# EDGAR Filing Document

**Accession Number:** 0002106973
**File Stem:** 0001193125-26-201377
**Filing Date:** 2026-5
**Character Count:** 1062028
**Document Hash:** ddbcad059a6a856395b5aca60dd7b42a
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-201377.hdr.sgml**: 20260501

**ACCESSION NUMBER**: 0001193125-26-201377

**CONFORMED SUBMISSION TYPE**: SF-1/A

**PUBLIC DOCUMENT COUNT**: 20

**FILED AS OF DATE**: 20260501

**DATE AS OF CHANGE**: 20260501

**ABS ASSET CLASS**: Other

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** APPALACHIAN POWER CO
- **CENTRAL INDEX KEY:** 0000006879
- **STANDARD INDUSTRIAL CLASSIFICATION:** ELECTRIC SERVICES [4911]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 540124790
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** SF-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-293890
- **FILM NUMBER:** 26932328

**BUSINESS ADDRESS:**
- **STREET 1:** 1 RIVERSIDE PLAZA
- **CITY:** COLUMBUS
- **STATE:** OH
- **ZIP:** 43215
- **BUSINESS PHONE:** 614-716-1000

**MAIL ADDRESS:**
- **STREET 1:** 1 RIVERSIDE PLAZA
- **CITY:** COLUMBUS
- **STATE:** OH
- **ZIP:** 43215
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Appalachian Power Recovery Funding LLC
- **CENTRAL INDEX KEY:** 0002106973
- **STANDARD INDUSTRIAL CLASSIFICATION:** ASSET-BACKED SECURITIES [6189]
- **ORGANIZATION NAME:** Office of Structured Finance
- **EIN:** 413000250
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** SF-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-293890-01
- **FILM NUMBER:** 26932329

**BUSINESS ADDRESS:**
- **STREET 1:** 3 JAMES CENTER
- **STREET 2:** 1051 E CARY ST, SUITE 1100
- **CITY:** RICHMOND
- **STATE:** VA
- **ZIP:** 23219
- **BUSINESS PHONE:** 614-716-1519

**MAIL ADDRESS:**
- **STREET 1:** 3 JAMES CENTER
- **STREET 2:** 1051 E CARY ST, SUITE 1100
- **CITY:** RICHMOND
- **STATE:** VA
- **ZIP:** 23219

##### [**Table of Contents**](#toc)
**As filed with the Securities and Exchange Commission on May 1, 2026** 

**Registration Nos. 333- 293890 and 333-293890-01** 

**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549** 

**Amendment No. 1** 

**to** 

**FORM SF-1** 

**REGISTRATION STATEMENT** 

***UNDER***

***THE SECURITIES ACT OF 1933***

---

| | |
|:---|:---|
| **APPALACHIAN POWER COMPANY** | **APPALACHIAN POWER RECOVERY FUNDING LLC** |
| **(Exact name of registrant, sponsor and depositor as**<br> **specified in its charter)** | **(Exact name of registrant and issuing entity as**<br> **specified in its charter)** |
| **Virginia** | **Delaware** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(State or other jurisdiction of**<br> **incorporation or organization)** |
| **1-3457** |  |
| **(Commission File Number)** |  |
| **0000006879** | **0002106973** |
| **(Central Index Key Number)** | **(Central Index Key Number)** |
| **54-0124790** | **41-3000250** |
| **(I.R.S. Employer Identification Number)** | **(I.R.S. Employer Identification Number)** |
| **1 Riverside Plaza**<br> **Columbus, OH 43215-2373**<br> **(614) 716-1000** | **1051 E Cary St., Suite 1100**<br> **Richmond, VA, 23219**<br> **(614) 716-1519** |
| **(Address, including zip code, and telephone number, including area code, of depositor's principal executive offices)** | **(Address, including zip code, and telephone number, including area code, of issuing entity's principal executive offices)** |

---

**Ryan F. Aguiar, Senior Counsel** 

**Jack J. Gravelle, Associate General Counsel** 

**American Electric Power Service Corporation** 

**1 Riverside Plaza** 

**Columbus, Ohio 43215-2373** 

**(614) 716-1630** 

**(Name, address, including zip code, and telephone number, including area code, of agent for service)** 

***With Copies to:***

---

| | |
|:---|:---|
| **Robert G. Stephens**<br> **George J. Vlahakos**<br> **Sidley Austin LLP**<br> **1000 Louisiana Street, Suite 5900**<br> **Houston, Texas 77002**<br> **(713) 495-4500** | **Michael F. Fitzpatrick, Jr.**<br> **Adam R. O'Brian**<br> **Hunton Andrews Kurth LLP**<br> **200 Park Avenue**<br> **New York, New York 10166**<br> **(212) 309-1000** |

---

**Approximate date of commencement of proposed sale to the public:** 

**As soon as practicable after the effective date of this Registration Statement.** 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering ☐

**The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.** 

------

##### [**Table of Contents**](#toc)
**The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.** 

**Subject to Completion, dated May 1, 2026** 

**PRELIMINARY PROSPECTUS** 

**$1,375,500,000 Series 2026-A Senior Secured SAC Bonds** 

**Appalachian Power Company** 

***Sponsor, Depositor and Initial Servicer***

***Central Index Key Number: 0000006879***

## Appalachian Power Recovery Funding LLC
***Issuing Entity***

**Central Index Key Number: 0002106973** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Tranche** | **Expected<br>Weighted<br>Average<br>Life<br>(Years)** | **Principal<br>Amount<br>Offered<sup>(1)</sup>** | **Scheduled<br>Final<br>Payment<br>Date** | **Final<br>Maturity<br>Date** | **Interest<br>Rate<sup>(2)</sup>** | **Initial<br>Price<br>to<br>Public** | **Underwriting<br>Discounts<br>and<br>Commissions** | **CUSIP** | **ISIN** |
|  A-1 |  | $450000000% |  |  |  |  |  | $— |  |
|  A-2 |  | $325500000% |  |  |  |  |  | $— |  |
|  A-3 |  | $600000000% |  |  |  |  |  | $— |  |

---

(1) Preliminary, subject to change

(2) Interest on the SAC bonds will accrue from    , 2026. If the SAC bonds are delivered
after that date, the purchaser will pay accrued interest.

The total initial price to the public is $. The total amount of the underwriting discounts and commissions is $. The total amount of proceeds to the issuing entity before deduction of expenses (estimated to be $) is $. The distribution frequency is semi-annually. The first expected payment date is , 2027.

**Investing in the Series 2026-A Senior Secured SAC bonds involves risks. Please read "<u>[Risk Factors](#rom44535_4)</u>" beginning on page 26 to read about factors you should consider before buying the SAC bonds.** 

Appalachian Power Company, as "**depositor**", is offering up to $1,375,500,000 aggregate principal amount of Series 2026-A Senior Secured SAC Bonds (referred to herein as the "**SAC bonds**") in three tranches to be issued by Appalachian Power Recovery Funding LLC, a Delaware limited liability company (the "**issuing entity**") and wholly owned subsidiary of Appalachian Power Company. Appalachian Power Company is the "**seller**," the "**initial servicer**" and the "**sponsor**" with regard to the SAC bonds. The SAC bonds are senior secured obligations of the issuing entity only and will be secured by the SAC property, which includes the right to bill and collect an irrevocable, binding, nonbypassable charge, known as the "**SAC charge**," paid by all existing and future State Corporation Commission of the Commonwealth of Virginia-jurisdictional area retail customers of Appalachian Power Company, irrespective of the generation provider of such retail customers, including partially exempt customers (as defined below), as discussed herein. "**Virginia Commission-jurisdictional area**" refers to Appalachian Power Company's customer base in Virginia that will be subject to the SAC charges. SAC charges are required to be adjusted at least annually, with semi-annual (and, beginning 12 months prior to the scheduled final payment date of the latest maturing tranche of the SAC bonds, quarterly) or interim, as necessary, to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the SAC bonds during the next two succeeding bond payment dates and non-standard true-ups to account for updated class allocations. Credit enhancement for the SAC bonds will be provided by the true-up mechanism, as well as by funds in the general, excess funds and capital subaccounts held under the indenture governing the SAC bonds.

Each SAC bond will be entitled to interest on and of each year, beginning on , 2026. The first scheduled payment date is , 2027. Interest will accrue from the date of issuance and must be paid by the purchaser of the SAC bonds if the SAC bonds are delivered after that date. On each payment

------

##### [**Table of Contents**](#toc)
date, scheduled principal payments shall be paid sequentially in accordance with the expected sinking fund schedule in this prospectus, but only to the extent funds are available in the collection account after payment of certain fees and expenses and after payment of interest.

The SAC bonds represent obligations only of the issuing entity, Appalachian Power Recovery Funding LLC, and are secured only by the assets of the issuing entity, consisting principally of the SAC property and related assets to support its obligations under the SAC bonds. Please read "Description of the SAC Bonds—Security for the SAC Bonds," and "Description of the SAC Property" in this prospectus. The SAC property includes the right to impose, bill, charge, collect and receive SAC charges from Appalachian Power Company's Virginia Commission-jurisdictional area retail customers in amounts sufficient to make timely payments on the SAC bonds, as described further in this prospectus. Appalachian Power Company and its affiliates, other than the issuing entity, are not liable for any payments on the SAC bonds. The SAC bonds do not obligate the Commonwealth of Virginia or any of its political subdivisions, agencies, or instrumentalities to levy any tax or make any appropriation for payment of the SAC bonds nor are they special obligations or indebtedness of the Commonwealth of Virginia or any of its political subdivisions, agencies or instrumentalities.

All matters relating to the structuring and pricing of the SAC bonds have been considered by Appalachian Power Company and the State Corporation Commission of the Commonwealth of Virginia (the "**Virginia Commission**"), acting through its financial advisor.

**Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.** 

The underwriters expect to deliver the SAC bonds through the book-entry facilities of The Depository Trust Company for the accounts of its participants including Clearstream Banking S.A. ("**Clearstream**") and Euroclear Bank SA/NV, as operator of the Euroclear System ("**Euroclear**") against payment on or about , 2026. There currently is no secondary market for the SAC bonds, and we cannot assure you that one will develop.

As provided in § 56-249.8 of the Code of Virginia (the "**Securitization Law**"), the Commonwealth of Virginia and its agencies, including the Virginia Commission, have pledged to and agree with holders of SAC bonds, the owners of the SAC property, and other financing parties, that the Commonwealth of Virginia and its agencies, including the Virginia Commission, will not (a) alter the provisions of the Securitization Law that (i) authorize the Virginia Commission to create an irrevocable contract right or chose in action by the issuance of the financing order, to create SAC property, and (ii) make the SAC charges imposed by the financing order irrevocable, binding, or nonbypassable charges; (b) take or permit any action that impairs or would impair the value of SAC property or the security for the SAC bonds or revises the securitized asset costs for which recovery is authorized; or (c) in any way impair the rights and remedies of the holders of SAC bonds, assignees, or other financing parties, as further described in the Securitization Law. The Virginia Commission's obligations relating to the SAC bonds, including the true-up adjustment mechanism, are direct, explicit, irrevocable and unconditional upon issuance of the SAC bonds, and are legally enforceable against the Virginia Commission, which is a United States public sector entity, in accordance with Virginia law.

***Joint Book-Running Managers***

---

| | | |
|:---|:---|:---|
| **Goldman Sachs & Co. LLC**<br> *(Structuring Advisor)* | **J.P. Morgan** | **RBC Capital Markets** |

---

***Co-Managers***

---

| | | |
|:---|:---|:---|
| **Jefferies LLC** | **Morgan Stanley** | **SMBC Nikko** |

---

**The date of this prospectus is , 2026.** 

------

##### [**Table of Contents**](#toc)
**TABLE OF CONTENTS** 

---

| | |
|:---|:---|
|  | **Page** |
|  **[ABOUT THIS PROSPECTUS](#rom44535_1)** | **1** |
|  **[CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION](#rom44535_2)** | **3** |
|  **[OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS](#rom44535_3a)** | **7** |
|  **[PROSPECTUS SUMMARY OF TERMS](#rom44535_3)** | **8** |
|  **[RISK FACTORS](#rom44535_4)** | **26** |
|  **[RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS](#rom44535_5)** | **26** |
|  **[SERVICING RISKS](#rom44535_6)** | **29** |
|  **[STORM-RELATED RISKS](#rom44535_7)** | **32** |
|  **[RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE SAC PROPERTY](#rom44535_8)** | **32** |
|  **[OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE SAC BONDS](#rom44535_9)** | **36** |
|  **[REVIEW OF SAC PROPERTY](#rom44535_10)** | **42** |
|  **[DESCRIPTION OF THE SAC PROPERTY](#rom44535_11)** | **46** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Creation of SAC Property; Financing Order](#rom44535_12) | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Securitization Financing Rider; SAC Charges](#rom44535_13) | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Billing and Collection Terms and Conditions](#rom44535_14) | 48 |
|  **[THE SECURITIZATION LAW](#rom44535_15)** | **49** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Overview](#rom44535_16) | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo and Other Utilities May Securitize Securitized Asset Costs and Related Financing and Ongoing Costs](#rom44535_17) | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Constitutional Matters](#rom44535_18) | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Virginia Commission May Adjust SAC Charges and Customer Class Allocations](#rom44535_19) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [SAC Charges Are Nonbypassable](#rom44535_20) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Securitization Law Protects the SAC Bondholders' Security Interest in SAC Property](#rom44535_21) | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Securitization Law Characterizes the Transfer of SAC Property as a True Sale](#rom44535_22) | 54 |
|  **[APCO'S FINANCING ORDER](#rom44535_23)** | **55** |
|  **[THE DEPOSITOR, SELLER, INITIAL SERVICER AND SPONSOR](#rom44535_24)** | **58** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [About APCo](#rom44535_25) | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Servicing Experience](#rom44535_26) | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo's Retail Customer Base and Electric Energy Consumption](#rom44535_27) | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Forecasting Electricity Consumption](#rom44535_28) | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Credit Policy; Billing Process; Collections Process; Termination of Service](#rom44535_29) | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Average Days Sales Outstanding](#rom44535_30) | 64 |
|  **[APPALACHIAN POWER RECOVERY FUNDING LLC, THE ISSUING ENTITY](#rom44535_31)** | **65** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General](#rom44535_32) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our Purpose](#rom44535_33) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our Relationship with APCo](#rom44535_34) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our Managers](#rom44535_35) | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Manager Fees and Limitation on Liabilities](#rom44535_36) | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [We Are a Separate and Distinct Legal Entity from APCo](#rom44535_37) | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Administration Agreement](#rom44535_38) | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Intercreditor Agreement and Joinder](#rom44535_39) | 69 |

---

i

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
|  | **Page** |
|  **[THE SAC CHARGES](#rom44535_40)** | **69** |
|  **[DESCRIPTION OF THE SAC BONDS](#rom44535_41)** | **71** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General](#rom44535_42) | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Payments of Interest and Principal on the SAC Bonds](#rom44535_43) | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Expected Sinking Fund Schedule](#rom44535_44) | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Redemption of the SAC Bonds](#rom44535_45) | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [SAC Bonds Will Be Issued in Book-Entry Form](#rom44535_46) | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Definitive Certificated SAC Bonds](#rom44535_47) | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Registration and Transfer of the SAC Bonds](#rom44535_48) | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Security for the SAC Bonds](#rom44535_49) | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Collection Account for the SAC Bonds](#rom44535_50) | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [How Funds in the Collection Account Will Be Allocated](#rom44535_51) | 82 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [How Funds in the Subaccounts Will Be Used Upon Repayment of the SAC Bonds](#rom44535_52) | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Reports to SAC Bondholders](#rom44535_53) | 84 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Website Disclosures](#rom44535_54) | 85 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [We and the Trustee May Modify the Indenture](#rom44535_55) | 85 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [What Constitutes an Event of Default on the SAC Bonds](#rom44535_56) | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our Covenants](#rom44535_57) | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Access to the List of SAC Bondholders](#rom44535_58) | 93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [We Must File an Annual Compliance Statement](#rom44535_59) | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Trustee Must Provide an Annual Report to All SAC Bondholders](#rom44535_60) | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [What Will Trigger Satisfaction and Discharge of the Indenture](#rom44535_61) | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Our Legal Defeasance and Covenant Defeasance Options](#rom44535_62) | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [No Recourse to Others](#rom44535_63) | 96 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Governing Law](#rom44535_64) | 96 |
|  **[THE TRUSTEE](#rom44535_65)** | **97** |
|  **[WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE SAC BONDS](#rom44535_66)** | **100** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Weighted Average Life Sensitivity](#rom44535_67) | 100 |
|  **[ESTIMATED ANNUAL FEES AND EXPENSES](#rom44535_68)** | **102** |
|  **[THE SALE AGREEMENT](#rom44535_69)** | **103** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo's Sale and Assignment of the SAC Property](#rom44535_70) | 103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Conditions to the Sale of the SAC Property](#rom44535_71) | 104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo's Representations and Warranties](#rom44535_72) | 105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo's Covenants](#rom44535_73) | 109 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo's Obligation to Indemnify Us and the Trustee and to Take Legal Action](#rom44535_74) | 112 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Successors to APCo](#rom44535_75) | 113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amendment](#rom44535_76) | 113 |
|  **[THE SERVICING AGREEMENT](#rom44535_77)** | **114** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Servicing Procedures](#rom44535_78) | 114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Servicing Standards and Covenants](#rom44535_79) | 115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [SAC Charge Adjustment Process](#rom44535_80) | 115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Remittances to Collection Account](#rom44535_81) | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Servicer Compensation](#rom44535_82) | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [APCo's Representations and Warranties as Servicer](#rom44535_83) | 118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Servicer Will Provide Statements to Us, the Virginia Commission and the Trustee](#rom44535_84) | 120 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Servicer Will Provide Assessments Concerning Compliance with the Servicing Agreement](#rom44535_85) | 120 |

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ii

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##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
|  | **Page** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Matters Regarding APCo as the Servicer](#rom44535_86) | 121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Events Constituting a Default by the Servicer](#rom44535_87) | 122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Trustee's Rights if the Servicer Defaults](#rom44535_88) | 123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Waiver of Past Defaults](#rom44535_89) | 123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [The Obligations of a Successor Servicer](#rom44535_90) | 124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amendment](#rom44535_91) | 124 |
|  **[USE OF PROCEEDS](#rom44535_92)** | **129** |
|  **[PLAN OF DISTRIBUTION](#rom44535_93)** | **130** |
|  **[AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS](#rom44535_94)** | **132** |
|  **[MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES](#rom44535_95)** | **133** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General](#rom44535_96) | 133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Income Tax Status of the SAC Bonds and Us as Issuing Entity](#rom44535_97) | 134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Tax Consequences to U.S. Holders](#rom44535_98) | 134 |
|  **[MATERIAL VIRGINIA INCOME TAX CONSEQUENCES](#rom44535_99)** | **138** |
|  **[ERISA CONSIDERATIONS](#rom44535_100)** | **139** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [General](#rom44535_101) | 139 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Regulation of Assets Included in a Plan](#rom44535_102) | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Prohibited Transaction Exemptions](#rom44535_103) | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Consultation with Counsel and Representation](#rom44535_104) | 141 |
|  **[LEGAL PROCEEDINGS](#rom44535_105)** | **142** |
|  **[RATINGS FOR THE SAC BONDS](#rom44535_106)** | **143** |
|  **[WHERE YOU CAN FIND MORE INFORMATION](#rom44535_107)** | **144** |
|  **[INCORPORATION BY REFERENCE](#rom44535_108)** | **145** |
|  **[INVESTMENT COMPANY ACT AND VOLCKER RULE MATTERS](#rom44535_109)** | **146** |
|  **[RISK RETENTION](#rom44535_110)** | **147** |
|  **[LEGAL MATTERS](#rom44535_111)** | **148** |
|  **[GLOSSARY OF DEFINED TERMS](#rom44535_113)** | **149** |

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**ABOUT THIS PROSPECTUS** 

This prospectus is part of a registration statement filed with the U.S. Securities and Exchange Commission or the "**SEC**". This prospectus provides information about us, the SAC bonds and Appalachian Power Company, as depositor, sponsor and initial servicer. This prospectus describes the terms of the SAC bonds offered hereby. You should carefully review this prospectus, any free writing prospectus the issuing entity files with the SEC, and the information, if any, contained in the documents referenced in this prospectus under the heading "Where You Can Find More Information."

References in this prospectus to the terms "**we**," "**us**," "**our**" or "**the issuing entity**" mean Appalachian Power Recovery Funding LLC. References to "**APCo**," "**the sponsor**," "**the initial servicer**," "**the depositor**" or "**the seller**" mean Appalachian Power Company. References to "**the servicer**" refer to APCo and any successor servicer under the servicing agreement referred to in this prospectus. References to the "**Securitization Law**" means § 56-249.8 of the Code of Virginia, established by the General Assembly of the Commonwealth of Virginia (the "**Virginia legislature**"), providing for a financing mechanism through which electric utilities can use securitization financing for securitized asset costs, by issuing "**SAC bonds**." We also refer to the State Corporation Commission of the Commonwealth of Virginia as the "**Virginia Commission**." Unless the context otherwise requires, the terms "**Virginia Commission-jurisdictional area retail customer,**" "**customer**" or "**retail customer**" means all existing and future Virginia Commission-jurisdictional area retail customers that receive electric service within APCo's geographic service territory in the Commonwealth of Virginia (including the partially exempt customers) that have not opted out (to the extent eligible to opt out under the Securitization Law) and are therefore subject to the SAC charges, irrespective of the generation supplier of such retail customers. Pursuant to the Securitization Law, certain retail customers of APCo whose demand exceeded five megawatts during the calendar year prior to the filing of APCo's petition for a financing order with the Virginia Commission were eligible to opt out of financing their pro rata obligation for SAC charges by providing written notice to APCo within 30 days of such filing. The time period for eligible customers to exercise this opt-out right has expired, and no customer provided APCo with the written notice required to do so. Accordingly, the maximum principal amount of SAC bonds authorized to be issued was not reduced by any customer opt-out payments. Additionally, the Virginia Commission found in the financing order that APCo does not have any present or future retail access customers that are categorically exempt from the SAC charges. However, under the Securitization Law and Section 56-577 A 6 of the Code of Virginia, certain retail access customers that purchase electricity from a licensed supplier other than APCo as of February 1, 2019, are exempt from the portion of the SAC charges representing the undepreciated Amos and Mountaineer plant balances (such customers, the "**partially exempt customers**"). Because the partially exempt customers do not currently pay APCo's generation charges, they are not included in the customer base to which the plant-balance portion of the SAC charges is allocated, but they do remain subject to the portion of the SAC charges attributable to storm restoration costs and upfront financing costs. You can find a glossary of some of the other defined terms we use in this prospectus on page 149 of this prospectus.

We have included cross-references to sections in this prospectus where you can find further related discussions. You can also find references to key topics in the table of contents on the preceding pages.

We have not, and the underwriters have not, authorized anyone to give you any information other than in this prospectus and the information incorporated by reference herein. We take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you. Neither we nor any underwriter, agent, dealer, salesperson, the Virginia Commission or APCo has authorized anyone else to provide you with any different information. Neither we nor any underwriter, agent, dealer, salesperson, the Virginia Commission or APCo take any responsibility for, and can provide any assurance as to the reliability of, any different information that others may give you. We are not offering to sell the SAC bonds in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is current only as of the date of this prospectus.

We expect to deliver the SAC bonds against payment for the SAC bonds on or about the date specified in the last paragraph of the cover page of this prospectus, which will be the business day following the

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date of pricing of the SAC bonds. Since trades in the secondary market generally settle in one business day, purchasers who wish to trade SAC bonds on the date prior to the first business day before the settlement date will be required, by virtue of the fact that the SAC bonds initially will settle in T+ , to specify alternative settlement arrangements to prevent a failed settlement.

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**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION** 

Certain statements included in this prospectus may be "**forward-looking statements**" within the meaning of the Securities Act of 1933, as amended (the "**Securities Act**") and the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"). Words such as "**may**," "**should**," "**expects**," "**intends**," "**projects**," "**plans**," "**believes**," "**estimates**," "**targets**," "**anticipates**" and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we and APCo undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Specific factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below:

• state and federal legislative, judicial and regulatory actions or developments, including deregulation, re-regulation, restructuring of the electric utility industry and changes in, or changes in application of, laws or regulations applicable to various aspects of APCo's business;

• the accuracy of the servicer's estimates of market demand and prices for energy;

• the accuracy of the servicer's estimates of industrial, commercial and residential growth in APCo's
customer base;

• the accuracy of the servicer's forecast of electrical consumption or the payment of SAC charges;

• the ability of APCo's customers to continue paying their utility bills;

• economic conditions in APCo's Virginia service territories, including the economy's effects on
customer demand for utility services;

• mechanical breakdowns or other incidents that could impair assets and disrupt operations of any of APCo's
generation facilities, transmission and distribution systems, or other operations;

• wholesale and retail competition, including alternative energy sources, growth in customer-owned power resource
technologies that displace utility-supplied energy or that may be sold back to the utility, and alternative energy suppliers and delivery arrangements;

• prolonged or recurring U.S. federal government shutdowns that could adversely affect APCo's operations,
regulatory approvals, and financial performance and could cause volatility in the capital markets which may interrupt APCo's access to capital;

• blackouts or disruptions of interconnected transmission systems (the regional power grid);

• economic, regulatory, or workforce impacts related to pandemics;

• changes in climate and weather conditions, including natural disasters such as wind and ice storms, hurricanes,
floods, wildfires and droughts;

• acts of war and military conflicts, the effects of terrorism (including increased security costs), embargoes,
cybersecurity threats, labor strikes impacting material supply chains, global information technology disruptions, and other catastrophic events;

• the impact of changes in interest rates and global market conditions on financing;

• declining energy demand related to customer energy efficiency, conservation measures, technological advancements,
or increased distributed generation;

• the unpredictability of civil unrest and its direct and indirect impact on APCo; and

• other factors we discuss in this prospectus.

