AMERICAN ELECTRIC POWER CO INCAEP
AMERICAN ELECTRIC POWER CO INC Fair Value Disclosure
FAIR VALUE MEASUREMENTS
The disclosures in this note apply to all Registrants except AEPTCo unless indicated otherwise.
Fair Value Measurements of Long-term Debt (Applies to all Registrants)
The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs. These instruments are not marked-to-market. The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.
The book values and fair values of Long-term Debt are summarized in the following table:
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Company | Book Value | Fair Value | Book Value | Fair Value | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| AEP | $ | 47,322 | $ | 44,930 | $ | 42,643 | $ | 38,965 | ||||||||||||||||||
| AEP Texas | 7,016 | 6,586 | 6,442 | 5,831 | ||||||||||||||||||||||
| AEPTCo | 6,599 | 5,812 | 5,768 | 4,853 | ||||||||||||||||||||||
| APCo | 6,259 | 6,147 | 5,661 | 5,346 | ||||||||||||||||||||||
| I&M | 3,561 | 3,288 | 3,494 | 3,154 | ||||||||||||||||||||||
| OPCo | 3,718 | 3,331 | 3,716 | 3,203 | ||||||||||||||||||||||
| PSO | 3,526 | 3,349 | 2,856 | 2,562 | ||||||||||||||||||||||
| SWEPCo | 4,974 | 4,603 | 3,981 | 3,432 | ||||||||||||||||||||||
Fair Value Measurements of Other Temporary Investments (Applies to AEP)
Other Temporary Investments include marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS. See “Other Temporary Investments” section of Note 1 for additional information.
The following is a summary of Other Temporary Investments and Restricted Cash:
| December 31, 2025 | ||||||||||||||||||||||||||
| Gross | Gross | |||||||||||||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||||||||||||
| Other Temporary Investments and Restricted Cash | Cost | Gains | Losses | Value | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Restricted Cash (a) | $ | 71 | $ | — | $ | — | $ | 71 | ||||||||||||||||||
| Other Cash Deposits | 13 | — | — | 13 | ||||||||||||||||||||||
| Fixed Income Securities – Mutual Funds (b) | 167 | — | (2) | 165 | ||||||||||||||||||||||
| Equity Securities – Mutual Funds | 13 | 29 | — | 42 | ||||||||||||||||||||||
| Total Other Temporary Investments and Restricted Cash | $ | 264 | $ | 29 | $ | (2) | $ | 291 | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Gross | Gross | |||||||||||||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||||||||||||
| Other Temporary Investments and Restricted Cash | Cost | Gains | Losses | Value | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Restricted Cash (a) | $ | 43 | $ | — | $ | — | $ | 43 | ||||||||||||||||||
| Other Cash Deposits | 13 | — | — | 13 | ||||||||||||||||||||||
| Fixed Income Securities – Mutual Funds (b) | 167 | — | (5) | 162 | ||||||||||||||||||||||
| Equity Securities – Mutual Funds | 13 | 27 | — | 40 | ||||||||||||||||||||||
| Total Other Temporary Investments and Restricted Cash | $ | 236 | $ | 27 | $ | (5) | $ | 258 | ||||||||||||||||||
(a)Primarily represents amounts held for the repayment of debt.
(b)Primarily short and intermediate maturities which may be sold and do not contain maturity dates.
The following table provides the activity for fixed income and equity securities within Other Temporary Investments:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Proceeds from Investment Sales | $ | 26 | $ | 27 | $ | 7 | ||||||||||||||
| Purchases of Investments | 22 | 21 | 19 | |||||||||||||||||
| Gross Realized Gains on Investment Sales | 4 | 6 | 1 | |||||||||||||||||
| Gross Realized Losses on Investment Sales | 1 | 1 | — | |||||||||||||||||
Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)
Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value. See “Nuclear Trust Funds” section of Note 1 for additional information.
