Ladies and gentlemen, thank you for standing by, and welcome to the American Electric Power First Quarter 2021 Earnings Conference Call. As a reminder, today's conference is being recorded. I would now like to turn the conference over to our host, Ms. Darcy Reese, Vice President of Investor Relations. Please go ahead.

Thank you, Tony. Good morning, everyone, and welcome to the First Quarter 2021 Earnings Call for American Electric Power. We appreciate you taking time today to join us today. Our earnings release, presentation slides and related financial information are available on our website at aep.com.

Thanks, Darcy, and welcome again everyone to American Electric Power's first quarter 2021 earnings call and happy Earth Day. Before I get started with our results for the quarter, I just have to say, I was struck with the public relations - public reactions to the Chauvin verdict. It has been a long wait, but justice and faith in our legal system does prevail. I bring this up because it happens, I had chosen a song, which I do every quarter as you know for a different reason, but now it serves two purposes. One, the most mesmerizing singer as I'd ever heard was the late Marvin Gaye. I thought of his song when actually thinking about our quarter and the multitude of activities that AEP continues to accomplish and was thinking of what's going on the Marvin Gaye hit from 1971 written during another tumultuous time in America. This song was a plea for peace, justice and understanding perspectives to move forward in a positive way together. As I said, this song was released in 1971, 50 years ago, but it could not be more appropriate today. We need our leaders, our communities and indeed, our companies to continue to come together and stop the divisiveness, which the new cycle tends to feed off of and recognized we have a lot more in common than are differences, that would be a great start to advancing this nation in a positive way. That being said, getting to my original purpose, as I said earlier, what's going on with AEP as the lyrics say, hey, man, what's happening, whoo, everything is everything. We're going to do a get down today, why I tell you. So here we go, the first quarter of 2021 came in with operating earnings of $1.15 per share versus $1.02 for first quarter '20, which met our expectations particularly given impact in Texas, Arkansas, Louisiana and Oklahoma, which we reported on in last quarter's earnings call. AEP continues to reaffirm our 2021 guidance range of $4.55 to $4.75 per share and our 5% to 7% long-term growth rate, and we would still be disappointed not to be in the upper half of the guidance range.

Thanks, Nick, and thanks, Darcy. It's good to be with everyone this morning. I'm going to walk us through the financial results for the quarter, share some thoughts on our service territory load and economy, and then finish with a review of our credit metrics and liquidity. So let's go to Slide 7, which shows the comparison of GAAP to operating earnings for the quarter. GAAP earnings were $1.16 per share compared to $1 per share in 2020. There is a reconciliation of GAAP to operating earnings on Page 15 of the presentation today. Let's walk through our quarterly operating earnings performance by segment, this is laid out on Slide 8. Operating earnings for the first quarter totaled $1.15 per share or $571 million compared to $1.02 per share or $504 million in 2020. Looking at the drivers by segment, operating earnings for the Vertically Integrated Utilities were $0.54 per share, up $0.04, driven by the favorable impact of weather due to warmer than normal winter temps in 2020. Other favorable items in this segment included Off-system sales, higher transmission revenue and the impact of rate changes across multiple jurisdictions, partially offsetting these favorable items were higher depreciation, lower normalized retail load, higher O&M, a prior period fuel adjustment and higher other taxes. The Transmission and Distribution Utilities segment earned $0.23 per share, down $0.01 from last year. Earnings in this segment declined primarily due to lower normalized retail load attributable in part to storm Uri. Other smaller decreases included higher depreciation, tax and O&M expenses. Favorable drivers in this segment included transmission revenue, rate changes and weather. The AEP Transmission Holdco segment continued to grow, contributing $0.35 per share, an improvement of $0.07 per share from last year. Net plant increased by $1.3 billion or 13% since March of…

Our first question comes from the line of Shar Pourreza with Guggenheim Partners. Please go ahead.

Good morning, Shar.

Good morning, guys. Good morning, Nick. Good morning, everyone.

Good morning.