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You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this prospectus, and, except as required by law, we undertake no obligation to update or revise any forward-looking statement, including unanticipated events, after the date of this prospectus. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

All subsequent written and oral forward-looking statements attributable to us and APCo or to persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. The forward-looking statements included in this prospectus are made only as of their respective dates, and we undertake no obligation to update these statements to reflect subsequent events or circumstances, except as required by law.

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**OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS** 

**NOTICE TO PROSPECTIVE INVESTORS IN THE EEA** 

THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSES OF REGULATION (EU) 2017/1129, AS AMENDED (THE "**PROSPECTUS REGULATION**"). THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF SAC BONDS IN ANY MEMBER STATE OF THE EEA WILL BE MADE ONLY TO QUALIFIED INVESTORS WITHIN THE MEANING OF THE PROSPECTUS REGULATION (EACH, AN "**EEA QUALIFIED INVESTOR**"). ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THE EEA OF SAC BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY DO SO ONLY WITH RESPECT TO EEA QUALIFIED INVESTORS. NEITHER WE NOR ANY UNDERWRITER HAVE AUTHORIZED, NOR DO WE OR THEY AUTHORIZE, THE MAKING OF ANY OFFER OF SAC BONDS IN THE EEA OTHER THAN TO EEA QUALIFIED INVESTORS.

EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT IT HAS NOT OFFERED, SOLD OR OTHERWISE MADE AVAILABLE, AND WILL NOT OFFER, SELL OR OTHERWISE MAKE AVAILABLE, ANY SAC BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS PROSPECTUS TO ANY RETAIL INVESTOR IN THE EEA. FOR THESE PURPOSES, (A) THE EXPRESSION "**RETAIL INVESTOR**" MEANS A PERSON WHO IS ONE (OR MORE) OF THE FOLLOWING: (1) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU, AS AMENDED ("**MIFID II**"); OR (2) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97, AS AMENDED, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR (3) AN EEA QUALIFIED INVESTOR, AND (B) THE EXPRESSION "**OFFER**" INCLUDES THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE SAC BONDS TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE SAC BONDS.

**NOTICE TO PROSPECTIVE INVESTORS IN THE UK** 

THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF SAC BONDS IN THE UK WILL BE MADE ONLY TO QUALIFIED INVESTORS AS DEFINED IN PARAGRAPH 15 OF SCHEDULE 1 TO THE PUBLIC OFFERS AND ADMISSIONS TO TRADING REGULATIONS 2024 (EACH, A "**UK QUALIFIED INVESTOR**"). ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THE UK OF SAC BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY DO SO ONLY WITH RESPECT TO UK QUALIFIED INVESTORS. NEITHER WE NOR ANY UNDERWRITER HAVE AUTHORIZED, NOR DO WE OR THEY AUTHORIZE, THE MAKING OF ANY OFFER OF SAC BONDS IN THE UK OTHER THAN TO UK QUALIFIED INVESTORS.

EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT IT HAS NOT OFFERED, SOLD OR OTHERWISE MADE AVAILABLE, AND WILL NOT OFFER, SELL OR OTHERWISE MAKE AVAILABLE, ANY SAC BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS PROSPECTUS TO ANY RETAIL INVESTOR IN THE UNITED KINGDOM. FOR THESE PURPOSES, (A) THE EXPRESSION "**RETAIL INVESTOR**" MEANS A PERSON WHO IS NEITHER: (a) A PROFESSIONAL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2(1) OF REGULATION (EU) NO 600/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UK; NOR (b) A UK QUALIFIED INVESTOR, AND (B) THE EXPRESSION "**OFFER**" INCLUDES THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE SAC BONDS TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO BUY OR SUBSCRIBE FOR THE SAC BONDS.

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THE COMMUNICATION OF THIS PROSPECTUS AND ANY OTHER DOCUMENT OR MATERIALS RELATING TO THE ISSUE OF THE SAC BONDS OFFERED HEREBY IS NOT BEING MADE, AND THIS PROSPECTUS AND SUCH OTHER DOCUMENTS AND/OR MATERIALS HAVE NOT BEEN APPROVED, BY AN AUTHORIZED PERSON FOR THE PURPOSES OF SECTION 21 OF THE FSMA. ACCORDINGLY, THIS PROSPECTUS AND SUCH OTHER DOCUMENTS AND/OR MATERIALS ARE NOT BEING DISTRIBUTED TO, AND MUST NOT BE PASSED ON TO, THE GENERAL PUBLIC IN THE UNITED KINGDOM. THIS PROSPECTUS AND SUCH OTHER DOCUMENTS AND/OR MATERIALS ARE FOR DISTRIBUTION ONLY TO PERSONS WHO: (a) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND WHO FALL WITHIN THE DEFINITION OF INVESTMENT PROFESSIONALS (AS DEFINED IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "**ORDER**"); (b) FALL WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER; (c) ARE OUTSIDE THE UNITED KINGDOM; OR (d) ARE OTHER PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED OR DISTRIBUTED UNDER THE ORDER (EACH SUCH PERSON, A "**RELEVANT PERSON**"). THIS PROSPECTUS AND ANY SUCH OTHER DOCUMENTS AND/OR MATERIALS ARE DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PROSPECTUS AND ANY SUCH OTHER DOCUMENTS AND/OR MATERIALS RELATE WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. ANY PERSON IN THE UNITED KINGDOM THAT IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS PROSPECTUS OR ANY OTHER DOCUMENTS AND/OR MATERIALS RELATING TO THE ISSUE OF THE SAC BONDS OFFERED HEREBY OR ANY OF THEIR CONTENTS.

EACH OF THE UNDERWRITERS HAS REPRESENTED AND AGREED THAT (I) IT HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA) RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE SAC BONDS IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUING ENTITY; AND (II) IT HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE SAC BONDS IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM.

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**OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS** 

NOTICE TO RESIDENTS OF CANADA

THE SAC BONDS MAY BE SOLD IN CANADA ONLY TO PURCHASERS PURCHASING, OR DEEMED TO BE PURCHASING, AS PRINCIPAL THAT ARE ACCREDITED INVESTORS, AS DEFINED IN NATIONAL INSTRUMENT 45-106 PROSPECTUS EXEMPTIONS OR SUBSECTION 73.3(1) OF THE SECURITIES ACT (ONTARIO), AND ARE PERMITTED CLIENTS, AS DEFINED IN NATIONAL INSTRUMENT 31-103 REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS. ANY RESALE OF THE SAC BONDS MUST BE MADE IN ACCORDANCE WITH AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE PROSPECTUS REQUIREMENTS OF APPLICABLE SECURITIES LAWS.

SECURITIES LEGISLATION IN CERTAIN PROVINCES OR TERRITORIES OF CANADA MAY PROVIDE A PURCHASER WITH REMEDIES FOR RESCISSION OR DAMAGES IF THIS PROSPECTUS (INCLUDING ANY AMENDMENT THERETO) CONTAINS A MISREPRESENTATION, PROVIDED THAT THE REMEDIES FOR RESCISSION OR DAMAGES ARE EXERCISED BY THE PURCHASER WITHIN THE TIME LIMIT PRESCRIBED BY THE SECURITIES LEGISLATION OF THE PURCHASER'S PROVINCE OR TERRITORY. THE PURCHASER SHOULD REFER TO ANY APPLICABLE PROVISIONS OF THE SECURITIES LEGISLATION OF THE PURCHASER'S PROVINCE OR TERRITORY FOR PARTICULARS OF THESE RIGHTS OR CONSULT WITH A LEGAL ADVISOR.

PURSUANT TO SECTION 3A.3 OF NATIONAL INSTRUMENT 33-105 UNDERWRITING CONFLICTS (NI 33-105), THE UNDERWRITERS ARE NOT REQUIRED TO COMPLY WITH THE DISCLOSURE REQUIREMENTS OF NI 33-105 REGARDING UNDERWRITER CONFLICTS OF INTEREST IN CONNECTION WITH THIS OFFERING.

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**PROSPECTUS SUMMARY OF TERMS** 

The following section is only a summary of selected information and does not provide you with all the information you will need to make your investment decision. There is more detailed information in this prospectus. To understand all of the terms of the offering of the SAC bonds, carefully read this entire prospectus. **You should carefully consider the Risk Factors beginning on page 26 of this prospectus before you invest in the SAC bonds**.

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| **Securities Offered**:  | $1,375,500,000 Series 2026-A Senior Secured SAC Bonds, scheduled to pay principal semi-annually and sequentially in accordance with the expected sinking fund schedule. Only the SAC bonds are being offered through this prospectus. |

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| **Tranche** | **Principal Amount\*** |
| A-1 | $450000000 |
| A-2 | $325500000 |
| A-3 | $600000000 |

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\* Preliminary, subject to change

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| **Issuing Entity and Capital Structure**:  | Appalachian Power Recovery Funding LLC is a special purpose limited liability company formed under Delaware law and a direct, wholly owned subsidiary of APCo, a corporation formed under Virginia law. We were formed solely to purchase and own the SAC property, to issue the SAC bonds and to perform activities incidental thereto. Please read "Appalachian Power Recovery Funding LLC, The Issuing Entity" in this prospectus. |

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In addition to the SAC property, our assets will include a capital investment by APCo (and not from the proceeds of the sale of the SAC bonds) in an amount equal to 0.50% of the initial principal amount of the SAC bonds (to be held in the capital subaccount). We will also have an excess funds subaccount to retain, until the next payment date, any amounts collected and remaining after all scheduled payments on the SAC bonds have been timely made.

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| **Issuing Entity's Address**:  | 1051 E Cary St., Suite 1100, Richmond, VA 23219 |

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| **Issuing Entity's Telephone Number**:  | (614) 716-1519 |

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| **Depositor, Seller, Initial Servicer and Sponsor**:  | APCo is a regulated electric utility engaged principally in the generation, transmission, distribution, and sale of electricity in West Virginia, central and western Virginia and northeast Tennessee. As of December 31, 2025, APCo owned or partially owned 16 generating plants, consisting of 105 generating units for an aggregate net generating capacity of 6,727 megawatts ("**MW**"), and served approximately 549,000 Virginia Commission-jurisdictional area retail customers in central and western Virginia through its retail business. APCo is a Virginia corporation and a wholly owned subsidiary of American Electric Power Company, Inc., referred to as "**AEP**", a public utility holding company based in Columbus, Ohio. AEP's over 17,000 employees operate and maintain the nation's largest electricity transmission system and approximately 252,000 miles of distribution  |

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lines to deliver power to nearly 5.6 million retail customers in 11 states. AEP also is one of the nation's largest electricity producers with approximately 31,000 megawatts of diverse generating capacity. The SAC bonds do not constitute a debt, liability or other legal obligation of APCo or AEP.

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| **APCo's Address**:  | 1 Riverside Plaza, Columbus, Ohio 43215-2373 |

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| **APCo's Phone Number**:  | (614) 716-1000 |

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| **Our Relationship With the Virginia Commission**:  | The Virginia Commission is consulting with APCo, to the extent requested by the Virginia Commission, with respect to the structuring and pricing of the SAC bonds. Prior to the submission of the final issuance advice letter and through the period ending with the issuance of the SAC bonds, APCo will, to the extent requested by the Virginia Commission, provide the Virginia Commission or its staff with timely information so that the Virginia Commission acting for itself or through its staff can remain informed of all material aspects relating to the structuring and pricing of, and financing costs relating to, the SAC bonds and participate as directed. |

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| **Trustee**:  | U.S. Bank Trust Company, National Association. Please read "The Trustee" in this prospectus for a description of the trustee's duties and responsibilities under the indenture. |

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| **Purpose of Transaction**:  | The financing order authorizes APCo, to recover certain Virginia Commission approved securitized asset costs, through the issuance of the SAC bonds, in an aggregate principal amount not to exceed approximately $1.376 billion, equal to the sum of: (a) approximately $1.36 billion of securitized asset costs, consisting primarily of the Virginia Commission-jurisdictional area storm restoration costs incurred between January 1, 2024 and March 31, 2025, of approximately $140.6 million and the Virginia Commission-jurisdictional area share of undepreciated Amos and Mountaineer plant balances of approximately $1.2 billion, plus (b) up-front financing costs, which are estimated at approximately $11.2 million, subject to update through the issuance advice letter process, in each case net of any large customer opt-out payments. |

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| **Transaction Overview**:  | The Securitization Law authorizes an electric utility to recover Virginia Commission-approved securitized asset costs, including storm restoration costs and undepreciated generation plant balances, through the issuance of securitized asset cost bonds pursuant to, and supported by, an irrevocable financing order of the Virginia Commission. The Securitization Law further authorizes the Virginia Commission to impose an irrevocable, nonbypassable securitized asset cost charge on all of an electric utility's retail customers within the Virginia Commission's jurisdiction, irrespective of generation supplier. The amount, allocation among customer classes, and terms of collection of securitized asset cost charges are governed by a financing order issued to the utility by the Virginia Commission and are subject to a statutory formula-based true-up mechanism designed to correct for any over- or under-collections of the securitized asset cost charges or to otherwise ensure the timely payment of principal,  |

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interest and all related financing costs and other required amounts and charges payable in connection with the securitized asset cost bonds. <br>

The electric bills of the utility's retail customers must include the securitized asset cost charge as a separate line item that reflects both the rate and the amount of the charge and state that the assignee is the owner of the rights to the securitized asset cost charges and that the utility is acting as servicer for the assignee. Securitized asset cost charges are collected separate and apart from base rates. Consistent with the financing order, the utility's base rates, exclusive of the cost of securitized asset cost bonds, will be reduced to reflect securitization benefits, and the utility's rate base will be reduced to reflect the securitization of utility plant balances, in each case effective on the date the utility receives the securitization proceeds, including through a temporary tracker or rider until such reductions are reflected in the utility's next base rate case.

Unless the context indicates otherwise, references in this prospectus to the "**financing order**" are to the financing order issued by the Virginia State Corporation Commission to Appalachian Power <br>

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Company in Case No. PUR-2025-00116 on November 24, 2025, as further described below.

On July 31, 2025, APCo completed filing a petition with the Virginia Commission under the Commonwealth of Virginia's Securitization Law, requesting a financing order authorizing securitization of the previously discussed costs and related financing costs. Following notice, Staff investigation, and a public hearing on October 1, 2025 before a Hearing Examiner, the Virginia Commission issued its financing order on November 24, 2025 authorizing the issuance of SAC bonds and such financing order became final and no longer subject to appeal on December 24, 2025.

The financing order authorizes APCo, through the issuance of SAC bonds, to recover certain Virginia Commission approved securitized asset costs in an aggregate principal amount not to exceed approximately $1.376 billion, equal to the sum of: (a) approximately $1.36 billion of securitized asset costs, consisting primarily of the Virginia Commission-jurisdictional area storm restoration costs incurred between January 1, 2024 and March 31, 2025, of approximately $140.6 million and the Virginia Commission-jurisdictional area share of undepreciated Amos and Mountaineer plant balances of approximately $1.2 billion, plus (b) up-front financing costs, which are estimated at approximately $11.2 million, subject to update through the issuance advice letter process, in each case net of any large customer opt-out payments. No eligible large customer elected to opt out.

The financing order also authorizes: (a) APCo's proposed financing structure and issuance of the SAC bonds; (b) the creation and sale of SAC property, including the right for the imposition, collection and periodic adjustments of SAC charges sufficient to pay the SAC bonds and associated financing costs; (c) the sale of the SAC property by APCo to us; and (d) a tariff rider to implement the SAC charges.

The primary transactions underlying the issuance and sale of the SAC bonds are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo will transfer and sell the SAC property to us in exchange for the net proceeds from the sale of the SAC
bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will sell the SAC bonds, which will be secured primarily by the SAC property, to the underwriters named in
this prospectus; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo will act as the initial servicer of the SAC property.

The SAC bonds are not obligations of the trustee, our managers, APCo, AEP or of any of their affiliates other than us. The SAC bonds are also not debt or obligations of the Commonwealth of Virginia, the Virginia Commission or any other public subdivision, agency or instrumentality of the Commonwealth of Virginia.

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| **Parties to Transaction and Responsibilities**  | The following chart represents a general summary of the parties to the transactions underlying the offering of the SAC bonds, their roles and their various relationships to the other parties: |

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![LOGO](g44535g17g17.jpg)

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| **Flow of Funds**  | The following chart represents a general summary of the flow of funds: |

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![LOGO](g44535g18g18.jpg)

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| **The Security for the SAC Bonds**:  | The SAC bonds will be secured by the collateral pledged pursuant to the indenture. The principal asset of the SAC bond collateral will be the SAC property. Under the Securitization Law and financing order, APCo's right in the SAC property shall be property in the form of a  |

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contract right or chose in action to create the SAC property and to make the SAC charges irrevocable and nonbypassable. Upon the transfer of the SAC property to us, we will have all of the rights, title and interest in the SAC property including the right to impose, bill, charge, collect and receive SAC charges from APCo's Virginia Commission-jurisdictional area retail customers, as well as to obtain periodic adjustments to such charges as provided in the financing order. In addition, the SAC property consists of all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the aforementioned rights and interests. <br>

The "SAC bond collateral," will also consist of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC charges related to the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights under the sale agreement and the bill of sale delivered by APCo pursuant to the sale agreement, our
rights under the servicing agreement, the intercreditor agreement and joinder, the administration agreement and any subservicing agency, other intercreditor, administration or collection agreements executed in connection with the servicing
agreement, the intercreditor agreement and joinder, or the administration agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights in the collection account and all subaccounts of the collection account, including the general
subaccount, the capital subaccount and the excess funds subaccount and all cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and securities entitlements carried therein or credited
thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all rights to compel the servicer to file for and obtain periodic adjustments to the SAC charges or allocations
among the customer classes in accordance with the Securitization Law, the financing order, the applicable true-up adjustment letters, the non-standard true-up adjustment rider (if applicable) and the securitization financing rider and any securitization financing rider adjustments filed in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment
property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all payments on or under, and all proceeds in respect of, any or all of the foregoing.

The subaccounts consist of a capital subaccount, which will be funded at closing in the amount of 0.50% of the initial aggregate principal amount of the SAC bonds, a general subaccount, into which the servicer will deposit all SAC charge collections, and an excess funds subaccount, into which we will transfer any amounts collected and remaining on a payment date after all payments to SAC bondholders and other parties have been made. Amounts on deposit in each of <br>

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these subaccounts will be available to make payments on the SAC bonds on each payment date. For a description of the SAC property, please read "Description of the SAC Property" in this prospectus.

For a description of the SAC bonds, please read "Description of the SAC Bonds" in this prospectus.

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|:---|:---|
| **The SAC Property**:  | In general terms, all of the rights and interests of SAC that are transferred to us pursuant to the sale agreement are referred to in this prospectus as the "**SAC property**." The SAC property includes the right to impose, bill, charge, collect, and receive SAC charges in amounts sufficient to pay principal and interest and ongoing financing costs in connection with the SAC bonds, to obtain periodic adjustments to such charges as provided in the financing order and all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the foregoing rights and interests. SAC charges are payable by APCo's customers. |

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The SAC property is the principal collateral securing the SAC bonds. SAC charges authorized in a financing order are irrevocable and not subject to reduction, impairment, or adjustment by further action of the Virginia Commission, except for the required annual true-up adjustment, with semi-annual (and, beginning 12 months prior to the scheduled final payment date of the latest maturing tranche of the SAC bonds, quarterly) or interim adjustments, as necessary, to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the SAC bonds during the next two succeeding bond payment dates and non-standard true-ups to account for updated class allocations and the non-standard true-up adjustment to update class allocations. Please read "APCo's Financing Order—True-Ups" in this prospectus. All revenues and collections resulting from SAC charges are part of the SAC property.

We will purchase the SAC property from APCo to support the issuance of the SAC bonds. APCo, as the initial servicer, will bill and collect the SAC charges from its customers. APCo will include the SAC charges in its bills to its customers and is required to show the SAC charges as a separate line item, reflecting both the rate and amount of the SAC charges. The servicer is also required to provide a statement on customer bills that we are the owner of the rights to the SAC charges and that APCo is acting as servicer for us as required by § 56-249.8 D 1 of the Securitization Law.

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|:---|:---|
| **State and Virginia Commission Pledges**:  | The Commonwealth of Virginia has pledged in the Securitization Law that it will not alter the provisions of the part of the Securitization Law which authorizes the Virginia Commission to create an irrevocable contract right or chose in action by the issuance of a financing order, to create securitized asset cost property, and to make the securitized asset cost charges imposed by a financing order irrevocable, binding and nonbypassable charges, take or permit any action that impairs or would impair the value of the SAC property, or, except for true-up adjustments discussed in "APCo's Financing  |

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Order—True-ups" and "The Servicing Agreement—SAC Charge Adjustment Process" in this prospectus, reduce, alter or impair the SAC charges to be imposed, collected and remitted for the benefit of the SAC bondholders until the principal, interest and premium, if any, and any other fees, expenses or charges incurred and contracts to be performed in connection with the SAC bonds have been paid and performed in full. Please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions" and "The Securitization Law—APCo and Other Utilities May Securitize Securitized Asset Costs and Related Financing and Ongoing Costs" in this prospectus. <br>

The Virginia Commission is a constitutional agency established under Article IX of the Virginia Constitution. The Virginia Commission has pledged in the financing order that subsequent to the transfer of securitized asset cost property to an assignee or the issuance of securitized asset cost bonds authorized therein, whichever is earlier, the financing order is irrevocable and, except for changes made pursuant to the formula-based adjustment mechanism authorized under the financing order, it may not amend, modify or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust SAC charges approved in the financing order. Please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions" and "APCo's Financing Order—Virginia Commission Pledge" in the prospectus.

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|:---|:---|
| **True-up Mechanism for Payment of Scheduled Principal and Interest**:  | SAC charges are required to be adjusted pursuant to a true-up adjustment mechanism to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the SAC bonds. |

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The servicer is required to, at least annually, make a true-up adjustment; provided that, the servicer shall implement a semi-annual true-up (and, beginning 12 months prior to the scheduled final payment date, quarterly), if the servicer forecasts that SAC charge collections during the current relevant period will be insufficient to make all scheduled payments of principal, interest, and other amounts in respect of the SAC bonds on a timely basis, to replenish any draws upon the capital subaccount, or to pay ongoing financing costs on a timely basis.

The servicer may also make interim true-up adjustments more frequently if the servicer forecasts that SAC charge collections will be insufficient to make, on a timely basis, all scheduled payments of interest and other financing costs in respect of the SAC bonds and/or to replenish any draws on the capital subaccount.

In addition, the servicer also has the right to effect a non-standard true-up in the event of a significant and sustained change in the forecasted load of any customer class. For purposes of this non-standard true-up, a significant change is deemed to have occurred if the forecasted load of any customer class for the upcoming <br>

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remittance period is projected to increase or decrease by ten percent or more compared to the original projected load for that class as set forth in the financing order or in the most recent application of the true-up mechanism or the non-standard true-up. <br>

Please read "The SAC Charges," "APCo's Financing Order" and "The Servicing Agreement —SAC Charge Adjustment Process" in this prospectus.

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|:---|:---|
| **Nonbypassable SAC Charges**:  | The nonbypassable SAC charges are separate and apart from APCo's base rates and shall be paid by all Virginia Commission-jurisdictional area retail customers of APCo or its successors or assignees, irrespective of the generation supplier of such customer, under Virginia Commission-approved rate schedules as provided in the financing order. |

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In the financing order, the Virginia Commission found that APCo does not have any present or future retail access customers that are categorically exempt from the SAC charges. However, under the Securitization Law and Section 56-577 A 6 of the Code of Virginia, partially exempt customers are exempt from the portion of the SAC charges representing the undepreciated Amos and Mountaineer plant balances. Because the partially exempt customers do not currently pay APCo's generation charges, they are not included in the customer base to which the plant-balance portion of the SAC charges is allocated, but they do remain subject to the portion of the SAC charges attributable to storm restoration costs and upfront financing costs. As of December 31, 2025, there were 6 total partially exempt customers, representing approximately 0.05% of total revenue and 2.37% of total kilowatt-hours of APCo during that same period. Section 56-577 A 6 of the Code of Virginia applies only to customers that took such action as of February 1, 2019, and accordingly the number of partially exempt customers is fixed and cannot increase. The number of partially exempt customers may decrease over time and, if any current partially exempt customer becomes subject to APCo's generation charges by purchasing electricity supplied by APCo, then such customer will no longer be a partially exempt customer and will be subject to the full SAC charges. Please read "The SAC Charges," "APCo's Financing Order" and "The Servicing Agreement —SAC Charge Adjustment Process" in this prospectus.

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|:---|:---|
| **APCo's Prior Experience With Cost Recovery Securitizations**:  | The SAC bonds are the first issuance of bonds APCo has sponsored in Virginia and that are secured by SAC property pursuant to the Securitization Law. However, AEP through its other subsidiaries has prior experience as servicer in the issuance of bonds similar to the SAC bonds, including servicing experience by APCo (in the State of West Virginia) and AEP's subsidiaries such as Southwestern Electric Power Company, Kentucky Power Company, Public Service Company of Oklahoma, AEP Texas, Inc. and Ohio Power Company. Please Read "Servicing Experience" in this prospectus for additional information about AEP's experience as servicer. |

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|:---|:---|
| **Initial SAC Charge as a Percentage of Customer's Total Electricity Bill**:  | The initial SAC charge would represent approximately % of the total bill for a typical 1,000 kWh/month Virginia Commission-jurisdictional area residential customer as of , 2026. |

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|:---|:---|
| **Payment Dates**:  | Interest on the SAC bonds is payable semi-annually on and . Interest will be calculated on a 30/360 basis. The first scheduled interest and principal payment date is , 2027. |

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|:---|:---|
| **Interest Payments**:  | Interest is due on each payment date. Interest will accrue with respect to SAC bonds from the date we issue the SAC bonds at the interest rate specified in the table below. |

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|:---|:---|
| **Tranche** | **Interest Rate** |
| A-1% |  |
| A-2% |  |
| A-3% |  |

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If any payment date is not a business day, payments scheduled to be made on such date may be made on the next succeeding business day and no interest shall accrue upon such payment during the intervening period.