The following is a summary of nuclear trust fund investments:
| December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Gross | Gross | Other-Than- | Gross | Gross | Other-Than- | ||||||||||||||||||||||||||||||||||||||||||
| Fair | Unrealized | Unrealized | Temporary | Fair | Unrealized | Unrealized | Temporary | ||||||||||||||||||||||||||||||||||||||||
| Value | Gains | Losses | Impairments | Value | Gains | Losses | Impairments | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 29 | $ | — | $ | — | $ | — | $ | 24 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Fixed Income Securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| United States Government | 1,351 | 22 | (1) | (15) | 1,323 | 8 | (5) | (20) | |||||||||||||||||||||||||||||||||||||||
| Corporate Debt | 376 | 6 | (7) | (6) | 210 | 1 | (10) | (6) | |||||||||||||||||||||||||||||||||||||||
| Subtotal Fixed Income Securities | 1,727 | 28 | (8) | (21) | 1,533 | 9 | (15) | (26) | |||||||||||||||||||||||||||||||||||||||
| Equity Securities - Domestic | 3,160 | 2,621 | (1) | — | 2,838 | 2,289 | — | — | |||||||||||||||||||||||||||||||||||||||
| Spent Nuclear Fuel and Decommissioning Trusts | $ | 4,916 | $ | 2,649 | $ | (9) | $ | (21) | $ | 4,395 | $ | 2,298 | $ | (15) | $ | (26) | |||||||||||||||||||||||||||||||
The following table provides the securities activity within the decommissioning and SNF trusts:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Proceeds from Investment Sales | $ | 2,909 | $ | 2,851 | $ | 2,788 | |||||||||||
| Purchases of Investments | 2,959 | 2,902 | 2,845 | ||||||||||||||
| Gross Realized Gains on Investment Sales | 120 | 126 | 99 | ||||||||||||||
| Gross Realized Losses on Investment Sales | 5 | 12 | 27 | ||||||||||||||
The base cost of fixed income securities was $1.7 billion and $1.5 billion as of December 31, 2025 and 2024, respectively. The base cost of equity securities was $540 million and $549 million as of December 31, 2025 and 2024, respectively.
The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2025 was as follows:
| Fair Value of Fixed | |||||
| Income Securities | |||||
| (in millions) | |||||
| Within 1 year | $ | 402 | |||
| After 1 year through 5 years | 709 | ||||
| After 5 years through 10 years | 223 | ||||
| After 10 years | 393 | ||||
| Total | $ | 1,727 | |||
Fair Value Measurements of Financial Assets and Liabilities
For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.
The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis. As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There have not been any significant changes in management’s valuation techniques.
AEP
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Other Temporary Investments and Restricted Cash | ||||||||||||||||||||||||||||||||
| Restricted Cash | $ | 48 | $ | — | $ | — | $ | 23 | $ | 71 | ||||||||||||||||||||||
| Other Cash Deposits (a) | — | — | — | 13 | 13 | |||||||||||||||||||||||||||
| Fixed Income Securities – Mutual Funds | 165 | — | — | — | 165 | |||||||||||||||||||||||||||
| Equity Securities – Mutual Funds (b) | 42 | — | — | — | 42 | |||||||||||||||||||||||||||
| Total Other Temporary Investments and Restricted Cash | 255 | — | — | 36 | 291 | |||||||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) (d) | 2 | 831 | 393 | (713) | 513 | |||||||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Commodity Hedges (c) | — | 100 | 18 | (14) | 104 | |||||||||||||||||||||||||||
| Total Risk Management Assets | 2 | 931 | 411 | (727) | 617 | |||||||||||||||||||||||||||
| Spent Nuclear Fuel and Decommissioning Trusts | ||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents (e) | 14 | — | — | 15 | 29 | |||||||||||||||||||||||||||
| Fixed Income Securities: | ||||||||||||||||||||||||||||||||
| United States Government | — | 1,351 | — | — | 1,351 | |||||||||||||||||||||||||||
| Corporate Debt | — | 376 | — | — | 376 | |||||||||||||||||||||||||||
