Subsequent Events

9 Months Ended

Sep. 30, 2021

SUBSEQUENT EVENTS

The disclosure in this note applies to AEP and AEPTCo.

Disposition of KPCo and KTCo

In October 2021, AEP entered into a Stock Purchase Agreement to sell KPCo and KTCo to Liberty Utilities Co., a subsidiary of Algonquin Power & Utilities Corp. (Liberty), for approximately a $2.85 billion enterprise value. The sale is subject to regulatory approvals from the FERC, the KPSC, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and clearance from the Committee on Foreign Investment in the United States.

KPCo currently operates and owns a 50% interest in the 1,560 MW coal-fired Mitchell Power Plant (Mitchell Plant) with the remaining 50% owned by WPCo. The Stock Purchase Agreement is further contingent upon approval by the KPSC, WVPSC and FERC of a new proposed Mitchell Plant Operations and Maintenance Agreement and Mitchell Plant Ownership Agreement between KPCo and WPCo pursuant to which WPCo will replace KPCo as the operator of the Mitchell Plant and KPCo employees at the Mitchell Plant will become employees of WPCo at closing of the transaction. Under the proposed Ownership Agreement, WPCo is obligated to purchase KPCo’s 50% interest in the Mitchell Plant on December 31, 2028 unless KPCo and WPCo have agreed to retire the Mitchell Plant earlier or, absent such agreement, if WPCo elects prior to December 31, 2027 to retire the Mitchell Plant on December 31, 2028. The Ownership Agreement provides that the purchase price for KPCo’s 50% ownership interest in the Mitchell Plant will be determined through the mutual agreement of WPCo and KPCo (subject to approval from the KPSC and WVPSC) or through a fair market valuation determination conducted by independent appraisals if KPCo and WPCo are unable to reach agreement as to the purchase price.

The sale is expected to close in the second quarter of 2022 with Liberty acquiring the assets and assuming the liabilities of KPCo and KTCo, excluding pension and other post-retirement benefit plan assets and liabilities. AEP expects to provide customary transition services to Liberty for a period of time after closing of the transaction.

AEP expects to receive approximately $1.45 billion in cash, net of taxes and transaction fees.

The major classes of KPCo and KTCo’s assets and liabilities as presented on the balance sheets of AEP and AEPTCo as of September 30, 2021 are shown in the table below.


	September 30, 2021
	AEP		AEPTCo
	(in millions)
Assets:
Accounts Receivable and Accrued Unbilled Revenues	$	24.7	$	1.6
Fuel, Materials and Supplies	26.5		—
Property, Plant and Equipment, Net	2,264.6		164.5
Regulatory Assets	501.7		—
Other Classes of Assets that are not Major	43.8		0.3
Total Assets	$	2,861.3	$	166.4

Liabilities:
Accounts Payable	$	51.2	$	1.5
Long-term Debt Due Within One Year	125.0		—
Customer Deposits	31.9		—
Deferred Income Taxes	448.3		14.9
Long-term Debt	978.0		—
Regulatory Liabilities and Deferred Investment Tax Credits	146.5		7.5
Other Classes of Liabilities that are not Major	93.2		4.2
Total Liabilities	$	1,874.1	$	28.1