On each payment date, we will pay interest on the SAC bonds equal to the following amounts:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if there has been a payment default, any interest payable but unpaid on any prior payment dates, together with
interest on such unpaid interest, if any; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• accrued interest on the principal balance of the SAC bonds from the close of business on the preceding payment
date, or the date of the original issuance of the SAC bonds, as applicable, after giving effect to all payments of principal made on the preceding payment date, if any.

We will pay interest on the SAC bonds before we pay the principal of the SAC bonds. Please read "Description of the SAC Bonds—Payments of Interest and Principal on the SAC Bonds" in this prospectus. We will calculate interest on the basis of a 360-day year of 12 30-day months.

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|:---|:---|
| **Principal Payments and Record Dates and Payment Sources**:  | On each payment date for the SAC bonds, referred to in this prospectus as a "**payment date**," we will pay amounts of principal and interest then due or scheduled to be paid on the SAC bonds from amounts available in the collection account and the related subaccounts held by the trustee. We will make these payments to the holders of record of the SAC bonds on each record date, referred to in this prospectus as a "**record date**." These available amounts, which will include the applicable SAC charges collected by the servicer and remitted to us since the last payment date, are described in greater detail under "Description of the SAC Bonds—The Collection Account for the SAC Bonds." The trustee will pay the principal of the SAC bonds in the amounts and on the payment dates specified in the  |

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expected sinking fund schedule described in this prospectus, but only to the extent SAC charge collections received from the servicer and amounts available from trust accounts held by the trustee are sufficient to make principal payments after payment of amounts having a higher priority of payment. Please read "Description of the SAC Bonds—How Funds in the Collection Account Will Be Allocated" in this prospectus. <br>

Failure to pay a scheduled principal payment on any payment date or the entire outstanding amount of a tranche of the SAC bonds by the scheduled final payment date for that tranche will not result in a default. The failure to pay the entire outstanding principal balance of a tranche of the SAC bonds will result in a default only if such payment has not been made by the final maturity date for that tranche.

If there is a shortfall in the amounts available to make principal payments on the SAC bonds that are due and payable, on a final maturity date or upon an acceleration following an event of default, the trustee will distribute principal from the collection account based on the principal amount then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal payments on the SAC bonds that are scheduled to be paid, and if more than one tranche is scheduled to be paid on such payment date, the trustee will distribute principal from the collection account sequentially in the numerical order of such tranches.

**Weighted Average Life**:

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|:---|:---|
| **Tranche** | **Expected Weighted<br>Average Life (years)** |
| A-1 |  |
| A-2 |  |
| A-3 |  |

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|:---|:---|
| **Scheduled Final Payment Dates and Final Maturity Dates**:  | The scheduled final payment dates and the final maturity dates of the SAC bonds are as set forth in the table below: |

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|:---|:---|:---|
| **Tranche** | **Scheduled<br>Final<br>Payment<br>Date** | **Final<br>Maturity<br>Date** |
| A-1 |  |  |
| A-2 |  |  |
| A-3 |  |  |

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|:---|:---|
| **Optional Redemption**:  | None. Non-call for the life of the SAC bonds. |

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|:---|:---|
| **Mandatory Redemption**:  | None. We are not required to redeem the SAC bonds at any time prior to maturity. |

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|:---|:---|
| **Priority of Payments**:  | On each payment date for the SAC bonds, the trustee shall apply all amounts on deposit in the collection account, including all investment  |

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earnings thereon, to pay the following amounts for the SAC in the following order of priority: <br>

1. all amounts owed by us to the trustee (including legal fees and expenses and outstanding indemnity amounts), not to exceed $200,000 in any 12-month period; provided, however, that such cap shall be disregarded and inapplicable upon the acceleration of the SAC bonds following the occurrence of an event of default;

2. payment of the servicing fee relating to the SAC bonds with respect to such payment date, plus any unpaid servicing fees relating to the SAC bonds from prior payment dates;

3. payment of the due and unpaid administration fee, which will be a fixed amount specified in the administration agreement between us and APCo, and the due and unpaid fees of our independent managers, which will be in an amount specified in an agreement between us and our independent managers;

4. payment of all of our other ordinary and periodic operating expenses relating to the SAC bonds for such payment date, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement;

5. payment of the interest then due on the SAC bonds, including any past-due interest;

6. payment of the principal due to be paid on any tranche of the SAC bonds on a final maturity date or acceleration upon an event of default;

7 .payment of the principal then scheduled to be paid on a tranche of the SAC bonds pursuant to the expected sinking fund schedule, including any previously unpaid scheduled principal;

8. payment of any unpaid fees, expenses and indemnity amounts owed to the trustee;

9. payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents;

10. replenishment of the amount, if any, by which the required capital balance of the capital subaccount exceeds the amount in the capital subaccount as of such payment date;

11. the return on invested capital to APCo then due and payable;

12. allocation of the remainder, if any, to the excess funds subaccount for distribution on subsequent payment dates; and

13. after the SAC bonds have been paid in full and discharged, and all of the other foregoing amounts have been paid in full, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, released to us free and clear of the lien of the indenture and series supplement.

The amount of the servicer's fee referred to in clause 2 above will be 0.05% of the aggregate initial principal amount of the SAC bonds (for so long as APCo is the servicer) on an annualized basis. In the event of the appointment of a successor servicer that is not an affiliate of <br>

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APCo, the servicing fee shall not, unless the Virginia Commission consents, exceed 0.60% of the initial aggregate principal amount of the SAC bonds. The priority of distributions for the collected SAC charges, as well as available amounts in the subaccounts, are described in more detail under "Description of the SAC Bonds—How Funds in the Collection Account Will Be Allocated." <br>

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|:---|:---|
| **Credit Enhancement**:  | Credit enhancement for the SAC bonds will be as follows: |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *True-Up Mechanism*. The Virginia Commission will approve
adjustments to the SAC charges, but only upon petition of the servicer, to make up for any shortfall or reduce any excess in collected SAC charges. We sometimes refer to these adjustments as "true-up adjustments" or the "true-up mechanism." SAC charges are required to be adjusted at least annually, with semi-annual (and, beginning 12 months prior to the last scheduled final payment date
for the last maturing tranche of the SAC bonds, quarterly), or interim adjustments to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other ongoing financing costs in connection
with the SAC bonds and to replenish any draws on the capital subaccount. Please read "APCo's Financing Order—True-Ups" in this prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Non-Standard True-Up*. In
addition to the true-up mechanisms described above, the servicer also has the right to effect a non-standard true-up in the event
of a significant and sustained change in the forecasted load of any customer class. For purposes of this non-standard true-up, a significant change is deemed to have
occurred if the forecasted load of any customer class for the upcoming remittance period is projected to increase or decrease by ten percent or more compared to the original projected load for that class as set forth in the financing order or in the
most recent application of the true-up mechanism or the non-standard true-up. Please read "APCo's Financing Order—True-Ups" in this prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Collection Account*. Under the indenture, the securities intermediary will hold a collection account for
the SAC bonds, divided into various subaccounts. The primary subaccounts for credit enhancement purposes are

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the general subaccount-the trustee will deposit into the general
subaccount all SAC charge collections remitted to it by the servicer with respect to the SAC bonds and investment earnings on amounts in the general subaccount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the capital subaccount-APCo will deposit an amount equal to 0.50% of the initial principal amount of the SAC
bonds into the capital subaccount on the date of issuance of the SAC bonds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the excess funds subaccount-any excess amount of collected SAC charges
and investment earnings on amounts in the excess funds subaccount of SAC bonds will be held in the excess funds subaccount.

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Each of these subaccounts for the SAC bonds, in addition to any other subaccounts that may be created pursuant to the indenture, will be available to make payments on the SAC bonds on each payment date.

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|:---|:---|
| **Reports to SAC Bondholders**:  | Pursuant to the indenture, the trustee shall make available electronically on its reporting website to each of the SAC bondholders a statement provided and prepared by the servicer containing information concerning, among other things, us and the collateral for the SAC bonds. Unless and until the SAC bonds are issued in definitive certificated form, the reports for the SAC bonds will be provided to The Depository Trust Company. The reports will be available to beneficial owners of the SAC bonds on the reporting website of the trustee or upon written request to the trustee or the servicer. These reports will not be examined and reported upon by an independent public accountant. In addition, no independent public accountant will provide an opinion thereon. Furthermore, if required by the Trust Indenture Act, the trustee will be required to make available electronically on its website a brief annual report to all SAC bondholders containing information concerning the trustee. Please read "Description of the SAC Bonds—Reports to SAC Bondholders" and "—The Trustee Must Provide an Annual Report to All SAC Bondholders" in this prospectus. |

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|:---|:---|
| **Servicing Compensation**:  | We will pay the servicer on each payment date the servicing fee with respect to the SAC bonds. As long as APCo or any affiliated entity acts as servicer, this fee will be 0.05% of the initial principal amount of the SAC bonds on an annualized basis, plus reimbursement for its out-of-pocket costs for external accounting and legal services, and subject to the adjustment mechanism described in the financing order. If a successor servicer is appointed, the servicing fee will be negotiated by the successor servicer and the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds), but will not, unless the Virginia Commission consents, exceed 0.60% of the initial principal amount of the SAC bonds on an annualized basis. In no event will the trustee be liable for any servicing fee in its individual capacity or its capacity as trustee. |

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|:---|:---|
| **Federal Income Tax Status**:  | Sidley Austin LLP expects to issue an opinion, that, for federal income tax purposes (1) we will not be treated as a taxable entity separate and apart from APCo, our sole member, and (2) based on Revenue Procedure 2005-62, 2005-2 CB 507 as modified by Revenue Procedure 2024-15, 2024-12 I.R.B. 717, the SAC bonds will constitute indebtedness of APCo. Each beneficial owner of a SAC bond, by acquiring a beneficial interest, agrees to treat such SAC bond as indebtedness of our sole member secured by the collateral for federal (and, to the extent applicable, state) income tax purposes unless otherwise required by appropriate taxing authorities. Please read "Material U.S. Federal Income Tax Consequences" in this prospectus. |

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|:---|:---|
| **Virginia State Income Tax Status**:  | Troutman Pepper Locke LLP, special Virginia tax counsel to us and to APCo, expects to issue an opinion that for Virginia income tax purposes (a) assuming that the issuing entity is treated as an entity that is disregarded from APCo for federal income tax purposes, we  |

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will not be treated as a taxable entity separate and apart from APCo, our sole member; and (b) assuming that the SAC bonds are treated as indebtedness for federal income tax purposes, the SAC bonds will constitute indebtedness of APCo, assuming, in each case, that such treatment applies for U.S. federal income tax purposes. Please read "Material U.S. Federal Income Tax Consequences" and "Material Virginia Income Tax Consequences" in this prospectus. <br>

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|:---|:---|
| **ERISA Considerations**:  | Employee benefit plans, plans or other arrangements that are subject to (a) ERISA or Section 4975 of the Internal Revenue Code; or (b) any federal, state, local or other law that is similar to the fiduciary responsibility provisions of Title I of ERISA or the prohibited transaction provisions of Title I of ERISA or Section 4975 of the Internal Revenue Code ("**applicable similar law**") and investors acting on behalf of, or using assets of, such employee benefit plans, plans or arrangements may acquire the SAC bonds subject to specified conditions. The acquisition, holding or disposition of the SAC bonds could be treated as a direct or indirect prohibited transaction under ERISA and/or Section 4975 of the Internal Revenue Code or in the case of employee benefit plans, plans or arrangements subject to applicable similar law, could be treated as a violation of such applicable similar law. Accordingly, by purchasing and holding the SAC bonds, each investor that is or is acting on behalf of, or using assets of, such an employee benefit plan, plan or arrangement subject to ERISA and/or Section 4975 of the Internal Revenue Code or applicable similar law will be deemed to certify that the purchase, holding and subsequent disposition of the SAC bonds will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code, in the case of an employee benefit plan, plan or arrangement subject to applicable similar law, will not constitute or result in a violation of applicable similar law. Please read "ERISA Considerations" in this prospectus. |

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|:---|:---|
| **Credit Ratings**:  | The SAC bonds are expected to receive credit ratings from at least two nationally recognized statistical rating organizations. See "Ratings for the SAC Bonds" in this prospectus. |

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|:---|:---|
| **Use of Proceeds**:  | Upon the issuance and sale of the SAC bonds, we will use the net proceeds to pay to APCo the purchase price of APCo's rights under the financing order, which are SAC property. |

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The net proceeds from the sale of the SAC property will be applied in accordance with the financing order, and shall be used to finance approximately $1.36 billion of securitized asset costs, *plus* up-front financing costs of issuing the SAC bonds of approximately $11.2 million. Please read "Use of Proceeds" in the prospectus.

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|:---|:---|
| **Investment Company Act Registration**:  | We anticipate relying on the exclusion or exemption from the definition of "investment company" under the Investment Company Act contained in Rule 3a-7 of the Investment Company Act, although there may be additional exclusions or exemptions available to us. We are being structured so as not to constitute a "covered fund" for purposes of the regulations adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. |

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|:---|:---|
| **Risk Retention**:  | The SAC bonds are not subject to the 5% risk retention requirements imposed by Section 15G of the Exchange Act due to the exemption provided in Rule 19(b)(8) of the risk retention regulations in 17 C.F.R. Part 246 of the Exchange Act or Regulation RR. For information regarding the requirements of the EU Securitization Regulation and the UK Securitization Framework as to risk retention and other matters, please read "Risk Factors—Other Risks Associated with an Investment in the SAC Bonds—Regulatory provisions affecting certain investors could adversely affect the liquidity and the regulatory treatment of investments in the SAC bonds" in this prospectus. |

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|:---|:---|
| **Minimum Denomination**:  | $100,000 or integral multiples of $1,000 in excess thereof, except for one bond of each tranche which may be of a smaller denomination. |

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|:---|:---|
| **Expected Settlement**:  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2026, settling flat. DTC, Clearstream and Euroclear. |

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|:---|:---|
| **Risk Factors**:  | **You should consider carefully the risk factors beginning on page 26 of this prospectus before you invest in the SAC bonds.** |

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**SUMMARY OF RISK FACTORS** 

Set forth below is a summary of the material risk factors which you should consider before deciding whether to invest in the SAC bonds. These risks can affect the timing or ultimate payment of the SAC bonds and the value of your investment in the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• You may experience material payment delays or incur a loss on your investment in the SAC bonds because the source
of funds for payment is limited.

**Risks associated with potential judicial, legislative or regulatory actions** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We and APCo are not obligated to indemnify you for changes in law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Future judicial action could reduce the value of your investment in the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Future state action could reduce the value of your investment in the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Virginia Commission might attempt to take actions that could reduce the value of your investment in the SAC
bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The servicer may not fulfill, or may be unsuccessful in any attempt to fulfill, its obligations to act on behalf
of the SAC bondholders to protect bondholders from actions by the Virginia Commission or the Commonwealth of Virginia.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A municipal entity may seek to acquire portions of APCo's electric distribution facilities and avoid
payment of the SAC charges.

**Servicing Risks** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Your investment in the SAC bonds depends on APCo or its successor or assignee, acting as servicer of the SAC
property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inaccurate forecasting of electricity consumption or unanticipated delinquencies or write-offs might reduce
scheduled payments on the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we have to replace APCo as the servicer, we may experience difficulties finding and using a replacement
servicer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes to billing and collection practices might result in delays in collections which may reduce the value of
your investment in the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Limits on rights to terminate service might make it more difficult to collect the SAC charges.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If the servicer enters bankruptcy proceedings, the remittance of SAC charges by the servicer prior to the date of
bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the SAC bonds.

**Storm related risks** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Storm damage to APCo's service territories could impair payment of the SAC bonds.

**Risks associated with the unusual nature of the SAC property** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Future adjustments to the SAC charges by customer class might result in insufficient collection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Foreclosure of the trustee's lien on the SAC property might not be practical, and acceleration of the SAC
bonds before maturity might have little practical effect.

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**Risks associated with potential bankruptcy proceedings of the seller or the servicer** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The servicer will commingle the SAC charges with other revenues it collects, which might obstruct access to the
SAC charges in case of the servicer's bankruptcy and reduce the value of your investment in the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The bankruptcy of APCo might result in losses or delays in payments on the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The sale of the SAC property might be construed as a financing and not a sale in a case of APCo's
bankruptcy which might delay or limit payments on the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If the servicer enters bankruptcy proceedings, the remittance of certain SAC charges by the servicer prior to the
date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owed on the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Claims against APCo might be limited in the event of a bankruptcy of the seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The bankruptcy of APCo might limit the remedies available to the trustee.

**Other risks associated with an investment in the SAC bonds** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo's indemnification obligations under the sale agreement and the servicing agreement are limited and
might not be sufficient to protect your investment in the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The credit ratings are no indication of the expected rate of payment of principal on the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The SAC bonds' credit ratings might affect the market value of the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Alternatives to purchasing electricity through APCo's distribution facilities may be more widely utilized
by customers in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The absence of a secondary market for the SAC bonds might limit your ability to resell the SAC bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• You might receive principal payments for the SAC bonds later than you expect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo may cause the issuance, by another subsidiary or affiliated entity, of additional SAC bonds secured by
additional SAC property that includes a nonbypassable charge on customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo's operations are subject to risks beyond its control, including cyber-security intrusions, terrorist
attacks or other catastrophic events, which could limit APCo's operations and ability to service the SAC property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If the investment of collected SAC charges and other funds held by the trustee in the collection account results
in investment losses or the investments become illiquid, you may receive payment of principal and interest on the SAC bonds later than you expect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Regulatory provisions affecting certain investors could adversely affect the liquidity and the regulatory
treatment of investments in the SAC bonds.

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**RISK FACTORS** 

*Please carefully consider all the information we have included or incorporated by reference in this prospectus, including the risks described below and the statements in* "*Cautionary Statement Regarding Forward-Looking Information,*" *before deciding whether to invest in the SAC bonds.*

**You may experience material payment delays or incur a loss on your investment in the SAC bonds because the source of funds for payment is limited.** 

The only source of funds for payment of the SAC bonds will be our assets, which consist of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property securing the SAC bonds, including the right to impose, bill, charge, collect and receive SAC
charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the funds on deposit in the accounts held by the trustee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights under various contracts we describe in this prospectus.

The SAC bonds are not a charge on the full faith and credit or taxing power of the Commonwealth of Virginia or any governmental agency or instrumentality, nor will the SAC bonds be insured or guaranteed by APCo, including in its capacity as the sponsor, depositor, seller or initial servicer, or by its parent, AEP, any of their respective affiliates (other than us), the trustee or any other person or entity. The SAC bonds will be nonrecourse obligations, secured only by the collateral pledged to secure the SAC bonds under the indenture. Delays in payment on the SAC bonds might result in a reduction in the market value of the SAC bonds and, therefore, the value of your investment in the SAC bonds. Thus, you must rely for payment of the SAC bonds solely upon the collections of the SAC charges, and funds on deposit in the accounts held by the trustee. Our organizational documents restrict our right to acquire other assets unrelated to the transactions described in this prospectus. Please read "Appalachian Power Recovery Funding LLC, The Issuing Entity" in this prospectus.

**RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS** 

**We and APCo are not obligated to indemnify you for changes in law.** 

Neither we nor APCo, nor any affiliate, successor or assignee, will indemnify you for any changes in the law, including any federal preemption or repeal or amendment of the Securitization Law, that might affect the value of the SAC bonds. APCo will agree in the sale agreement to institute any legal or administrative action or proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or supplement to the Securitization Law that would be materially adverse to us, the trustee or the SAC bondholders. However, we cannot assure you that APCo would be able to take this action or that any such action would be successful. Although APCo or any successor assignee might be required to indemnify us if legal action based on the law in effect at the time of the issuance of the SAC bonds invalidates the SAC property, such indemnification obligations do not apply for any changes in law after the date the SAC bonds are issued, whether such changes in law are effected by means of any legislative enactment, any constitutional amendment or any final and non-appealable judicial decision. Please read "The Sale Agreement—APCo's Covenants" in this prospectus.

**Future judicial action could reduce the value of your investment in the SAC bonds.** 

The SAC property is a creation of the Securitization Law and the financing order that has been issued by the Virginia Commission to APCo pursuant to the Securitization Law. The Securitization Law was amended and reenacted in March 2025. There is uncertainty associated with investing in bonds payable from an asset that depends for its existence on legislation because there is limited judicial or regulatory experience implementing and interpreting the legislation.

The Securitization Law or any financing order or any provision thereof might be directly contested in courts or otherwise become the subject of litigation. Because the SAC property is a creation of the Securitization Law

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and the financing order, any judicial determination affecting the validity of or interpreting the Securitization Law or the financing order, the SAC property or our ability to make payments on the SAC bonds might have an adverse effect on the value of the SAC bonds or cause a delay in the recovery of your investment. As of the date of this prospectus, no such litigation has arisen; however, we cannot assure you that a lawsuit challenging the validity of the Securitization Law or any financing order will not be filed in the future or that, if filed, such lawsuit will not be successful. If an invalidation of any relevant underlying legislative provision or any financing order provision were to result from such litigation, you might lose some or all of your investment or might experience delays in recovering your investment. Please read "The Securitization Law—Constitutional Matters" in this prospectus.

Other states have passed laws with financing provisions similar to some provisions of the Securitization Law, and some of these laws have been challenged by judicial actions or utility commission proceedings. To date, none of these challenges has succeeded, but future judicial challenges might be made. An unfavorable decision regarding another state's law would not automatically invalidate the Securitization Law or the financing order, but it might provoke a challenge to the Securitization Law or the financing order, establish a legal precedent for a successful challenge to the Securitization Law or the financing order or heighten awareness of the political and other risks of the SAC bonds, and in that way may limit the liquidity and value of the SAC bonds. Therefore, legal activity in other states may indirectly affect the value of your investment in the SAC bonds.

**Future state action could reduce the value of your investment in the SAC bonds.** 

Despite the Commonwealth of Virginia's pledges in the Securitization Law and the financing order, respectively, not to take or permit certain actions that would impair the value of the SAC property or the SAC charges, the Virginia legislature might attempt to repeal or amend the Securitization Law in a manner that limits or alters the SAC property so as to reduce its value. For a description of the Commonwealth of Virginia's pledge, please read "The Securitization Law-APCo and Other Utilities May Securitize Securitized Asset Costs and Related Financing and Ongoing Costs" in this prospectus. As of the date of this prospectus, we are not aware of any pending legislation in the Virginia legislature that would affect any provisions of the Securitization Law.

Except as described in "The Sale Agreement —APCo's Obligation to Indemnify Us and the Trustee and to Take Legal Action" in this prospectus, neither we, APCo, nor any of its successors, assignees or affiliates will indemnify you for any change in law, including any amendment or repeal of the Securitization Law, that might affect the value of the SAC bonds.

If an action of the Virginia legislature or the Virginia Commission adversely affecting the SAC property or the ability to collect SAC charges were considered a "taking" under the United States or Virginia Constitutions, the Commonwealth of Virginia might be obligated to pay full compensation in an amount equal to the estimated value of the SAC property at the time of the taking. However, even in that event, there is no assurance that any amount provided as compensation would be sufficient for you to recover fully your investment in the SAC bonds or to offset interest lost pending such recovery.

Nothing in the Commonwealth of Virginia's or Virginia Commission's pledge precludes any limitation or alteration of the Securitization Law or the financing order if full compensation is made by law for the full protection of the SAC charges collected pursuant to the financing order and of the holders of the SAC bonds and any assignee or financing party entering into a contract with APCo. It is unclear what "full compensation" and "full protection" would be afforded to the holders of SAC bonds by the Commonwealth of Virginia or the Virginia Commission if such limitation or alteration were attempted.

In order to place a state constitutional amendment on the ballot, a ballot measure on such a proposed amendment must be passed by a majority vote of the members elected to each house of the Virginia General Assembly during two successive legislative sessions, with a general election for the House of Delegates occurring between such sessions. Absent an amendment to the Virginia Constitution, the Securitization Law

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cannot be amended or repealed by direct action of the electorate of the Commonwealth of Virginia. The enforcement of any rights against the Commonwealth of Virginia or the Virginia Commission under their respective pledges may be subject to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against state and local governmental entities in Virginia. These limitations might include, for example, the necessity to exhaust administrative remedies prior to bringing suit in a court, or limitations on type and locations of courts in which the Commonwealth of Virginia or the Virginia Commission may be sued, or limitations on awards or collection of damages.

**The Virginia Commission might attempt to take actions that could reduce the value of your investment in the SAC bonds.** 

The Securitization Law provides that for a financing order issued to create SAC property, upon the earlier of (a) the transfer of the SAC property to us; and (b) the issuance of the SAC bonds, the financing order becomes irrevocable and that the Virginia Commission may not amend, modify, or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate or otherwise adjust the SAC charges approved in the financing order, except for the true-up adjustments to the SAC charges. However, the Virginia Commission retains the power to adopt, revise or rescind rules or regulations affecting APCo or a successor utility. The Virginia Commission also retains the power to interpret the financing order granted to APCo, and in that capacity might be called upon to rule on the meanings of provisions of the financing order that might need further elaboration. Any new or amended regulations or orders from the Virginia Commission might adversely affect the ability of the servicer to disconnect customers for nonpayment, assess late fees, impose deposit requirements or collect the SAC charges in full and on a timely basis, which may negatively impact the rating of the SAC bonds or their price and, accordingly, the amortization of the SAC bonds and their weighted average lives.

