Equity Method Investment, Ownership Percentage

  
  
The major classes of KPCo and KTCo’s assets and liabilities presented in Assets Held for Sale and Liabilities Held for Sale on the balance sheets of AEP and AEPTCo are shown in the table below:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | AEP |  | AEPTCo |
|  |  | June 30, 2022 |  | December 31, 2021 |  | June 30, 2022 |  | December 31, 2021 |
|  |  | (in millions) |
| ASSETS |  |  |  |  |  |  |  |  |
| Accounts Receivable and Accrued Unbilled Revenues |  | $ | 87.1  |  |  | $ | 33.2  |  |  | $ | 1.9  |  |  | $ | 1.5  |  |
| Fuel, Materials and Supplies |  | 37.4  |  |  | 30.6  |  |  | —  |  |  | —  |  |
| Property, Plant and Equipment, Net |  | 2,358.0  |  |  | 2,302.7  |  |  | 166.9  |  |  | 165.3  |  |
| Regulatory Assets |  | 484.5  |  |  | 484.7  |  |  | —  |  |  | —  |  |
| Other Classes of Assets that are not Major |  | 47.5  |  |  | 68.5  |  |  | 2.7  |  |  | 1.1  |  |
| Total Major Classes of Assets Held for Sale |  | 3,014.5  |  |  | 2,919.7  |  |  | 171.5  |  |  | 167.9  |  |
| Loss on the Expected Sale of Kentucky Operations |  | (68.8) |  |  | —  |  |  | —  |  |  | —  |  |
| Assets Held for Sale |  | $ | 2,945.7  |  |  | $ | 2,919.7  |  |  | $ | 171.5  |  |  | $ | 167.9  |  |
|  |  |  |  |  |  |  |  |  |
| LIABILITIES |  |  |  |  |  |  |  |  |
| Accounts Payable |  | $ | 74.3  |  |  | $ | 53.4  |  |  | $ | 1.2  |  |  | $ | 1.1  |  |
| Long-term Debt Due Within One Year |  | 415.0  |  |  | 200.0  |  |  | —  |  |  | —  |  |
| Customer Deposits |  | 38.0  |  |  | 32.4  |  |  | —  |  |  | —  |  |
| Deferred Income Taxes |  | 453.5  |  |  | 441.6  |  |  | 16.2  |  |  | 15.4  |  |
| Long-term Debt |  | 688.3  |  |  | 903.1  |  |  | —  |  |  | —  |  |
| Regulatory Liabilities and Deferred Investment Tax Credits |  | 140.1  |  |  | 148.1  |  |  | 7.9  |  |  | 7.6  |  |
| Other Classes of Liabilities that are not Major |  | 91.1  |  |  | 102.3  |  |  | 2.3  |  |  | 3.5  |  |
| Liabilities Held for Sale |  | $ | 1,900.3  |  |  | $ | 1,880.9  |  |  | $ | 27.6  |  |  | $ | 27.6  |  |

  
DISPOSITIONS  
Disposition of Mineral Rights (Generation & Marketing Segment) (Applies to AEP)  
In June 2022, AEP closed on the sale of certain mineral rights to a nonaffiliated third-party and received $120 million of proceeds. The sale resulted in a pretax gain of $116 million in the second quarter of 2022.   
IMPAIRMENTS  
Flat Ridge 2 Wind LLC (Generation & Marketing Segment) (Applies to AEP)  
In April 2019, AEP acquired Sempra Renewables LLC and its ownership interests in 724 MWs of wind generation and battery assets. The acquisition included a 50% ownership interest in five non-consolidated joint ventures, including Flat Ridge 2 Wind LLC (Flat Ridge 2), and two tax equity partnerships. The five non-consolidated joint ventures are jointly owned and operated by BP Wind Energy. Flat Ridge 2 sells electricity to three counterparties through long-term PPAs.   
Regarding AEP’s investment in Flat Ridge 2, in June 2022, as a result of deteriorating financial performance, sale negotiations AEP’s ongoing evaluation and ultimate decision to exit the investment in the near term, in June 2022 management determined a decline in the fair value of AEP’s investment in Flat Ridge 2 was other than temporary. In accordance with the accounting guidance for “Investments - Equity Method and Joint Ventures”, AEP recorded a pretax other than temporary impairment charge of $186 million in Equity Earnings (Losses) of Unconsolidated Subsidiaries in AEP’s Statement of Income in the second quarter of 2022. AEP’s determination of fair value utilized ASC 820 Fair Value Measurement market approach to valuation and was based on Level 2 pricing information from a third-party market participant. The carrying value of the investment in Flat Ridge 2 was not material to AEP as of June 30, 2022.  
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