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VARIABLE INTEREST ENTITIES | 6 Months Ended
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Jun. 30, 2025
Equity Method Investments and Joint Ventures [Abstract] |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES The disclosures in this note apply to AEP unless indicated otherwise. The accounting guidance for “Variable Interest Entities” is a consolidation model that considers if a company has a variable interest in a VIE. A VIE is a legal entity that possesses any of the following conditions: the entity’s equity at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, equity owners are unable to direct the activities that most significantly impact the legal entity’s economic performance (or they possess disproportionate voting rights in relation to the economic interest in the legal entity), or the equity owners lack the obligation to absorb the legal entity’s expected losses or the right to receive the legal entity’s expected residual returns. Entities are required to consolidate a VIE when it is determined that they have a controlling financial interest in a VIE and therefore, are the primary beneficiary of that VIE, as defined by the accounting guidance for “Variable Interest Entities.” In determining whether AEP is the primary beneficiary of a VIE, management considers whether AEP has the power to direct the most significant activities of the VIE and is obligated to absorb losses or receive the expected residual returns that are significant to the VIE. Management believes that significant assumptions and judgments were applied consistently. AEP holds ownership interests in businesses with varying ownership structures. Partnership interests and other variable interests are evaluated to determine if each entity is a VIE, and if so, whether or not the VIE should be consolidated into AEP’s financial statements. AEP has not provided material financial or other support that was not previously contractually required to any of its consolidated VIEs. AEP’s interests in non-consolidated VIEs are accounted for under the equity method of accounting. Consolidated Variable Interest Entities Cost Recovery Funding (Applies to AEP) In June 2025, Cost Recovery Funding was formed for the sole purpose of issuing and servicing securitization bonds related to plant retirement costs, deferred storm costs related to 2020, 2021, 2022 and 2023 major storms, deferred purchased power expenses, under-recovered purchased power rider costs and issuance-related expenses, including KPSC advisor expenses. Management concluded that KPCo is the primary beneficiary of Cost Recovery Funding because KPCo has the power to direct the most significant activities of the VIE and KPCo’s equity interest could potentially be significant. Therefore, KPCo is required to consolidate Cost Recovery Funding. As of June 30, 2025, $9 million of the securitized bonds was included in Long-term Debt Due Within One Year and $459 million was included in Long-term Debt on the balance sheet. Cost Recovery Funding’s securitized assets were $468 million as of June 30, 2025, which was presented separately on the face of the balance sheet. The securitized assets represent the right to impose and collect KPCo recovery charges from KPCo’s customers. The securitization bonds are payable only from and secured by the securitized assets. The bondholders have no recourse to KPCo or any other AEP entity. KPCo acts as the servicer for Cost Recovery Funding’s securitized assets and remits all related amounts collected from customers to Cost Recovery Funding for interest and principal payments on the securitization bonds and related costs. See the tables below for the classification of Cost Recovery Funding’s assets and liabilities on the balance sheet. The 2024 Annual Report includes a detailed discussion of other Registrants’ consolidated VIEs. The balances below represent the assets and liabilities of AEP’s consolidated VIEs. These balances include intercompany transactions that are eliminated upon consolidation.
