AMERICAN ELECTRIC POWER CO INC (AEP)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

AEP CONSOLIDATED RESULTS OF OPERATIONS

Second Quarter of 2026 Compared to Second Quarter of 2025

Earnings Attributable to AEP Common Shareholders decreased from $1.2 billion in 2025 to $713 million in 2026 primarily due to:

•The favorable $480 million impact from the receipt of the June 2025 FERC NOLC order related to the treatment of NOLCs in transmission formula rates.

•A decrease in sales volumes in the residential class driven by favorable weather in 2025.

These decreases were partially offset by:

•Investment in transmission assets, which resulted in higher revenues and income.

•An increase due to rate proceedings in AEP’s various jurisdictions.

•Favorable mark-to-market economic hedging activity.

•An increase in sales volume driven primarily by new data processing load added in the commercial and industrial customer classes.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Earnings Attributable to AEP Common Shareholders decreased from $2 billion in 2025 to $1.6 billion in 2026 primarily due to:

•The favorable $480 million impact from the receipt of the June 2025 FERC NOLC order related to the treatment of NOLCs in transmission formula rates.

•Unfavorable mark-to-market economic hedging activity.

•A decrease in sales volumes in the residential class driven by favorable weather in 2025.

•A decrease due to a probable, partial disallowance of the Pirkey Plant net book value in the SWEPCo 2025 Texas Base Rate Case.

These decreases were partially offset by:

•Investment in transmission assets, which resulted in higher revenues and income.

•An increase due to rate proceedings in AEP’s various jurisdictions.

•An increase in sales volume driven primarily by new data processing load added in the commercial and industrial customer classes.

•A gain from the sale of a non-utility investment in land at APCo.

See Results of Operations section for additional information by segment.

1

Non-GAAP Financial Measures

AEP reports its financial results in accordance with GAAP. AEP supplements its reporting of financial information with certain non-GAAP financial measures, such as operating earnings. The most comparable GAAP measure to operating earnings is GAAP earnings. Operating earnings, which could differ from earnings reported in accordance with GAAP, exclude certain gains and losses and other specified items, including mark-to-market adjustments from commodity hedging activities and other items as set forth in the reconciliation below, that management believes are not indicative of AEP’s ongoing performance.

This information is intended to enhance an investor’s overall understanding of period over period financial results and provide an indication of AEP’s baseline operating performance by excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. These non-GAAP financial measures are not a presentation defined under GAAP and may not be comparable to other companies’ presentations. These non-GAAP measures should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP measures.

Reconciliation of GAAP Earnings to Operating Earnings

The following tables present a reconciliation of operating earnings to the most directly comparable GAAP measure.

(a)Represents the earnings (loss) attributable to common shareholders or AEP member, or net income (loss) for registrants with no noncontrolling interest.

(b)Represents the mark‑to‑market impact of economic hedging activities which are excluded to align with the recognition of the underlying hedged exposures.

(c)Represents the estimated impact of the probable, partial disallowance of costs included in AEP Texas’ UTM filing.

(d)Represents probable liability related to SWEPCo’s agreements with certain existing wholesale customers and current discussions with one remaining existing wholesale customer under generation supply contracts, which is expected to result in credits to these wholesale customers.

(e)Tax effect is calculated using the statutory tax rate unless otherwise noted.

(a)Represents the earnings (loss) attributable to common shareholders or AEP member, or net income (loss) for registrants with no noncontrolling interest.

(b)Excluding tax related adjustments, all items presented in the table are tax adjusted at the statutory rate unless otherwise noted.

(c)Represents the mark‑to‑market impact of economic hedging activities which are excluded to align with the recognition of the underlying hedged exposures.

(d)Represents the impact of the FERC NOLC Order for years 2021-2024.

2

(a)Represents the earnings (loss) attributable to common shareholders or AEP member, or net income (loss) for registrants with no noncontrolling interest.

(b)Represents the mark‑to‑market impact of economic hedging activities which are excluded to align with the recognition of the underlying hedged exposures.

(c)Represents the impact of the WVPSC order related to the 2024 Modified Rate Base Cost surcharge update filing.

(d)Represents the estimated impact of the probable, partial disallowance of the Pirkey Plant net book value in the 2025 Texas Base Rate Case.

(e)Represents the estimated impact of the probable, partial disallowance of costs included in AEP Texas’ UTM filing.

(f)Represents probable liability related to SWEPCo’s agreements with certain existing wholesale customers and current discussions with one remaining existing wholesale customer under generation supply contracts, which is expected to result in credits to these wholesale customers.

(g)Tax effect is calculated using the statutory tax rate unless otherwise noted.

(a)Represents the earnings (loss) attributable to common shareholders or AEP member, or net income (loss) for registrants with no noncontrolling interest.

(b)Excluding tax related adjustments, all items presented in the table are tax adjusted at the statutory rate unless otherwise noted.

(c)Represents the mark‑to‑market impact of economic hedging activities which are excluded to align with the recognition of the underlying hedged exposures.

(d)Represents an adjustment to the estimated loss on the sale of AEP OnSite Partners as a result of the contractual working capital true-up.

(e)Represents the reduction in regulatory assets for OVEC-related purchased power costs as a result of approved legislation in Ohio.