| Subtotal Fixed Income Securities | — | 1,727 | — | — | 1,727 | |||||||||||||||||||||||||||
| Equity Securities – Domestic (b) | 3,160 | — | — | — | 3,160 | |||||||||||||||||||||||||||
| Total Spent Nuclear Fuel and Decommissioning Trusts | 3,174 | 1,727 | — | 15 | 4,916 | |||||||||||||||||||||||||||
| Total Assets | $ | 3,431 | $ | 2,658 | $ | 411 | $ | (676) | $ | 5,824 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) (d) | $ | 4 | $ | 752 | $ | 151 | $ | (633) | $ | 274 | ||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Commodity Hedges (c) | — | 19 | 1 | (14) | 6 | |||||||||||||||||||||||||||
| Fair Value Hedges | — | 30 | — | — | 30 | |||||||||||||||||||||||||||
| Total Risk Management Liabilities | $ | 4 | $ | 801 | $ | 152 | $ | (647) | $ | 310 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Other Temporary Investments and Restricted Cash | ||||||||||||||||||||||||||||||||
| Restricted Cash | $ | 43 | $ | — | $ | — | $ | — | $ | 43 | ||||||||||||||||||||||
| Other Cash Deposits (a) | — | — | — | 13 | 13 | |||||||||||||||||||||||||||
| Fixed Income Securities – Mutual Funds | 162 | — | — | — | 162 | |||||||||||||||||||||||||||
| Equity Securities – Mutual Funds (b) | 40 | — | — | — | 40 | |||||||||||||||||||||||||||
| Total Other Temporary Investments and Restricted Cash | 245 | — | — | 13 | 258 | |||||||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) (f) | 3 | 597 | 292 | (518) | 374 | |||||||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Commodity Hedges (c) | — | 116 | 22 | (13) | 125 | |||||||||||||||||||||||||||
| Total Risk Management Assets | 3 | 713 | 314 | (531) | 499 | |||||||||||||||||||||||||||
| Spent Nuclear Fuel and Decommissioning Trusts | ||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents (e) | 10 | — | — | 14 | 24 | |||||||||||||||||||||||||||
| Fixed Income Securities: | ||||||||||||||||||||||||||||||||
| United States Government | — | 1,323 | — | — | 1,323 | |||||||||||||||||||||||||||
| Corporate Debt | — | 210 | — | — | 210 | |||||||||||||||||||||||||||
| Subtotal Fixed Income Securities | — | 1,533 | — | — | 1,533 | |||||||||||||||||||||||||||
| Equity Securities – Domestic (b) | 2,838 | — | — | — | 2,838 | |||||||||||||||||||||||||||
| Total Spent Nuclear Fuel and Decommissioning Trusts | 2,848 | 1,533 | — | 14 | 4,395 | |||||||||||||||||||||||||||
| Total Assets | $ | 3,096 | $ | 2,246 | $ | 314 | $ | (504) | $ | 5,152 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) (f) | $ | 4 | $ | 534 | $ | 148 | $ | (434) | $ | 252 | ||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Commodity Hedges (c) | — | 13 | — | (13) | — | |||||||||||||||||||||||||||
| Fair Value Hedges | — | 72 | — | — | 72 | |||||||||||||||||||||||||||
| Total Risk Management Liabilities | $ | 4 | $ | 619 | $ | 148 | $ | (447) | $ | 324 | ||||||||||||||||||||||
AEP Texas
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Restricted Cash for Securitized Funding | $ | 14 | $ | — | $ | — | $ | — | $ | 14 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Restricted Cash for Securitized Funding | $ | 24 | $ | — | $ | — | $ | — | $ | 24 | ||||||||||||||||||||||
APCo
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Restricted Cash for Securitized Funding | $ | 18 | $ | — | $ | — | $ | — | $ | 18 | ||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | — | 3 | 81 | (2) | 82 | |||||||||||||||||||||||||||
| Total Assets | $ | 18 | $ | 3 | $ | 81 | $ | (2) | $ | 100 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 6 | $ | — | $ | (3) | $ | 3 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Restricted Cash for Securitized Funding | $ | 16 | $ | — | $ | — | $ | — | $ | 16 | ||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | — | 7 | 35 | (5) | 37 | |||||||||||||||||||||||||||
| Total Assets | $ | 16 | $ | 7 | $ | 35 | $ | (5) | $ | 53 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 7 | $ | — | $ | (5) | $ | 2 | ||||||||||||||||||||||
