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Acquisitions and Dispositions | 6 Months Ended
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Jun. 30, 2024
Acquisitions and Dispositions | ACQUISITIONS, ASSETS AND LIABILITIES HELD FOR SALE AND DISPOSITIONS The disclosures in this note apply to AEP unless indicated otherwise. ACQUISITIONS Rock Falls Wind Facility (Vertically Integrated Utilities Segment) (Applies to AEP and PSO) In November 2022, PSO entered into an agreement to acquire the Rock Falls Wind Facility. In February 2023, the FERC approved PSO’s acquisition of the Rock Falls Wind Facility under Section 203 of the Federal Power Act. In March 2023, PSO acquired an ownership interest in the entity that owned Rock Falls during its development and construction for $146 million. In accordance with the guidance for “Business Combinations,” AEP management determined that the acquisition of the Rock Falls Wind Facility represents an asset acquisition. The lease obligations related to Rock Falls were not material as at the time of acquisition. ASSETS AND LIABILITIES HELD FOR SALE Planned Disposition of AEP OnSite Partners (Generation & Marketing Segment) (Applies to AEP) In April 2023, AEP initiated a sales process for its ownership in AEP OnSite Partners. AEP OnSite Partners targets opportunities in distributed solar, combined heat and power, energy storage, waste heat recovery, energy efficiency, peaking generation and other energy solutions. As of June 30, 2024, AEP OnSite Partners owned projects located in 21 states, including approximately 103 MWs of installed solar capacity and two solar projects under construction totaling approximately 8 MWs. As of June 30, 2024, the net book value of the assets and liabilities of AEP OnSite Partners was $341 million. In May 2024, AEP signed an agreement to sell AEP OnSite Partners to a nonaffiliated third party. AEP has received clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The sale remains subject to FERC approval under Section 203 of the Federal Power Act and is expected to close in the third quarter of 2024. AEP expects to receive cash proceeds of approximately $315 million, net of taxes and transaction costs. Management concluded the assets in AEP OnSite Partners met the accounting requirements to be presented as Held for Sale in the second quarter of 2024 based on the signing the sale agreement. Any changes to the book value or carrying value of these assets, or the anticipated sale price, could further reduce future net income and impact financial condition. In May 2024, AEP ceased recognition of depreciation on the AEP OnSite Partners assets due to their classification as Held for Sale on the balance sheets. The major classes of the assets and liabilities presented in Assets Held for Sale and Liabilities Held for Sale on the balance sheets of AEP are shown in the following table:
|  | June 30, 2024 |  |
|  | (in millions) |  |
ASSETS |  |  |  |
Property, Plant and Equipment, Net |  | $ | 309.2 |  |  |
Other Classes of Assets that are not Major |  | 54.4 |  |  |
Total Major Classes of Assets Held for Sale |  | 363.6 |  |  |
Loss on the Expected Sale of AEP OnSite Partners (net of $2.8 million of Income Tax Benefit) |  | (10.4) |  |  |
Assets Held for Sale |  | $ | 353.2 |  |  |
LIABILITIES |  |  |  |
Other Classes of Liabilities that are not Major |  | $ | 12.5 |  |  |
Liabilities Held for Sale |  | $ | 12.5 |  |  |
DISPOSITIONS Disposition of the Competitive Contracted Renewables Portfolio (Generation & Marketing Segment) (Applies to AEP) In February 2022, AEP management announced the initiation of a process to sell all or a portion of AEP Renewables’ competitive contracted renewables portfolio (the portfolio) within the Generation & Marketing segment. In late January 2023, AEP received final bids from interested parties. In February 2023, AEP’s Board of Directors approved management’s plan to sell the portfolio and AEP signed an agreement with a nonaffiliated party. AEP recorded a pretax loss of $112 million ($88 million after-tax) in the first quarter of 2023 as a result of reaching Held for Sale status and determining the carrying value of the portfolio exceeded the estimated fair value. In August 2023, AEP completed the sale of the entire portfolio to the nonaffiliated party and received cash proceeds of approximately $1.2 billion, net of taxes and transaction costs. Disposition of NMRD (Generation & Marketing Segment) (Applies to AEP) In December 2023, AEP and the joint owner signed an agreement to sell NMRD to a nonaffiliated third party and the sale was completed in February 2024. AEP received cash proceeds of approximately $107 million, net of taxes and transaction costs. The transaction did not have a material impact on net income or financial condition.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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