This Integrated Resource Plan {IRP, Plan or Report) is submitted by Appalachian Power Company (APCo or Company) based upon the best information available at the time of preparation. This Plan is not a firm commitment to specific resource additions or other courses of action over the period of the plan, as the future is uncertain. The Plan provides the basis for a short-term course of action and strives to maintain optionality in meeting APCo's resource obligations in order for the Company to take advantage of market opportunities and technological advancements. Accordingly, this IRP and the action items described herein are subject to change as new information becomes available or as circumstances warrant.

This IRP is consistent with the requirements of the Virginia Clean Economy Act (VCEA), as well as other legal requirements and regulations. The specific locations within this IRP filing, which respond to each requirement of the IRP, appear in the Appendix as part of APCo's larger index (Exhibit D).

An IRP explains how an electric utility company plans to meet the projected capacity (i.e., peak demand) and energy requirements of its customers. APCo is required to provide an IRP that encompasses a 15-year forecast planning period (in this filing, 2022-2036). This IRP has been developed using the Company's current long-term assumptions for:

• Customer load requirements - peak demand and hourly energy;

• commodity prices - coal, natural gas, on-peak and off-peak power prices, capacity and emission prices;

• supply-side alternative costs - including fossil fuel, renewable generation, and storage resources;

• transmission and distribution planning, including projects that meet the definition of grid transformation projects; and

• demand-side management program costs and impacts.

In addition, APCo considered the effect of environmental rules. This IRP considers the potential cost associated with some form of future regulation of carbon emissions, during the planning period, even though there is uncertainty as to the timing and form future carbon regulation may take.

To meet its customers' future capacity and energy requirements, APCo will continue the operation of, and ongoing investment in, its existing fleet of generation resources including the base-load coal units at Amos and Mountaineer, the natural gas combined-cycle (Dresden) facility, combustion turbine (Ceredo) units. Additionally, the Company will continue to evaluate the benefits and viability of the continued operation of its two gas-steam units at Clinch River. The Clinch River extension will be considered periodically to determine its final date of operation.

The Company will also continue to operate its hydroelectric generators, including Smith Mountain Lake. The Company has a portfolio of 630MW of purchase power agreements consisting of five wind farms, one hydro-electric facility and three solar facilities planned to come online in 2022. During the reporting period, wind contracts of 37SMW will expire.

APCo analyzed various scenarios that would provide adequate supply and demand resources to meet its projected peak load obligations and minimize costs to its customers, including energy costs, for the next fifteen years. The key components of APCo's Hybrid Plan based upon these various analyses are as follows:

• Renewable and energy storage resources compliant with the VCEA requirements

• Renewable Energy Credits (RECs) as a resource option that could be selected if they are a less costly VCEA compliance option than other renewable resources, based on a forecasted REC price curve;

• Demand-side resources, including additional EE and Demand Response (DR) programs consistent with the Company's 2021 Energy Efficiency plan and current demand response resources and;

• Distributed resources, primarily in the form of residential and commercial rooftop solar (i.e. Distributed Energy Resources (DERs)).

Key Changes from 2019 IRP

This IRP includes the following changes from the Company's 2019 IRP:

• Addresses the Commission's orders to APCO's 2019 IRP.

• Incorporates requirements of the VCEA related to resource acquisition.

• Incorporates the most recent load forecast consistent with the VCEA filing, which shows a reduced need for capacity additions over the forecast period and energy needs.

• Incorporates the most recent fundamental forecast developed in the second quarter of 2021 and consistent with the recent VCEA filing.

• Incorporates updated renewable costs informed by the Company's 2021 Renewable Request for Proposals (RFP) and Bloomberg New Energy Finance's (BNEF) 2H 2020 U.S. Renewable Energy Market Outlook.

• Updated modeling scenarios evaluating the Clinch River Unit 1 and 2 retirement date alternatives.

• Inclusion of a five-year estimated annual rate impact on a typical residential customer.

• Includes a retirement analysis of the Company's Amos and Mountaineer units, consistent with the Stipulation adopted in Case PUR-2020-00015.

Summary of APCo Resource Plan

APCo's retail sales are projected to remain relatively constant with stronger growth expected from the industrial class (+0.3% per year) while the residential class is projected to decline over the forecast horizon at a compounded annual growth rate (CAGR) of -0.3% per year. APCo's internal energy needs are expected to remain relatively flat and peak demand is expected to change at an average rate of -0.1% per year through 2033. Figure ES- 1 below shows APCo's "going-in" (i.e. before resource additions) capacity position over the planning period, which uses the PJM summer peak to determine resource requirements.

