AMERICAN ELECTRIC POWER CO INC

Earnings Attributable to SWEPCo Common Shareholder

(a)Includes firm wholesale sales to municipals and cooperatives.

The major components of the decrease in Revenues were as follows:

•Retail Revenues decreased $173 million primarily due to the following:

•A $148 million decrease due to a revenue refund associated with the Turk Plant and SWEPCo’s 2012 Texas Base Rate Case.

•An $82 million decrease in fuel revenues.

•A $25 million increase in rider revenues.

•A $15 million increase in weather-related usage primarily due to a 7% increase in heating degree days.

•Transmission Revenues increased $20 million primarily due to the following:

•A $13 million increase due to a FERC order which denied stand-alone treatment of NOLCs in transmission formula rates.

•A $12 million increase in transmission investment.

•A $5 million decrease due to a reversal of a prior period provision for refund in 2023.

•Purchased Electricity, Fuel and Other Consumables Used for Electric Generation expenses decreased $74 million primarily due to a current year decrease in amortization of under-recovered fuel regulatory assets.

•Other Operation and Maintenance expenses increased $52 million primarily due to the following:

•An $18 million increase in transmission expenses primarily due to an increase in SPP expenses.

•A $17 million increase in employee-related expenses due to the voluntary severance program that occurred in the second quarter of 2024.

•A $14 million increase due to a disallowance recorded on the remaining net book value of the Dolet Hills Power Station as a result of an LPSC approved settlement agreement in April 2024.

•A $6 million increase due to the prior year capitalization of previously expensed renewable generation pre-construction charges.

•Asset Impairments and Other Related Charges decreased $86 million due to the probable disallowance of Turk Plant capitalized AFUDC in excess of the Texas jurisdictional capital cost cap as a result of the PUCT’s December 2023 preliminary order in the 2012 Texas Base Rate Case.

•Depreciation and Amortization expenses increased $47 million primarily due to an increase in amortization of regulatory assets and a higher depreciable base, partially offset by the recognition of a regulatory asset related to NOLCs.

•Taxes Other Than Income Taxes decreased $10 million primarily due to a decrease in property taxes.

•Non-Service Cost Components of Net Periodic Benefit Cost increased $13 million primarily due to a plan remeasurement triggered by settlements related to the voluntary severance program.

•Interest Expense decreased $42 million primarily due to the recognition of debt carrying charges as a result of the IRS PLR received regarding the treatment of stand-alone NOLCs in retail rate making.

•Income Tax Benefit increased $151 million primarily due to the following:

•A $109 million increase due to a reduction in Excess ADIT regulatory liabilities as a result of the IRS PLR received regarding the treatment of stand-alone NOLCs in retail rate making.

•A $32 million increase due to the reversal of a regulatory liability related to the merchant portion of Turk Plant Excess ADIT as a result of the APSC's March 2024 denial of SWEPCo's request to allow the merchant portion of the Turk Plant to serve Arkansas customers.

Southwestern Electric Power Company

We have audited the accompanying consolidated balance sheets of Southwestern Electric Power Company and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

As described in Notes 1 and 5 to the consolidated financial statements, the Company's consolidated financial statements reflect the actions of regulators that result in the recognition of certain revenues and expenses in different time periods than enterprises that are not rate-regulated. Regulatory assets (deferred expenses to be recovered in the future) and regulatory liabilities (deferred future revenue reductions or refunds) are recorded to reflect the economic effects of regulation in the same accounting period by matching expenses with their recovery through regulated revenues and matching income with its passage to customers in cost-based regulated rates. As of December 31, 2024, there were $1,028 million of deferred costs included in regulatory assets, $454 million of which were pending final regulatory approval, and $632 million of regulatory liabilities awaiting potential refund or future rate reduction, $7 million of which were pending final regulatory determination. Management reviews the probability of recovery of regulatory assets and refund of regulatory liabilities at each balance sheet date and whenever new events occur, such as changes in the regulatory environment, issuance of regulatory commission orders, or passage of new legislation.