The servicer is required to file with the Virginia Commission, on our behalf, certain periodic true-up adjustments of the SAC charges.

The Virginia Commission is obligated under the financing order to administratively approve the requested adjustment (including, if applicable, the correction of any mathematical or clerical error in such calculations) within 30 days of the date of the request for adjustment; absent such notice, the adjustment becomes effective. However, for purposes of any non-standard true-up, the servicer must specify an effective date at least 30 days after filing, and upon administrative approval or the passage of 30 days without notification from the Virginia Commission regarding the non-standard true-up, no further action of the Virginia Commission is required for implementation of the non-standard true-up. Please read "APCo's Financing Order—True-Ups" and "—Adjustments to Allocation of SAC Charges" in this prospectus. True-up adjustment procedures may be challenged in the future. Challenges to or delays in the true-up process might adversely affect the market perception and valuation of the SAC bonds. Also, any litigation might materially delay SAC charge collections due to delayed implementation of true-up adjustments and might result in missing payments or payment delays and lengthened weighted average life of the SAC bonds.

**The servicer may not fulfill, or may be unsuccessful in any attempt to fulfill, its obligations to act on behalf of the SAC bondholders to protect bondholders from actions by the Virginia Commission or the Commonwealth of Virginia.** 

The servicer will agree in the servicing agreement to take any action or proceeding reasonably necessary to compel performance by the Virginia Commission and the Commonwealth of Virginia of any of their obligations or duties under the securitization provisions of the Securitization Law or the financing order, including any actions reasonably necessary to block or overturn any attempts to cause a repeal, or modification of, or supplement to the securitization provisions of the Securitization Law or the financing order or the rights of bondholders in the SAC property by executive action, legislative enactment, constitutional amendment or other means that would be adverse to the bondholders. The servicer, however, may not be able to take those actions for a number of reasons, including due to legal or regulatory restrictions, financial constraints and practical

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difficulties in successfully challenging any such legislative enactment or constitutional amendment. Additionally, any action the servicer is able to take may not be successful. Any such failure to perform its obligations or to successfully compel performance by the Virginia Commission or the Commonwealth of Virginia could negatively affect SAC bondholders' rights and result in a loss of their investment in the SAC bonds.

**A municipal entity may seek to acquire portions of APCo's electric distribution facilities and avoid payment of the SAC charges.** 

Virginia law authorizes municipalities to seek to acquire portions of an electric utility's electric distribution facilities through voluntary transactions or the power of condemnation for use as part of municipally-owned utility systems. There can be no assurance that one or more municipalities will not seek to acquire some or all of APCo's electric distribution facilities while the SAC bonds remain outstanding. The Securitization Law specifies that SAC charges approved by a financing order shall be collected by an electric utility as well as its "successors or assignees." In the servicing agreement, APCo has covenanted to assert in an appropriate forum that any municipality that acquires any portion of APCo's electric distribution facilities by condemnation, including upon the expiration of any franchise agreement, must be treated as a successor to APCo under the Securitization Law and the financing order and that customers in such municipalities remain responsible for payment of SAC charges. However, the involved municipality might assert that it should not be treated as a successor to APCo for these purposes and that its distribution customers are not responsible for payment of SAC charges. In any case, we cannot assure you that the SAC charges will be collected from customers of municipally owned utilities who were formerly customers of APCo and that such an occurrence might not affect the timing or receipt of payments with respect to the SAC bonds.

**SERVICING RISKS** 

**Your investment in the SAC bonds depends on APCo or its successor or assignee, acting as servicer of the SAC property.** 

APCo, as initial servicer, will be responsible for, among other things, calculating, billing and collecting the SAC charges from its customers, submitting requests to the Virginia Commission to adjust these charges, monitoring the collateral for the SAC bonds and taking certain actions in the event of non-payment by a customer. The trustee's receipt of collections in respect of the SAC charges, which will be used to make payments on the SAC bonds, will depend in part on the skill and diligence of the servicer in performing these functions. The systems that the servicer has in place for SAC charge billings and collections, together with the regulations of the Virginia Commission governing electric utilities such as APCo might, in particular circumstances, cause the servicer to experience difficulty in performing these functions in a timely and completely accurate manner. If the servicer fails to make SAC charge collections for any reason, then the servicer's payments to the trustee in respect of the SAC charges might be delayed or reduced. In that event, our payments on the SAC bonds might be delayed or reduced.

**Inaccurate forecasting of, or changes in, electricity consumption or unanticipated delinquencies or write-offs might reduce scheduled payments on the SAC bonds.** 

The SAC charges are assessed based on forecasted customer usage (i.e., kilowatt-hours ("**kWh**") of electricity consumed by customers). The amount and the rate of SAC charge collections will depend in part on actual electricity usage and the amount of collections and write-offs. If the servicer inaccurately forecasts electricity consumption or uses inaccurate customer delinquency or write-off data when setting or adjusting the SAC charges, or if the effectiveness of the adjustments is delayed for any reason, there could be a shortfall or material delay in SAC charge collections, which might result in missed or delayed payments of principal and/or interest and lengthened weighted average life of the SAC bonds. Please read "APCo's Financing Order—True-Ups" and "—Adjustments to Allocation of SAC Charges" in this prospectus.

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APCo's base revenue forecast is developed by applying the load forecast for each customer class, through the next budget year (typically only the first two years of the forecast horizon), to estimated price-load relationships. These price-load relationships are regression models that estimate class-level average base rate revenue realizations as a function of either monthly kWh consumption per customer (for the residential and commercial classes) or monthly kWh sales (for all other classes). The functions are estimated based on monthly data taken from APCo's billing system. While APCo monitors the accuracy of its forecast by conducting variance analysis on a monthly basis while taking into account weather impacts on kWh sales and other deviations from such forecast within the customer count, inaccurate forecasting of base rate revenue by the servicer might result from, among other things, unanticipated weather or economic conditions, resulting in less base rate revenue than forecast using systematic patterns; general economic conditions causing customers to leave APCo or reduce the base rate revenue from such customers; the occurrence of a natural disaster, such as a hurricane or winter storm, or an act of terrorism, cyberattack or other catastrophic event, including pandemics, unexpectedly disrupting electrical service and reducing base rate revenues and demand; changes in the market structure of the electric industry; customers consuming less electricity than anticipated because of increased energy prices, increased conservation efforts, economic conditions or unanticipated increases in electric usage efficiency; or customers unexpectedly switching to alternative sources of energy, including self-generation of electric power. Please read "The Depositor, Seller, Initial Service and Sponsor—Forecasting Consumption" in this prospectus for additional information about APCo's base revenue forecast.

The servicer's use of inaccurate delinquency or write-off rates might result also from, among other things, unexpected deterioration of the economy or the occurrence of a natural disaster or extreme weather, an act of terrorism, cyberattack or other catastrophic event or the unanticipated declaration of a moratorium on terminating electric service to customers in the event of any such occurrences, any of which would cause greater delinquencies or write-offs than expected or force APCo to grant additional payment relief to more customers, or any other change in law that makes it more difficult for APCo to terminate service to nonpaying customers or that requires APCo to apply more lenient credit standards in accepting customers.

**If we have to replace APCo as the servicer, we may experience difficulties finding and using a replacement servicer.** 

If APCo ceases to service the SAC property, it might be difficult to find a successor servicer. Under the financing order, the annual servicing fee payable to a successor servicer is capped and the payment of compensation in excess of the cap is dependent upon Virginia Commission approval. Also, any successor servicer might have less experience and ability than APCo and might experience difficulties in collecting SAC charges and determining appropriate adjustments to the SAC charges and billing and/or payment arrangements may change, resulting in delays or disruptions in collections. A successor servicer might charge fees that, while permitted under the financing order, are substantially higher than the fees paid to APCo as the initial servicer. Although a true-up adjustment may be required to allow for the increase in fees, there could be a gap between the incurrence of those fees and the implementation of the true-up adjustment to adjust for the increase that might adversely affect distributions from the collection account. In the event of the commencement of a case by or against the servicer under the Bankruptcy Code or similar laws, we and the trustee might be prevented from effecting a transfer of servicing due to operation of the Bankruptcy Code. Any of these factors and others might delay the timing of payments and may reduce the value of your investment. Please read "The Servicing Agreement" in this prospectus.

APCo has entered into the APCo Receivables Purchase Agreement and the corresponding APCo Receivables Agency Agreement, and may enter in the future, financing arrangements involving the sale of its accounts receivable. With respect to the APCo Receivables Purchase Agreement, such agreement will, upon the issuance of the SAC bonds, be subject to the intercreditor agreement and joinder described under "Appalachian Power Recovery Funding LLC The Issuing Entity—Intercreditor Agreement and Joinder." APCo will agree with us in the sale agreement that if it becomes a party to another future trade receivables purchase and sale arrangement or similar arrangement under which it sells all or any portion of its accounts receivables, or if APCo

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hereafter causes SAC property or other similar property to be created under a separate financing order and acts as servicer for such SAC property, or similar property, consisting of nonbypassable charges payable by APCo's customers comparable to those sold by the seller pursuant to the sale agreement, in connection with a separate issuance of bonds, APCo and the other parties to such arrangement shall enter into a joinder or amendment to the intercreditor agreement or into a separate intercreditor agreement in connection therewith and the terms the documentation evidencing such trade receivables purchase and sale arrangement or similar arrangement will expressly exclude the SAC charges from any receivables or other assets pledged or sold under such arrangement and the rating agency condition shall be satisfied. Although the SAC charges are not subject to such receivables financings, the SAC charges and accounts receivable are owed by the same customers, including those comprising the customer classes described herein and are expected to be collected for the foreseeable future under a single bill with respect to such customers. As required by the sale agreement, each intercreditor agreement will provide that, in the event the trustee has the right to replace APCo as servicer or the investors have the right to replace APCo as collection agent for the accounts receivable financing, the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds) and the investors' agent will act jointly in the exercise of such rights and neither party will be entitled to replace APCo under its agreement without the consent of the other party (which consent, in the case of the trustee, shall be at the written direction of the holders of a majority in principal amount of the SAC bonds). The intercreditor agreement and joinder, or any similar agreement executed after the issuance of the SAC bonds in accordance with the requirements of the sale agreement, may therefore make it more difficult for the trustee to replace APCo following a servicer default. Conversely, if a default were to occur under the APCo Receivables Agency Agreement or similar agreement executed by APCo in the future, such a default may increase the possibility of APCo being replaced as servicer under the servicing agreement, even if APCo is not in default under the servicing agreement.

**Changes to billing and collection practices might result in delays in collections which may reduce the value of your investment in the SAC bonds.** 

The financing order specifies the methodology for determining the amount of the SAC charges we may impose. The servicer may not change this methodology without approval from the Virginia Commission. However, the servicer may set its own billing and collection arrangements with retail customers from whom it collects the charges directly, provided that these arrangements comply with the Virginia Commission's customer safeguards and the provisions of the servicing agreement. For example, to recover part of an outstanding bill, the servicer may agree to extend a retail customer's payment schedule or to write off the remaining portion of the bill, including the SAC charges. Also, the servicer may change billing and collection practices, which might adversely impact the timing and amount of retail customer payments and might reduce SAC charge collections, thereby limiting our ability to make scheduled payments on the SAC bonds until any resulting undercollections can be trued-up and recovered from other retail customers. Separately, the Virginia Commission might require changes to these practices. Any changes in billing and collection practices regulations might make it more difficult for the servicer to collect the SAC charges and adversely affect the value of your investment in the SAC bonds.

**Limits on rights to terminate service might make it more difficult to collect the SAC charges.** 

If APCo, as the servicer, is billing customers for SAC charges, it may terminate service to the customer for non-payment of SAC charges pursuant to the applicable rules of the Virginia Commission. Nonetheless, the rules and regulations of the Virginia Commission, which may change from time to time, regulate and control the right to disconnect service. For example, electric utilities generally may not terminate service to a customer (a) on a holiday or weekend day; (b) during certain extreme weather conditions; or (c) during a federal government shutdown who timely provides proof that such customer is a federal government employee whose pay is suspended. To the extent these customers do not pay for their electric service, APCo will not be able to collect SAC charges from these customers.

In addition, APCo may be limited in the future in its ability to terminate service or collect SAC charges. The Virginia Commission, in response to a federal mandate or otherwise, could impose restrictions on the rates APCo

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charges to provide its services, including the inability to implement approved rates, or delay actions with respect to APCo's base rate case and filings. For example, under its emergency powers, the Virginia legislature or the Virginia Commission could impose a temporary rate reduction and/or a temporary moratorium on electric service disconnections for the non-payment of customer bills.

**If the servicer enters bankruptcy proceedings, the remittance of SAC charges by the servicer prior to the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the SAC bonds.** 

In the event of a bankruptcy of the servicer, a party in interest might take the position that the remittance of funds prior to bankruptcy of the servicer, pursuant to the servicing agreement or intercreditor agreement and joinder, constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes a preference, any such remittance within 90 days of the filing of the bankruptcy petition could be avoidable, and the funds could be required to be returned to the bankruptcy estate of the servicer. To the extent that SAC charges have been commingled with the general funds of the servicer, the risk that a court would hold that a remittance of funds was a preference would increase. Also, if we are considered to be an "insider" of the servicer, any such remittance made within one year of the filing of the bankruptcy petition could be avoidable as well if the court were to hold that such remittance constitutes a preference. In either case, we or the trustee would merely be an unsecured creditor of the servicer. If any funds were required to be returned to the bankruptcy estate of the servicer, we would expect that the amount of any future SAC charges would be increased through the true-up mechanism to recover such amount, though this would not eliminate the risk of payment delays or losses on your investment in the SAC bonds.

**STORM-RELATED RISKS** 

**Storm damage to APCo's service territories could impair payment of the SAC bonds.** 

Transmission, distribution and usage of electricity could be interrupted temporarily, reducing the collections of SAC charges. There could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity in APCo's service territories, which could cause the per-kWh SAC charge to be greater than expected. Legislative action adverse to the SAC bondholders might be taken in response, and such legislation, if challenged as violative of the Commonwealth of Virginia's or the Virginia Commission's pledge, might be defended on the basis of public necessity. Please read "The Securitization Law—APCo and Other Utilities May Securitize Securitized Asset Costs and Related Financing and Ongoing Costs—Virginia and Virginia Commission Pledges" and "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Future state action could reduce the value of your investment in the SAC bonds" in this prospectus.

**RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE SAC PROPERTY** 

**Future adjustments to SAC charges by customer class might result in insufficient collection.** 

The customers who pay the SAC charges are divided into customer classes. SAC charges will be allocated among customer classes and assessed in accordance with the formula specified in the financing order.

A shortfall in the collections of SAC charges in one customer class may be corrected by making adjustments to the SAC charges payable by that customer class and any other customer class. Accordingly, if enough customers in a customer class fail to pay SAC charges or cease to be customers, the servicer might have to substantially increase the SAC charges for the remaining customers in that customer class and for other customer classes. These increases could lead to further unanticipated failures by the remaining customers to pay SAC charges, thereby increasing the risk of a shortfall in funds to pay interest and principal on the SAC bonds.

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**Foreclosure of the trustee's lien on the SAC property might not be practical, and acceleration of the SAC bonds before maturity might have little practical effect.** 

Under the Securitization Law and the indenture, the trustee or the SAC bondholders have the right to foreclose or otherwise enforce the lien on the SAC property securing the SAC bonds. However, in the event of foreclosure, there is likely to be a limited market, if any, for the SAC property. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although principal of the SAC bonds will be due and payable upon acceleration of the SAC bonds before maturity, SAC charges likely would not be accelerated and the nature of our business will result in the principal of the SAC bonds being paid as funds become available.

**RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER** 

*For a detailed discussion of the following bankruptcy risks, please read "How a Bankruptcy May Affect Your Investment" in this prospectus.* 

**The servicer will commingle the SAC charges with other revenues it collects, which might obstruct access to the SAC charges in case of the servicer's bankruptcy and reduce the value of your investment in the SAC bonds.** 

The servicer will be required to remit collections to the trustee on our behalf each business day based on estimated daily collections, using a weighted average balance of days outstanding on APCo's retail bills. The servicer will not segregate the SAC charges from the other funds it collects from customers or its general funds. The SAC charges will be segregated only when the servicer pays them to the trustee.

Despite this requirement, the servicer might fail to remit the full amount of the SAC charges to the trustee or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of SAC charge collections available to make payments on the SAC bonds.

The Securitization Law provides that the priority of a security interest perfected in SAC property is not impaired by the commingling of the funds arising from SAC charges with any other funds of the servicer. In a bankruptcy of the servicer, however, a bankruptcy court might rule that federal bankruptcy law does not recognize our right to collections of the SAC charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the SAC charges held by the servicer as of the date of bankruptcy would not be available to pay amounts owed on the SAC bonds. In this case, we would have only a general unsecured claim against the servicer for those amounts. This decision could cause material delays in payments of principal or interest, or losses, on the SAC bonds and could materially reduce the value of your investment in the SAC bonds. Please read "How a Bankruptcy May Affect Your Investment" in this prospectus.

**The bankruptcy of APCo might result in losses or delays in payments on SAC bonds.** 

The Securitization Law and the financing order provide that as a matter of Virginia law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rights and interests of a selling utility under a financing order, including the right to impose, bill,
charge, collect and receive SAC charges, are contract rights of the seller prior to its pledge, sale or transfer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller may transfer all of its rights under a financing order, including the right to impose, bill, charge,
collect and receive future SAC charges that customers do not yet owe;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property constitutes an existing, present intangible property right or interest therein, even though the
imposition and collection of SAC charges depend on further acts that have not yet occurred; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a transfer of the SAC property from the seller, or its affiliate, to us, under an agreement that expressly states
the transfer is a sale or other absolute transfer, is a true sale of and not a pledge of the SAC property.

Please read "The Securitization Law" in this prospectus. These provisions are important to maintaining payments on the SAC bonds in accordance with their terms during any bankruptcy of APCo. In addition, the transaction has been structured with the objective of keeping us legally separate from APCo and its affiliates in the event of a bankruptcy of APCo or any such affiliates.

A bankruptcy court generally follows state property law on issues such as those addressed by the state law provisions described above. However, a bankruptcy court does not follow state law if it determines that the state law is contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy court in a APCo bankruptcy refused to enforce one or more of the state property law provisions described above, the effect of this decision on you as a beneficial owner of the SAC bonds might be similar to the treatment you would receive in a APCo bankruptcy if the SAC bonds had been issued directly by APCo. A decision by the bankruptcy court that, despite our separateness from APCo, our assets and liabilities and those of APCo should be consolidated would have a similar effect on you as a bondholder.

We have taken steps together with APCo, as the seller, to reduce the risk that in the event the seller or an affiliate of the seller were to become the debtor in a bankruptcy case, a court would order that our assets and liabilities be substantively consolidated with those of APCo or an affiliate. Nonetheless, these steps might not be completely effective, and thus if APCo or an affiliate were to become a debtor in a bankruptcy case, a court might order that our assets and liabilities be consolidated with those of APCo or such affiliate. This might cause material delays in payment of, or losses on, the SAC bonds and might materially reduce the value of your investment in the SAC bonds. For example:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• without permission from the bankruptcy court, the trustee might be prevented from taking actions against APCo or
recovering or using funds on your behalf or replacing APCo as the servicer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the bankruptcy court might order the trustee to exchange the SAC property for other property, of lower value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• tax or other government liens on APCo's property might have priority over the trustee's lien and
might be paid from collected SAC charges before payments on the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee's lien might not be properly perfected in the collected SAC property collections prior to or as
of the date of APCo's bankruptcy, with the result that the SAC bonds would represent only general unsecured claims against APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the bankruptcy court might rule that neither our property interest nor the trustee's lien extends to SAC
charges in respect of electricity consumed after the commencement of APCo's bankruptcy case, with the result that the SAC bonds would represent only general unsecured claims against APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we and APCo might be relieved of any obligation to make any payments on the SAC bonds during the pendency of the
bankruptcy case and might be relieved of any obligation to pay interest accruing after the commencement of the bankruptcy case;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo might be able to alter the terms of the SAC bonds as part of its plan of reorganization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the bankruptcy court might rule that the SAC charges should be used to pay, or that we should be charged for, a
portion of the cost of providing electric service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the bankruptcy court might rule that the remedy provisions of the sale agreement are unenforceable, leaving us
with an unsecured claim for actual damages against APCo that may be difficult to prove or, if proven, to collect in full;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the servicer defaults or enters bankruptcy proceedings, it might be difficult to find a successor servicer and
payments on the SAC bonds might be suspended;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the mere fact of a servicer or seller bankruptcy proceeding might have an adverse effect on the resale market for
the SAC bonds and on the value of the SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer will commingle the SAC charges with other revenues it collects, which might obstruct access to the
SAC charges in case of the bankruptcy of the servicer and reduce the value of your investment in the SAC bonds.

Please read "How a Bankruptcy May Affect Your Investment" in this prospectus.

**The sale of the SAC property might be construed as a financing and not a sale in a case of APCo's bankruptcy which might delay or limit payments on the SAC bonds.** 

The Securitization Law provides that the characterization of a transfer of SAC property as a sale or other absolute transfer will not be affected or impaired by treatment of the transfer as a financing for federal or state tax purposes or financial reporting purposes. We and APCo will treat the transaction as a sale under applicable law, although for financial reporting and federal and state tax purposes the transaction is intended to be treated as a financing. In the event of a bankruptcy of APCo, a party in interest in the bankruptcy might assert that the sale of the SAC property to us was a financing transaction and not a "sale or other absolute transfer" and that the treatment of the transaction for financial reporting and tax purposes as a financing and not a sale lends weight to that position. If a court were to characterize the transaction as a financing, we expect that we would, on behalf of ourselves and the trustee, be treated as a secured creditor of APCo in the bankruptcy proceedings, although a court might determine that we only have an unsecured claim against APCo. See "— The servicer will commingle the SAC charges with other revenues it collects, which might obstruct access to the SAC charges in case of the servicer's bankruptcy and reduce the value of your investment in the SAC bonds" above.

Even if we had a security interest in the SAC property, we would not likely have access to the related SAC charge collections during the bankruptcy and would be subject to the risks of a secured creditor in a bankruptcy case, including the possible bankruptcy risks described in the immediately preceding risk factor. As a result, repayment of the SAC bonds might be significantly delayed and a plan of reorganization in the bankruptcy might permanently modify the amount and timing of payments to us of the SAC charge collections and therefore the amount and timing of funds available to us to pay SAC bondholders.

**If the servicer enters bankruptcy proceedings, the remittance of certain SAC charges by the servicer prior to the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owed on the SAC bonds.** 

In the event of a bankruptcy of the servicer, a party in interest might take the position that the remittance of funds prior to bankruptcy of the servicer, pursuant to the servicing agreement, constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes a preference, any such remittance within 90 days of the filing of the bankruptcy petition could be voidable, and the funds could be required to be returned to the bankruptcy estate of the servicer. To the extent that SAC charges have been commingled with the general funds of the servicer, the risk that a court would hold that a remittance of funds was a preference would increase. Also, if we are considered to be an "**insider**" of the servicer, any such remittance made within one year of the filing of the bankruptcy petition could be voidable as well if the court were to hold that such remittance constitutes a preference. In either case, we or the trustee would merely be an unsecured creditor of the servicer. If any funds were required to be returned to the bankruptcy estate of the servicer, we would expect that the amount of any future SAC charges would be increased through the true-up mechanism to recover such amount, though this would not eliminate the risk of payment delays or losses on your investment in the SAC bonds.

**Claims against APCo might be limited in the event of a bankruptcy of the seller.** 

If the seller were to become a debtor in a bankruptcy case, claims, including indemnity claims, by us against the seller under the sale agreement and the other documents executed in connection with the sale agreement

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would be unsecured claims and would be disposed of in the bankruptcy case. In addition, the bankruptcy court might estimate any contingent claims that we have against the seller and, if it determines that the contingency giving rise to these claims is unlikely to occur, estimate the claims at a lower amount. A party in interest in the bankruptcy of APCo, as the seller, might challenge the enforceability of the indemnity provisions in the sale agreement. If a court were to hold that the indemnity provisions were unenforceable, we would be left with a claim for actual damages against the seller based on breach of contract principles, which would be subject to estimation and/or calculation by the court. We cannot give any assurance as to the result if any of the above-described actions or claims were made. Furthermore, we cannot give any assurance as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving APCo.

**The bankruptcy of APCo might limit the remedies available to the trustee.** 

Upon an event of default for the SAC bonds under the indenture, the Securitization Law permits the trustee to enforce the security interest in the SAC property in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the Virginia Commission to order the sequestration and payment to all SAC bondholders of all revenues arising from the SAC charges. There can be no assurance, however, that a Virginia court would issue this order after an APCo bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee would be required to seek an order from the bankruptcy court lifting the automatic stay to permit this action by the Virginia court, and an order requiring an accounting and segregation of the revenues arising from the SAC property. There can be no assurance that a court would grant either order.

**OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE SAC BONDS** 

**APCo's indemnification obligations under the sale agreement and the servicing agreement are limited and might not be sufficient to protect your investment in the SAC bonds.** 

APCo is obligated under the sale agreement to indemnify us and the trustee, for itself and on behalf of the SAC bondholders, only in specified circumstances and will not be obligated to repurchase any SAC property in the event of a breach of any of its representations, warranties or covenants regarding the SAC property. Similarly, APCo is obligated under the servicing agreement to indemnify us, the independent managers and the trustee, for itself and on behalf of the SAC bondholders only in specified circumstances. Please read "The Sale Agreement" and "The Servicing Agreement" in this prospectus.