So the - couple of quick questions here. First on the incremental 8.6 gigs of renewable opportunities, which just added to plan. It's very sizable - maybe touch a little bit on how we should think about these new opportunities in light of the 5% to 7% growth that you gave, what sort of financing avenues were you kind of looking at the approval tariffs and what are you assuming in terms of owned versus PPA?

Yeah, I think we have - the last part - last part of your question first. I think we have a pretty compelling argument now for owners of these facilities given even past the winter storm activity that we learned operationally, certainly what we learned from the - really this the provisions of the agreements that we put in place relative to the approvals really stands better in terms of our ability to manage the project, manage congestion, manage other factors that really provide benefits to our customers. So we're going to make a strong position that we should own those assets and actually when you think about the strength of the utilities, it's going to be important for the states to really focus on how do we keep our utilities strong and PPAs don't do it from a capital structure perspective. We need to make sure that ownership and their flexibility of operations is key in that regard. And regarding the other, 8600 megawatts, yeah, it is a sizable number, but obviously when you look at the evaluation of the retirements, when you look at the needs of the operating companies and also North Central certainly showed, you can deploy capital and reduce the overall bills to consumers. So when you think about the retirements of coal-fired generation, the imposition of additional transmission, having the benefits of the fuel cost aspects of it are tremendously important. So when you look at the analysis having some level of carbon pricing in there certainly increases the focus on the ability for renewables to come into play and that's certainly what we've been focusing on. So as you look at the finance ability of it, the finance ability pretty much work like we - like it did for North Central, although it is large number. So we'll have to be very aware of what our balance sheet strength looks like during the process, the timing of when the different tranches of these renewables come into play, the cash position that supported with these projects coming online and being able to improve as Julia mentioned. This FFO to debt thing where it is today is really a 2021 issue. In 2022, FFO to debt comes back up and certainly with the ability to put these projects in place, it will help in terms of our ability to continue to fund these projects. So it will probably - we've certainly would like for it all to be incremental, but in reality when you go through this process, it will probably be around capital allocation and prioritization associated with that within the existing plan, but also incremental. So it'd be a combination of both. Yet to be seen, obviously if load continues to grow, if the position relative to the regulatory framework getting concurrent recovery, making sure that we get off the tax ADIT issues, that's all going to be helpful in terms of our ability to finance. So it's still a work in progress.

Got it. And then maybe just transitioning to corporate strategy and asset optimization, obviously, the strategic review for Kentucky is started, so Brian has been obviously very busy year, can we maybe just elaborate on the phase we are in with that process has - have bidders emerge or data rooms opened and assuming this would backfill most of your Wind Catcher equity need. So assuming we are looking at a Duke style Indiana GIC transaction for the entire OPCo. So we should obviously consider leakage share any NOLs as well that could be applicable in this case?

Yes, Shar, you are always ahead in terms of questions. Yeah, and I really can't answer any of those at this point because we are in a process and certainly as soon as we have information on it, I think the real issue here is, we have made a deliberate decision to really start our portfolio management approach and evaluating jurisdictions, because we are fully regulated. We can look at these areas and determine what the best fit is in terms of future capital needs and what our focus is in terms of moving to a clean energy economy. So - and for us to come out and say that we are in a strategic process relative to Kentucky is an important statement in that regard. That's probably as far as we can go right now.

Let me ask you something a little bit more of a theoretical question, would you consider asset rotations above your current equity needs, let's say, from North Central to fund the incremental CapEx or renewables or T&D, I mean, you're within your credit metric guidance but does it make sense for you to further improve your balance sheet and simplify your store even further. I mean, do you kind of like looking at the stock valuation and does it may be more sense to - do you think there's incremental value from a multiple standpoint to even have a stronger balance sheet and operating even less states here and I'm thinking maybe Texas?

Well, certainly, like I said, this is at the beginning of this process, but multiple expansion is clearly on our minds and making sure that you can - you're investing in the right things at the right places at the right time is going to be incredibly important. And you saw that with North Central of timing the recovery with the actual investments with the turnkey approach that we took and it's all about the timing of it, it's all about the decisions made to ensure that we are doing proper capital allocation and rotation to manage this process forward. So - and like I said earlier, that's going to be a continuing part of our business.

