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SIGNIFICANT ACCOUNTING MATTERS | 9 Months Ended
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Sep. 30, 2025
Accounting Policies [Abstract] |
SIGNIFICANT ACCOUNTING MATTERS | SIGNIFICANT ACCOUNTING MATTERS The disclosures in this note apply to all Registrants unless indicated otherwise. General The unaudited condensed financial statements and footnotes were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the unaudited condensed interim financial statements reflect all normal and recurring accruals and adjustments necessary for a fair statement of the net income, financial position and cash flows for the interim periods for each Registrant. Net income for the three and nine months ended September 30, 2025 is not necessarily indicative of results that may be expected for the year ending December 31, 2025. The condensed financial statements are unaudited and should be read in conjunction with the audited 2024 financial statements and notes thereto, which are included in the 2024 Annual Reports. Earnings Per Share (EPS) (Applies to AEP) Basic EPS is calculated by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted-average outstanding common shares, assuming conversion of all potentially dilutive securities. Dilutive securities are primarily related to forward sale of equity agreements and restricted stock units. See Note 13 - Financing Activities for more information regarding the forward sale of equity agreements. The following table presents AEP’s basic and diluted EPS calculations included on the statements of income:
| Three Months Ended September 30,
| 2025 |  | 2024
| (in millions, except per share data)
|  |  | $/share |  |  |  | $/share
Earnings Attributable to AEP Common Shareholders | $ | 972.0 |  |  |  |  | $ | 959.6 |  |  |
Weighted-Average Number of Basic AEP Common Shares Outstanding | 534.9 |  |  | $ | 1.82 |  |  | 532.2 |  |  | $ | 1.80 |
Weighted-Average Dilutive Effect | 3.1 |  |  | (0.01) |  |  | 1.4 |  |  | — |
Weighted-Average Number of Diluted AEP Common Shares Outstanding | 538.0 |  |  | $ | 1.81 |  |  | 533.6 |  |  | $ | 1.80 |
| Nine Months Ended September 30,
| 2025 |  | 2024
| (in millions, except per share data)
|  |  | $/share |  |  |  | $/share
Earnings Attributable to AEP Common Shareholders | $ | 2,998.0 |  |  |  |  | $ | 2,303.0 |  |  |
Weighted-Average Number of Basic AEP Common Shares Outstanding | 534.2 |  |  | $ | 5.61 |  |  | 529.2 |  |  | $ | 4.35 |
Weighted-Average Dilutive Effect | 2.2 |  |  | (0.02) |  |  | 1.3 |  |  | (0.01) |
Weighted-Average Number of Diluted AEP Common Shares Outstanding | 536.4 |  |  | $ | 5.59 |  |  | 530.5 |  |  | $ | 4.34 |
There were no antidilutive shares outstanding as of September 30, 2025 and 2024. Restricted Cash (Applies to AEP, AEP Texas, APCo and SWEPCo) Restricted Cash primarily includes funds held by trustees for the payment of securitization bonds. Reconciliation of Cash, Cash Equivalents and Restricted Cash The following tables provide a reconciliation of Cash, Cash Equivalents and Restricted Cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows:
|  | September 30, 2025
|  | AEP |  | AEP Texas |  | APCo |  | SWEPCo
|  | (in millions)
Cash and Cash Equivalents |  | $ | 1,067.7 |  |  | $ | 0.1 |  |  | $ | 3.9 |  |  | $ | 2.7 |
Restricted Cash |  | 39.1 |  |  | 7.3 |  |  | 10.8 |  |  | 7.8 |
Total Cash, Cash Equivalents and Restricted Cash |  | $ | 1,106.8 |  |  | $ | 7.4 |  |  | $ | 14.7 |  |  | $ | 10.5 |
|  | December 31, 2024
|  | AEP |  | AEP Texas |  | APCo |  | SWEPCo
|  | (in millions)
Cash and Cash Equivalents |  | $ | 202.9 |  |  | $ | 0.1 |  |  | $ | 3.9 |  |  | $ | 1.2 |
Restricted Cash |  | 43.1 |  |  | 23.5 |  |  | 16.2 |  |  | 3.4 |
Total Cash, Cash Equivalents and Restricted Cash |  | $ | 246.0 |  |  | $ | 23.6 |  |  | $ | 20.1 |  |  | $ | 4.6 |
Supplementary Cash Flow Information (Applies to AEP)
|  | Nine Months Ended September 30,
Cash Flow Information |  | 2025 |  | 2024
|  | (in millions)
Cash Paid (Received) for: |  |  |  |
Interest, Net of Capitalized Amounts |  | $ | 1,315.1 |  |  | $ | 1,247.3 |
Income Taxes, Net |  | 60.1 |  |  | 87.9 |
Sale of Transferable Tax Credits |  | (102.2) |  |  | (163.7) |
Noncash Investing and Financing Activities: |  |  |  |
Acquisitions Under Finance Leases |  | 30.0 |  |  | 24.5 |
Construction Expenditures Included in Current Liabilities as of September 30, |  | 1,168.8 |  |  | 1,015.1 |
Acquisition of Nuclear Fuel Included in Current Liabilities as of September 30, |  | 1.4 |  |  | 8.2 |
NEW ACCOUNTING STANDARDS The disclosures in this note apply to all Registrants unless indicated otherwise. Management reviews the FASB’s standard-setting process and the SEC’s rulemaking activity to determine the relevance, if any, to the Registrants’ business. The following standards/rules will impact the Registrants’ financial statements. SEC Climate Disclosure Rule In March 2024, the SEC adopted final rules that would require registrants to disclose certain climate-related information in registration statements and annual reports. The final rules require registrants to disclose, among other things, material climate-related risks, activities to mitigate such risks and information about a registrant’s board of directors oversight and management’s role in managing material climate-related risks. The final rules also require registrants to provide information related to any climate-related targets or goals that are material to a registrant’s business, results of operations or financial condition. Litigation challenging the new rules was filed by multiple parties in multiple jurisdictions, which have been consolidated and assigned to the U.S. Court of Appeals for the Eighth Circuit. In April 2024, the SEC issued an order staying the final climate disclosure rules pending the completion of judicial review at the Court of Appeals. While a majority of the reporting requirements would be applicable to the fiscal year beginning in 2025, with the addition of assurance reporting for GHG emissions starting in 2029 for large accelerated filers, the SEC subsequently clarified in its briefing that it would address a new effective date for the rules at the conclusion of its stay of the rules. In March 2025, the SEC announced that it voted to end its defense of the final climate disclosure rules. In April 2025, 18 states filed a motion to intervene in the case and to hold the case in abeyance until the SEC takes action to amend or rescind the rules. In