Share of Net Investment in Pirkey Power Plant

  
  
November 2021, the LPSC issued a directive which deferred the issues regarding modification of the level and timing of recovery of the Dolet Hills Power Station from SWEPCo’s pending rate case to a separate existing docket. In addition, the recovery of the deferred fuel costs are planned to be addressed.   
In March 2021, the APSC approved fuel rates that provide recovery of $20 million for the Arkansas share of the 2021 Dolet Hills Power Station fuel costs over five years through the existing fuel clause.  
If any of these costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.  
Pirkey Power Plant and Related Fuel Operations (Applies to AEP and SWEPCo)  
In 2020, management announced plans to retire the Pirkey Power Plant in 2023. The Pirkey Power Plant non-fuel costs are recoverable by SWEPCo through base rates and fuel costs are recovered through active fuel clauses and are subject to prudency determinations by the various commissions. As of June 30, 2022, SWEPCo’s share of the net investment in the Pirkey Power Plant was $204 million, including CWIP, before cost of removal. Sabine is a mining operator providing mining services to the Pirkey Power Plant. Under the provisions of the mining agreement, SWEPCo is required to pay, as part of the cost of lignite delivered, an amount equal to mining costs plus a management fee. SWEPCo expects fuel deliveries, including billings of all fixed and operating costs, from Sabine to cease during the first quarter of 2023. Under the fuel agreements, SWEPCo’s fuel inventory and unbilled fuel costs from mining related activities were $79 million as of June 30, 2022. As of June 30, 2022, SWEPCo had a net under-recovered fuel balance of $187 million, inclusive of costs related to the Pirkey Power Plant billed by Sabine, but excluding impacts of the February 2021 severe winter weather event. Upon cessation of lignite deliveries by Sabine to the Pirkey Power Plant, additional operational, reclamation and other land-related costs incurred by Sabine will be billed to SWEPCo and included in existing fuel clauses. If any of these costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.  
Regulatory Assets Pending Final Regulatory Approval (Applies to all Registrants except AEPTCo)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | AEP |
|  |  | June 30, |  | December 31, |
|  |  | 2022 |  | 2021 |
|  Noncurrent Regulatory Assets |  | (in millions) |
|  |  |   |  |   |
| Regulatory Assets Currently Earning a Return |  |   |  |   |
| Unrecovered Winter Storm Fuel Costs (a) |  | $ | 133.7  |  |  | $ | 430.2  |  |
| Pirkey Power Plant Accelerated Depreciation |  | 129.3  |  |  | 87.0  |  |
| Welsh Plant, Units 1 and 3 Accelerated Depreciation |  | 65.9  |  |  | 45.9  |  |
| Dolet Hills Power Station Accelerated Depreciation  |  | 52.8  |  |  | 72.3  |  |
|  |  |  |  |  |
| Plant Retirement Costs – Unrecovered Plant, Louisiana |  | 35.2  |  |  | 35.2  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Dolet Hills Power Station Fuel Costs - Louisiana |  | 31.5  |  |  | 30.9  |  |
| Other Regulatory Assets Pending Final Regulatory Approval |  | 14.7  |  |  | 9.2  |  |
| Regulatory Assets Currently Not Earning a Return |  |   |  |   |
| Storm-Related Costs |  | 322.3  |  |  | 256.9  |  |
| Plant Retirement Costs – Asset Retirement Obligation Costs |  | 25.9  |  |  | 25.9  |  |
| Renewable Energy Portfolio Standards Costs - Virginia |  | 14.0  |  |  | 2.1  |  |
| COVID-19 |  | 11.5  |  |  | 11.2  |  |
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
| Other Regulatory Assets Pending Final Regulatory Approval |  | 42.8  |  |  | 41.8  |  |
| Total Regulatory Assets Pending Final Regulatory Approval | $ | 879.6  |  |  | $ | 1,048.6  |  |

(a) Includes $37 million and $63 million of unrecovered winter storm fuel costs recorded as a current regulatory asset as of June 30, 2022 and December 31, 2021, respectively.155
