---
ticker: AEP
company: AEP
filing_type: 10-K
year_current: 2025
year_prior: 2024
risks_added: 1
risks_removed: 1
risks_modified: 5
risks_unchanged: 39
source: SEC EDGAR
url: https://riskdiff.com/aep/2025-vs-2024/
markdown_url: https://riskdiff.com/aep/2025-vs-2024/index.md
generated: 2026-06-01
---

# AEP: 10-K Risk Factor Changes 2025 vs 2024

> Source: U.S. Securities and Exchange Commission (EDGAR)  
> Generated: 2026-06-01  
> All data extracted directly from official filings. No hallucinated content.

## Summary

| Status | Count |
|--------|-------|
| New risks added | 1 |
| Risks removed | 1 |
| Risks modified | 5 |
| Unchanged | 39 |

---

## New in Current Filing: The occurrence of one or more wildfires could cause tremendous loss, impact the market value and credit ratings of our securities and have a material adverse effect on our financial condition. (Applies to all Registrants)

More frequent and severe drought conditions, extreme swings in amount and timing of precipitation, changes in vegetation, unseasonably warm temperatures, very low humidity, stronger winds and other factors have increased the duration of the wildfire season and the potential impact of an event. AEP's infrastructure could pose risks to safety and system reliability and wildfire mitigation initiatives may not be successful or effective in preventing or reducing wildfire-related events. Wildfires can occur even when effective mitigation procedures are followed. Despite AEP's early-stage wildfire mitigation initiatives, a wildfire could be ignited, spread and cause damages, which could subject AEP to significant liability. Other potential risks associated with wildfires include the inability to secure sufficient insurance coverage, increased costs for insurance and mitigation efforts, regulatory recovery risk, litigation risk, and the potential for a credit downgrade and subsequent additional costs to access capital markets. 29 29 29 29 29 29

---

## No Match in Current: Ohio House Bill 6 (HB 6), which provides for beneficial cost recovery for OPCo and for plants owned by OVEC, has come under public scrutiny. (Applies to AEP and OPCo)

*This section from the 2024 filing does not have a high-confidence textual match in 2025. It may have been removed, merged, or substantially reworded.*

In 2019, Ohio adopted and implemented HB 6 which benefits OPCo by authorizing rate recovery for certain costs including renewable energy contracts, OVEC's coal-fired generating units and energy efficiency measures. AEP and OPCo engaged in lobbying efforts and provided testimony during the legislative process in connection with HB 6. In July 2020, an investigation led by the U.S. Attorney's Office resulted in a federal grand jury indictment of an Ohio legislator and associates and Generation Now, an entity registered as a 501(c)(4) social welfare organization, in connection with an alleged racketeering conspiracy involving the adoption of HB 6. Certain defendants in that case had previously plead guilty and, in March 2023, a federal jury convicted the Ohio legislator and another individual of participating in the racketeering conspiracy. If certain provisions of HB 6 were to be eliminated, it is unclear whether new legislation addressing similar issues would be adopted. To the extent that OPCo is unable to recover the costs currently authorized by HB 6, it could reduce future net income and cash flows and impact financial condition. In addition, the impact of continued public scrutiny of HB 6 is not known and may have an adverse impact on AEP and OPCo, including their relationship with regulatory and legislative authorities, customers and other stakeholders. AEP is a defendant in current litigation relating to HB 6 and AEP or OPCo may be involved in future litigation. 24 24 24 24 24 24

---

## Modified: Management is unable to predict the course, results or impact, if any, of current or future litigation or investigations relating to the severe winter weather in Texas in February 2021. (Applies to AEP and AEP Texas)

**Key changes:**

- Reworded sentence: "The judge overseeing the MDL issued an initial case management order and stayed discovery."