Neither the trustee nor the SAC bondholders will have the right to accelerate payments on the SAC bonds as a result of a breach under the sale agreement or servicing agreement, absent an event of default under the indenture governing the SAC bonds as described in "Description of the SAC Bonds—What Constitutes an Event of Default on the SAC bonds." Furthermore, APCo might not have sufficient funds available to satisfy its indemnification obligations under these agreements, and the amount of any indemnification paid by APCo might not be sufficient for you to recover all of your investment in the SAC bonds. In addition, if APCo becomes obligated to indemnify SAC bondholders, the ratings on the SAC bonds will likely be downgraded as a result of the circumstances causing the breach and the fact that SAC bondholders will be unsecured creditors of APCo with respect to any of these indemnification amounts. APCo will not indemnify any person for any loss, damages, liability, obligation, claim, action, suit or payment resulting solely from a downgrade in the ratings on the SAC bonds, or for any consequential damages, including any loss of market value of the SAC bonds resulting from a default or a downgrade of the ratings of the SAC bonds. Please read "The Sale Agreement—APCo's Representations and Warranties" and "—APCo's Obligation to Indemnify Us and the Trustee and to Take Legal Action" in this prospectus.

**The credit ratings are no indication of the expected rate of payment of principal on the SAC bonds.** 

We expect that the SAC bonds will receive credit ratings from at least two nationally recognized statistical rating organizations ("**NRSRO**"). A rating is not a recommendation to buy, sell or hold the SAC bonds. The

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ratings merely analyze the probability that we will repay the total principal amount of the SAC bonds at the final maturity date (which is later than the scheduled final payment date) and will make timely interest payments. The ratings are not an indication that the rating agencies believe that principal payments are likely to be paid on time according to the expected sinking fund schedule.

Under Rule 17g-5 of the Exchange Act, NRSROs providing APCo, as the sponsor, with the requisite certification will have access to all information posted on a website by APCo for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the SAC bonds. As a result, an NRSRO other than the NRSRO hired by APCo (the "**hired NRSRO**") may issue ratings on the SAC bonds ("**Unsolicited Ratings**"), which may be lower, and could be significantly lower, than the ratings assigned by the hired NRSROs. The Unsolicited Ratings may be issued prior to, or after, the issuance date of the SAC bonds. Issuance of any Unsolicited Rating will not affect the issuance of the SAC bonds. Issuance of an Unsolicited Rating lower than the ratings assigned by the hired NRSRO on the SAC bonds might adversely affect the value of the SAC bonds and, for regulated entities, could affect the status of the SAC bonds as a legal investment or the capital treatment of the SAC bonds. Investors in the SAC bonds should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO. None of APCo, us, the underwriters or any of their affiliates will have any obligation to inform you of any Unsolicited Ratings assigned after the date of this prospectus. In addition, if we or APCo fail to make available to a non-hired NRSRO any information provided to any hired rating agency for the purpose of assigning or monitoring the ratings on the SAC bonds, a hired NRSRO could withdraw its ratings on the SAC bonds, which could adversely affect the market value of the SAC bonds and/or limit your ability to resell the SAC bonds.

**The SAC bonds' credit ratings might affect the market value of the SAC bonds.** 

A downgrading of the credit ratings on the SAC bonds might have an adverse effect on the market value of the SAC bonds. Credit ratings may change at any time. A NRSRO has the authority to revise or withdraw its rating based solely upon its own judgment.

**We are issuing several tranches of the SAC bonds.** 

The financing order authorizes us to issue one or more tranches of SAC bonds not to exceed the Securitizable Balance (as defined pursuant to the financing order). SAC charges collected by APCo will be allocated among the tranches of SAC bonds as set forth in the expected sinking fund schedule and the priority of payments set forth under "Description of the SAC Bonds—How Funds in the Collection Account Will Be Allocated" in this prospectus. However, we cannot assure you that the existence of multiple tranches of SAC bonds would not cause reductions or delays in payment on your SAC bonds. In addition, some matters relating to the SAC bonds may require the vote of the SAC bondholders of all tranches of the SAC bonds. Your interests in these votes might conflict with the interests of the beneficial owners of SAC bondholders of another tranche and therefore these votes could result in an outcome that is materially unfavorable to you.

**Alternatives to purchasing electricity through APCo's distribution facilities may be more widely utilized by customers in the future.** 

Broader use of distributed generation by APCo's customers may result from customers' changing perceptions of the merits of utilizing existing generation technology or from technological developments resulting in smaller-scale, more fuel efficient, more environmentally friendly and/or more cost effective distributed generation. SAC charges, which generally are consumption based, are applied to all existing and future Virginia Commission-jurisdictional area retail customers of APCo (or its successor or assignee) that receive electric service within APCo's geographic service territory in the Commonwealth of Virginia (including the partially exempt customers) that have not opted out (to the extent eligible to opt out under the Securitization Law). SAC charges will not be imposed on customers who do not receive transmission or distribution services from APCo. Any customer who self-generates or co-generates electricity will be assessed SAC charges based

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upon the total firm and standby load served by APCo. Technological developments and/or more widespread use of distributed generation might allow greater numbers of customers to reduce or eliminate their payment of SAC charges.

**The absence of a secondary market for the SAC bonds might limit your ability to resell the SAC bonds.** 

The underwriters for the SAC bonds might assist in resales of the SAC bonds, but they are not required to do so. A secondary market for the SAC bonds might not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of the SAC bonds. We do not anticipate that the SAC bonds will be listed on any securities exchange. Please read "Plan of Distribution" in this prospectus.

**You might receive principal payments for the SAC bonds later than you expect.** 

The amount and the rate of collection of the SAC charges for the SAC bonds, together with the related SAC charge adjustments, will generally determine whether there is a delay in the scheduled repayments of the SAC bonds principal. If the servicer collects the SAC charges at a slower rate than expected, it might have to request adjustments of the SAC charges. If those adjustments are not timely and accurate, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in the SAC bonds. Please read "Description of the SAC Bonds" in this prospectus.

**APCo may cause the issuance, by another subsidiary or affiliated entity, of additional SAC bonds, or similar bonds, secured by additional SAC property, or similar property, that includes a nonbypassable charge on customers.** 

Any new issuance of SAC bonds, or similar bonds, by another subsidiary or affiliated entity of APCo may include terms and provisions that would be unique to that particular issuance, and will be registered on separate registration statements or otherwise exempt from registration. APCo has covenanted in the sale agreement that the satisfaction of the rating agency condition and the execution and delivery of an amendment or possible joinder to the intercreditor agreement are conditions precedent to the sale of additional SAC property or similar property consisting of nonbypassable charges payable by customers comparable to the SAC property to another subsidiary or affiliated entity. Please read "Sale Agreement—Covenants of the Seller" in this prospectus.

In the event a customer does not pay in full all amounts owed under any bill, including SAC charges, APCo, as servicer, is required to allocate any resulting shortfalls in the collection of SAC charges ratably based on the amounts of SAC charges owed in respect of the SAC bonds, and amounts owed in respect of additional SAC bonds, or similar bonds. However, if a dispute arises with respect to the allocation of such SAC charges or other delays occur on account of the administrative burdens of making such allocation, we cannot assure you that any new issuance of SAC bonds, or similar bonds, by another subsidiary or affiliated entity of APCo would not cause reductions or delays in payment of principal and interest on your SAC bonds.

**APCo's operations are subject to risks beyond its control, including cyber-security intrusions, terrorist attacks or other catastrophic events, which could limit APCo's operations and ability to service the SAC property.** 

APCo operates in an industry that requires the use of sophisticated information technology systems and network infrastructure, which control an interconnected system of generation, distribution, and transmission systems shared with third parties. APCo's continued efforts to integrate, consolidate, and streamline its operations have also resulted in increased reliance on current and recently completed projects for technology systems, including but not limited to, a customer information and billing system, automated meter reading systems, and other similar technological tools and initiatives.

APCo has been subject to attempted cyberattacks from time to time, but these attacks have not had a material impact on its system or business operations. A successful physical or cyber-security intrusion may occur

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despite APCo's security measures or those that it requires its vendors to take, which include compliance with reliability standards and critical infrastructure protection standards. Despite the implementation of security measures, all assets and systems are potentially vulnerable to disability, failures, or unauthorized access due to physical or cyber-security intrusions caused by human error, vendor bugs, terrorist attacks, or other malicious acts. If APCo's assets or systems were to fail, be physically damaged, or be breached, and were not recovered in a timely manner, APCo may be unable to perform critical business functions, including the distribution of electricity and the metering and billing of customers, all of which could materially affect APCo's ability to bill and collect SAC charges or otherwise service the SAC property.

**If the investment of collected SAC charges and other funds held by the trustee in the collection account results in investment losses or the investments become illiquid, you may receive payment of principal and interest on the SAC bonds later than you expect.** 

Funds held by the trustee in the collection account will be invested in eligible investments at the written direction of the servicer. Eligible investments include money market funds having a rating from Moody's and S&P of "Aaa-mf" and "AAAm," respectively. Although investments in these money market funds have traditionally been viewed as highly liquid with a low probability of principal loss, illiquidity and principal losses have been experienced by investors in certain of these funds as a result of disruptions in the financial markets in recent years. If investment losses or illiquidity is experienced, you might experience a delay in payments of principal and interest on the SAC bonds and a decrease in the value of your investment in the SAC bonds.

**Regulatory provisions affecting certain investors could adversely affect the liquidity and the regulatory treatment of investments in the SAC bonds.** 

Investors should be aware, and in some cases are required to be aware, of certain restrictions and obligations with regard to any securitisation (as such term is defined for purposes of the relevant legislation) imposed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the European Union ()"**EU** "), pursuant to Regulation (EU) 2017/2402 relating to a European
framework for simple, transparent and standardised securitisation (including any implementing regulation, secondary legislation, technical standards and official guidance related thereto), in each case as amended, varied or substituted from time to
time (as amended, the "**EU Securitization Regulation** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the non-EU member states of the European Economic Area
(" **EEA** "), pursuant to the EU Securitization Regulation, to the extent (if at all) implemented or applicable in such member states; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the United Kingdom ()"**UK** "), pursuant to the regime under the Financial Services and Markets
Act 2000, as amended (the "**FSMA**") comprising (a) the Securitisation Regulations 2024 (SI 2024/102), as amended ()"**SR 2024**") as well as (b) the Securitisation Part of the Prudential Regulation Authority
(" **PRA**") Rulebook (the "**PRA Securitization Rules**") and the securitisation sourcebook ()"**SECN**") of the FCA Handbook (collectively, the "**UK Securitization Framework**" and
together with the EU Securitization Regulation the "**Securitization Regulations** ").

The EU Due Diligence Requirements apply to institutional investors (as defined in the EU Securitization Regulation), being (subject to certain conditions and exceptions) (a) institutions for occupational retirement provision; (b) credit institutions (as defined in Regulation (EU) No 575/2013, as amended (the "**CRR**")); (c) alternative investment fund managers who manage and/or market alternative investment funds in the EU; (d) investment firms (as defined in the CRR); (e) insurance and reinsurance undertakings; and (f) management companies of UCITS funds (or internally managed UCITS); and the EU Due Diligence Requirements apply also to certain consolidated affiliates of such credit institutions and investment firms. Each such institutional investor and each relevant affiliate is referred to herein as an "**EU Institutional Investor**".

The UK Due Diligence Requirements apply to institutional investors (as defined in the UK Securitization Framework) being (subject to certain conditions and exceptions): (a) insurance undertakings and reinsurance

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undertakings as defined in the FSMA; (b) trustees or managers of an occupational pension scheme as defined in the FSMA, and certain fund managers appointed under the Pensions Act 1995 in respect of such schemes; (c) alternative investment fund managers as defined in the Alternative Investment Fund Managers Regulations 2013 with permission under Part 4A of the FSMA (in respect of managing an AIF), who market or manage alternative investment funds in the UK (and additionally, small registered UK AIFMs as defined in the Alternative Investment Fund Managers Regulations 2013); (d) UCITS as defined in the FSMA, which are authorised open ended investment companies as defined in the FSMA, and management companies as defined in the FSMA; (e) FCA investment firms as defined in Regulation (EU) No 575/2013 as it forms part of UK domestic law and as amended (the "**UK CRR**"); and (f) CRR firms as defined in the UK CRR; and the UK Due Diligence Requirements apply also to certain consolidated affiliates of such CRR firms. Each such institutional investor and each relevant affiliate is referred to herein as a "**UK Institutional Investor**".

EU Institutional Investors and UK Institutional Investors are referred to together as "**Institutional Investors**"; and a reference to the applicable EU Due Diligence Requirements and the UK Due Diligence Requirements (together and for the purposes of this section, the "**Due Diligence Requirements**") means, in relation to an Institutional Investor, as the case may be, the Due Diligence Requirements to which such Institutional Investor is subject. In addition, for the purpose of the following paragraph, a reference to a "**third country**" means (a) in respect of an EU Institutional Investor and the EU Securitization Regulation, a country other than an EU Member State, or (b) in respect of a UK Institutional Investor and the UK Securitization Framework, a country other than the UK.

The applicable Due Diligence Requirements restrict an Institutional Investor from investing in a securitisation unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in each case, it has verified that the originator, sponsor or original lender will retain, on an ongoing basis, a
material net economic interest of not less than five percent. in the securitisation in accordance with the applicable Retention Requirement and the risk retention is disclosed to the Institutional Investor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of an EU Institutional Investor, it has verified that the originator, sponsor or SSPE has, where
applicable, made available the information required by the EU Transparency Requirements in accordance with the frequency and modalities provided for thereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of a UK Institutional Investor, it has verified that the originator, sponsor or SSPE has made
available sufficient information to enable the investor independently to assess the risks of holding the securitisation position, and has committed to make further information available on an ongoing basis, as appropriate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of an EU Institutional Investor, it has verified that, where the originator or original lender either
(a) is not a credit institution or an investment firm or (b) is established in a third country, the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined
criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes in order to ensure that credit-granting is based on a thorough
assessment of the obligor's creditworthiness; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of a UK Institutional Investor, it has verified that, where the originator or original lender is
established in the UK and is not a UK CRR firm or an FCA investment firm, the originator or original lender grants all the credits giving rise to the underlying exposures (unless they are trade receivables not originated in the form of a loan) on
the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes in accordance with UK SECN 8.2 or
Article 9(1) of Chapter 2 of the Securitisation Part of the PRA Rulebook, as amended.

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The applicable Due Diligence Requirements further require that an Institutional Investor carry out a due diligence assessment which enables it to assess the risks involved prior to investing, including but not limited to the risk characteristics of the individual investment position and the underlying assets and all the structural features of the securitisation that can materially impact the performance of the investment. In addition, pursuant to the applicable Due Diligence Requirements, while holding an exposure to a securitisation, an Institutional Investor is subject to various monitoring obligations in relation to such exposure, including but not limited to: (a) establishing appropriate written procedures to monitor compliance with the due diligence requirements and the performance of the investment and of the underlying assets; (b) performing stress tests on the cash flows and collateral values supporting the underlying assets; (c) ensuring internal reporting to its management body; and (d) being able to demonstrate to its competent authorities, upon request, that it has a comprehensive and thorough understanding of the investment and underlying assets and that it has implemented written policies and procedures for the risk management and as otherwise required by the applicable Due Diligence Requirements.

If a Competent Authority for an Institutional Investor determines that such Institutional Investor failed to comply with the applicable Due Diligence Requirements in respect of an investment in a securitisation, including as a result of non-compliance with (a) the applicable EU Retention Requirements and/or UK Retention Requirements or (b) the applicable EU Transparency Requirements and/or UK Transparency Requirements, such Institutional Investor is liable to penalties and, if it is subject to regulatory capital requirements, a punitive regulatory capital charge with respect to such securitisation position.

Neither we nor APCo nor any other party to the transactions described in this prospectus, intends, at any time, to retain a material net economic interest in such transactions, or to take any other action with regard to such transactions, in a manner prescribed or contemplated by the Securitization Regulations. In particular, no such party undertakes to take any action, or refrain from taking any action, for purposes of, or in connection with, compliance by any prospective investor (or any other Person) with any applicable requirement thereof.

Neither we nor APCo nor any other party to the transactions described in this prospectus, nor our or each of their respective affiliates, corporate officers or professional advisers or any other person makes any representation, warranty or guarantee that any such information and in any reports provided to investors in relation to this transaction is sufficient for the purposes of complying with the Due Diligence Requirements and no such person shall have any liability to any prospective investor or any other person with respect to the insufficiency of such information or any failure of the transactions contemplated hereby to satisfy or otherwise comply with the Securitization Regulations or any other legal, regulatory or other requirements, and no such person shall have any liability to any prospective investor with respect to any deficiency in such information or any failure of the transactions or structure contemplated hereby to comply with or otherwise satisfy such requirements.

Consequently, the SAC bonds may not be a suitable investment for an Institutional Investor. As a result, the price and liquidity of the SAC bonds in the secondary market may be adversely affected.

With respect to the Securitization Regulations, each prospective investor in the SAC bonds is required to independently assess and determine whether the information provided herein (including in respect of the structural features of the transaction) and in any reports provided to investors in relation to this transaction are sufficient to comply with the Securitization Regulations or any other regulatory requirement. Neither we, nor APCo nor any other party to the transactions, nor our or their respective affiliates or any other person makes any representation, warranty or guarantee that any such information or structure is sufficient for such purposes or any other purpose and no such person shall have any liability to any prospective investor or any other person with respect to the insufficiency of such information or structure or any failure of the transactions contemplated hereby to satisfy the requirements of the Securitization Regulations or any other regulatory requirement. Each prospective investor in the SAC bonds which is subject to the Due Diligence Requirements of the Securitization Regulations or any other regulatory requirement should consult with its own legal, accounting and other advisors and/or its national regulator to determine whether, and to what extent, such information or structure is sufficient for such purposes and any other requirements of which it is uncertain.

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**REVIEW OF SAC PROPERTY** 

Pursuant to the rules of the SEC, APCo, as sponsor, has performed, as described below, a review of the SAC property underlying the SAC bonds. As required by these rules, the review was designed and effected to provide reasonable assurance that disclosure regarding the SAC property is accurate in all material respects. APCo did not engage a third party in conducting its review.

The SAC bonds will be secured under the indenture by the SAC bond collateral. The principal asset of the SAC bond collateral is the SAC property. The SAC property is a existing, present intangible property right authorized and created pursuant to the Securitization Law and an irrevocable financing order. The SAC property includes (i) the irrevocable right to impose, bill, charge, collect and receive nonbypassable SAC charges in amounts sufficient to pay scheduled principal and interest and ongoing financing costs in connection with the SAC bonds and (ii) all revenues, collections, claims, rights to payments, money or proceeds arising from the rights and interests arising in the financing order. The SAC charges are payable by all existing and future Virginia Commission-jurisdictional area retail customers of APCo (or its successor or assignee) that receive electric service within APCo's geographic service territory in the Commonwealth of Virginia (including the partially exempt customers) that have not opted out (to the extent eligible to opt out under the Securitization Law), irrespective of the generation supplier of such retail customers.

Pursuant to the Securitization Law, certain retail customers of APCo whose demand exceeded five megawatts during the calendar year prior to the filing of APCo's petition for a financing order with the Virginia Commission were eligible to opt out of financing their pro rata obligation for SAC charges by providing written notice to APCo within 30 days of such filing. The time period for eligible customers to exercise this opt-out right has expired, and no customer provided APCo with the written notice required to do so. Accordingly, the maximum principal amount of SAC bonds authorized to be issued was not reduced by any customer opt-out payments. Under the Securitization Law and Section 56-577 A 6 of the Code of Virginia, partially exempt customers are exempt from the portion of the SAC charges representing the undepreciated Amos and Mountaineer plant balances. Because the partially exempt customers do not currently pay APCo's generation charges, they are not included in the customer base to which the plant-balance portion of the SAC charges is allocated, but they do remain subject to the portion of the SAC charges attributable to storm restoration costs and upfront financing costs. Please read "the SAC Charges" in this prospectus.

SAC charges will be added to each customer's bill as a separate line item. During the 12 months ended December 31, 2025, approximately 41.9% of APCo's total deliveries in the Virginia Commission-jurisdictional area were to residential customers, approximately 19.6% were to commercial customers and approximately 32.4% were to industrial customers. During the 12 months ended December 31, 2025, approximately 99.998% were to retail customers at distribution voltage and 0.002% were to customers at transmission voltage. During the 12 months ended December 31, 2025, municipal-specific rate codes comprised approximately 6.0% of APCo's total retail electric revenues in the Virginia Commission-jurisdictional area.

The SAC property is not a static pool of receivables or assets. SAC charges authorized in the financing order are irrevocable and not subject to reduction, impairment, or adjustment by further action of the Virginia Commission except that SAC charges are subject the true-up adjustment to correct for over-collections and under-collections and to provide the expected recovery of amounts sufficient to timely provide all scheduled payments of debt service and other required amounts and charges in connection with the SAC bonds. There is no "cap" on the level of SAC charges that may be imposed on retail customers to meet scheduled principal of and interest on the SAC bonds. All revenues and collections resulting from SAC charges provided for in the financing order are part of the SAC property. The SAC property is described in more detail under "Description of the SAC Property" in this prospectus.

In the financing order, the Virginia Commission, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• orders that APCo, as servicer, shall impose, bill charge and collect from all Virginia Commission-jurisdictional
area retail customers required to pay or collect SAC charges under the financing order,

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SAC charges in an amount sufficient to provide for the timely recovery of its periodic payment requirement (including, without limitation, payment of principal and interest on the SAC bonds and on-going financing costs); <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• orders that upon any sale, assignment, or other transfer of the SAC property to us by APCo, we shall be the owner
of the rights to the SAC property and that APCo as servicer is merely the collection agent for us; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pledges and agrees with the holders of the SAC bonds, the owners of the SAC property, and other financing parties
that it and the Commonwealth of Virginia and its agencies shall not take any action to: (a) alter the provisions of the Securitization Law that authorizes it to create an irrevocable contract right or chose in action by the issuance of the
financing order, to create securitized asset cost property in the form of the SAC property, and to make the securitized asset cost charges imposed by the financing order in the form of the SAC charges irrevocable, binding, or nonbypassable charges;
(b) take or permit any action that impairs or would impair the value of the SAC property or the security for the SAC bonds or revises the securitized asset costs for which recovery is authorized; (c) in any way impair the rights and
remedies of the bondholders, assignees, and other financing parties related thereto; or (d) except for changes made pursuant to the true-up adjustment mechanism authorized under by the financing order,
reduce, alter, or impair SAC charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the SAC bondholders, assignees, and financing parties until any and all principal, interest, premium, financing costs and other
fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related SAC bonds have been paid and performed in full.

Please read "The Securitization Law" and "APCo's Financing Order" in this prospectus for more information.

The characteristics of SAC property are unlike the characteristics of assets underlying mortgage and other commercial asset securitizations because SAC property is a creature of statute and state regulatory commission proceedings. Because the nature and characteristics of the SAC property and many elements of the SAC bonds securitization are set forth and constrained by the securitization provisions of the Securitization Law, APCo, as sponsor, does not select the assets to be securitized in ways common to many securitizations. Moreover, the SAC bonds do not contain origination or underwriting elements similar to typical mortgage or other loan transactions involved in other forms of asset-backed securities. The securitization provisions of the Securitization Law and the Virginia Commission require the imposition on, and collection of SAC charges from, all existing and future retail customers located within the Virginia Commission-jurisdictional area, subject to the limited exception for certain partially exempt customers. Please read "The SAC Charges" in this prospectus. Since the SAC charges are assessed against all such customers and the true-up adjustment mechanism adjusts for the impact of customer defaults, the collectability of the SAC charges is not ultimately dependent upon the credit quality of particular APCo customers, as would be the case in the absence of the true-up adjustment mechanism.

The review by APCo of the SAC property underlying the SAC bonds has involved a number of discrete steps and elements as described in more detail below. First, APCo has analyzed and applied the securitization provisions of the Securitization Law's requirements for securitization of securitized asset costs in seeking approval of the Virginia Commission for the issuance of the financing order and in its application for a financing order with respect to the characteristics of the SAC property to be created pursuant to the Securitization Law and the financing order. APCo worked with its counsel in preparing the application for a financing order and with the Virginia Commission on the terms of the financing order. Moreover, APCo worked with its counsel and counsel to the underwriters in preparing the legal agreements that provide for the terms of the SAC bonds and the security for the SAC bonds. APCo has analyzed economic issues and practical issues for the scheduled payment of the SAC bonds.

