Business Performance

Looking To 2013 and Beyond

Comparison Of Five Year

Our projected operating earnings range is $3.05 to $3.25 per share for 2013 and $3.15 to $3.45 per share for 2014. We expect that success in the regulatory arena, continued cost control and increased earnings contributions from Transmission operations will help offset the continued effects of customer switching in Ohio and other increased expenses.

Electricity sales are expected to grow 0.5 percent in 2013, driven by projected industrial growth of 1.8 percent. In Ohio, West Virginia, Oklahoma and Texas, we anticipate increases related to shale gas development and oil and gas production. Residential load is forecasted to fall 0.4 percent from 2012 levels with commercial load expected to decline 0.1 percent.

AEP Operating Company

Growing the dividend for our shareholders remains a priority. In fact, our Board of Directors is targeting a dividend payout ratio (annual dividend divided by operating earnings per share) of 60 percent to 70 percent of earnings, an increase from the previous 50 percent to 60 percent target. The dividend is supported by our regulated operations. AEP has paid a dividend for 411 consecutive quarters, a feat only a handful of companies can claim. Coupled with the increase in the payout ratio, this further indicates the Board of Directors’ commitment to our regulated business model and to rewarding AEP’s shareholders.

Our capital plan calls for investments of $3.6 billion in 2013 and an estimated $3.8 billion in both 2014 and 2015, supported by cash flows from operations and financing activities. Equity financing beyond the existing Dividend Reinvestment Plan and employee purchases of company stock through 401(k) plans is not anticipated.

Capital allocation is a subject AEP’s management takes very seriously. The executive management team works year-round with our operating company presidents and business unit leaders to focus on getting capital to work where customers want it, where regulators support it and where we have attractive returns and reduced lag in cost recovery. Based on the above criteria, we are moving capital dollars into transmission, nuclear and the regulated environmental component of generation, and this capital investment underpins our earnings growth forecast.

AEP Energy Sales

Operating Earnings

AEP Capital Investments

AEP was named to the Target Rock Advisors 2013 Sustainable Utility Leaders Index (SULI), which is a stock index for guiding sustainable and socially responsible investment decisions. The Index also recognizes the work of utilities that have excelled at socially responsible corporate citizenship. AEP was one of 24 utilities named to the SULI.

AEP was named one of the 50 most advanced companies in the U.S. for our performance in corporate responsibility in the new NYSE Euronext Vigeo index. NYSE Euronext (NYX), the world’s largest exchange group, and Vigeo, a European expert in assessing responsible performance, teamed up to promote and support responsible investment through a range of SRI indices. Launched in July 2013, the index distinguishes companies achieving the most advanced Environmental, Social and Governance performance.

Closing Bell at the NYSE

AEP CEO Nick Akins was among a group of executives to ring the closing bell at the NYSE at the close of 2012 COMMIT!Forum in New York City.

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