**Prior (2024):**

As a result of the February 2021 severe winter weather in Texas which caused a shortage of electric generation, ERCOT instructed AEP Texas and other Texas electric utilities to initiate power outages to avoid a sustained large-scale outage and prevent long-term damage to the electric system. At its peak, approximately 468,000 (44%) AEP Texas customers were without power. In February 2021, AEP Texas received a Civil Investigative Demand from the Office of the Attorney General of Texas requesting, among other data, information about its communications to and from ERCOT, PUCT, retail electric providers, utilities, or power generation companies, concerning power outages related to the February 2021 winter storm. The company responded to the Civil Investigative Demand in March 2021. AEP Parent and AEP Texas are named in approximately 100 lawsuits alleging multiple claims of wrongful death, personal injury, property damage and other injuries and damages. Certain wind farms formerly owned by AEP have also been named as defendants in up to approximately 125 lawsuits, along with other Texas energy companies and transmission and distribution utilities. Most of the lawsuits contain hundreds of plaintiffs and one of the suits is a purported class action on behalf of all customers in ERCOT. The complaints seek monetary damages among other forms of relief. The litigation has been consolidated into a multi-district litigation (MDL) proceeding in Texas state court. The judge overseeing the MDL issued an initial case management order and stayed all proceedings and discovery. Management is unable to predict the course or outcome of these or any future litigation or investigations or their impact, if any, on future results of operations, financial condition and cash flows. 30 30 30 30 30 30

**Current (2025):**

As a result of the February 2021 severe winter weather in Texas which caused a shortage of electric generation, ERCOT instructed AEP Texas and other Texas electric utilities to initiate power outages to avoid a sustained large-scale outage and prevent long-term damage to the electric system. At its peak, approximately 468,000 (44%) AEP Texas customers were without power. In February 2021, AEP Texas received a Civil Investigative Demand from the Office of the Attorney General of Texas requesting, among other data, information about its communications to and from ERCOT, PUCT, retail electric providers, utilities, or power generation companies, concerning power outages related to the February 2021 winter storm. The company responded to the Civil Investigative Demand in March 2021. AEP Parent and AEP Texas are named in approximately 100 lawsuits alleging multiple claims of wrongful death, personal injury, property damage and other injuries and damages. Certain wind farms formerly owned by AEP have also been named as defendants in up to approximately 125 lawsuits, along with other Texas energy companies and transmission and distribution utilities. Most of the lawsuits contain hundreds of plaintiffs and one of the suits is a purported class action on behalf of all customers in ERCOT. The complaints seek monetary damages among other forms of relief. The litigation has been consolidated into a multi-district litigation (MDL) proceeding in Texas state court. The judge overseeing the MDL issued an initial case management order and stayed discovery. Two appeals regarding motions to dismiss the plaintiffs' claims filed in representative cases by AEP Texas and other similarly situated defendants are currently pending; resolution of either of these appeals in favor of AEP Texas would result in dismissal of the plaintiffs' claims against AEP Texas in those cases. A separate appeal regarding a motion to dismiss filed on behalf of the three formerly AEP-owned wind farms and other similarly situated defendants is also pending; resolution of this appeal in favor of the three wind farms would result in dismissal of the plaintiffs' claims against the wind farms in those cases. Management is unable to predict the course or outcome of these or any future litigation or investigations or their impact, if any, on future results of operations, financial condition and cash flows.

---

## Modified: New climate disclosure rules proposed by the U.S. Securities and Exchange Commission may increase our costs of compliance and adversely impact our business. (Applies to all Registrants)

**Key changes:**

- Reworded sentence: "On March 24, 2024, the SEC adopted new rules relating to the disclosure of a range of climate-related risks."

**Prior (2024):**

On March 21, 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks. AEP is currently assessing the proposed rule, but at this time AEP cannot predict the costs of implementation or any potential adverse impacts resulting from the rule. To the extent this rule is finalized as proposed, AEP could incur increased costs relating to the assessment and disclosure of climate-related risks. AEP may also face increased litigation risks related to disclosures made pursuant to the rule if finalized as proposed. In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon-intensive sectors.

**Current (2025):**

On March 24, 2024, the SEC adopted new rules relating to the disclosure of a range of climate-related risks. The rules have been challenged in court and are currently stayed. At this time AEP cannot predict the costs of implementation or any potential adverse impacts resulting from the rule as adopted. To the extent these rules or any replacement rules are adopted, AEP could incur increased costs relating to the assessment and disclosure of climate-related risks. AEP may also face increased litigation risks related to disclosures made pursuant to any rules that are implemented. In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon-intensive sectors.