Terrific. Thank you, guys. I'll jump in the queue. I appreciate it.

Thank you. Next, we go to the line of Julien Dumoulin Smith with Bank of America. Please go ahead.

Good morning, Julien.

Hey, good morning, team. Congratulations on all these updates.

Yeah.

A lot to digest here today, I did. If I can, let's start with a higher level question here, right. So you're proposing a lot specifically in PSO, how do you think about the events that have transpired in Texas and Uri impacting that and specifically around some intermittent resources like solar in Oklahoma, right. We just haven't seen a lot of that historically and so this is a little bit of new territory for that geography more than the economics all around. Can you talk to that and have you kind of vetted some of the proposals here and the approval process?

Yeah, so obviously, we're right out of the gate in terms of the announcement of what's included in each jurisdiction. So we'll have discussions with the commissions and that's part of the integrated resource planning processes and keep in mind too, when we do this evaluation during the RFP, I mean, during the process, as always solving for whatever the lease cost is in terms of what those resources are. So it shows up as win. And then solar, typically it's showing up as more wind early on and solar starts to pick up, but that's pretty fungible as you go forward. I mean, these plans will change as we go forward based upon where technologies go, certainly where the opportunities exist. Oklahoma may want more wind and less solar, but that won't matter, it'd be a part of the total renewables piece that's included there. The other part of it too is, we will be very mindful of how much renewables are placed into service in relation to 24/7 supply and there is some natural gas that's built into this plan as well that enables more renewables to be put in place, but the real focus going forward during this transitional period will be for units that provide 24/7 to be more of a reliability component, certainly more of a - sort of an insurance backstop for weather events or other events that may occur that impact the grid security and will have to be very, very mindful of how those studies actually go. And I'll tell you, in our climate report, we saw for 2050 with a $15 carbon price and then more aggressive $30 carbon price, the 2035 case didn't solve because of the timing of getting resources in place and system-related issues. So you have to really think about how that's done and we've looked at these plans and we certainly believe that was the level of 24/7 supply we still have out there and the additional opportunity associated with just the diversity of some of these projects. It's going to be of particular value to our customers going forward. And I guess, I'll just remind you that North Central, had it been operational during this time of the Texas and Oklahoma outages with the Uri would have saved customers $227 million. So you think about the savings associated with that and the other thing too, the previous question, someone was - Shar was asking, when the utilities do it, they focus on the long term and North Central already had the weather package is already in place where you don't find that in a large part of the market. So we think the long-term when we go about after these investments and that's why ownership is clearly important.

Excellent. And just to clarify this a little bit further, I know that the equity numbers aren't moving around too much, we're at all, frankly, relative to CapEx, but how much capital could be shifted given the latest updates here in the three-year versus the five-year outlook here? Just want to understand, out of the total 10-year view that you guys are providing today, how much could be in that three-year and five-year window as you think about just the specific timing of each of these dockets that will come up for renewable resources?

Well, yeah, as I mentioned, 10,000 of the megawatts of the 16,000 - over 16,000 is in the '21 to '25 timeframe, so it's going to be near-term. So when you think about these projects, they take a couple of years to put in place. You'll be looking more at that '23 to '25 for most of it, but some of it was - is already in play. There is already RFPs going out for suppliers of some of these renewables as we speak. Julia, anything do you want to add to that?

No, you've got that perfect, thank you.

Thank you.

Thank you. Our next question comes from the line of Stephen Byrd with Morgan Stanley. Please go ahead.

Hi, thanks guys for taking my question.

Good morning, Stephen.

Good morning. Congrats on a great update and a big movement in renewables, so happy to see that. I wanted - if you could just talk a little bit more about as you grow out renewables, whether there might be some additional transmission distribution requirements or stores there just other things that would sort of be additive as well, it's obviously just huge amount of megawatts, just curious about the other impacts?