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In light of the unique nature of the SAC property, APCo has taken (or prior to the offering of the SAC bonds, will take) the following actions in connection with its review of the SAC property and the preparation of the disclosure for inclusion in this prospectus describing the SAC property, the SAC bonds and the proposed securitization:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewed the securitization provisions of the Securitization Law, the rules and regulations of the Virginia
Commission as they relate to the SAC property in connection with the preparation and filing of the application with the Virginia Commission for the approval of the financing order in order to confirm that the application and proposed financing order
satisfied applicable statutory and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actively participated in the proceeding before the Virginia Commission relating to the approval of the requested
financing order;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compared the financing order, as issued by the Virginia Commission, to the securitization provisions of the
Securitization Law and the rules and regulations of the Virginia Commission as they relate to the SAC property to confirm that the financing order met such requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compared the proposed terms of the SAC bonds to the applicable requirements in the securitization provisions of
the Securitization Law, the financing order and the regulations of the Virginia Commission to confirm that they met such requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prepared and reviewed the agreements to be entered into in connection with the issuance of the SAC bonds and
compared such agreements to the applicable requirements in the securitization provisions of the Securitization Law, the financing order and the regulations of the Virginia Commission to confirm that they met such requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewed the disclosure in this prospectus regarding the securitization provisions of the Securitization Law, the
financing order and the agreements to be entered into in connection with the issuance of the SAC bonds, and compared such descriptions to the relevant securitization provisions of the Securitization Law, the financing order and such agreements to
confirm the accuracy of such descriptions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consulted with legal counsel to assess if there is a basis upon which the SAC bondholders (or the trustee acting
on their behalf) could successfully challenge the constitutionality of any legislative action by the Commonwealth of Virginia (including the Virginia Commission) that could repeal or amend the securitization provisions of the Securitization Law that
could substantially impair the value of the SAC property, or substantially reduce, alter or impair the SAC charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewed the process and procedures in place for it, as servicer, to perform its obligations under the servicing
agreement, including without limitation, billing and collecting the SAC charges to be provided for under the SAC property, forecasting SAC charge revenues, preparing and filing applications for true-up adjustments to the SAC charges and enforcing credit standards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewed the operation of the true-up mechanism for adjusting SAC charge
levels to meet the scheduled payments on the SAC bonds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• with the assistance of the underwriters, prepared financial models in order to set the initial SAC charges to be
provided for under the SAC property at a level sufficient to pay on a timely basis scheduled principal and interest on the SAC bonds.

In connection with the preparation of such models, APCo:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewed (a) the historical electric usage and customer growth within APCo's customer base; and
(b) forecasts of expected energy sales and customer growth; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• analyzed the sensitivity of the weighted average life of the SAC bonds in relation to variances in actual
electricity consumption levels (electric sales at distribution voltage) from forecasted levels and in relation to the true-up mechanism in order to assess the probability that the weighted average life of the

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SAC bonds may be extended as a result of such variances, and in the context of the operation of the true-up mechanism for adjustment of SAC charges to address under- or over-collections in light of scheduled payments on the SAC bonds.

As a result of this review, APCo has concluded that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property, the financing order and the agreements to be entered into in connection with the issuance of
the SAC bonds meet in all material respects the applicable statutory and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the disclosure in this prospectus regarding the securitization provisions of the Securitization Law, the
financing order and the agreements to be entered into in connection with the issuance of the SAC bonds is as of its date, accurate in all material respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer has adequate processes and procedures in place to perform its obligations under the servicing
agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• SAC charge revenues, as adjusted from time to time as provided in the securitization provisions of the
Securitization Law and the financing order, are expected to be sufficient to pay on a timely basis scheduled principal and interest on the SAC bonds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the design and scope of APCo's review of the SAC property as described above is effective to provide
reasonable assurance that the disclosure regarding the SAC property in this prospectus is accurate in all material respects.

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**DESCRIPTION OF THE SAC PROPERTY** 

**Creation of SAC Property; Financing Order** 

In accordance with the Securitization Law, the Financing Order defines the "securitized asset cost property" constituting the SAC property as the rights and interests of APCo, or its successor or assignee, under the financing order, including the right to impose, bill, charge, collect and receive SAC charges authorized in the financing order and to obtain periodic adjustments to such SAC charges as provided in the financing order. The SAC bonds will be secured by the SAC property, as well as the other collateral described under "Description of the SAC Bonds—The Security for the SAC Bonds."

In addition to the right to impose, bill, charge, collect and receive SAC charges, the financing order:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorizes the transfer of the SAC property to us and the issuance of SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establishes procedures for annual true-up adjustments to SAC charges to
correct for over-collections or under-collections and semi-annual and more frequent interim true-up adjustments if the servicer forecast insufficient SAC charge collections; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provides and pledges that after the earlier of the transfer of the SAC property to an assignee or the issuance of
SAC bonds authorized by the financing order, the financing order is irrevocable and may not be amended, modified, or terminated by any subsequent action of the Virginia Commission (except for the true-up mechanism adopted by the Virginia Commission).

A form of issuance advice letter and a form of tariff rider (referred to herein as the "**securitization financing rider**") are attached to the financing order. We will complete and file both documents with the Virginia Commission immediately after the pricing of the SAC bonds. The issuance advice letter confirms to the Virginia Commission the interest rate, expected sinking fund schedule and amortization schedule for the SAC bonds and sets forth the actual dollar amount of the initial SAC charges as described below under "APCo's Financing Order—Issuance Advice Letter." The Virginia Commission's review of the issuance advice letter will be limited to determining that the final structuring, terms and pricing of the SAC bonds are consistent with the criteria established in the financing order and that the mathematical calculations are accurate.

**Securitization Financing Rider; SAC Charges** 

The securitization financing rider establishes the initial SAC charges. It also implements the procedures for periodic adjustments to the SAC charges, the payment of SAC charges and the annual procedures allowing APCo as servicer to reconcile the amount of SAC charges remittances with the periodic payment requirement.

The SAC charges will be payable by all existing and future Virginia Commission-jurisdictional area retail customers that receive electric service within APCo's geographic service territory in the Commonwealth of Virginia, irrespective of the generation supplier of such customer. Please read "The Securitization Law—SAC Charges Are Nonbypassable" in this prospectus.

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For purposes of billing SAC charges, each customer will be designated as a customer belonging to one of the SAC charge customer classes in accordance with the methodology approved in APCo's most recent base rate case. Accordingly, APCo will initially allocate the SAC charges among the SAC charge customer classes as follows:

**SAC Charge Customer Classes** 

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| | |
|:---|:---|
| **Customer Class** | **Allocation Percentage** |
|  Residential | 61.32% |
|  Commercial | 21.30% |
|  Industrial | 17.38% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total\*** | **100.00%** |

---

\* Total may not add up due to rounding. 

The financing order provides that the allocation methodology shall remain in effect unless otherwise modified by order of the Virginia Commission in a subsequent base rate case or cases. In addition, upon the occurrence of a significant and sustained change, the servicer may submit a non-standard true-up adjustment tariff rider to the Virginia Commission to reallocate SAC charges among customer classes. A significant and sustained change is deemed to have occurred if the forecasted load of any customer class for the upcoming remittance period is projected to increase or decrease by ten percent or more compared to the original projected load for that class as set forth in the financing order or in the most recent application of the true-up mechanism and such changes are projected to be sustained. Please read "The Servicing Agreement—SAC Charge Adjustment Process" in this prospectus.

The nonbypassable charge applicable to each SAC charge customer class for any period will be determined based on the allocation percentage of such class and the periodic billing requirement, which includes the amount necessary to make payments on the SAC bonds and pay on-going financing costs for the related period, and the most recent forecast of billing determinants for that class. The periodic billing requirement represents the aggregate dollar amount of the SAC charges that must be billed so that the projected SAC charge collections will be timely and sufficient to meet the entire aggregate periodic payment requirement for that period, based upon: (a) forecast usage data for the period; (b) forecast uncollectibles for the period; and (c) forecast lags in collection of billed SAC charges for the period. In the true-up process, the over- or under-collection from any prior period will be added to or subtracted from, as the case may be, the periodic billing requirement for the upcoming period.

The true-up adjustment methodology approved in the financing order requires that any delinquencies or under-collections, regardless of the customer class in which they arise, are reflected in the cumulative difference between the periodic payment requirement and actual collections and are taken into account in the application of the true-up mechanism.

The SAC charges will be calculated to recover the periodic payment requirement for the SAC bonds, including securitized asset costs and financing costs (consisting of remaining up-front financing costs and on-going financing costs), and will be allocated among customer classes in accordance with the allocation methodology approved in APCo's most recent base rate case. The SAC charges for each class will then be determined using the most recent forecast of billing determinants for that class, consistent with the tariff and true-up methodology approved in the financing order.

The initial SAC charge would represent approximately % of the total bill for a typical 1,000 kWh/month Virginia Commission-jurisdictional area residential customer as of , 2026.

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**Billing and Collection Terms and Conditions** 

APCo bills its customers, on average, every business day based on a 21 day cycle calendar. Residential and most commercial customers are billed in established cycles, with the total number of days between meter readings ranging from 28 to 30 days. Commercial and industrial customers with more complex billing arrangements (normally dictated by contractual terms) are manually billed on a calendar month basis.

SAC charges will be collected by the servicer. SAC charges will be deposited by the servicer into the collection account under the terms of the indenture and the servicing agreement. The servicer will deposit in the collection accounts payments of SAC charges each business day based on estimated daily collections (subject to subsequent reconciliation with actual customer receipts) in accordance with the procedures described below under "The Servicing Agreement —Remittances to Collection Account."

So long as the intercreditor agreement and joinder is in effect, APCo will allocate, or cause to be allocated, amounts owed to us and the other recipients of remittances described therein in accordance with the terms of the intercreditor agreement and joinder. Any amounts collected by APCo that represent partial payments of: (a) if the intercreditor agreement and joinder remains in effect, the portion of the customer bill allocable to SAC charges pursuant to the terms of the intercreditor agreement and joinder; or (b) otherwise, the amount paid by a customer will be applied to all charges on such customer's bill, including without limitation electric service charges and all SAC charges (under the financing order or future financing orders) and all similar securitization charges, based, as to a bill with charges covering more than one month, on the chronological order of billing, and, as to those charges with the same billing date, on a pro-rata basis. In addition, subject to any applicable intercreditor agreement and joinder, in the event APCo sponsors future offerings of SAC bonds or other securitization bonds, partial collections representing SAC charges and any other similar securitization charges shall be allocated among all such securitization bonds on a pro-rata basis based upon the amounts billed with respect to each issuance of securitization bonds.

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**THE SECURITIZATION LAW** 

**Overview** 

In March 2025, the Virginia Legislature passed the "Financing for Certain Securitized Asset Costs; Phase I Utility" law (referred to herein as the "**Securitization Law**"), establishing a financing mechanism though which APCo can use securitization financing for securitized asset costs by issuing "securitized asset cost bonds." The securitized asset cost bonds must be approved in a financing order issued by the Virginia Commission. This provision of Virginia law, the Securitization Law, as amended, is codified at Va. Code § 56-249.8. A Virginia electric utility subject to the jurisdiction of the Virginia Commission must apply to the Virginia Commission in order for a financing order under the Securitization Law to authorize the issuance of securitized asset cost bonds.

APCo's service territory in Virginia was struck by several severe weather events between January 1, 2024 and March 31, 2025, causing substantial damage to APCo's transmission and distribution facilities. APCo applied for a financing order under the Securitization Law, which was issued on November 24, 2025. The financing order became final and nonappealable on December 24, 2025, as a result of no third party filing a petition to challenge the financing order.

Under the Securitization Law and the financing order, APCo's customers will pay SAC charges, which are nonbypassable charges included in their monthly charges for electric service. SAC charges will fund payments of principal and interest on the SAC bonds, together with related financing costs. SAC charges will be collected by APCo, as initial servicer, or its successor, as provided for in the financing order. SAC charges are required to be adjusted at least annually, and more frequently as necessary or otherwise required by the financing order, to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal, interest and other required amounts in connection with the SAC bonds.

**APCo and Other Utilities May Securitize Securitized Asset Costs and Related Financing and Ongoing Costs** 

*We May Issue SAC Bonds to Recover APCo's Securitized Asset Costs.* 

Under the Securitization Law and the plenary power granted to the Virginia Commission under the Virginia Constitution, the Virginia Commission may issue financing orders approving the issuance of SAC bonds, such as the SAC bonds, to recover certain costs of APCo, including securitized asset costs, upfront and ongoing financing costs associated with the issuance of securitized asset bonds, and the cost of undepreciated generation plant balances. APCo, its successors or a third-party assignee of APCo may issue securitized asset cost bonds. The Securitization Law requires the proceeds of the securitized asset cost bonds to be used for the purposes of recovering or financing securitized asset costs and financing costs. The SAC bonds are secured by and payable from the securitized asset cost property, which includes the right to impose, bill, charge, collect and remit SAC charges, to obtain periodic adjustments to such charges as provided in the financing order and all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the foregoing rights and interests. Under the financing order, the expected term of the scheduled final payment date of the last maturing tranche of SAC bonds issued is required to be no more than approximately 20 years from the issuance of the SAC Bonds, while the final maturity date of each tranche is longer than the scheduled final payment date for such tranche.

Under the financing order, securitized asset costs generally are to be allocated among customer classes in accordance with the methodology approved in APCo's or its successors' most recent base rate case. SAC charges can be imposed only when and to the extent that SAC bonds are issued.

The Securitization Law contains a number of provisions designed to facilitate the securitization of securitized asset costs and related upfront and ongoing financing costs.

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*Creation of SAC Property.* 

As authorized by the Securitization Law, and provided by the financing order, as of the effective date of the financing order, the SAC property is approved and, upon transfer of the SAC property to us, the SAC property shall be created, and shall consist of (a) all rights and interests of APCo or its successors or assignees under the financing order, including the right to impose, bill, charge, collect and receive SAC charges authorized in financing order and as the servicer to obtain true-up adjustments to such charges as provided in the financing order, and (b) all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the rights and interests specified in the financing order, regardless of whether such revenues, collections, claims, rights to payment, payments, money or proceeds are imposed, billed, charged, collected or received with, or maintained together with or commingled with other revenues, collections, rights to payment, payments, money or proceeds. The creation of SAC property is conditioned upon, and shall he simultaneous with, the sale or other transfer of the SAC property to us, and the issuance of the SAC bonds and the pledge of the SAC Property to secure the SAC bonds.

*A Financing Order is Irrevocable.* 

A financing order, once effective, together with the securitized asset cost charges authorized in such financing order, is irrevocable and not subject to amendment or modification by the Virginia Commission, except for true-up adjustments pursuant to the Securitization Law in order to correct over-collections or under-collections and to ensure the projected recovery of amounts sufficient to provide timely payment of debt service and all other upfront and ongoing financing costs in connection with the related securitized asset cost bonds. Although a financing order is irrevocable, the Securitization Law allows for electric utilities, including APCo, to apply for one or more new financing orders to provide for refinancing retiring and refunding securitized asset cost bonds.

*Commonwealth of Virginia and Virginia Commission Pledges.* 

The Commonwealth of Virginia has pledged in the Securitization Law that it will not (i) alter the provisions of the part of the Securitization Law which authorizes the Virginia Commission to create a contract right or chose in action by the issuance of a financing order, to create SAC property, and to make the SAC charges imposed by a financing order irrevocable, binding and nonbypassable charges, (ii) take or permit any action that impairs or would impair the value of the SAC property or the security for SAC bonds or revises the SAC charges for which recovery is authorized, or in any way impair the rights and remedies of the bondholders, assignees, and other financing parties, or (iii) except for true-up adjustments discussed in "APCo's Financing Order—True-ups" and "The Servicing Agreement —SAC Charge Adjustment Process," reduce, alter or impair the SAC charges to be imposed, billed, charged, collected and remitted for the benefit of SAC bondholders, any assignee, and any other financing parties until the principal, interest, premium, if any, financing costs, and any other fees, expenses, or charges incurred and contracts to be performed in connection with the related SAC bonds have been paid and performed in full. However, nothing will preclude limitation or alteration if and when full compensation is made by law for the full protection of the SAC charges collected pursuant to the financing order and the full protection of the SAC bondholders and any assignee or financing party. Please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions" in this prospectus.

The Virginia Commission is an independent constitutional state agency established under Article IX of the Virginia Constitution and has jurisdiction over APCo. Pursuant to the Securitization Law and as expressly provided in the financing order, after the earlier of the transfer of SAC property or the issuance of the SAC bonds, the financing order is irrevocable. Except for formula-based true-up adjustments authorized in the financing order, the Commission may not amend, modify, or terminate the financing order or reduce, impair, postpone, terminate, or otherwise adjust the SAC charges approved therein until the SAC bonds and all related financing costs have been paid in full. In addition, consistent with the Securitization Law, the Commonwealth of

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Virginia and the Virginia Commission have pledged not to take or permit any action that would reduce, alter, or impair the SAC charges, the value of the SAC property, or the rights and remedies of SAC bondholders and other financing parties until those obligations are fully paid. Please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions" in this prospectus.

The Commonwealth of Virginia does not have a commonwealth-wide voter referendum or initiative process that would allow direct action on the Securitization Law. As a result, absent an amendment to the Virginia Constitution, the Securitization Law cannot be amended or repealed by direct action of the electorate of the Commonwealth of Virginia.

**Constitutional Matters** 

To date, no federal or Virginia cases addressing the repeal or amendment of the Securitization Law or securitization provisions analogous to those contained in the Securitization Law have been decided. There have been cases in which federal courts have applied the Contract Clause of the United States Constitution to strike down legislation regarding similar matters, such as legislation reducing or eliminating taxes, public charges or other sources of revenues servicing other types of bonds issued by public instrumentalities or private issuers, or otherwise substantially impairing or eliminating the security for bonds or other indebtedness. However, while Virginia courts apply the Contract Clause of the Virginia Constitution, set forth in Virginia Constitution Art. I, § 11, in a similar manner as the Contract Clause of the United States Constitution, Virginia courts have not addressed the Contract Clause of the Virginia Constitution in the context of similar financial matters, leaving the federal Contract Clause as the better understood constitutional contract clause defense to any legislation that substantially impairs private contractual obligations.

Based upon this case law, Sidley Austin LLP, as counsel to APCo and us, with respect to the Contract Clause of the United States Constitution, and Troutman Pepper Locke LLP, as Virginia counsel to APCo and us, with respect to the Contract Clause of the Virginia Constitution, expect to deliver opinions, prior to the closing of the offering of the SAC bonds described in this prospectus, to the effect that, for the purposes of the Contract Clause of the United States Constitution, and the Contract Clause of the Virginia Constitution, respectively, the commonwealth pledge described above unambiguously indicates the Commonwealth of Virginia's intent to be bound with the holders of the SAC bonds and, subject to all of the qualifications, limitations and assumptions set forth in their opinions, supports the conclusion that, for the purposes of the Contract Clause of the United States Constitution, the commonwealth pledge constitutes a binding contractual relationship between the Commonwealth of Virginia and the holders of the SAC bonds.

Subject to all of the qualifications, limitations and assumptions set forth in such opinion, including that any impairment of the contract be "substantial," (a) the opinion of Sidley Austin LLP, with respect to the Contract Clause of the United States Constitution, is expected to state that a reviewing court of competent jurisdiction would conclude that, absent a demonstration by the Commonwealth of Virginia that the same is necessary to further a significant and legitimate public purpose, the holders of the SAC bonds could successfully challenge under the Contract Clause of the United States the constitutionality of any action by the Virginia legislature which becomes law, or any action of the Virginia Commission of a legislative character, including rescission or amendment of the financing order, determined by such court to limit, alter, impair or reduce the value of the SAC charges or SAC property or otherwise cause an impairment of the terms of the SAC bonds or the rights and remedies of the holders of the SAC bond prior to the time that the SAC bonds are fully paid, and (b) the opinion of Troutman Pepper Locke LLP, with respect to the Contract Clause of the Virginia Constitution, is expected to state that a reviewing Virginia court of competent jurisdiction would conclude that the commonwealth pledge provides a basis upon which the holders of the SAC bonds could challenge successfully under the Contract Clause of the Virginia Constitution any action by the legislature of the Commonwealth of Virginia or any action by the Virginia Commission of a legislative character, including the rescission or amendment of the financing order, that violates the commonwealth pledge in a manner that substantially impairs or would substantially impair the value of the SAC charges or SAC property, prior to the time that the SAC bonds are paid and

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performed in full, unless the action is a proper exercise of the Commonwealth of Virginia's police power and the adjustment of the rights and responsibilities are based upon reasonable conditions and of a character appropriate to the public purpose justifying the action.

In addition, any action of the Virginia legislature adversely affecting the SAC property or the ability to collect charges may be considered a "taking" under the United States or Virginia Constitutions. Sidley Austin LLP has advised us that it is not aware of any federal, and Troutman Pepper Locke LLP, has advised us that it is not aware of any Virginia court cases addressing the applicability of the Takings Clause of the United States or Virginia Constitution, respectively, in a situation analogous to that which would be involved in an amendment or repeal of the Securitization Law. It is possible that a court would decline even to apply a Takings Clause analysis to a claim based on an amendment or repeal of the Securitization Law, because, for example, a court might determine that a Contract Clause analysis rather than a Takings Clause analysis should be applied. Accordingly, while the application is uncertain (a) assuming applicable courts would apply a Takings Clause analysis under the Takings Clause of the United States Constitution, the opinion of Sidley Austin LLP is expected to state that, under the Takings Clause of the United States Constitution, the Commonwealth of Virginia would be required to pay just compensation to holders of the SAC bonds if the Commonwealth of Virginia's amendment or repeal of the Securitization Law or taking of any other action in contravention of the commonwealth pledge if doing so (i) constituted a permanent appropriation of a substantial property interest of the holders of the SAC property or denied all economically productive use of the SAC property, (ii) destroyed the SAC property other than in response to emergency conditions, or (iii) substantially impaired the value of the SAC property or the SAC charges (other than as contemplated under the formula-based true-up mechanism authorized by the Securitization Law and the financing order) so as to unduly interfere with the reasonable expectations of the holders of the SAC bonds arising from their investments in the bonds and (b) although there is an absence of judicial precedent directly on point, and assuming applicable Virginia courts would apply a Takings Clause analysis under the Takings Clause of the Virginia Constitution, the opinion of Troutman Pepper Locke LLP is expected to state that under the Takings Clause of the Virginia Constitution, a reviewing Virginia court of competent jurisdiction would hold that the Commonwealth would be required to pay just compensation to holders of the SAC bonds if the Virginia legislature or the Commonwealth of Virginia repealed or amended the Securitization Law or took any other action contravening the commonwealth pledge and doing so constituted a permanent appropriation of a substantial property interest of the holders of the SAC bonds in the SAC property and deprived the holders of the SAC bonds of their reasonable expectations arising from their investments in the SAC bonds. In examining whether action of the Virginia legislature amounts to a regulatory taking, both federal and state courts may consider the character of the governmental action, the economic impact of the governmental action on the holders of the SAC bonds, and the extent to which the governmental action interferes with distinct investment-backed expectations. There is no assurance, however, that, any such award of compensation would be sufficient to pay the full amount of principal and interest on the SAC bonds.

In connection with the foregoing, Sidley Austin LLP has advised us that issues relating to the Contract and Takings Clauses of the United States Constitution, and Troutman Pepper Locke LLP, has advised us that issues relating to the Contract and Takings Clauses of the Virginia Constitution, are essentially decided on a case-by-case basis and that the courts' determinations, in most cases, appear to be strongly influenced by the facts and circumstances of the particular case, and each has further advised us that there are no reported controlling judicial precedents that are directly on point. The opinions described above will be subject to the qualifications included in them. The degree of impairment necessary to meet the standards for relief under a Takings Clause analysis or Contract Clause analysis could be substantially in excess of what a holder of the SAC bonds would consider material.

In addition, Troutman Pepper Locke LLP, expects to render an opinion, prior to the closing of the offering of the SAC bonds described in this prospectus, to the effect that the Securitization Law was duly enacted by the Virginia legislature in accordance with all applicable laws of the Commonwealth of Virginia, is in full force and effect, and Troutman Pepper Locke LLP is unaware of any pending appeal or litigation challenging the validity of the Securitization Law.

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We and APCo will file a copy of each of the Sidley Austin LLP and Troutman Pepper Locke LLP, opinions as exhibits to an amendment to the registration statement of which this prospectus is a part, or to one of our periodic filings with the SEC.

For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions" in this prospectus.

**The Virginia Commission May Adjust SAC Charges and Customer Class Allocations** 

The Securitization Law authorizes the Virginia Commission to provide, and the Virginia Commission has provided, in the financing order, that SAC charges be adjusted at least annually. The purposes of these true-up adjustments are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to correct any over-collections or under-collections; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to ensure the projected recovery of amounts sufficient to provide timely payment of debt service and all other
financing costs (including any necessary replenishment of the capital subaccount).

True-up adjustments will additionally be applied semi-annually (and, beginning 12 months prior to the last scheduled final payment date of the last maturing SAC bonds, quarterly) if a servicer forecasts a shortfall in SAC charge collections to ensure the amount of SAC charges collected is sufficient to make all scheduled payments of principal of and interest on the SAC bonds and ongoing financing costs on a timely basis, including to replenish draws on the capital subaccount.

In addition to these annual, semi-annual and quarterly true-up adjustments, APCo will also be authorized to apply the true-up mechanism more frequently to make interim true-up adjustments from time-to-time in order to ensure recovery of amounts sufficient to the timely and full payment of interest and scheduled principal on the SAC Bonds and other required amounts and charges in connection with the SAC bonds.

The financing order also provides for a non-standard true-up to adjust, if necessary, customer class allocations. If the servicer determines there has been, or will be, a significant and sustained change in the forecasted load of any customer class—defined in the financing order as a projected increase or decrease of ten or more for the upcoming remittance period compared to the original projection in the financing order or the most recent true-up adjustment—the servicer may file a non-standard true-up with the Virginia Commission.

**SAC Charges Are Nonbypassable** 

The Securitization Law and financing order provide that the SAC charges are nonbypassable. The SAC charges are: (a) imposed on and part of all retail customer bills; (b) collected by APCo or its successors or assignees (or a collection agent) separate and apart from base rates; and (c) paid by all retail customers of APCo irrespective of the customer's generation supplier. As defined in the financing order, "**customers**" means all existing and future Virginia Commission-jurisdictional retail customers that receive electric service within APCo's Virginia service territory that have not opted out (to the extent eligible to opt out under Securitization Law) and are therefore subject to the SAC charges.