---

## Modified: Supply chain disruptions, tariffs and inflation could negatively impact our operations and corporate strategy. (Applies to all Registrants)

**Key changes:**

- Reworded sentence: "The delivery of components, materials, equipment and 27 27 27 27 27 27 other resources that are critical to AEP's business operations and corporate strategy has been restricted by domestic and global supply chain upheaval."
- Reworded sentence: "International tensions from any source, including the ramifications of regional conflict or increased tariffs, could further exacerbate the global supply chain upheaval."
- Added sentence: "The current administration has implemented tariffs on certain imported goods and may impose additional tariffs."
- Reworded sentence: "The United States economy has been in an elevated inflationary environment and supply chain disruptions have contributed to higher prices of components, materials, equipment and other needed commodities."

**Prior (2024):**

AEP's operations and business plans depend on the global supply chain to procure the equipment, materials and other resources necessary to build and provide services in a safe and reliable manner. The delivery of components, materials, equipment and other resources that are critical to AEP's business operations and corporate strategy has been restricted by domestic and global supply chain upheaval. This has resulted in the shortage of critical items. International tensions, including the ramifications of regional conflict, could further exacerbate the global supply chain upheaval. These disruptions and shortages could adversely impact business operations and corporate strategy. The constraints in the supply chain could restrict the availability and delay the construction, maintenance or repair of items that are needed to support normal operations or are required to execute on AEP's corporate strategy for continued capital investment in utility equipment and impact AEP's strategy to transition its generation fleet. These disruptions and constraints could reduce future net income and cash flows and possibly harm AEP's financial condition. Supply chain disruptions have contributed to higher prices of components, materials, equipment and other needed commodities and these inflationary increases may continue in the future. The economy in the United States has encountered a material level of inflation compared to the recent past and that has contributed to increased uncertainty in the outlook of near-term economic activity, including the level of future inflation and the possibility of a recession. AEP typically recovers increases in capital expenses from customers through rates in regulated jurisdictions. Failure to recover increased capital costs could reduce future net income and cash flows and possibly harm AEP's financial condition. Increases in inflation raises our costs for labor, materials and services, and failure to secure these on reasonable terms may adversely impact our financial condition.

**Current (2025):**

AEP's operations and business plans depend on the global supply chain to procure the equipment, materials and other resources necessary to build and provide services in a safe and reliable manner. The delivery of components, materials, equipment and 27 27 27 27 27 27 other resources that are critical to AEP's business operations and corporate strategy has been restricted by domestic and global supply chain upheaval. This has resulted in the shortage of critical items. International tensions from any source, including the ramifications of regional conflict or increased tariffs, could further exacerbate the global supply chain upheaval. These disruptions and shortages could adversely impact business operations and corporate strategy. The current administration has implemented tariffs on certain imported goods and may impose additional tariffs. The constraints in the supply chain could restrict the availability and delay the construction, maintenance or repair of items that are needed to support normal operations or are required to execute on AEP's corporate strategy for continued capital investment in utility equipment and impact AEP's strategy to transition its generation fleet. These disruptions and constraints could reduce future net income and cash flows and possibly harm AEP's financial condition. The United States economy has been in an elevated inflationary environment and supply chain disruptions have contributed to higher prices of components, materials, equipment and other needed commodities. A prolonged continuation or a further increase in the severity of supply chain and inflationary disruptions, including increased tariffs, could result in additional increases in the cost of certain goods, services and cost of capital and further extend lead times. AEP typically recovers increases in capital expenses from customers through rates in regulated jurisdictions. Failure to recover increased capital costs could reduce future net income and cash flows and possibly harm AEP's financial condition. Increases in inflation raises our costs for labor, materials and services, and failure to secure these on reasonable terms may adversely impact our financial condition.