I&M
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 12 | $ | 9 | $ | (11) | $ | 10 | ||||||||||||||||||||||
| Spent Nuclear Fuel and Decommissioning Trusts | ||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents (e) | 14 | — | — | 15 | 29 | |||||||||||||||||||||||||||
| Fixed Income Securities: | ||||||||||||||||||||||||||||||||
| United States Government | — | 1,351 | — | — | 1,351 | |||||||||||||||||||||||||||
| Corporate Debt | — | 376 | — | — | 376 | |||||||||||||||||||||||||||
| Subtotal Fixed Income Securities | — | 1,727 | — | — | 1,727 | |||||||||||||||||||||||||||
| Equity Securities - Domestic (b) | 3,160 | — | — | — | 3,160 | |||||||||||||||||||||||||||
| Total Spent Nuclear Fuel and Decommissioning Trusts | 3,174 | 1,727 | — | 15 | 4,916 | |||||||||||||||||||||||||||
| Total Assets | $ | 3,174 | $ | 1,739 | $ | 9 | $ | 4 | $ | 4,926 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 11 | $ | — | $ | (11) | $ | — | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 19 | $ | 7 | $ | (8) | $ | 18 | ||||||||||||||||||||||
| Spent Nuclear Fuel and Decommissioning Trusts | ||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents (e) | 10 | — | — | 14 | 24 | |||||||||||||||||||||||||||
| Fixed Income Securities: | ||||||||||||||||||||||||||||||||
| United States Government | — | 1,323 | — | — | 1,323 | |||||||||||||||||||||||||||
| Corporate Debt | — | 210 | — | — | 210 | |||||||||||||||||||||||||||
| Subtotal Fixed Income Securities | — | 1,533 | — | — | 1,533 | |||||||||||||||||||||||||||
| Equity Securities - Domestic (b) | 2,838 | — | — | — | 2,838 | |||||||||||||||||||||||||||
| Total Spent Nuclear Fuel and Decommissioning Trusts | 2,848 | 1,533 | — | 14 | 4,395 | |||||||||||||||||||||||||||
| Total Assets | $ | 2,848 | $ | 1,552 | $ | 7 | $ | 6 | $ | 4,413 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 9 | $ | 1 | $ | (10) | $ | — | ||||||||||||||||||||||
OPCo
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Liabilities: | (in millions) | |||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | — | $ | 33 | $ | — | $ | 33 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Liabilities: | (in millions) | |||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | — | $ | 47 | $ | — | $ | 47 | ||||||||||||||||||||||
PSO
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 1 | $ | 43 | $ | (2) | $ | 42 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 28 | $ | 2 | $ | (2) | $ | 28 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 3 | $ | 21 | $ | (2) | $ | 22 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 7 | $ | 1 | $ | (2) | $ | 6 | ||||||||||||||||||||||
SWEPCo
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Restricted Cash for Securitized Funding | $ | 15 | $ | — | $ | — | $ | — | $ | 15 | ||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | — | — | 37 | (2) | 35 | |||||||||||||||||||||||||||
| Total Assets | $ | 15 | $ | — | $ | 37 | $ | (2) | $ | 50 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 11 | $ | 2 | $ | (2) | $ | 11 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Other | Total | ||||||||||||||||||||||||||||
| Assets: | (in millions) | |||||||||||||||||||||||||||||||
| Restricted Cash for Securitized Funding | $ | 3 | $ | — | $ | — | $ | — | $ | 3 | ||||||||||||||||||||||
| Risk Management Assets | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | — | 1 | 18 | (1) | 18 | |||||||||||||||||||||||||||
| Total Assets | $ | 3 | $ | 1 | $ | 18 | $ | (1) | $ | 21 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Risk Management Liabilities | ||||||||||||||||||||||||||||||||
| Risk Management Commodity Contracts (c) | $ | — | $ | 2 | $ | 1 | $ | (1) | $ | 2 | ||||||||||||||||||||||
(a)Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or third-parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.