July 2025, the SEC filed a status report stating that it does not intend to review or reconsider the rules and asked the Court of Appeals to make a ruling on the case. In September 2025, the Court of Appeals issued an order holding the case in abeyance until the SEC either formally defends the rules or initiates a new rulemaking process for reconsideration. The Registrants are currently evaluating the status of the rules and the impact of the final rules on their respective consolidated financial statements and related disclosures. ASU 2023-07 “Improvements to Reportable Segment Disclosures” (ASU 2023-07) In November 2023, the FASB issued ASU 2023-07, to address investors’ observations that there is limited information disclosed about segment expenses and to better understand expense categories and amounts included in segment profit or loss. The new standard requires annual and interim disclosure of (a) the categories and amounts of significant segment expenses (determined by management using both qualitative and quantitative factors) that are regularly provided to the CODM and included within each reported measure of segment profit or loss, (b) the amounts and a qualitative description of “other segment items”, defined as the difference between reported segment revenues less the significant segment expenses and each reported measure of segment profit or loss disclosed, (c) reportable segment profit or loss and assets that are currently only required annually, (d) the CODM’s title and position, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources and (e) a requirement that entities with a single reportable segment provide all disclosures required by ASU 2023-07 and all existing segment disclosures in Topic 280. Additionally, this new standard allows disclosure of one or more additional profit or loss measures if the CODM uses more than one measure provided that at least one of the disclosed measures is determined in a manner “most consistent with the measurement principles under GAAP”. If multiple measures are presented, additional disclosure is required about how the CODM uses each measure to assess performance and decide how to allocate resources. Management adopted ASU 2023-07 and its related implementation guidance effective January 1, 2024 for the annual reporting period and applied the amendments retrospectively to all prior periods presented in the annual consolidated financial statements. The amendments for interim periods were adopted in the fiscal year beginning on January 1, 2025. The adoption of the new standard did not impact the results of operations, statements of financial position or cash flows. See Note 8 - Business Segments for additional information. ASU 2023-09 “Improvements to Income Tax Disclosures” (ASU 2023-09) In December 2023, the FASB issued ASU 2023-09, to address investors’ suggested enhancements to (a) better understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (b) assess income tax information that affects cash flow forecasts and capital allocation decisions and (c) identify potential opportunities to increase future cash flows. The new standard requires an annual rate reconciliation disclosure of the following categories regardless of materiality: state and local income tax, net of federal income tax effect, foreign tax effects, effect of changes in tax laws or rates enacted in the current period, effect of cross-border tax laws, tax credits, changes in valuation allowances, nontaxable or nondeductible items and changes in unrecognized tax benefits. The new standard also requires an annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes and by individual jurisdictions that are equal to or greater than 5 percent of total income taxes paid. Disclosure of income (loss) from continuing operations before income tax expense (benefit) disaggregated between domestic and foreign jurisdictions and income tax expense (benefit) from continuing operations disaggregated by federal, state and foreign jurisdictions is required. The new standard removes the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. The amendments in the new standard may be applied on either a prospective or retrospective basis for public business entities for fiscal years beginning after December 15, 2024 with early adoption permitted. Management will adopt the amendments to this standard prospectively beginning with the Annual Report on Form 10-K for the fiscal year ending December 31, 2025. ASU 2024-03 “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures” (ASU 2024-03) In November 2024, the FASB issued ASU 2024-03, the intent of which is to improve financial reporting and respond to investor input by requiring public business entities to disclose additional information about certain expenses in the notes to financial statements in interim and annual reporting periods. Among other provisions, the new standard requires disclosure of disaggregated amounts for expenses such as employee compensation, depreciation, and intangible asset amortization included in each expense caption presented on the face of the income statement. Public business entities are required to include certain amounts that are already required to be disclosed under GAAP in the same disclosure as the other disaggregation requirements as well as a qualitative description of any amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The new standard also requires disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. The amendments in the new standard are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments in the new standard should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. Management is evaluating the new standard and has not yet determined when, or the method by which, the Registrants will adopt its amendments. ASU 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software” (ASU 2025-06) In September 2025, the FASB issued ASU 2025-06, the intent of which is to modernize the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met for the commencement of capitalization of eligible costs. The amendments in the new standard may be applied on either a retrospective, prospective or modified prospective basis for public business entities for fiscal years beginning after December 15, 2027 with early adoption permitted. Management is evaluating the new standard and has not yet determined when, or the method by which, the Registrants will adopt its amendments.

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