SWEPCO • Requested rate base: $1.238B Texas • Requested ROE: 10.0% • Cap Structure: 51.54%D / 48.46%E • Base Rate Increase: $69M net ($106M less $37M TCRF/DCRF decrease) • Percentage Rate Incr: 12.7% total bill
Slide 19: AEP Transmission Manages the Largest Diverse Transmission Portfolio
AEP TRANSMISSION MANAGES ATHE DIVERSE LARGEST PORTFOLIO TRANSMISSION NETWORK IN NORTH AMERICA Located in PJM AEP Transmission Business Located in SPP Located in ERCOT Joint Operating Transcos Ventures Companies OH Transco ETT APCo $2,070M $2,828M $2,328M WV Transco Transource I&M $621M $299M $1,057M
Slide 20: AEPTHC Capital and EPS Forecast for 2016-2019
AEPTHC CAPITAL AND EPS FORECAST FOR 2016-2019 12 $0.89 - $0.92 0.95 Cumulative capital investment of $0.76 - $0.79 0.85 10 nearly $10 billion to grow EPS at a CAGR of 39% through 2019 $9.9B 0.75 $0.56 - $0.59 0.65 8 $0.54 $8.3B 0.55 6 $0.39 $6.7B 0.45 $0.31 $5.4B 0.35 4 $4.0B 0.25 $0.16 $0.09 0.15 2
Slide 21: $3 Billion Annual Transmission Investment
$3 BILLION ANNUAL TRANSMISSION INVESTMENT Improving reliability by replacing aging infrastructure Enhancing resiliency to combat extreme weather and increasing physical security Integrating renewables and supporting environmental mandates Relieving congestion to support an efficient generation marke
Slide 22: Positioning for a Sustainable Future
POSITIONING FOR A SUSTAINABLE FUTURE Transforming our generation fleet Dramatically reducing emissions Adding more renewable sources Integrating renewables through the nation’s largest transmission network 21
Slide 23: AEP's Generating Resource Portfolio Past and Future Capacity
AEP'S GENERATING RESOURCE PORTFOLIO PAST AND FUTURE CAPACITY 80% 71% 68% 70% 60% 50% 47% 42% 40% 30% 30% 27% 23% 20% 20% 13% 14% 10% 7% 6% 7% 7% 6% 7% 2% 3% 0% 0% 0% 1999 2005 2017 Future 1999 2005 2017 Future 1999 2005 2017 Future 1999 2005 2017 Future 1999 2005 2017 Future Coal Natural Gas Nuclear
Slide 24: Investing Billions to Reduce Emissions
INVESTING BILLIONS TO REDUCE EMISSIONS 23
Slide 25: Dramatic Reductions in Emissions
DRAMATIC REDUCTIONS IN EMISSIONS 2000-2016 2000-2017 2000-Future* CO2 actual estimated estimated 44% 56% 59% *Future excludes Cardinal, Conesville, Stuart and Zimmer plants 24
Slide 26: Dramatic Reductions in Emissions
DRAMATIC REDUCTIONS IN EMISSIONS 1990-2016 1990-2017 1990-Future* ACTUAL ESTIMATED ESTIMATED SO2 94% 94% 94% NOx 90% 91% 93% 2001-2015 2001-2017 2001-Future* ACTUAL ESTIMATED ESTIMATED Hg 73% 92% 93% *Future excludes Cardinal, Conesville, Stuart and Zimmer plants 25
Slide 27: Investing in a Greener Future
INVESTING IN A GREENER FUTURE Total MW 3,400 5,400 3,000 Source: Current internal Integrated Resource Plans, which largely do not reflect ITC/PTC extension or Bonus Depreciation. Wind and solar represent nameplate MW capacity. 26
Slide 28: Delivering Clean Energy Resources
DELIVERING CLEAN ENERGY RESOURCES AEP's 2017 Renewable Portfolio, in MW Hydro, Wind, Solar & Pumped Storage Owned MW PPA MW Total MW AEP Ohio 210 210 Appalachian Power Company 788 454 1,242 Indiana Michigan Power Company 38 450 488 Public Service of Oklahoma 1,139 1,139 Southwestern Electric Power C
Slide 29: Contracted Renewables
CONTRACTED RENEWABLES $1B CAPITAL ALLOCATED 2017-2019 Renewable Generation Asset Owner “Behind-the-Meter” Energy Assets Universal Scale Energy Assets Schools, Cities, Hospitals and Utilities, Municipalities, Key Customers Commercial / Industrial Corporations and Cooperative Accounts Accounts Solar,
Slide 30: Contracted Renewables Outlook
CONTRACTED RENEWABLES OUTLOOK STRONG PIPELINE OF ADDITIONAL OPPORTUNITIES DEVELOPMENT PROJECTS DISCIPLINED INVESTMENT Fully contracted assets Specific return requirements Strong credit counterparties Detailed technical reviews Long-term predictable cash Measured approach to flows and earnings projec
Slide 31: Preferred Project Partner
PREFERRED PROJECT PARTNER Strong balance sheet Customer relationship Ability to invest Incremental sales channel Tax appetite AEP IS A WELCOMED STRATEGIC PARTNER 30
Slide 32: The Premier Regulated Energy Company
THE PREMIER REGULATED ENERGY COMPANY HIGHER HIGHER growth dividends MORE MORE regulated certainty 31
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