Yeah, there will be and many of these projects, obviously, we'll have to look at the placement of these projects as in the level of congestion, but also the level of transmission investment that's required. But keep in mind too with the Biden administrations doing relative to the movement to clean energy, which obviously is a big part of his plan, large scale transmission will also be incredibly important. So, I see with what's going on today and in excess of all these things coming together, our transmission which you've always said is, as far as I can see for a decade, well, it's probably even higher. We don't know what that number is at this point and I think we've got to get through the process and fully understand that, but when you do the net benefits associated with fuel and the capital cost of the renewables projects and transmission, it's still a benefit to consumers. So, we'll go through that process, but you're right to be bullish about transmission in relation to these investments, but also everyone else's investments because we are the largest transmission provider in the country and most of this has to come through us.

That's really helpful. And then I wanted to drill into Texas for just a moment. There are some bills as you know that are floating around that would permit securitization of costs and those look to be, I guess to me, quite helpful from a financing point of view, just curious how you're thinking about that impact, how might that impact your thoughts on financing? I appreciate the point you raised earlier that essentially the credit metrics are sort of artificially low at the moment because of the storm, but with some of this - some of these bills be especially helpful to you?

Well, certainly the ERCOT portion of Texas, we are essentially a large company there at T&D. So, and we have, based on our cost provisions in place for recovery of that, we - the only real exposure we've got from a standpoint is any, I guess some of the reps, they could potentially go bankrupt and - but that's where it's going to be important to understand where that goes and also as far as securitization is concerned, we view securitization in the past in Texas and you're seeing it develop for what's classified of storm caused, but it really is Uri-related investments we'd be fine with that. Julia, anything...

No, that would be great. Great question, Stephen. So, we're keeping an eye on what's going on in Oklahoma. There is an opportunity potentially to engage in some securitization activity there, would love to get cash in the door. So if that's something that's workable, we will absolutely take the cash and my understanding is, the way that is being at least they initially discussed it and potentially structured would be such - in such a way that that does not sit on our balance sheet, which makes it even better. So, yes, we'll take that cash and with no doubt on the balance sheet, we like that very much. So, we are definitely poised and ready and waiting.

That's great. Maybe one last quick one, just as we think about this growth in renewables, any changes in terms of your thoughts on coal retirement dates?

Well, obviously the move we made on the second Rockport Unit solidified at least at 2028 and it could occur earlier depend on what the conditions are and what the evaluations are with the commission and the replacements of capacity. And so, we are - and actually, we're looking for provisions like that even in legislation that's occurring, because you're seeing all kinds of incentives developed for extension of PTCs, ITCs, direct pay we like, so direct pay not only for renewables projects, but also for transmission. If you have an ITC, but I think also, we'd like to see incentives for the undepreciated plant balances of coal units to further accelerate the ability to retire and obviate the impact to our customers. But the current plan does assume any of these advancements so - and this happens all the time where we have plans that are out there that are public, but lot of things get worked on and we'll continue to work on these objectives, because our objective is to move as quickly as possible to derisk these investments, particularly with new environmental rules with CCR and other things. We're making decisions about these plants and you've seen the last two quarters, we've announced earlier retirements of coal and lignite plant operation. So I would fully expect to see that process to continue.

Very good. Thank you very much.

Yeah.

Thank you. Our next question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead.

Yeah, thanks. Good morning, Nick and team.

Good morning, Steve. How are you doing?

I'm doing well. I have a couple of questions on the Kentucky Power announcement.

Yeah.

So just I think, Nick, you said that you're doing a strategic review with a target for year-end. So, is that the target to basically have a sales done and proceeds by year-end or have a kind of like a sale or other plan announced by year-end?

Steve, so, I didn't say year-end. I said we would get the evaluation done in 2021, that could be earlier in the year, it could be later in the year. Obviously, we need to get farther down the road in terms of this process. I can tell you that the process is established, it's ongoing and we're going to move as quickly as possible. So - and we've always talked about the timing of the resolution of anything related to the weather was Kentucky or anything else in relation to the needs around North Central. So, and we still believe that timing fits.

Okay, that's helpful.

So, I wasn't saying that would be the end of the year before we know anything, I just said during '21.

Okay. And just, is there kind of - this may be, it seems silly, but just, is there a reason that this wasn't like part of your slide deck or release or just - it was just stated on the call, just - it's something just happened, the Board just decide something?

