PS Deal Module Utilization v9.0 Case Study - AEP

1. PS Deal Module Utilization v9.0 Case Study - AEP Rick Gray rgray2@aep.com

2. Contents • AEP – Company Overview • Project Scope • PS Enterprise Deal Module Overview • Purpose of the Deal Module • AEP’s Scope of Delivered Functionality • Deal Module Flexibility vs. Complexity • AEP Customizations • Known Deal Module Issues • Requests for Improvements • Review and Summary • Questions

3. AEP – Company Overview • American Electric Power has been providing electric service for more than 100 years and is one of the nation’s largest electric utilities, serving in 11 states. 2009 • Revenues (in billions) $13.5 • Net Income (in billions) $1.362 • Service Territory ~200,000 Square Miles • Total Assets (in billions) $45.2 • U.S. Customers (year-end) 5,213 • Employees (year-end) ~20,000

4. Project Scope • PS Modules: AP, AR/BI, GL, Treasury, Project Costing • Technical Upgrade • Reapply customizations, unless no longer required • No new functionality, unless replaced customizations • Technical Scope • Double upgrade from 8.0 -> 8.9 -> 9.0 • 5,358 Functional Requirements • 441 Customizations (Work Units) • 18,204 PeopleSoft, 222 non-PeopleSoft Objects customized • 49 Customizations for Deal Module

5. Deal Module Scope Overview Prospectus Bond Issuance for ABC Company Issued: June 1st, 2009 $50,000,000 5% Interest Payment Monthly Matures 30 Years Calculates the dollar transactions (Cash Flows): Original $50M Cash Receipt Monthly Interest Accruals and Payment $208,333.33 Maturity $50M Repayment

6. Deal Module Scope Overview • Generates Cash Flow: • $50,000,000 on June 1, 2009 in Bank Account 123456 • Cash Balance is integrated with Cash Module for Cash Position. • Feeds into Bank Reconciliation. • Expenditures feed into Financial Gateway for disbursements • Generates Accounting: • Cash $50,000,000 • LT Debt $50,000,000 Calculates the dollar transactions (Cash Flows): Original $50M Cash Receipt Monthly Interest Payment $208,333.33 Maturity $50M Repayment Company ABC’s total debt is increased by $50M. Visibility to understanding the total debt of ABC.

7. People Books Description-AEP Utilization Deal Management provides the following business processes (items in gray are not used at AEP): • Instrument type and instrument template creation and maintenance. • External and internal deal creation and maintenance. • Trade tickets creation and maintenance. • Securities creation and maintenance. • Undo deal functionality. • Deal confirmation, administration, and reevaluation. • Deal portfolio management. • Deal collateral administration and review. • Equities creation and maintenance. • Deal Fees

8. Deal Flexibility • Financings are varied, complicated, and change • The Deal Module attempts to meet the needs • At AEP we only use two Types • Flexibility within types

9. Flexibility vs. Complexity Prospectus Bond Issuance for ABC Company Issued: June 1st, 2009 $50,000,000 5% Interest Payment Monthly Matures 30 Years • Issue Date June 1 – • Bonds rarely settle in issuance date • Settlement vs. Coupon Start vs. Issue Date • Interest Payment Date • Frequency • Initial Payment period long or short • Weekend and holidays • Interest Calculation • Day count basis (30/360, Actual/365, etc..) • Interest Bearing, discounted, compounding, arrears, etc..) • ETC… , ETC… and so forth Bottom line – There are several variables and combinations that change the derived cashflows.

10. AEP Deal Customizations AEP added customizations for the following processes: • Accuracy: • Deal Approval Workflow • Accounting Review and Approval • Undo Accounting • Unroll deal functionality • Deal Deactivation and Link new deals • Lock cashflows after accounting has ran • Unlock Settlement Instructions and Description for Spawned Deals (Sell Buyback and Rolls) • Key Deal Indicator Report – Lists and Compares Data between deals • Efficiency: • Auto Roll functionality • Deal Import (Short Term Debt and Investments) • Deal Templates – Added Settlement Instructions for cashflows

11. AEP Challenges with PS Deal Module • Deal Challenges: • Complexity – Lack of Documentation • Deal Locks once entered • Accounting Locked for Life of Deal • Cashflows Inflexible • “Equity” Recorded in PS is only the Investment Side • AEP Identified Bugs: • Interest accruals on partial sell buybacks • Interest Overrides with Purchased Interest • Short / Long Initial Interest Payments on Amortized Loans • SWAPS – Cashflow Processed as MAN do not pick-up Accounting • Cashflows Editable for Investments after Accounting Occurs

12. Request for Improvements with Deal Module • AEP’s Wish List: • Documentation! – Detail User Manual • Fix known Bugs and Improve QA on Releases • Allow Deal Editing until Accounting is Posted and/or Bank Reconciled • Un-Approve Cashflow • Allow Changes through Life of Deal • Accounting Template, Settlement Instructions • Simplify Entry • Perhaps VRDN, Money Market, CP etc.. Independent Entry Screens • Allow unscheduled interest and principal payments (up and down) • Instrument Templates should include Settlement Instructions • Undo and Redo (Accounting, Roll, Sell Buyback, etc..) • Rate Reset from import should update deals without visiting each deal • Approval workflow for Deal Cashflows • Process to require approvals on changes to settlements instructions • Changes made to settlement instructions should be flagged as unapproved • Cashflows with unapproved settlement instructions should not process

13. Questions? Rick Gray AEP Cash Management rgray2@aep.com

14. Appendix PeopleSoft Deal Module Utilization v9.0 Case Study - AEP Rick Gray AEP Cash Management rgray2@aep.com

15. Appendix A – AEP Custom Deal Approval Deal Process and Approval Workflow Summary Page

16. Appendix B – AEP Custom Deal Workflow Deal Workflow Setup by Portfolio

17. Appendix C – AEP Custom Undo Accounitng Deal Undo Accounting Entries

18. Appendix D – AEP Custom UnRoll Deal Unroll

19. Appendix E – AEP Custom Deal Auto-Roll Deal Auto-roll

20. Appendix F - AEP Custom Deal Import Deal Import Staging Table

21. Appendix G –AEP Custom Deal Import Deal Import Setup