The principal considerations for our determination that performing procedures relating to the accounting for the effects of cost-based regulation is a critical audit matter are (i) the significant judgment by management in assessing probability of the recovery of regulatory assets and refund of regulatory liabilities and (ii) a high degree of auditor judgment, subjectivity, and

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's evaluation of new events, such as changes in the regulatory environment, issuance of regulatory commission orders, or passage of new legislation, including controls over the probability of recovery of regulatory assets and refund of regulatory liabilities. These procedures also included, among others (i) evaluating the reasonableness of management's assessment of probability of future recovery for regulatory assets and refund of regulatory liabilities; (ii) testing, on a sample basis, the regulatory assets and liabilities, including those subject to pending rate cases and regulatory proceedings, by considering (a) the provisions and formulas outlined in rate orders; (b) other regulatory correspondence; and (c) application of relevant regulatory precedents.

As described in Notes 1 and 6 to the consolidated financial statements, in April 2024, the Federal EPA finalized revisions to the CCR Rule to expand the scope of the rule to include inactive impoundments at inactive facilities (“legacy CCR surface impoundments”) as well as to establish requirements for currently exempt solid waste management units that involve the direct placement of CCR on the land (“CCR management units”). The Federal EPA is requiring that owners and operators of legacy surface impoundments comply with all of the existing CCR Rule requirements applicable to inactive CCR surface impoundments at active facilities, except for the location restrictions and liner design criteria. Management evaluated the applicability of the rule to current and former plant sites and recorded incremental asset retirement obligations (AROs) based on initial cost estimates primarily reflecting compliance with the rule through closure in place and future groundwater monitoring requirements pursuant to the revised CCR Rule. As disclosed by management, accounting for the incremental ARO arising from the revised CCR Rule requires significant judgment by management due to the significant measurement uncertainty in estimating the incremental liability. As further groundwater monitoring and other analysis is performed, management expects to refine the assumptions and underlying cost estimates used in recording the incremental ARO arising from the revised CCR Rule. The estimated liability can significantly change if there are changes in the impacted coal ash site acreage inputs or if refinements in the assumptions over the remediation costs for legacy CCR surface impoundments and CCR management units, including assumptions over future groundwater monitoring requirements vary from the initial estimates. As a result of the rule, the Company recorded an incremental ARO of $24 million in the second quarter of 2024.

The principal considerations for our determination that performing procedures relating to the incremental ARO arising from the revised CCR Rule is a critical audit matter are (i) the significant judgment by management when developing the estimate of the incremental ARO; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the impacted coal ash site acreage and management’s assumptions over the remediation costs for legacy CCR surface impoundments and CCR management units, including assumptions over future groundwater monitoring requirements (collectively “management’s assumptions”); and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of the incremental ARO arising from the revised CCR Rule, including controls over the impacted coal ash site acreage and management’s assumptions used in the estimate of the incremental ARO. These procedures also included, among others, (i) testing the completeness and accuracy of data used, including the impacted coal ash site acreage, in the estimate of the incremental ARO; (ii) testing management’s process for determining estimate of the incremental ARO, and (iii) the involvement of professionals with specialized skill and knowledge to assist in (a) assessing the adequacy of the cost assessment of the incremental ARO in accordance with the remediation requirements outlined in the Federal EPA’s revised CCR rule, (b) evaluating the reasonableness of management’s process over measuring coal ash site acreage and (c) evaluating the reasonableness of management’s assumptions used in the estimate.

The management of Southwestern Electric Power Company Consolidated (SWEPCo) is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. SWEPCo’s internal control is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of SWEPCo’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on management’s assessment, management concluded SWEPCo’s internal control over financial reporting was effective as of December 31, 2024.

This annual report does not include an audit report from PricewaterhouseCoopers LLP, SWEPCo’s registered public accounting firm regarding internal control over financial reporting pursuant to the Securities and Exchange Commission rules that permit SWEPCo to provide only management’s report in this annual report.