The Virginia Commission found, as stated in the financing order, that APCo does not have any present or future retail access customers that are categorically exempt from the SAC charges. However, under the Securitization Law and Section 56-577 A 6 of the Code of Virginia, partially exempt customers are exempt from the portion of the SAC charges representing the undepreciated Amos and Mountaineer plant balances. Because the partially exempt customers do not currently pay APCo's generation charges, they are not included in the customer base to which the plant-balance portion of the SAC charges is allocated, but they do remain subject to the portion of the SAC charges attributable to storm restoration costs and upfront financing costs. Please read "The SAC Charges" in this prospectus.

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Any successor to APCo, including after reorganization, bankruptcy, merger, sale, or electric utility restructuring, must perform and satisfy APCo's obligations under the financing order in the same manner and to the same extent as APCo, including billing, collecting, and remitting the SAC charges. Selecting another supplier for electricity supply service does not permit a customer to bypass the SAC charges so long as the customer remains a retail customer within APCo's Virginia service territory.

**The Securitization Law Protects the SAC Bondholders' Security Interest in SAC Property** 

The Securitization Law provides that an enforceable security interest in SAC property will be created after all of the following have occurred (a) the issuance of a financing order; (b) value is received by the debtor or seller for such SAC property; (c) the debtor or seller has rights in such SAC property or the power to transfer rights in such SAC property; and (d) a security agreement granting such security interest is executed and delivered by the debtor or seller. The security interest attaches without physical delivery of collateral or other act, and upon filing of a financing statement with the Virginia Commission.

Upon perfection by filing a financing statement in accordance with §56-249.8 E 2 of the Securitization Law and otherwise in accordance with the Virginia Uniform Commercial Code, the security interest will be valid, binding, and perfected against all parties having claims of any kind in tort, contract, or otherwise against the person granting the security interest, regardless of whether the parties have notice of the lien. Also upon the filing of the financing statement, a transfer of an interest in the SAC property shall be perfected against all parties having claims of any kind, including any judicial lien or other lien creditors or any claims of the transferor or creditors of the transferor, and shall have priority over all competing claims other than any prior security interest, ownership interest, or assignment in the property previously perfected in accordance with the Securitization Law.

The Securitization Law provides that priority of transfers of and security interests in SAC property will not be impaired by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• commingling of funds arising from SAC charges with other funds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• modifications to the financing order (including formula-based true-ups).

Amounts collected as SAC charges are deemed proceeds of the SAC property notwithstanding any commingling. Please read "Risk Factors—Risks Associated with the Unusual Nature of the SAC property" in this prospectus.

**The Securitization Law Characterizes the Transfer of SAC Property as a True Sale** 

The Securitization Law provides that any sale, assignment, or other transfer of SAC property shall be an absolute transfer and true sale of and not a pledge of, or secured transaction relating to, the transferor's right, title, and interest in, to, and under the SAC property if the documents governing the transaction expressly state that the transaction is a sale or other absolute transfer other than for federal and state income tax purposes. For all purposes other than federal and state income tax purposes, the parties' characterization of a transaction as a sale of an interest in SAC property shall be conclusive that the transaction is a true sale and that ownership has passed to the party characterized as the purchaser, regardless of any fact or circumstance that might support characterization of the transfer as a secured transaction.. Please read "The Sale Agreement" and "Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer" in this prospectus.

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**APCO'S FINANCING ORDER** 

*Background.* APCo's Virginia Commission-jurisdictional area incurred substantial costs associated with (a) storm restoration work performed between January 1, 2024 and March 31, 2025; and (b) the Virginia Commission-jurisdictional area share of the undepreciated balances of APCo's Amos and Mountaineer generating facilities as of December 31, 2023. On July 31, 2025, APCo completed filing a petition with the Virginia Commission under the Commonwealth of Virginia's Securitization Law, requesting a financing order authorizing securitization of the previously discussed costs and related financing costs. Following notice, Staff investigation, and a public hearing on October 1, 2025 before a Hearing Examiner, the Virginia Commission issued its financing order on November 24, 2025 authorizing the issuance of SAC bonds.

The financing order authorizes APCo, through the issuance of SAC bonds, to recover certain Virginia Commission approved securitized asset costs in an aggregate principal amount not to exceed approximately $1.376 billion, equal to the sum of: (a) approximately $1.36 billion of securitized asset costs, consisting primarily of the Virginia Commission-jurisdictional area storm restoration costs incurred between January 1, 2024 and March 31, 2025, of approximately $140.6 million and the Virginia Commission-jurisdictional area share of undepreciated Amos and Mountaineer plant balances of approximately $1.2 billion, plus (b) up-front financing costs, which are estimated at approximately $11.2 million, subject to update through the issuance advice letter process, in each case net of any large customer opt-out payments.

The financing order also authorizes: (a) APCo's proposed financing structure and issuance of the SAC bonds within one year of the date of the issuance of the financing order; (b) the creation and sale of SAC property, including the right for the imposition, collection and periodic adjustments of SAC charges sufficient to pay the SAC bonds and associated financing costs; (c) the sale of the SAC property by APCo to us; and (d) a tariff rider to implement the SAC charges. The financing order became final and nonappealable on December 24, 2025, as a result of no third-party filing a petition to challenge the financing order.

We have filed the financing order with the SEC as an exhibit to the registration statement of which this prospectus forms a part.

The financing order and the Securitization Law include the Commonwealth of Virginia's pledge that neither the Commonwealth of Virginia nor the Virginia Commission shall not take any action to: (a) alter the provisions of the Securitization Law that authorize the Virginia Commission to create an irrevocable contract right or chose in action by the issuance of the financing order, to create the SAC property in the form of the SAC property, and to make the SAC charges imposed by the financing order in the form of the SAC charges irrevocable, binding, or nonbypassable charges; (b) take or permit any action that impairs or would impair the value of the SAC property or the security for the SAC bonds or revises the securitized asset costs for which recovery is authorized by the financing order; (c) in any way impair the rights and remedies of the SAC bondholders, assignees, and other financing parties related thereto; or (d) except for changes made pursuant to the true-up adjustment authorized under the financing order, reduce, alter, or impair SAC charges that are to be imposed, billed, charged, collected, and remitted for the benefit of such SAC bondholders, assignees, and financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related SAC bonds have been paid and performed in full. This pledge is binding upon issuance of the SAC bonds and is legally enforceable; however, the SAC bonds are not a debt or general obligation of the Commonwealth of Virginia, and neither the Commonwealth of Virginia's full faith and credit nor its taxing power is pledged to their payment or interest.

*Issuance of SAC Bonds.* The financing order authorizes APCo to cause us to issue SAC bonds in an aggregate principal amount of approximately $1.376 billion.

*Collection of SAC Charges.* The financing order authorizes APCo to impose, bill, and collect nonbypassable SAC charges from APCo's retail customers in amounts designed, through a formula-based true-up mechanism, to be sufficient to provide for timely payment of scheduled principal of and interest on the SAC bonds and to pay all related ongoing financing costs associated with the SAC bonds.

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*No Cap; Duration of SAC Charges*. There is no "cap" on the level of SAC charges that may be imposed on customers to provide for the timely payment of scheduled principal and interest on the SAC bonds and all related financing costs and other required amounts and charges payable in connection with the SAC bonds. There is also no limit on how long SAC charges may be imposed; pursuant to the financing order, the SAC charges will be imposed until the SAC bonds and all related financing costs have been paid in full.

*Issuance Advice Letter.* Following the determination of the final terms of the SAC bonds and prior to their issuance, APCo is required to submit to the Virginia Commission within one business day after actual pricing of the SAC bonds an issuance advice letter, which will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• describe the final structure and terms of the SAC bond issuance, including an updated accounting of the up-front financing costs, and on-going financing costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• demonstrate compliance with and certify that the structuring, pricing and financing costs of the SAC bonds
achieved the statutory cost objectives, as set forth in the financing order; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide an updated analysis of the net present value calculation, as compared to traditional methods of finance.

Both the issuance advice letter and the accompanying securitization financing rider become effective on the date of issuance of the SAC bonds.

Subsequently, unless the Virginia Commission issues a disapproval letter stopping the issuance of SAC bonds before noon on the third business day after pricing, the transaction shall be final, irrevocable and incontestable and shall proceed without any further action by the Virginia Commission. The Virginia Commission shall only issue a disapproval letter to stop the transaction if the Virginia Commission determines that (a) the transaction does not comply with the financing order; or (b) APCo has not delivered the required certification regarding achievement of the statutory cost objectives, set forth in the financing order.

*Securitization Financing Rider.* We are required, prior to the issuance of any SAC charges, to complete and file a securitization financing rider in the form attached to the financing order. The rate securitization financing rider establishes the initial SAC charges. They also implement the procedures for periodic adjustments to the SAC charges.

*True-Ups.* The financing order provides that SAC charges will be reviewed and adjusted at least annually to correct any overcollections or undercollections and to ensure the billing of amounts necessary to generate collections of the SAC charges sufficient to timely provide payment of all amounts due on the SAC bonds and all other ongoing financing costs. This true-up mechanism will additionally be applied semi-annually (and, beginning 12 months prior to the scheduled final payment date of the last maturing SAC bonds, quarterly) if a servicer forecasts a shortfall in SAC charge collections to ensure the amount of SAC charges collected is sufficient to make all scheduled payments of principal of and interest on the SAC bonds and ongoing financing costs on a timely basis, including to replenish draws on the capital subaccount. In addition to these annual, semi-annual and quarterly true-up adjustments, APCo will also be authorized to apply the true-up mechanism more frequently to make interim true-up adjustments from time-to-time in order to ensure recovery of amounts sufficient to the timely and full payment of interest and scheduled principal on the SAC bonds and other required amounts and charges in connection with the SAC bonds.

In addition to the true-up mechanism described above, the servicer also has the right to effect a non-standard true-up in the event of a significant and sustained change in the forecasted load of any customer class. For purposes of this non-standard true-up, a significant change is deemed to have occurred if the forecasted load of any customer class for the upcoming remittance period is projected to increase or decrease by ten percent or more compared to the original projected load for that class as set forth in the financing order or in the most recent application of the true-up mechanism or the non-standard true-up.

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To effect a non-standard true-up, the servicer shall file the proposed non-standard true-up with the Virginia Commission, including supporting data and analysis demonstrating the magnitude and expected duration of the load shift, any changes in billing determinants the non-standard true-up would implement, and the effective date for the adjustment, which must be at least 30 days after the date of the filing with the Virginia Commission. Such non-standard true-up shall also incorporate, if applicable, any updated customer class allocation approved in the servicer's most recent base rate case. Upon the servicer's submission of a non-standard true-up adjustment pursuant, the Virginia Commission shall either administratively approve the requested non-standard true-up in writing or inform the servicer that the non-standard true-up (a) has mathematical or clerical errors; and/or (b) does not allocate the burden of SAC charges in a manner that is consistent with the allocation methodology approved in the servicer's most recent base rate case. Upon administrative approval or the passage of 30 days without notification from the Virginia Commission regarding the non-standard true-up, no further action of the Virginia Commission will be required prior to implementation of the non-standard true-up.

The non-standard true-up is distinct from the true-up mechanism, both of which are intended to address, as applicable, under- or over-collections and, and, in the case of a non-standard true-up, may reallocate SAC charges among customer classes in a manner that is consistent with the customer class allocation methodology approved in APCo's most recent base rate case.

For more discussion of the true-up mechanism and the non-standard true-up, see "The Servicing Agreement—SAC Charge Adjustment Process" in this prospectus.

*Virginia Pledge.* The Commonwealth of Virginia and its agencies, including the Commission, has pledged in the financing order that it will not (a) alter the provisions of the Securitization Law that (i) authorize the Virginia Commission to create an irrevocable contract right or chose in action by the issuance of the financing order, to create SAC Property, and (ii) make the SAC charges imposed by the financing order irrevocable, binding, or nonbypassable charges; (b) take or permit any action that impairs or would impair the value of SAC Property or the security for the SAC bonds or revises the securitized asset costs for which recovery is authorized; or (c) in any way impair the rights and remedies of the SAC bondholders, assignees, or other financing parties, as further described in §56-249.8 K I of the Securitization Law.

*Virginia Pledge and True-Up Mechanism.* The Commonwealth of Virginia and its agencies, including the Virginia Commission, has pledged it will not, except for the changes made pursuant to the formulaic true-up mechanism, reduce, alter, or impair the SAC charges until any and all principal, interest, premium, financing costs and other fees, expenses or charges incurred, and any contracts to be performed, in connection with the SAC bonds have been paid and performed in full, as described in §56-249.8 K 1 d of the Securitization Law. However, nothing will preclude limitation or alteration if and when full compensation is made by law for the full protection of the SAC charges collected pursuant to the financing order and the full protection of the SAC bondholders and any assignee or financing party entering into a contract with APCo. Please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions" in this prospectus.

*Servicing Agreement.* In the financing order, the Virginia Commission authorized APCo, as the initial servicer, to enter into the servicing agreement which is described under "The Servicing Agreement" in this prospectus.

*Binding on Successors and Assignees.* The financing order, along with the SAC charges authorized in the financing order, is binding on:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any successor to APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any other entity responsible for billing and collecting charges on our behalf; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any successor to the Virginia Commission.

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**THE DEPOSITOR, SELLER, INITIAL SERVICER AND SPONSOR** 

**About APCo** 

*Background Information.* APCo is a regulated electric utility engaged principally in the generation, purchase, transmission, distribution, and sale of electricity in West Virginia, central and western Virginia and northeast Tennessee. As of December 31, 2025, APCo served approximately 549,000 Virginia Commission-jurisdictional area retail customers in central and western Virginia through its retail business. APCo is a Virginia corporation and a wholly owned subsidiary of AEP, a public utility holding company. APCo, acting as the initial servicer, and any successor servicer, referred to in this prospectus as the "**servicer**," will service the SAC property securing the SAC bonds under a servicing agreement with us. Neither APCo nor AEP nor any other affiliate (other than us) is an obligor on the SAC bonds. APCo is subject to the jurisdiction of the Federal Energy Regulatory Commission ("**FERC**") under the Federal Power Act of 2005 with respect to the issuance of securities, acquisitions and divestitures of utility assets, certain affiliate transactions and other matters. APCo is regulated by the Virginia Commission with respect to rates charged for delivery of electricity over its transmission and distribution system for end-use consumption by retail customers, quality of service, and service area certification.

*Municipalization.* Virginia law authorizes municipalities to seek to acquire portions of an electric utility's electric distribution facilities through voluntary transactions or the power of condemnation for use as part of municipally owned utility systems. The Securitization Law specifies that SAC charges approved by a financing order shall be collected by an electric utility as well as its "successors or assignees." In the servicing agreement, APCo has covenanted to assert in an appropriate forum that any municipality that acquires any portion of APCo's electric distribution facilities in the Commonwealth of Virginia by exercise of the power of condemnation, including upon the expiration of any franchise agreement applicable to APCo's operations in the Commonwealth of Virginia, must be treated as a successor to APCo under the Securitization Law and the financing order and that customers in such municipalities remain responsible for payment of SAC charges. However, the involved municipality might assert that it should not be treated as a successor to APCo for these purposes and that its distribution customers are not responsible for payment of SAC charges. Please read "Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—A municipal entity may seek to acquire portions of APCo's electric distribution facilities in the Commonwealth of Virginia and avoid payment of the SAC charges" in this prospectus.

*Service Territory.* APCo provides integrated electric utility services, including generation, transmission, distribution and sale of electricity, to approximately 549,000 Virginia Commission-jurisdictional area retail customers in central and western Virginia through its retail business. As of December 31, 2025, for APCo's operations in the Virginia Commission-jurisdiction area, Virginia Commission-jurisdictional service territory it had approximately 32,000 miles of distribution lines and 3,000 miles of transmission lines. As of December 31, 2025, APCo owned or partially owned 16 generating plants, consisting of 105 generating units for an aggregate net generating capacity of 6,727 MW. APCo also has additional generation and capacity through power purchase agreements and capacity purchase agreements of 1,026.5 MW. The generating and power purchase agreement capacity by fuel mix was the following: coal and lignite – 63%; natural gas - 22%; and renewables (wind) - 15%.

*Executive Offices.* APCo's principal executive offices are located at 1 Riverside Plaza, Columbus, Ohio 43215. The phone number at this address is (614) 716-1000.

*Where to Find Information About APCo.* AEP, a public utility holding company that wholly owns APCo, files periodic reports with the SEC as required by the Exchange Act. These SEC filings are available to the public over the internet at the SEC's website at www.sec.gov. AEP maintains a website at https://www.aep.com/, where it posts AEP's SEC filings as well as other filings and reports about APCo. Except as provided in this prospectus, no other information contained on that website constitutes part of this prospectus.

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**Servicing Experience** 

The SAC bonds are the first issuance of bonds APCo has sponsored in Virginia and that are secured by SAC property pursuant to the Securitization Law. However, AEP through its other subsidiaries has prior experience as servicer in the issuance of bonds similar to the SAC bonds, including the issuance of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) $477,749,000 aggregate principal amount of senior secured recovery bonds by Kentucky Power Cost Recovery LLC, a
wholly owned special purpose subsidiary of Kentucky Power Company ()"**Kentucky Power** "), issued on June 12, 2025, for the purpose of recovering certain extraordinary costs, including recovery of deferred costs and retired
generation costs, where Kentucky Power, a subsidiary of AEP, acted as servicer (the "**2025 Kentucky Power Bonds** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) $336,700,000 aggregate principal amount of senior secured storm recovery bonds by SWEPCO Storm Recovery Funding
LLC, a wholly owned special purpose subsidiary of Southwestern Electric Power Company ()"**SWEPCO** "), issued on December 18, 2024, for the purpose of recovering certain storm recovery costs, including carrying charges, related to
Hurricanes Laura and Delta and winter storm Uri, and funding a new storm recovery reserve account, where SWEPCO, a subsidiary of AEP, acted as servicer (the "**2024 SWEPCO Bonds** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) $696,920,000 aggregate principal amount of ratepayer-backed bonds by The Oklahoma Development Finance
Authority, a public trust and instrumentality of the State of Oklahoma, issued September 7, 2022, for the purpose of allowing Public Service Company of Oklahoma ()"**PSO**") to recover certain costs it incurred as a result of
winter storm Uri, where PSO, a subsidiary of AEP, acted as servicer (the "**2022 ODFA-PSO RBB Bonds** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) $235,282,000 aggregate principal amount of senior secured system restoration bonds by AEP Texas Restoration
Funding LLC, a wholly owned special purpose subsidiary of AEP Texas Inc. ()"**AEP Texas** "), issued on September 18, 2019, for the purpose of allowing AEP Texas to recover certain distribution-related system restoration costs in
its Central Division related to Hurricane Harvey and certain other weather-related events occurring after December 2008 but prior to Hurricane Harvey, where AEP Texas, a subsidiary of AEP, acted as the servicer (the "**2019 AEP Texas SRC Bonds** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) $380,300,000 aggregate principal amount of senior secured consumer rate relief bonds by Appalachian Consumer
Rate Relief Funding LLC, a wholly owned special purpose subsidiary of APCo, issued on November 15, 2013, for the purpose of allowing APCo to recover certain uncollected expanded net energy costs and associated financing costs, where APCo acted
as the servicer (the "**2013 APCo CRR Bonds** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) $267,408,000 aggregate principal amount of senior secured phase-in recovery bonds by Ohio Phase-In-Recovery Funding LLC, a wholly owned special purpose subsidiary of Ohio Power Company ()"**OPCo** "), issued on
August 1, 2013, for the purpose of allowing OPCo to recover certain uncollected previously approved phase-in costs and associated financing costs, where OPCo, a subsidiary of AEP, acted as the servicer
(the "**2013 OPCo PIR Bonds** "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) $800,000,000 aggregate principal amount of senior secured transition bonds by AEP Texas Central Transition
Funding III LLC, a wholly owned special purpose subsidiary of AEP Texas, issued on March 14, 2012, for the purpose of allowing AEP Texas's Central Division to recover certain costs related to its transition-to-competition in the State of Texas, where AEP Texas, a subsidiary of AEP, acted as the servicer (the "**2012 AEP TCC Transition Bonds**" and together with the 2025 Kentucky Power
Bonds, 2024 SWEPCO Bonds, 2022 ODFA-PSO RBB Bonds, the 2019 AEP Texas SRC Bonds, the 2013 APCo CRR Bonds, the 2013 OpCo PIR Bonds, the "**prior securitizations** ").

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##### [**Table of Contents**](#toc)
**APCo's Retail Customer Base and Electric Energy Consumption** 

The following tables show electric revenue, average number of retail customers and electricity sales for each of APCo's Virginia Commission-jurisdictional area customer classes for the five preceding years. There can be no assurances that the revenue, average number of retail customers and electricity sales, or the composition of any of the foregoing, will remain at or near the levels reflected in the following tables.

**Revenue by Customer Class <sup>(1)</sup>** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2022** | **2023** | **2024** | **2025** |
|  **Residential** | $696097441 | $814406293 | $901124059 | $995623957 | $1043643167 |
|  **Commercial** | $246770077 | $297767639 | $353760885 | $385219485 | $383582616 |
|  **Industrial** | $308175232 | $373582051 | $466543609 | $473754142 | $449028052 |
|  **Total**<sup>(2)</sup> | $1251042750 | $1485755983 | $1721428553 | $1854597584 | $1876253835 |

---

(1) Calculations based on APCo's Virginia Commission-jurisdictional area customers, including the partially
exempt customers.

(2) Totals may not add due to rounding.

**Average Retail Customers by Customer Class<sup>(1)(2)</sup>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2022** | **2023** | **2024** | **2025** |
|  **Residential** | 460210 | 460456 | 462259 | 465283 | 467581 |
|  **Commercial** | 72588 | 73192 | 74472 | 74684 | 75045 |
|  **Industrial** | 1938 | 1930 | 1945 | 1944 | 1936 |
|  **Total** | 534736 | 535578 | 538676 | 541911 | 544562 |

---

(1) Calculations based on APCo's Virginia Commission-jurisdictional area customers, including the partially
exempt customers.

(2) Calculated as the average of the end-of-month customer counts for the applicable period.

**Billed and Accrued KWh<sup>(1)</sup>** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2022** | **2023** | **2024** | **2025** |
|  **Residential** | 6245479642 | 6252213688 | 5674429500 | 5850905382 | 6080422866 |
|  **Commercial** | 2870856470 | 2948418507 | 2776870935 | 2873117615 | 2896064040 |
|  **Industrial** | 5014336474 | 5064268533 | 4814748000 | 4782830302 | 4688296547 |
|  **Total**<sup>(2)</sup> | 14130672586 | 14264900728 | 13266048435 | 13506853299 | 13664783453 |

---

(1) Calculations based on APCo's Virginia Commission-jurisdictional area customers, including the partially
exempt customers.

(2) Totals may not add due to rounding.

**Forecasting Electricity Consumption** 

APCo produces a base rate revenue forecast annually for planning purposes. These forecasts are inputs to earnings projections. Base rate revenues are defined as non-fuel revenues with rider revenues removed so that only the customer charge, MWh charges, MW charges, and other demand-related charges are included.

APCo's base rate revenue forecast is developed by applying the consumption forecast for each customer class, through the next budget year (typically only the first two years of the forecast horizon), to estimated price-

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##### [**Table of Contents**](#toc)
load relationships. These price-load relationships are regression models that estimate class-level average base rate revenue realizations as a function of either monthly MWh consumption per customer (for the residential and commercial classes) or monthly MWh sales (for all other classes). But the functions may occasionally be nonlinear due to either the nature of on-peak/off-peak pricing structures or tariff price tiers. The functions are estimated based on monthly data taken from APCo's billing system. Due to the combination of fixed and variable charges inherent in these revenues, these functions are generally downward sloping since the higher fixed charges make up less of the revenue collected as more energy is consumed. The final estimated functions maintain their estimated slopes but are shifted to ensure they pass through data since the most recent base rate case. Once these functions have been estimated, the projected monthly MWh sales from the consumption forecast are applied to arrive at the projected monthly base rate revenue value.

In producing a consumption forecast (an input into the base rate revenue forecast), APCo employs regression analysis of customer end-use electricity demand. This method considers economic trends, changes in competing and complimentary fuel prices and changes in appliance saturations, as well as changes in appliance efficiencies such as those mandated by legislation. Weather patterns are also accounted for in weather-sensitive classes. This method captures customer response to changes in the economic environment as well as trends in customer preferences. Peak demand forecasts are then generated using the consumption forecast as a basis.

The forecast cycle completed during the third quarter is typically adopted as APCo's official budget. APCo monitors the accuracy of each forecast by conducting variance analysis on a monthly basis while taking into account weather impacts on MWh sales and other deviations from the forecast.

**Annual Forecast Variance For Electricity Consumption<sup>(1)</sup>** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Electricity Consumption (MWh)** | **Electricity Consumption (MWh)** | **Electricity Consumption (MWh)** | **Electricity Consumption (MWh)** | **Electricity Consumption (MWh)** |
|  | **2021** | **2022** | **2023** | **2024** | **2025** |
| **<u>Residential</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forecast | 6264882 | 6215372 | 6142670 | 5982576 | 5907730 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actual | 6336298 | 6149270 | 5775260 | 5825883 | 6021441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance | 71416 | (66102) | (367410) | (156693) | 113711 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance (%) | 1.14% | -1.06% | -5.98% | -2.62% | 1.92% |
| **<u>Commercial</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forecast | 2818548 | 2878150 | 2817165 | 2800181 | 2771516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actual | 2914073 | 2904437 | 2814705 | 2859107 | 2877305 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance | 95525 | 26287 | (2460) | 58926 | 105789 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance (%) | 3.39% | 0.91% | -0.09% | 2.10% | 3.82% |
| **<u>Industrial</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forecast | 4865277 | 5111755 | 5221074 | 4961577 | 4750610 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actual | 5064808 | 5041412 | 4841563 | 4773571 | 4678722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance | 199531 | (70343) | (379511) | (188006) | (71888) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance (%) | 4.10% | -1.38% | -7.27% | -3.79% | -1.51% |
| **<u>Total</u>** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forecast | 13948707 | 14205277 | 14180909 | 13744334 | 13429856 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Actual | 14315180 | 14095120 | 13431528 | 13458561 | 13577467 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance | 366473 | (110157) | (749381) | (285773) | 147611 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variance (%) | 2.63% | -0.78% | -5.28% | -2.08% | 1.10% |

---

(1) Forecast sales are temperature normal. Numbers not exact due to rounding. Calculations based on APCo's
Virginia Commission-jurisdictional area customers, including the partially exempt customers.