| June 30, 2025
| Consolidated VIEs
| SWEPCo Sabine |  | I&M DCC Fuel |  |  |  | AEP Texas Restoration Funding |  | APCo Appalachian Consumer Rate Relief Funding |  | SWEPCo Storm Recovery Funding |  | KPCo Cost Recovery Funding |  | AEP Credit |  | Protected Cell of EIS |  | Transource Energy
| (in millions)
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Assets | $ | 3.1 |  |  | $ | 95.0 |  |  |  |  | $ | 18.6 |  |  | $ | 16.0 |  |  | $ | 18.1 |  |  | $ | 3.1 |  |  | $ | 1,235.0 |  |  | $ | 209.9 |  |  | $ | 58.6 |
Net Property, Plant and Equipment | — |  |  | 181.1 |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 621.8 |
Other Noncurrent Assets | 97.1 |  |  | 98.1 |  |  |  |  | 110.6 |  | (a) | 93.7 |  | (b) | 324.7 |  |  | 469.4 |  | (c) | 10.7 |  |  | — |  |  | 7.9 |
Total Assets | $ | 100.2 |  |  | $ | 374.2 |  |  |  |  | $ | 129.2 |  |  | $ | 109.7 |  |  | $ | 342.8 |  |  | $ | 472.5 |  |  | $ | 1,245.7 |  |  | $ | 209.9 |  |  | $ | 688.3 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Liabilities | $ | 16.6 |  |  | $ | 94.8 |  |  |  |  | $ | 30.7 |  |  | $ | 30.8 |  |  | $ | 28.5 |  |  | $ | 10.7 |  |  | $ | 1,179.5 |  |  | $ | 46.6 |  |  | $ | 30.1 |
Noncurrent Liabilities | 83.4 |  |  | 279.4 |  |  |  |  | 97.2 |  |  | 77.0 |  |  | 312.6 |  |  | 459.4 |  |  | 1.0 |  |  | 105.6 |  |  | 333.1 |
Equity | 0.2 |  |  | — |  |  |  |  | 1.3 |  |  | 1.9 |  |  | 1.7 |  |  | 2.4 |  |  | 65.2 |  |  | 57.7 |  |  | 325.1 |
Total Liabilities and Equity | $ | 100.2 |  |  | $ | 374.2 |  |  |  |  | $ | 129.2 |  |  | $ | 109.7 |  |  | $ | 342.8 |  |  | $ | 472.5 |  |  | $ | 1,245.7 |  |  | $ | 209.9 |  |  | $ | 688.3 |
(a)Includes an intercompany item eliminated in consolidation of $5 million. (b)Includes an intercompany item eliminated in consolidation of $1 million. (c)Includes an intercompany item eliminated in consolidation of $16 million.
| December 31, 2024
| Consolidated VIEs
| SWEPCo Sabine |  | I&M DCC Fuel |  |  |  | AEP Texas Restoration Funding |  | APCo Appalachian Consumer Rate Relief Funding |  | SWEPCo Storm Recovery Funding |  | AEP Credit |  | Protected Cell of EIS |  | Transource Energy
| (in millions)
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Assets | $ | 6.0 |  |  | $ | 79.3 |  |  |  |  | $ | 21.3 |  |  | $ | 14.2 |  |  | $ | 3.4 |  |  | $ | 1,118.3 |  |  | $ | 218.5 |  |  | $ | 40.2 |
Net Property, Plant and Equipment | — |  |  | 132.3 |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 598.3 |
Other Noncurrent Assets | 110.8 |  | 63.6 |  |  |  | 121.9 |  | (a) | 109.6 | (b) | 331.4 |  | 10.5 |  |  | — |  |  | 3.5 |
Total Assets | $ | 116.8 |  |  | $ | 275.2 |  |  |  |  | $ | 143.2 |  |  | $ | 123.8 |  |  | $ | 334.8 |  |  | $ | 1,128.8 |  |  | $ | 218.5 |  |  | $ | 642.0 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Liabilities | $ | 20.1 |  |  | $ | 79.2 |  |  |  |  | $ | 30.7 |  |  | $ | 30.5 |  |  | $ | 24.4 |  |  | $ | 1,068.8 |  |  | $ | 54.7 |  |  | $ | 57.2 |
Noncurrent Liabilities | 96.3 |  |  | 196.0 |  |  |  |  | 111.2 |  |  | 91.4 |  | 308.7 |  | 1.0 |  | 96.0 |  |  | 274.3 |
Equity | 0.4 |  | — |  |  |  |  | 1.3 |  | 1.9 |  | 1.7 |  | 59.0 |  |  | 67.8 |  |  | 310.5 |
Total Liabilities and Equity | $ | 116.8 |  |  | $ | 275.2 |  |  |  |  | $ | 143.2 |  |  | $ | 123.8 |  |  | $ | 334.8 |  |  | $ | 1,128.8 |  |  | $ | 218.5 |  |  | $ | 642.0 |
(a)Includes an intercompany item eliminated in consolidation of $5 million. (b)Includes an intercompany item eliminated in consolidation of $1 million. Significant Variable Interests in Non-Consolidated VIEs and Significant Equity Method Investments The 2024 Annual Report includes a detailed discussion of significant variable interests in non-consolidated VIEs and other significant equity method investments.

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/810/tableOfContent + Details
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