(f)Represents the impact of the FERC NOLC Order for years 2021-2024.

3

ELECTRIC INDUSTRY TRANSFORMATION

The electric utility

[Excerpt truncated for page length; source filing is linked above.]

RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

Company Overview

AEP is one of the largest investor-owned electric public utility holding companies in the United States.  AEP’s electric utility operating companies provide generation, transmission and distribution services to more than five million retail customers in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.

AEP’s subsidiaries operate an extensive portfolio of assets including:

•Approximately 252,000 circuit miles of distribution lines.

•Approximately 38,000 circuit miles of transmission lines, including approximately 2,000 circuit miles of 765 kV lines.

•Approximately 25,000 MWs of regulated owned generating capacity as of December 31, 2025.

AEP is committed to executing its strategy to improve customers’ lives with reliable, affordable power. AEP’s mission is to put the customer first and is focused on six core principles:

•Customer Service - Industry-best customer experience.

•Employee Commitment - Safe and secure workplace; engaged, trained and developed employees.

•Environmental Respect - Creative sustainable energy solutions.

•Regulatory & Legislative Integrity - Balanced regulatory outcomes; Trusted industry leadership.

•Operational Excellence - World-class asset performance.

•Financial Strength - Strong financial discipline.

42

AEP CONSOLIDATED RESULTS OF OPERATIONS

2025 Compared to 2024

Earnings Attributable to AEP Common Shareholders increased from $3.0 billion in 2024 to $3.6 billion in 2025 primarily due to:

•Investment in transmission assets, which resulted in higher revenues and income.

•The favorable impact from the receipt of the June 2025 FERC order related to the treatment of NOLCs in transmission formula rates.

•A revenue refund provision recorded in 2024 associated with the Turk Plant and SWEPCo’s 2012 Texas Base Rate Case.

•A decrease in operating expense due to the Federal EPA’s revised CCR rule which resulted in higher operating expenses in 2024.

•A decrease in operating expenses due to the voluntary severance program that occurred in the second quarter of 2024.

•An increase in sales volumes driven by favorable weather.

•Favorable rate proceedings in AEP’s various jurisdictions.

These increases were partially offset by:

•The favorable impact from the receipt of PLRs in 2024 related to the treatment of NOLCs in retail ratemaking. See “NOLCs in Retail Jurisdictions - IRS PLRs” section below for additional information.

•An increase in operating expenses recorded in 2025 due to an impairment of in-process internal use software development costs.

See “Results of Operations” section for additional information by operating segment.

43

Non-GAAP Financial Measures

AEP reports its financial results in accordance with GAAP by using earnings (loss) attributable to AEP common shareholders as stated above. AEP supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures including operating earnings. Operating earnings, which could differ from GAAP earnings, exclude certain gains and losses and other specified items, including mark-to-market adjustments from commodity hedging activities and other items as set forth in the reconciliation below. Management believes these items are not indicative of AEP's ongoing performance.

This information is intended to enhance an investor’s overall understanding of period over period financial results and provide an indication of AEP’s baseline operating performance by excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. These non-GAAP financial measures are not a presentation defined under GAAP and may not be comparable to other companies’ presentations.

Reconciliation of Reported GAAP Earnings to Operating Earnings

The following table presents a reconciliation of operating earnings to the most directly comparable GAAP measure.

(a)    Excluding tax related adjustments, all items presented in the table are tax adjusted at the statutory rate unless otherwise noted.

(b)    Represents the impact of mark-to-market economic hedging activities.

(c)    Represents an adjustment to the estimated loss on the sale of AEP OnSite Partners as a result of the contractual working capital true-up.

(d)    Represents the reduction in regulatory assets for OVEC-related purchased power costs as a result of approved legislation in Ohio in April 2025.

(e)    Represents the impact of the FERC NOLC Order for years 2021-2024.

(f) Represents an impairment of in-process internal use software development costs.

44

(a)Excluding tax related adjustments, all items presented in the table are tax adjusted at the statutory rate unless otherwise noted.

(b)Represents the impact of mark-to-market economic hedging activities.

(c)Represents the impact of the remeasurement of Excess ADIT in Arkansas and Michigan as a result of the denial of SWEPCo's request regarding the Turk Plant by the APSC and the approved treatment of stand-alone NOLCs by the MPSC.

(d)Represents the impact of receiving IRS PLRs related to NOLCs in retail ratemaking on I&M, PSO and SWEPCo. Amount includes a reduction in Excess ADIT and activity related to prior periods.

(e)Represents the impact of a disallowance recorded at SWEPCo on the remaining net book value of the Dolet Hills Power Station as a result of an LPSC approved settlement agreement in April 2024.

(f)Represents a provision for revenue refunds on certain capitalized costs associated with the Turk Plant.

(g)Represents the loss on the sale of AEP OnSite Partners.

(h)Represents employee severance charges and pension settlement expenses.

(i)Represents the impact of the Federal EPA Revised CCR Rule.

(j)Represents an estimated loss contingency related to a previously disclosed SEC investigation.

(k)Represents the impact of the remeasurement of ADIT as a result of enacted state tax legislation in Arkansas and Louisiana.

45

(a)Excluding tax relate

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]