No, I think it was out of respect to our employees, because obviously, you can't say something like this from an SEC perspective without some thought around that, but also there is the human aspects of it too and employee aspects. Matter of fact, our employees just found out about it. When I've said it, I have a webcast after this with all employees to talk about this to just alleviate their concerns through the process, but this is the way that occurs, there is multiple things you have to think about when you're making these kinds of announcements.

Understood. And then just in terms of - that's helpful. So in terms of the - in terms of thinking about your financing, this would still be potentially directed at replacing the equity needs that you have currently for North Central as a potential replacement for some of that it will be?

Yeah, I'll let Julia talk about that.

Steve, yeah, thank you for the question. Absolutely, to the extent that we get dollars in the door, that will be a wonderful place to put that to work in terms of being able to sidestep some of the equity need and we'll see if we can make that happen, absolutely.

We have the that we've access, but obviously it would change the nature of that.

One challenge with Kentucky Power has a lot of coal plants and exposure I guess, so to speak, just, do you feel like there is still despite that decent interest to be able to monetize at a reasonable price?

Yeah, and obviously different parties look at in different ways and that's what we're going to find out and through the strategic process is what evaluation Kentucky's ownership of Mitchell in terms of valuation and its impact on overall price would be. It still has value, it's still has years to operate and certainly, if you look at the plan that we presented, you still have a potential renewables opportunity there, particularly with the potential retirement of Mitchell at some point. So, anyone who is looking at this, I would say, it's not - in terms of just the valuation of Mitchell, it's a evaluation of what you do with it during the transition. So there's a lot of things to look at from that perspective.

And my last question just on this topic and my last question is just, the overall portfolio optimization kind of that you've been doing, is this a conclusion of that or is this something where we could get more?

No, it's going to be an ongoing part of our process. So it's just the beginning.

Great. That's helpful. Thank you very much.

Yeah, okay.

Thank you. Our next question comes from the line of the Durgesh Chopra with Evercore ISI. Please go ahead.

Good morning, Durgesh.

Hey, good morning, Nick. Thank you for taking my question. Just I have - I think you've covered the rest, just on storm costs, Julia, you're currently deferring those, right, the $1.2 billion on the balance sheet, can you just reminded us...

Yeah...

Thank you. Can you just remind us what is factored into your 2021 guidance, I'm just thinking about how the sort of the regulatory decisions here in the next few months impact your 2021 numbers?

Yeah, absolutely. You have it exactly right. We're deferring those storm costs, particularly as it relates to the fuel and purchase power costs, because that's the biggest chunk of the dollars that we had exposure to as it relates to storm in Uri in particular. And as it relates to what's embedded in our guidance, I would tell you, we actually updated our cash flow forecast. That's included in the slide deck that you have today to incorporate the impact of this particular circumstance as well as the fact that we did have some ice storms and more I'd characterize more kind of normal storm-related activities that occurred in the eastern portion of our jurisdictions here during the first quarter. So all of that is factored into those new cash flow forecast details, which you'll see impacting the cash flow from operations line in the slide included in the deck today. As you know, we did take on some additional debt to be able to accommodate the fuel and purchase power spike that was not anticipated and so that is now being absorbed into our 2021 operations and therefore into our earnings. Interestingly, if you look at Page number 8 of the slide deck that we have out there today, on the Corporate and Other segment, you'll actually see that interest expense was a benefit to us this time despite the fact that we have taken on a little additional debt in that capacity, because we took a $500 million term loan on at the parent company interest rates - in terms of interest cost I should say, was much lower in this particular quarter versus last year. We do have - still have lower debt outstanding from a short-term perspective versus last year. So all of those factors, interestingly, helped to have this impact to be one of benefit to us in this particular period. So, steady as she goes, no change in forecast, still feeling really good about where we are. Hopefully that helps you a little bit.

It does. It does a nutshell. It's captured in your EPS guidance, interest costs and the cash flow metrics already reflect the sort of the some of the treatment you might get in terms of recovery for these costs.