Over the planning period, the Company does not expect a capacity shortfall. Resource additions stipulated by the VCEA including renewable and storage resources further extend the Company's capacity position and serve to diversify its portfolio while also incorporating PJM's guidance on intermittent resources Effective Load Carrying Capability (ELCC) to ensure effective resource adequacy.

With resource additions driven by VCEA requirements during the reporting period, the Company structured its analysis to understand the near and long-term impacts of various VCEA compliant Portfolios. A key consideration in the analysis was the assessment of the inclusion of natural gas resources in its portfolio. Furthermore, the Company considered the impact of current and potential carbon costs. For this IRP, APCo considered a series of Base and Alternate Portfolios and developed a Hybrid Plan based on the following considerations:

• Minimizing the net present value of revenue requirements (i.e. cost to customers) over the evaluation period, while meeting capacity obligations.

• Compliance with the VCEA requirements.

• Integrating PJM guidance on ELCC for intermittent resources to support resource adequacy.

The cumulative technology capacity additions during the planning period associated with the Hybrid Plan are shown below in Table ES-1 and in Figure ES-2.

The Hybrid Plan is derived from the Base Portfolio which is consistent with the Company's 2021 VCEA Plan. It includes a similar mix of supply-side resources to the Base Portfolio but allows for an earlier addition of wind resources to take advantage of Production Tax Credits (PTC's) available through December 2025 under current law. Furthermore, the Hybrid Plan adds storage resources more uniformly across the reporting period compared to the Base Plan. Finally, the Hybrid plan assumed the extension of the Clinch River plant through the reporting period.

In the Hybrid Plan, incremental DR and EE resources consistent with the Company's 2021 Energy Efficiency plan and current demand response resources and DER resources are included through the reporting period. Incremental Behind the Meter (BTM) DER rooftop solar resources were included with a Nameplate capacity of 340MW by 2036 and reducing its capacity obligation by 83MW.

Figure ES-3 illustrates APCo's Hybrid Plan Capacity Position that supports the Company1 s PJM capacity obligations and meets the requirements in the VCEA.

To acquire new resources and specifically, to meet the requirements in the VCEA, the Company conducts multiple RFPs annually including the RPS component (56-585.5.C), the Virginia sited subrequirement (56-585.5.D) and the energy storage requirements (56-585.5.E.)

While the Company will meet its capacity obligation, the national transition to more intermittent and renewable resources is anticipated to impact the energy output from the Company's fleet of fossil-fueled generators. The Company will maintain appropriate capacity reserves and the Hybrid Plan includes resources to support the renewable energy targets set forth in the VCEA for the Company to Virginia customers. However, energy delivered to APCo's non-Virginia retail customers is expected to be purchased from the market and from fossil resources as shown in Figure ES-4.

The Hybrid Plan is presented as an option that balances cost, including energy costs while meeting the VCEA mandates.

In summary, the Hybrid Plan:

• Includes 220MW (nameplate) of additional solar resources planned for in service by 2025 (COD Dec 2024)

• Includes 204MW (nameplate) of additional wind resources planned for in service by 2025 (COD Dec 2024)

• Includes 64MW (nameplate) of planned additional 3rd party solar resources by 2025 installed at the distribution level of service

• Incorporates the use of Renewable Energy Credits (RECs) to support the Company's RPS requirements under the VCEA

• Includes EE program savings consistent with the Company's most recent EE plan

• Assumes the continued operation of the Clinch River plant through the reporting period which will be further considered in future IRPs.

Conclusion

The Hybrid Plan provides an optimized selection of resources that balances the Company's obligations for capacity and renewable energy requirements under the VCEA law while also meeting ongoing PJM reliability and capacity obligations.

The IRP process is a continuous activity; assumptions and plans are reviewed as new information becomes available and modified as appropriate. This IRP is not a commitment to specific resource additions or extensions or other courses of action, as the future is highly uncertain. The resource planning process continues to be complex, especially with regard to such things as pending regulatory restrictions, technology advancement, changing energy supply pricing fundamentals, uncertainty of demand and enduse efficiency improvements. These complexities highlight the need for flexibility and adaptability in any ongoing planning activity and resource planning process.

To that end, APCo intends to pursue the following five-year action plan:

1. Issue annual RFPs in compliance with VCEA requirements.

2. Seek competitive offers for energy storage in support of non-wires alternatives and energy storage requirements.

3. Utilize 100% of the Company's hydro resources for VCEA compliance beginning in 2025 through intra-Company transactions at market value.

4. Monitor federal and state regulatory developments related to continued operation of the Amos and Mountaineer plants.

5. Monitor developments in REC markets to evaluate RECs as a compliance option.

6. Continue to evaluate the benefits and viability for the continued operation of the natural gas fired Clinch River plant.

7. Be able to adjust this action plan and future IRPs to reflect changing circumstances.