(b)Amounts represent publicly-traded equity securities and equity-based mutual funds.
(c)Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”
(d)The December 31, 2025 maturities of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), were as follows: Level 1 matures $(2) million in 2026; Level 2 matures $12 million in 2026, $65 million in periods 2027-2029 and $1 million in periods 2030-2031; Level 3 matures $210 million in 2026, $51 million in periods 2027-2029, $(6) million in periods 2030-2031 and $(13) million in periods 2032-2034. Risk management commodity contracts are substantially comprised of energy contracts.
(e)Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.
(f)The December 31, 2024 maturities of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), were as follows: Level 1 matures $(1) million in 2025; Level 2 matures $(16) million in 2025, $(43) million in periods 2026-2028 and $4 million in periods 2029-2030; Level 3 matures $106 million in 2025, $45 million in periods 2026-2028, $9 million in periods 2029-2030 and $(16) million in periods 2031-2034. Risk management commodity contracts are substantially comprised of energy contracts.
The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:
| Year Ended December 31, 2025 | AEP | APCo | I&M | OPCo | PSO | SWEPCo | ||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 166 | $ | 35 | $ | 6 | $ | (47) | $ | 20 | $ | 17 | ||||||||||||||||||||||||||
| 157 | 50 | 13 | — | 38 | 43 | |||||||||||||||||||||||||||||||||
| 19 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| 16 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Settlements | (286) | (85) | (19) | 7 | (58) | (59) | ||||||||||||||||||||||||||||||||
| Transfers into Level 3 (d) (e) | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Transfers out of Level 3 (e) | (2) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Changes in Fair Value Allocated to Regulated Jurisdictions (f) | 188 | 81 | 9 | 7 | 41 | 34 | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | 259 | $ | 81 | $ | 9 | $ | (33) | $ | 41 | $ | 35 | ||||||||||||||||||||||||||
| Year Ended December 31, 2024 | AEP | APCo | I&M | OPCo | PSO | SWEPCo | ||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | 139 | $ | 22 | $ | 3 | $ | (51) | $ | 19 | $ | 11 | ||||||||||||||||||||||||||
| 90 | 24 | 7 | (1) | 26 | 24 | |||||||||||||||||||||||||||||||||
| 15 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| 4 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Settlements | (168) | (46) | (10) | 8 | (45) | (36) | ||||||||||||||||||||||||||||||||
| Transfers into Level 3 (d) (e) | 7 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Transfers out of Level 3 (e) | (6) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Changes in Fair Value Allocated to Regulated Jurisdictions (f) | 85 | 35 | 6 | (3) | 20 | 18 | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 166 | $ | 35 | $ | 6 | $ | (47) | $ | 20 | $ | 17 | ||||||||||||||||||||||||||
| Year Ended December 31, 2023 | AEP | APCo | I&M | OPCo | PSO | SWEPCo | ||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | 160 | $ | 69 | $ | 5 | $ | (40) | $ | 24 | $ | 14 | ||||||||||||||||||||||||||
| 52 | (12) | 4 | (4) | 30 | 20 | |||||||||||||||||||||||||||||||||
| 71 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| (17) | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Settlements | (172) | (57) | (9) | 6 | (53) | (34) | ||||||||||||||||||||||||||||||||
| Transfers into Level 3 (d) (e) | (6) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Transfers out of Level 3 (e) | 4 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Changes in Fair Value Allocated to Regulated Jurisdictions (f) | 47 | 22 | 3 | (13) | 18 | 11 | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | 139 | $ | 22 | $ | 3 | $ | (51) | $ | 19 | $ | 11 | ||||||||||||||||||||||||||
(a)Included in revenues on the statements of income.
(b)Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.
(c)Included in cash flow hedges on the statements of comprehensive income.
(d)Represents existing assets or liabilities that were previously categorized as Level 2.
(e)Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.
(f)Relates to the net gains (losses) of those contracts that are not reflected on the statements of income. These changes in fair value are recorded as regulatory liabilities for net gains and as regulatory assets for net losses or accounts payable.