---

## Modified: Regulation of greenhouse gas emissions could materially increase costs to AEP and its customers or cause some electric generating units to be uneconomical to operate or maintain. (Applies to all Registrants except AEP Texas, AEPTCo and OPCo)

**Key changes:**

- Reworded sentence: "AEP is committed to providing reliable affordable power to its customers."
- Reworded sentence: "AEP remains committed to making generation and capacity resource decisions that provide the most cost-efficient and reliable power to customers, irrespective of any specific carbon-reduction goal."
- Reworded sentence: "Further, real or alleged violations of environmental regulations, including those related to climate change, or an inability to meet AEP's voluntary climate aspirations, could adversely impact AEP's reputation, reduce future net income and cash flows and harm financial condition."

**Prior (2024):**

Federal or state laws or regulations may be adopted that would impose new or additional limits on the emissions of greenhouse gases, including, but not limited to, carbon dioxide and methane, from electric generation units using fossil fuels like coal. The potential effects of greenhouse gas emission limits on AEP's electric generation units are subject to significant uncertainties based on, among other things, the timing of the implementation of any new requirements, the required levels of emission reductions, the nature of any market-based or tax-based mechanisms adopted to facilitate reductions, the relative availability of greenhouse gas emission reduction offsets, the development of cost-effective, commercial-scale carbon capture and storage technology and supporting regulations and liability mitigation measures, and the range of available compliance alternatives. AEP routinely submits IRPs in various regulatory jurisdictions to address future generation and capacity needs. These IRPs take into account economics, customer demand, grid reliability and resilience, regulations and RTO capacity requirements. The objective of the IRPs is to recommend future generation and capacity resources that provide the most cost-efficient and reliable power to customers. Based on the output of the company's IRPs, in October 2022, AEP announced new intermediate and long-term CO2 emission reduction goals. AEP adjusted its near-term CO2 emission reduction target from a 2000 baseline to a 2005 baseline, upgraded its 80% reduction by 2030 target to include full Scope 1 emissions and accelerated its net-zero goal by five years to 2045 for Scope 1 and Scope 2 emissions. Risks to achieving these goals include, among other things, the ability to execute on renewable resource plans, evolving RTO requirements, regulatory approvals, customer demand for carbon-free energy, potential tariffs, carbon policy and regulation, operational performance of renewable generation and supply chain costs and constraints, all while continuing to provide the most cost-efficient and reliable power to customers. Technology research and development, innovation, and advancements in carbon-free generation are also critical to AEP's ability to achieve its 2045 goal. AEP's results of operations could be materially adversely affected to the extent that new federal or state laws or regulations or voluntary climate goals impose any new greenhouse gas emission limits. Any future limits on greenhouse gas emissions could create substantial additional costs in the form of taxes or emissions allowances, require significant capital investment in carbon capture and storage technology, fuel switching, or the replacement of high-emitting generation facilities with lower-emitting generation facilities and/or could cause AEP to retire generating capacity prior to the end of its estimated useful life. Although AEP typically recovers environmental expenditures, there can be no assurance in the future that AEP can recover such costs which could reduce future net income and cash flows and possibly harm financial condition. Further, real or alleged violations of environmental regulations, including those related to climate change, or an inability to meet AEP's voluntary climate goals, could adversely impact AEP's reputation. AEP may be constrained by the ability to procure resources or labor needed to build new generation at a reasonable price as well as to construct projects on time. In addition, new technologies that are not yet commercially available or are unproven at utility scale will likely be needed including new resources such as advanced nuclear, hydrogen and long-duration storage. If these technologies are not developed or are not available at reasonable prices, or if AEP invests in early-stage technologies that are then supplanted by technological breakthroughs, AEP's ability to achieve a net-zero target by 2045 at a cost-effective price could be at risk. Achieving our carbon reduction goals will require continued operation of our existing carbon-free technologies 32 32 32 32 32 32 including nuclear and renewables. The rapid transition to and expansion of certain low-carbon resources, such as renewables without cost-effective storage, may challenge our ability to meet customer expectations of reliability in a carbon constrained environment. AEP cannot predict the ultimate impact of achieving these objectives, or the various implementation aspects, on its system reliability, or its results of operations, financial condition, or liquidity.