You've got it. We did that by design because we wanted to make sure we had a fair amount of integrity in that forecast with - particularly when you look at the cash flow metrics and give a shout out to our fixed income friends because I know that's extremely important.

Understood, thanks. Just one last one for me. Nick, you mentioned the disappointing first quarter, it's just what to look forward there in terms of next steps, is there going to be a rulemaking procedure and just next steps there, what should we be looking for there?

Yeah, there it is open for right now. So, and obviously our comments will be very direct and very focused, and I'm sure there'll be others in the industry with that as well, but it just seems like a direct polar opposite to where the administration is trying to go with movement to a clean energy economy and really it is directly opposite to years of precedents of encouraging the development of transmission. So I'm certainly hopeful as we get through the dialog of what this all means and actually with RTO participation, when we originally joined the RTO years ago, we were making a lot of money off of through an outrates of transmission. We traded that in for generation benefits, because we were selling a lot of generation. We're not selling generation, so to any real extent and certainly when you look at the value proposition of an RTO, it is centered on the ability to optimize across a larger jurisdiction. But from an AEP perspective, you got the cost of the RTO and certainly, our customers need to be able to benefit from that. So if you disrupt that net cost benefit opportunity, you will have people making different decisions about RTO participation. So I think it's just sort of a policy move in the wrong direction, but certainly and hopeful that the commission comes together on that.

Understood. Is there a timeline as to when the common period ends and when they might make a final determination yet?

I don't know that there is right now, they have to post the noper in the Federal Register first. So we're thinking probably a summer timeframe for the noper.

Understood. Thank you. Appreciate the color.

Yeah.

Thank you. Our next question comes from the line of Andrew Weisel with Scotiabank. Please go ahead.

Good morning, Andrew.

Thanks. Good morning, everyone. I appreciate late in the call here. First, just to follow up on the transmission, are you able to provide an EPS sensitivity or potential impact if that RTO incentive adder would it be eliminated?

Yeah, we had in our queue, actually, the number for our evaluation that we lost the entire 50 basis points, it would amount to $55 million to $70 million pre-tax. So - and that's the evaluation now and who knows what they're going to do because you went in the meeting thinking they may actually go up on the RTO incentive, but they remains to be seen what they decide to do, but that's the impact.

Well, that was the next thing I was going to ask, do you see any potential of an increase or do you think that's, it's a highly improbable at this point?

I think certainly with what transpired, we're just trying to make sure it stays the same, but if it increases, there's a lot of reasons for it to increase because RTO participation and the adders associated with transmission, like I said, the expenses of an RTO continue to go up and up. So I think there definitely needs to be an incentive there.

Okay, great. Then just one last follow-up question on the renewables. Do you - you talked a bit about the cost savings from coal plant retirements and I know it's early and the cost would be continuously changing hopefully downward. But from what you see today, do you expect this update to the generation stack to lower customer bills in most cases, all else equal and you mentioned something about potential carbon policy, does your analysis assumes some sort of federal clean energy standard and how would it look from an affordability perspective without that?

We've always had the carbon value in our analysis from a resource planning perspective and I think it's $15 a ton is what we've used. In our reports, our Climate Report, we used two cases, a $15 case and a $30 case that was more aggressive and certainly that brought more - that case more renewables in more quickly, but that's not reflected in the plan that we've shown here. So, yes, it's certainly something that we're - we will continue to look at and evaluate with the commission.

If I could...

Yeah go ahead.

Just to throw additional finer point on that as well, if carbon pricing is excluded from the equation, the renewable opportunity could get a haircut buy about 2 gigawatts. So it's not that significant, but want to throw that out there.

Yeah, we're looking at this thing as a $15 billion to $20 billion investment opportunity. So, it would be not much of an impact if you took out the carbon pricing, but you can't plan for anything without putting in a carbon pricing these days.

Okay, great. And the affordability question, assuming the carbon is in the bulk part of what you're talking...