The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:
Significant Unobservable Inputs
December 31, 2025
| Significant | Input/Range | |||||||||||||||||||||||||||||||||||||||||||||||||
| Type of | Fair Value | Valuation | Unobservable | Weighted | ||||||||||||||||||||||||||||||||||||||||||||||
| Company | Input | Assets | Liabilities | Technique | Input (a) | Low | High | Average (b) | ||||||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AEP | Energy Contracts | $ | 224 | $ | 144 | Discounted Cash Flow | Forward Market Price | $ | 5.65 | $ | 141.75 | $ | 50.61 | |||||||||||||||||||||||||||||||||||||
| AEP | FTRs | 187 | 8 | Discounted Cash Flow | Forward Market Price | (32.49) | 21.68 | 0.49 | ||||||||||||||||||||||||||||||||||||||||||
| APCo | FTRs | 81 | — | Discounted Cash Flow | Forward Market Price | (0.26) | 17.55 | 3.47 | ||||||||||||||||||||||||||||||||||||||||||
| I&M | FTRs | 9 | — | Discounted Cash Flow | Forward Market Price | (0.46) | 21.68 | 1.60 | ||||||||||||||||||||||||||||||||||||||||||
| OPCo | Energy Contracts | — | 33 | Discounted Cash Flow | Forward Market Price | 21.44 | 85.92 | 50.10 | ||||||||||||||||||||||||||||||||||||||||||
| PSO | FTRs | 43 | 2 | Discounted Cash Flow | Forward Market Price | (32.49) | 8.54 | (5.49) | ||||||||||||||||||||||||||||||||||||||||||
| SWEPCo | FTRs | 37 | 2 | Discounted Cash Flow | Forward Market Price | (32.49) | 8.54 | (5.49) | ||||||||||||||||||||||||||||||||||||||||||
December 31, 2024
| Significant | Input/Range | |||||||||||||||||||||||||||||||||||||||||||||||||
| Type of | Fair Value | Valuation | Unobservable | Weighted | ||||||||||||||||||||||||||||||||||||||||||||||
| Company | Input | Assets | Liabilities | Technique | Input (a) | Low | High | Average (b) | ||||||||||||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| AEP | Energy Contracts | $ | 221 | $ | 145 | Discounted Cash Flow | Forward Market Price | $ | 2.75 | $ | 149.30 | $ | 49.34 | |||||||||||||||||||||||||||||||||||||
| AEP | FTRs | 93 | 3 | Discounted Cash Flow | Forward Market Price | (29.48) | 19.70 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||
| APCo | FTRs | 35 | — | Discounted Cash Flow | Forward Market Price | (0.25) | 9.32 | 1.56 | ||||||||||||||||||||||||||||||||||||||||||
| I&M | FTRs | 7 | 1 | Discounted Cash Flow | Forward Market Price | (4.07) | 9.32 | 1.34 | ||||||||||||||||||||||||||||||||||||||||||
| OPCo | Energy Contracts | — | 47 | Discounted Cash Flow | Forward Market Price | 14.53 | 72.40 | 42.44 | ||||||||||||||||||||||||||||||||||||||||||
| PSO | FTRs | 21 | 1 | Discounted Cash Flow | Forward Market Price | (29.48) | 10.54 | (3.88) | ||||||||||||||||||||||||||||||||||||||||||
| SWEPCo | FTRs | 18 | 1 | Discounted Cash Flow | Forward Market Price | (29.48) | 10.54 | (3.88) | ||||||||||||||||||||||||||||||||||||||||||
(a)Represents market prices in dollars per MWh.
(b)The weighted-average is the product of the forward market price of the underlying commodity and volume weighted by term.
The following table provides the measurement uncertainty of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts, FTRs and Other Investments for the Registrants as of December 31, 2025 and 2024:
Uncertainty of Fair Value Measurements
| Significant Unobservable Input | Position | Change in Input | Impact on Fair Value Measurement | |||||||||||||||||
| Forward Market Price | Buy | Increase (Decrease) | Higher (Lower) | |||||||||||||||||
| Forward Market Price | Sell | Increase (Decrease) | Lower (Higher) | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 24, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.