Proposed Settlement Terms A-OK for AEP - SPP Transmission Rider to Cut OK Lag

Research evidence excerpt

Proposed Settlement Terms A-OK for AEP - SPP Transmission Rider to Cut OK Lag

June 29, 2026 | 19:21 ET~

American Electric Power

AEP-NYSE Rating Price: Jun-29 Target Total Rtn Utilities, Power & Renewables

Market Perform $137.97 $141.00 5%

James M. Thalacker Analyst

james.thalacker@bmo.com (347) 668-8970

Edward M DeArias, CFA VP Associate

Proposed Settlement Terms A-OK for AEP - SPP edward.dearias@bmo.com (347) 274-1556

Holly Rohlfs Senior AssociateTransmission Rider to Cut OK Lag

holly.rohlfs@bmo.com (332) 274-9870

Bottom Line: Ethan Corcoran Senior Associate

AEP subsidiary Public Service Company of Oklahoma (PSO) filed a non-unanimous ethan.corcoran@bmo.com (347) 839-1752

joint stipulation and settlement agreement on Friday, with both PUD and the Legal Entity: BMO Capital Markets Corp.

Attorney General's office participating. The agreement provides a $72.7mm revenue

2YR Price Volume Chart

requirement ($148.7mm including DTLs) vs. the company's ~$299mm request, a 9.375% 150

ROE (effectively in-between Staff's 8.30% recommendation and PSO's 10.50% request), 140

and the company's requested 49.85% equity layer (versus the currently authorized 120

51.12%). Importantly, the agreement approves their SPP Transmission Cost Rider 110 30

(SPPTC), which should meaningfully reduce ongoing regulatory lag (+ to ROE/cash 100 20

flow). Remain Market Perform. 90 10

80 0

Dec Jun Dec Jun

Key Points LHS: Price ($) / RHS: Volume (mm) Source: FactSet

Company Data in $

While the headline ROE reduction and lower revenue requirement presented

Dividend $3.80 Shares O/S (mm) 544.1

in the settlement were below our expectations, the reduction in regulatory lag

from the SPPTC and timing element of the DTL offset produce a constructive Yield 2.8% Market Cap (mm) $75,071

outcome, in our view.