Yeah, and we've demonstrated that with North Central. I mean, you can put these projects in place and keep in mind, we're thinking about the resiliency and reliability of the grid too. So there's limitations and we have to go through that process, but the ones we have in this plan, we can do and certainly, when you look at the benefits of North Central, for example, it was $3 billion of benefit to the customers and so when you have those kinds of economics in play, if you're able to run your 24/7 generation has more of a reliability and as an insurance policy essentially and layer in as much renewables you can, put in transmission to make sure of the system continues to operate the way it should and then it could be pretty powerful combination to benefit customers in the future.

That's great. Thank you very much for the details.

Yeah.

Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please go ahead.

Good morning, Jeremy.

Good morning. Thanks for squeezing me in here at the end. Just wanted to touch based on Rockport, if I could, in kind of the decision tree that led to this and just wanted to see what other kinds of options you were evaluating, just a bit more color would be helpful there, thanks.

Yeah, so obviously we were looking at future requirements instead of environmental requirements on the units and if we kept them operating longer than 2028, that would be a challenge from an economic perspective. We didn't want to start making those kinds of investments not knowing how long the units would actually be operational, so that was a consideration. The other, as I mentioned, was litigation to clear all that out to make sure we took ownership and we took control. And then, of course the value of the short-term bridge that exists that gives us the flexibility to make decisions with the Indiana Commission to focus on what is the right path for that transition. So it gives us a lot of optionality, a lot of flexibility and the control and by the way, I mean there's two units there. So one we own, one we leased and it just made more sense for us to own both of them and make the decision of the plant as a whole and be able to adjust accordingly. So, it worked out well overall from that perspective and like I say, it gives us a lot of optionality and flexibility and actually at a pretty - at a price that I think it was $115 million. So it's an opportunity for us to really pay for that degree of optionality that has considerable value.

Great, that's helpful. I'll stop there. Thanks.

Yeah, sort of thing.

This is Darcy. We have time for one more question.

Great, thank you. Our last question comes from Michael Lapides with Goldman Sachs. Please go ahead.

Michael, you snuck in there.

I snuck in at the end that better late than never. Thank you for taking my question, team. Hey, Nick, you mentioned Kentucky today, you also outline the renewable growth platform and plan for the regulated businesses. And obviously, lots of renewable companies, pure plays trading at pretty good multiples even after the recent share price weakness, just curious how do you think about the renewable portfolio at the G&M segment and whether that piece of the business is truly core to AEP or whether the real growth is obviously in the regulated subsidiaries and maybe the non-reg contracted renewable business could potentially be a source of funds for the parent to fund regulated growth?

Yeah, so that's been a continual part of our business, just gets allocated capital, the AEP Energy gets allocated capital and he is perfectly willing to throw it back over the fence, because we make evaluations based upon his threshold which is commensurate with the regulated part and also just his business is important because it keeps us in a part of, like for example, we're doing a lot of projects here in Ohio directly with customers and it enables us to with customers and corporations actually and enables us to be in that business, but at the same time, we're able to manage the capital such that you can throw it back over the fence if we see a better opportunity on the regulated side. So we have that working very well where we can make those trade-offs on a continual basis. So yes, it could be a source of capital to do some of these things, and again that lends itself to the portfolio management approach to ensure that we're putting the money in the right place at the right time. So - and like I said, he is doing an incredible job with that and that organization and the fact is they are still doing the renewable part of it, but they're also doing specific relationships with customers with microgrids and those types of applications. So, the value proposition of that business is so important to us seeing the leading edge of what we need to be doing and making cases in our regulated business to ensure that we can continue to grow from those perspectives as well. So, all in all, it's working fine. But, yeah, the answer is yes, we can utilize that as a source.

Got it. Thank you, Nick. Much appreciate it, guys.

Okay.

Hey, Tani, I wanted to say thank you for joining us on today's call. As always, the IR team will be available to answer any questions you may have. If you could please give the replay information.

Thank you, ladies and gentlemen. This conference will be available for replay after 11:30 AM Eastern today through April 29th at midnight. You may access the AT&T replay system at any time by dialing 1-866-207-1041 and entering the access code 3802483. International participants may dial 402-970-0847. Those numbers, again, are 1-866-207-1041 and 402-970-0847 with access code 3802483. That does conclude our conference for today. We thank you for your participation and for using AT&T Event Conferencing Service. You may now disconnect.