AEP TO SELL KENTUCKY OPERATIONS TO LIBERTY, SUBSIDIARY OF ALGONQUIN POWER & UTILITIES

October 26, 2021

COLUMBUS, Ohio, Oct. 26, 2021 – American Electric Power (Nasdaq: AEP) has entered into an agreement to sell its Kentucky operations, which include Kentucky Power and AEP Kentucky Transco, to Liberty, the regulated utility business of parent company Algonquin Power & Utilities Corp. (NYSE: AQN), for $2.846 billion enterprise value. The sale is expected to close in the second quarter of 2022, pending regulatory approvals.

AEP announced in April 2021 that the company was conducting a strategic review of its Kentucky operations, including a potential sale, and held a competitive process as part of the review.

“Kentucky Power and its employees are an important part of the communities in eastern Kentucky, and I am grateful for their valuable contributions to AEP,” said Nicholas K. Akins, AEP chairman, president and chief executive officer. “Liberty’s commitment to safety and operational excellence will allow Kentucky Power employees to continue their critical work producing and delivering reliable power for customers and communities. At the same time, the sale will strengthen AEP’s ability to invest in projects that will support a resilient, cleaner energy system.”

Founded in 1919 and headquartered in Ashland, Kentucky Power serves approximately 165,000 electricity customers in 20 eastern Kentucky counties. AEP Kentucky Transco is a regulated transmission business with assets exclusively in Kentucky.

The sale directly impacts 360 employees, including 315 who work for Kentucky Power and 45 from AEP whose roles directly support Kentucky operations. These employees will transfer to Liberty when the sale is completed.

“We’ve been proud to serve Kentucky Power customers for more than a century, and the commitment of our employees will remain strong throughout this transition and beyond,” said Brett Mattison, Kentucky Power president and chief operating officer. “We are working closely with Liberty to ensure a seamless transition for our customers and communities. Through their focus on safety, reliability, customer service and sustainability, Liberty is well-positioned to serve Kentucky customers. The same skilled and experienced employees who work to keep the lights on for our customers will continue to do so as part of Liberty.”

Liberty provides regulated electricity, natural gas, water and wastewater services to more than 1 million customer connections, mainly in 13 U.S. states and Canada.

Upon close of the sale, Liberty will acquire AEP’s Kentucky operations by purchasing all the stock of Kentucky Power and AEP Kentucky Transco. AEP expects to net approximately $1.45 billion in cash after taxes and transaction fees. The proceeds from the sale will be used to eliminate AEP’s forecasted equity needs in 2022 as the company invests in regulated renewables, transmission and other projects. Liberty will acquire all assets and assume liabilities of the Kentucky operations except for pension and other postretirement benefit obligations for the period the impacted employees were employed by AEP. AEP expects to provide customary transition services to Liberty after the closing.

AEP expects the sale to have an immaterial, one-time impact to after-tax book earnings. The transaction will be $0.01-$0.02 accretive to 2022 ongoing earnings.

The sale is subject to regulatory approvals from the Kentucky Public Service Commission and the Federal Energy Regulatory Commission. The transaction is also subject to federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and clearance from the Committee on Foreign Investment in the United States.

Kentucky Power owns 1,075 megawatts of generation including Big Sandy, a 295-megawatt natural gas-fueled plant located in Louisa, Kentucky. Kentucky Power also operates the 1,560-megawatt coal-fueled Mitchell Plant located in Moundsville, West Virginia, and owns 50% of the plant. Separate from the transaction approval process, Kentucky Power and AEP’s Wheeling Power subsidiary plan to file for approval of new ownership and operating agreements for Mitchell Plant consistent with recent orders issued by the Kentucky and West Virginia Public Service Commissions. These filings will request that Mitchell Plant be operated by Wheeling Power, which owns the remaining 50% of the plant. The 200 employees who operate Mitchell Plant will be transferred from Kentucky Power to Wheeling Power upon approval. The filings also will address environmental compliance cost allocations and plant ownership arrangements for the period after Dec. 31, 2028. Liberty will own and obtain power from Kentucky Power’s 50% portion of Mitchell Plant through 2028.

Barclays and Goldman Sachs and Co. served as AEP’s financial advisors for the strategic review of the Kentucky operations. Morgan Lewis & Bockius LLP served as legal counsel to AEP.

American Electric Power, based in Columbus, Ohio, is powering a cleaner, brighter energy future for its customers and communities. AEP’s approximately 16,800 employees operate and maintain the nation’s largest electricity transmission system and more than 223,000 miles of distribution lines to safely deliver reliable and affordable power to 5.5 million regulated customers in 11 states. AEP also is one of the nation’s largest electricity producers with approximately 31,000 megawatts of diverse generating capacity, including more than 5,900 megawatts of renewable energy. The company’s plans include growing its renewable generation portfolio to approximately 50% of total capacity by 2030. AEP is on track to achieve an 80% reduction in carbon dioxide emissions from 2000 levels by 2030 and has committed to achieve net zero by 2050. AEP is recognized consistently for its focus on sustainability, community engagement, and diversity, equity and inclusion. AEP’s family of companies includes utilities AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle). AEP also owns AEP Energy, which provides innovative competitive energy solutions nationwide. For more information, visit aep.com.

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This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: changes in economic conditions, electric market demand and demographic patterns in AEP service territories; the impact of pandemics, including COVID-19, and any associated disruption of AEP’s business operations due to impacts on economic or market conditions, costs of compliance with vaccination or testing mandates to AEP, electricity usage, employees including employee unwillingness to comply with potential vaccination mandates, customers, service providers, vendors and suppliers; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability or cost of capital to finance new capital projects and refinance existing debt; the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material; decreased demand for electricity; weather conditions, including storms and drought conditions, and AEP’s ability to recover significant storm restoration costs; the cost of fuel and its transportation, the creditworthiness and performance of fuel suppliers and transporters and the cost of storing and disposing of used fuel, including coal ash and spent nuclear fuel; the availability of fuel and necessary generation capacity and the performance of AEP’s generation plants; AEP’s ability to recover fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire renewable generation, transmission lines and facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms, including favorable tax treatment, and to recover those costs; new legislation, litigation and government regulation, including changes to tax laws and regulations, oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances that could impact the continued operation, cost recovery, and/or profitability of AEP’s generation plants and related assets; evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including coal ash and nuclear fuel; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions, including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance; resolution of litigation; AEP’s ability to constrain operation and maintenance costs; prices and demand for power generated and sold at wholesale; changes in technology, particularly with respect to energy storage and new, developing, alternative or distributed sources of generation; AEP’s ability to recover through rates any remaining unrecovered investment in generation units that may be retired before the end of their previously projected useful lives; volatility and changes in markets for coal and other energy-related commodities, particularly changes in the price of natural gas; changes in utility regulation and the allocation of costs within regional transmission organizations, including ERCOT, PJM and SPP; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of AEP debt; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, OPEB, captive insurance entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements; accounting standards periodically issued by accounting standard-setting bodies; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, naturally occurring and human-caused fires, cyber security threats and other catastrophic events; and the ability to attract and retain the requisite work force and key personnel.

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