**Current (2025):**

Federal or state laws or regulations may be adopted that would impose new or additional limits on the emissions of greenhouse gases, including, but not limited to, carbon dioxide and methane, from electric generation units using fossil fuels like coal. The potential effects of greenhouse gas emission limits on AEP's electric generation units are subject to significant uncertainties based on, among other things, the timing of the implementation of any new requirements, the required levels of emission reductions, the nature of any market-based or tax-based mechanisms adopted to facilitate reductions, the relative availability of greenhouse gas emission reduction offsets, the development of cost-effective, commercial-scale carbon capture and storage technology and supporting regulations and liability mitigation measures, and the range of available compliance alternatives. AEP is committed to providing reliable affordable power to its customers. To achieve this, AEP and its subsidiaries routinely meet with state regulators and key stakeholders to understand their needs for both dispatchable and renewable generation resources. This process evaluates, amongst other things, future supply and demand fundamentals, the economic aspects of investments, grid reliability and resilience, regulations and evolving RTO requirements, the advancement of generation technologies, and market impacts and constraints. As part of the regulatory process, AEP routinely submits IRPs in various regulatory jurisdictions to address future generation needs. The objective of the IRPs is to recommend future generation and capacity resources that provide the most cost-efficient and reliable power to customers. AEP remains committed to making generation and capacity resource decisions that provide the most cost-efficient and reliable power to customers, irrespective of any specific carbon-reduction goal. Based on the assumptions used in the most recent analysis, AEP expects that its Scope 1 GHG emissions will be reduced by 80% by 2030 (from a 2005 baseline). AEP's GHG reduction efforts are predicated on the combined preferences of the eleven states that we operate in. AEP has made significant progress in reducing GHG emissions from its power generation fleet and while we aspire to be at net-zero Scope 1 and 2 emissions by 2045, our performance will ultimately be driven by the needs and desires of the states we serve. AEP is engaging with regulators and policymakers and our decisions around generation resources are reflected in the preferences of these states. AEP has embraced the advancement of low-carbon generation solutions where supported, which may include early-stage projects to bring small modular nuclear reactors to Virginia and Indiana as an example. Further advancement of affordable new generation technologies and a market for offsets, as well as continued alignment with our states, would be required to achieve net-zero emissions. AEP's results of operations could be materially adversely affected to the extent that new federal or state laws or regulations impose any new greenhouse gas emission limits. Any future limits on greenhouse gas emissions could create substantial additional costs in the form of taxes or emissions allowances, require significant capital investment in carbon capture and storage technology, fuel switching, or the replacement of high-emitting generation facilities with lower-emitting generation facilities and/or could cause AEP to retire generating capacity prior to the end of its estimated useful life. Although AEP typically recovers environmental expenditures, there can be no assurance in the future that AEP can recover such costs which could reduce future net income and cash flows and possibly harm financial condition. Further, real or alleged violations of environmental regulations, including those related to climate change, or an inability to meet AEP's voluntary climate aspirations, could adversely impact AEP's reputation, reduce future net income and cash flows and harm financial condition.

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## Modified: Our financial position may be adversely impacted if announced dispositions do not occur as planned. (Applies to AEP)

**Key changes:**

- Reworded sentence: "Any planned sale of assets and investments, including the announced transaction involving a noncontrolling interest in IMTCo and OHTCo, may not occur for any number of reasons beyond our control, including regulatory approval."

**Prior (2024):**

In April 2023, AEP initiated a sales process for its ownership in AEP Energy and AEP Onsite Partners. AEP Onsite Partners also owns a 50% interest in NM Renewable Development, LLC, (NMRD). Separate from the remainder of AEP Onsite Partners, AEP and the joint owner have signed an agreement in December 2023 to sell NMRD to a non-affiliated third-party. Any planned sale of assets and investments, including subsidiaries, may not occur for any number of reasons beyond our control, including regulatory approval. If AEP is unable to recover the net book value or carrying value of these assets as part of the sale process, it could reduce future net income and impact financial condition.

**Current (2025):**

Any planned sale of assets and investments, including the announced transaction involving a noncontrolling interest in IMTCo and OHTCo, may not occur for any number of reasons beyond our control, including regulatory approval. If the transaction is unable to be completed, it could reduce future expected cash flows and impact financial condition.

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*Data sourced from SEC EDGAR. Last updated 2026-06-01.*