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##### [**Table of Contents**](#toc)
**Credit Policy; Billing Process; Collections Process; Termination of Service** 

APCo bills its customers directly, and its current credit policies, billing process, and termination of service policies are described below. All information below pertains only to APCo's customers.

*Credit Policy* 

In accordance with the Virginia Commission's regulations, the servicer may require deposits from certain applicants for service of existing customers' accounts to protect it against losses. Deposits may be obtained from customers who cannot demonstrate credit worthiness.

*Billing Process* 

APCo bills its customers once every month, and we expect that an approximately equal number of bills will be distributed each business day. Payments are generally due not later than 21 days after issuance of the related bill. If the due date falls on a holiday or weekend, the due date for payment purposes is the next business day. A bill not paid on or before the due date is considered delinquent. Based on qualifications, customers may be eligible for a budget billing plan. Failure to make timely payments while on any bill payment assistance plan allows the servicer to remove customers from that payment plan, begin account collection activities including the initiation of termination of service.

*Collection Process* 

APCo historically received the majority of customer payments via electronic fund transfers the U.S. mail and paystations; however, other payment options such as credit/debit cards are also available. APCo may change their collection policies and procedures, consistent with Virginia Commission guidelines and the Financing Order, from time to time.

*Write-off and Delinquencies* 

**Gross Write-Offs as a Percentage of Revenues<sup>(1)</sup>** 

The following table shows gross write-offs for electricity and gross write-offs as a percentage of revenue for the past five years for APCo's Virginia Commission-jurisdictional area customers.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2021** | **2022** | **2023** | **2024** | **2025** |
|  Total Revenues | $1251042750 | $1485755983 | $1721428553 | $1854597584 | $1876253835 |
|  Gross Write-Offs | $4248996 | $10456041 | $5172307 | $4629845 | $5598655 |
|  Percentage of Total Revenue | 0.34% | 0.70% | 0.30% | 0.25% | 0.30% |

---

(1) Calculations based on APCo's Virginia Commission-jurisdictional area customers, including the partially
exempt customers. Numbers not exact due to rounding. Amounts due from retail customers are considered delinquent if a retail customer has paid less than the full amount due by the due date.

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##### [**Table of Contents**](#toc)
**Net Write-Offs as a Percentage of Revenues<sup>(1)</sup>** 

The following table shows, for its Virginia Commission-jurisdictional area territories, total APCo net write-offs for electricity and total net write-offs as a percentage of revenue for the past five years. Net write-offs include amounts recovered by APCo from deposits, bankruptcy proceedings and payments received after an account has been either written-off by APCo or transferred to one of its external collection agencies.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2021** | **2022** | **2023** | **2024** | **2025** |
|  Total Revenues | $1251042750 | $1485755983 | $1721428553 | $1854597584 | $1876253835 |
|  Net Write-Offs | $491715 | $8478827 | $3583445 | $2722077 | $3729891 |
|  Percentage of Total Revenue | 0.04% | 0.57% | 0.21% | 0.15% | 0.20% |

---

(1) Calculations based on APCo's Virginia Commission-jurisdictional area customers, including the partially
exempt customers. Numbers not exact due to rounding.

**Delinquencies as a Percentage of Revenues<sup>(1)(2)</sup>** 

The following table sets forth information relating to the delinquency experience of APCo for residential, commercial, industrial and governmental Virginia Commission-jurisdictional area customers for the past five years:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **As of December 31,** | **2021** | **2022** | **2023** | **2024** | **2025** |
|  1 – 30 days past due | 0.48% | 0.36% | 0.42% | 0.28% | 0.53% |
|  31 – 60 days past due | 0.31% | 0.06% | 0.05% | 0.06% | 0.13% |
|  61 – 90 days past due | 0.19% | 0.02% | 0.03% | 0.03% | 0.05% |
|  90+ days past due | 0.53% | 0.01% | 0.02% | 0.00% | 0.04% |
|  Total | 1.51% | 0.45% | 0.52% | 0.37% | 0.75% |

---

(1) Calculations based on APCo's Virginia Commission-jurisdictional area customers, including the partially
exempt customers.

(2) Delinquencies are calculated based upon the past due amounts as of December 31 for each year as a
percentage of total revenues for the relevant year. Totals may not add due to rounding.

APCo does not anticipate delinquency of SAC charge collections to materially differ from the approximated rates indicated above.

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##### [**Table of Contents**](#toc)
**Average Days Sales Outstanding** 

The following table sets forth information relating to APCo's average days sales outstanding for all of APCo's Virginia Commission-jurisdictional area retail customers for the past five years. Days sales outstanding is a measure of the average number of days that APCo takes to collect its revenue. The average number of days for the collection of SAC charges relating to the SAC bonds is expected to be similar to APCo's revenue collection experience. The days sales outstanding numbers in the following table were generally calculated using a formula which we calculated as follows: on a billing cycle basis, the sum for all retail customers of the number of days between a bill being sent to a retail customer and such bill being paid multiplied by the amount of the bill paid by such retail customer, divided by the total amount paid by all retail customers for such billing cycle.

---

| | | |
|:---|:---|:---|
| **Year** | **Average<br>Days Sales<br>Outstanding\*** | **Average<br>Days Sales<br>Outstanding\*** |
|  2021 |  | 32.76 |
|  2022 |  | 32.70 |
|  2023 |  | 33.81 |
|  2024 |  | 33.48 |
|  2025 |  | 35.47 |

---

\* Calculations based on APCo's Virginia Commission-jurisdictional area retail customers, including the partially exempt customers. Numbers not exact due to rounding. Days Sales Outstanding excludes customers on deferred financing agreements/payment plans.

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##### [**Table of Contents**](#toc)
**APPALACHIAN POWER RECOVERY FUNDING LLC, THE ISSUING ENTITY** 

**General** 

We are a limited liability company formed under the Delaware Limited Liability Company Act pursuant to a limited liability company agreement executed by our sole member, APCo, and the filing of a certificate of formation with the Secretary of the State of Delaware. The limited liability company agreement will be amended and restated prior to the issuance date, and all references in this prospectus to our limited liability company agreement mean our amended and restated limited liability company agreement. Our limited liability company agreement restricts us from engaging in activities other than those described in this section. We do not have any employees, but we will pay our member for out-of-pocket expenses incurred by the member in connection with its services to us in accordance with our limited liability company agreement and administration agreement. We have summarized selected provisions of our limited liability company agreement below, a copy of which will be filed as an exhibit to the registration statement of which this prospectus is a part. On the date of issuance of the SAC bonds, our capital will be equal to 0.50% of the principal amount of such SAC bonds issued or such other amount as may allow the SAC bonds to achieve the desired security rating and treat the SAC bond as debt under applicable guidance issued by the Internal Revenue Service, which we also refer to as the IRS.

As of the date of this prospectus, we have not carried on any business activities and have no operating history. Our fiscal year is the calendar year. Immediately following the issuance of the SAC bonds, our assets will include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property and all related SAC charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights under the sale agreement and under the bill of sale delivered by APCo pursuant to the sale agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights under the servicing agreement, the intercreditor agreement and joinder, the administration agreement
and any subservicing, agency, other intercreditor, administration or collection agreements executed in connection with the servicing agreement, the intercreditor agreement or the administration agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the collection account and all subaccounts of the collection account;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all rights to compel the servicer to file for and obtain periodic adjustments to the SAC charges or allocations
among the customer classes in accordance with the Securitization Law, the financing order, the securitization financing rider and any securitization financing rider adjustments filed in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment
property, letters of credit, letters of credit rights, money, commercial tort claims and supporting obligations related to the foregoing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all payments on or under and all proceeds in respect of any or all of the foregoing.

The indenture provides that the SAC property, as well as our other assets, other than any cash released to us by the trustee semi-annually from earnings on the capital subaccount, will be pledged by us to the trustee to secure our obligations in respect of the SAC bonds. Pursuant to the indenture, the collected SAC charges remitted to the trustee by the servicer must be used to pay principal and interest on the SAC bonds and our other obligations specified in the indenture.

**Our Purpose** 

We were created for the specific purposes of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• purchasing, acquiring, owning, holding, administering, servicing and entering into agreements regarding the
receipt and servicing of the SAC property and other SAC bond collateral;

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• managing, selling, assigning, pledging, collecting amounts due on, or otherwise dealing with, the SAC property
and the other SAC bond collateral and certain other related assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• negotiating, authorizing, executing, delivering and assuming our obligations under, and performing our duties
under, the basic documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• filing with the SEC one or more registration statements under the Securities Act and filing such other documents
necessary under applicable securities laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorizing, executing, delivering, issuing and registering the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making payments on the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pledging our interest in SAC property and other SAC bond collateral to the trustee under the indenture in order
to secure the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• distributing amounts released to us; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• performing other activities that are incidental to, necessary, suitable or convenient to accomplish these
purposes.

Our limited liability company agreement does not permit us to engage in any activities not directly related to these purposes, including issuing securities other than the SAC bonds, incurring indebtedness other than as contemplated by the basic documents (provided that we may incur ordinary-course obligations payable to service providers and trade creditors in connection with permitted activities) and borrowing money or making loans to other persons. The list of permitted activities set forth in our limited liability company agreement may not be altered, amended or repealed without the affirmative vote of a majority of our managers, including the affirmative vote of each independent manager.

**Our Relationship with APCo** 

On the date of issuance of the SAC bonds, APCo will sell the SAC property to us pursuant to the sale agreement between us and APCo. Pursuant to the servicing agreement between us and APCo, APCo will serve as the initial servicer of the SAC property. We will pay APCo fixed fees for performing these services. Pursuant to an administration agreement between us and APCo, APCo will provide administrative services to us, for which we will also pay APCo a fixed fee for performing these services.

**Our Managers** 

Pursuant to our limited liability company agreement, our affairs will be managed by managers, whom we refer to in this prospectus as our "**managers**." APCo will appoint our managers from time to time or, in the event APCo transfers its interest in us, the new owner or owners will appoint our managers. Prior to the issuance of the SAC bonds, and thereafter at all times until the SAC bonds are paid in full we will have at least two independent managers, each of whom, among other things, is not and has not been for at least five years prior to the date of his or her appointment:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a member, partner, equity holder, manager, director, officer or employee of us, APCo or any of our or
APCo's affiliates (other than as an independent director, independent manager or special member of us or an affiliate of ours that is required by a creditor to be a single purpose bankruptcy remote entity);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a creditor, supplier or service provider (including provider of professional services) to us, APCo or any of
their respective equity holders or affiliates, other than a nationally recognized company that routinely provides professional independent managers or independent directors and other corporate services to us, APCo or any of its affiliates in the
ordinary course of its business,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a family member of any member, partner, equity holder, manager, director, officer, employee, creditor, supplier
or service provider, or

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a person who controls (whether directly, indirectly or otherwise) APCo or its affiliates or any member, partner,
equity holder, manager, officer, employee, director, creditor, supplier or service provider described above;

except that the indirect or beneficial ownership of stock of APCo or its affiliates through a mutual fund or similar diversified investment vehicle with respect to which APCo does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an independent manager.

The independent managers will also (a) have prior experience as an independent director, independent manager or independent member; (b) be employed by a nationally-recognized company that provides professional independent managers and other corporate services in the ordinary course of business; and (c) be duly appointed as an independent manager. The managers (other than the independent managers) will be employees or officers of APCo or AEP. The managers will devote the time necessary to conduct our affairs.

APCo, as our sole member, appointed Sean Emerick and William Bleier as our independent managers.

None of our managers has been involved in any legal proceedings which are specified in Item 401(f) of the SEC's Regulation S-K.

The following is a list of our managers as of the date of this prospectus:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Background** |
| Trevor I. Mihalik | 59 | President and manager of the issuing entity. Vice president and chief financial officer of APCo, executive vice president and chief financial officer of American Electric Power Company, Inc. (AEP), and executive vice president, chief financial officer and director of American Electric Power Service Corporation, a subsidiary of AEP (Service Corporation) since January 2025. From January 2024 to January 2025, Mr. Mihalik served as executive vice president and group president of Sempra, a utility holding company. From 2018 to 2024, Mr. Mihalik served as executive vice president and chief financial officer of Sempra. Mr. Mihalik also served as senior vice president – controller & chief accounting officer of Sempra from 2012 to 2018. |
| Matthew D. Fransen | 49 | Manager of the issuing entity. Vice president and treasurer of APCo, treasurer of AEP and senior vice president-treasury and finance of the Service Corporation since December 1, 2024. Joined the Service Corporation in January 2002 and was appointed as director-strategic initiatives in 2010, appointed managing director-strategic initiatives in 2013, became vice president-renewables in February 2016 and vice president-regulated infrastructure development in June 2021. Treasurer of certain other AEP System companies. |
| Franz D. Messner | 57 | Assistant treasurer and manager of the issuing entity. Assistant treasurer of APCo and managing director of corporate finance of American Electric Power Service Corporation, a subsidiary of AEP (Service Corporation) since May 2016, and was director of corporate planning and budgeting prior to that. Assistant treasurer of certain other AEP system companies. |

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Background** |
| Sean Emerick | 60 | Manager of the issuing entity. Lead project & program manager since October 2022 for CT Corporation Staffing, Inc., a subsidiary of CT Corporation System. Director, special services, CT Corporation, since 2014. From 2011 to 2014, regional service manager for CT Corporation and, prior to that, vice president and general manager of corporate services at National Registered Agents, Inc. from 2007 to 2011. |
| William Bleier | 35 | Manager of the issuing entity. Associate Director, Customer Service for CT Corporation since 2020. From 2017 to 2020 served as Service Manager, Large Corporations and prior to that served as Account Manager, Mid-Market from 2014 to 2017. |

---

**Manager Fees and Limitation on Liabilities** 

As of the date of this prospectus, we have not paid any compensation to any manager since the date we were formed. We will not compensate our managers, other than our independent manager, for their services performed on our behalf. The independent manager will be paid a manager's fee from our assets.

Our limited liability company agreement provides that to the extent permitted by law, our managers will not be liable for our debts, obligations or liabilities.

Under our limited liability company agreement, we indemnify our managers to the fullest extent permitted by law against expenses incurred by them in connection with an action, suit or proceeding if they acted in good faith and in a manner in which they reasonably believed to be in or not opposed to our best interests, except for such judgments, penalties, fines or other expenses that were directly caused by their fraud, gross negligence, willful misconduct, or in the case of an independent manager, bad faith.

**We Are a Separate and Distinct Legal Entity from APCo** 

Under our limited liability company agreement, we may not file a voluntary bankruptcy petition or any other petition for relief under the Bankruptcy Code without prior unanimous consent of our managers (including our independent managers). APCo has agreed that it will not cause us to file a voluntary petition for relief under the Bankruptcy Code. Our limited liability company agreement requires us, except for financing reporting purposes and for federal and state income tax purposes, and, to the extent consistent with applicable state law, state income and franchise tax purposes, to maintain our existence separate from APCo, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• taking all steps necessary to continue our identity as a separate legal entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making it apparent to third persons that we are an entity with assets and liabilities distinct from those of
APCo, other affiliates of APCo, or any other person; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making it apparent to third persons that, except for federal and certain other tax purposes, we are not a
division of APCo or any of its affiliates or any other person.

Our principal place of business is 1051 E Cary St., Suite 1100, Richmond, VA 23219 and our telephone number at such address is (614) 716-1519.

**Administration Agreement** 

APCo will, pursuant to an administration agreement between APCo and us, provide administrative services to us, including services relating to the preparation of financial statements, required filings with the SEC, any tax returns we might be required to file under applicable law, qualifications to do business, and minutes of our managers' meetings. We will pay APCo a fixed fee of $100,000 per annum, payable by us in semi-annual

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installments of $50,000, which shall be prorated based on the fraction of a calendar year during which APCo provides any of the services set forth in the administration agreement, plus we will reimburse APCo for all costs and expenses for services performed by unaffiliated third parties and actually incurred by APCo in performing such services described above.

**Intercreditor Agreement and Joinder** 

APCo is a party to the APCo Receivables Purchase Agreement, under which APCo sells a portion of its accounts receivable to AEP Credit, an APCo affiliate, which in turn sells percentage interests in such receivables to financial institutions pursuant to the AEP Receivables Purchase Agreement. APCo has been appointed under the terms of the APCo Receivables Agency Agreement as an agent for AEP Credit and the Receivables Agent for purposes of collecting and servicing the APCo receivables sold under this arrangement. Although the SAC charges are not subject to such receivable financial arrangement, the SAC charges and accounts receivable are collected from some of the same customers of APCo and are expected to be collected for the foreseeable future under a single bill sent to those customers. The Receivables Agent for such receivables financing arrangement will, prior to the issuance of the SAC bonds, execute a joinder to the intercreditor agreement with AEP Credit, APCo, us and the trustee. The intercreditor agreement (as supplemented by such joinder) will, among other things, provide that (a) the SAC charges are excluded from the assets sold under the receivables financing arrangement; (b) in the event the accounts receivable investors have the right to replace APCo as collection agent upon the occurrence of certain events, such investors will not replace APCo without the consent of the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds); and (c) in the event that the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds), has the right to replace APCo as servicer under the servicing agreement, the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds) will not replace APCo without the consent of the Receivables Agent for the accounts receivable investors.

If APCo becomes a party to another future trade receivables purchase and sale arrangement or similar arrangement under which it sells all or any portion of its accounts receivables, or if APCo hereafter causes SAC property or other similar property to be created under a separate financing order and acts as servicer for such SAC property, or similar property, consisting of nonbypassable charges payable by APCo's customers comparable to those sold by the seller pursuant to the sale agreement, in connection with a separate issuance of bonds, APCo and the other parties to such arrangement shall enter into a joinder or amendment to the intercreditor agreement or into a separate intercreditor agreement in connection therewith, and the terms of the documentation evidencing such trade receivables purchase and sale arrangement or similar arrangement shall expressly exclude the SAC charges from any receivables or other assets pledged or sold under such arrangement and the rating agency condition shall be satisfied. Please read "Risk Factors—Servicing Risks—If we have to replace APCo as the servicer, we may experience difficulties finding and using a replacement servicer" in this prospectus.

**THE SAC CHARGES** 

APCo will be the initial servicer of the SAC bonds. Beginning on the first day of the first billing cycle for APCo that begins after the date we issue the SAC bonds (which issuance date shall not occur prior to the third business day after pricing of the SAC bonds), the initial SAC charges will be imposed on APCo's Virginia Commission-jurisdictional area retail customers in each SAC charge customer class at the applicable rate for the class determined pursuant to the financing order. These SAC charges may be adjusted annually, or more frequently under certain circumstances, by the servicer in accordance with its filings with the Virginia Commission. Please read "APCo's Financing Order" in this prospectus.

Under the Securitization Law and Section 56-577 A 6 of the Code of Virginia, partially exempt customers are exempt from the portion of the SAC charges representing the undepreciated Amos and Mountaineer plant

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balances. Because the partially exempt customers do not currently pay APCo's generation charges, they are not included in the customer base to which the plant-balance portion of the SAC charges is allocated, but they do remain subject to the portion of the SAC charges attributable to storm restoration costs and upfront financing costs. As of December 31, 2025, there were 6 total partially exempt customers, representing approximately 0.05% of total revenue and 2.37% of total kilowatt-hours of APCo during that same period. Section 56-577 A 6 of the Code of Virginia applies only to customers that took such action as of February 1, 2019, and accordingly the number of partially exempt customers is fixed and cannot increase. The number of partially exempt customers may decrease over time and, if any current partially exempt customer becomes subject to APCo's generation charges by purchasing electricity supplied by APCo, then such customer will no longer be a partially exempt customer and will be subject to the full SAC charges.

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**DESCRIPTION OF THE SAC BONDS** 

**General** 

We have summarized selected provisions of the indenture and the SAC bonds below. This summary is subject to the terms and provisions of the indenture and the series supplement for the SAC bonds, forms of which we have filed with the SEC as an exhibit to the registration statement of which this prospectus forms a part. You should carefully read the summary below and the terms and provisions of the indenture that may be important to you before investing in the SAC bonds. Please read "Where You Can Find More Information" in this prospectus.

The SAC bonds are not a debt or general obligation of the Commonwealth of Virginia, the Virginia Commission or of any other political subdivision, agency or instrumentality of the Commonwealth of Virginia and do not represent an interest in or legal obligation of AEP, APCo or any of their affiliates, other than us. None of AEP, APCo or any of their affiliates will guarantee or insure the SAC bonds. The financing order authorizing the issuance of the SAC bonds does not constitute a pledge of the full faith and credit or the taxing power of the Commonwealth of Virginia. The issuance of the SAC bonds under the Securitization Law will not directly, indirectly or contingently obligate the Commonwealth of Virginia, the Virginia Commission or any other political subdivision of the Commonwealth of Virginia to levy or to pledge any form of taxation for the SAC bonds or to make any appropriation for their payment.

We will issue the SAC bonds and secure their payment under an indenture that we will enter into with the trustee. We will issue the SAC bonds in a minimum denomination of $100,000 and in integral multiples of $1,000 in excess thereof, except that we may issue one bond of each tranche in a smaller denomination. The initial principal amount, scheduled final payment date, final maturity date and interest rate for the SAC bonds are stated in the table below. In no event shall the scheduled final payment date for the SAC bonds exceed approximately 20 years from the date of issuance of the SAC bonds. The final maturity date of each tranche is longer than the scheduled final payment date of each tranche of SAC bonds.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Tranche** | **Expected<br>Weighted<br>Average Life<br>(Years)** | **Principal Amount<br>Offered\*** | **Scheduled Final<br>Payment Date** | **Final<br>Maturity Date** | **Interest Rate** |
|  A-1 |  | $450000000% |  |  |  |
|  A-2 |  | $325500000% |  |  |  |
|  A-3 |  | $600000000% |  |  |  |

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\* Principal amount is approximate and subject to change. 

The scheduled final payment date for each tranche of the SAC bonds is the date when the outstanding principal balance of that tranche will be reduced to zero if we make payments according to the expected sinking fund schedule for that tranche. The final maturity date for each tranche of the SAC bonds is the date when we are required to pay the entire remaining unpaid principal balance, if any, of all outstanding SAC bonds of that tranche. The failure to pay principal of any tranche of the SAC bonds by the final maturity date for that tranche is an event of default for the SAC bonds, but the failure to pay principal of any tranche of the SAC bonds by the respective scheduled final payment date will not be an event of default. Please read "Description of the SAC Bonds—Payments of Interest and Principal on the SAC Bonds" and "What Constitutes an Event of Default on the SAC Bonds" in this prospectus.

**Payments of Interest and Principal on the SAC Bonds** 

Interest on each tranche of the SAC bonds will accrue on the principal balance of that tranche of SAC bonds at the interest rate indicated on the cover of this prospectus and in the table above on this page 71. Beginning , 2027, we will make payments on the SAC bonds semi-annually on and of each year, or, if

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that day is not a business day, the following business day (each, a "**payment date**"). Interest payments on the SAC bonds will be made from collections of the SAC charges, including amounts available in the excess funds subaccount and, if necessary, the amounts available in the capital subaccount.

On each payment date, we will pay interest on each tranche of the SAC bonds equal to the following amounts:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any interest payable but unpaid on any prior payment date, together with interest on such unpaid interest, if
any; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• accrued interest on the principal balance of each tranche of the SAC bonds from the close of business on the
preceding payment date (or with respect to the initial payment date, the date of the original issuance of the SAC bonds) after giving effect to all payments of principal made on the preceding payment date, if any.

We will pay interest on the SAC bonds before we pay principal on the SAC bonds.

The failure to pay accrued interest on the SAC bonds on any payment date (even if the failure is caused by a shortfall in SAC charges received) will result in an event of default of SAC bonds unless such failure is cured within five business days. If interest is not paid within that five-day period, we will pay such defaulted interest (plus interest on such defaulted interest at the applicable interest rate to the extent lawful) to the persons who are SAC bondholders on a special record date (as defined in the indenture). The special record date will be at least fifteen business days prior to the date on which the trustee is to make a special payment (a special payment date). We will fix any special record date and special payment date and, at least ten days before such special record date, we will send (or make available electronically) to each affected SAC bondholder a notice that states the special record date, the special payment date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid. An event of default under any tranche of the SAC bonds will automatically trigger an event of default under the SAC bonds. See "What Constitutes an Event of Default on the SAC Bonds" below.

On any payment date with respect to any tranche of the SAC bonds, we generally will pay principal of a particular tranche of the SAC bonds only until the outstanding principal balance has been reduced to the principal balance specified for that payment date in the expected amortization schedule, but only to the extent funds are available. Accordingly, principal of the SAC bonds may be paid later, but not sooner, than reflected in the expected sinking fund schedule except in the case of an acceleration. Please read "Risk Factors—Other Risks Associated with an Investment in the SAC Bonds" and "Weighted Average Life and Yield Considerations for the SAC Bonds" in this prospectus.

The trustee will retain in the excess funds subaccount for payment on later payment dates any collections of SAC charges in excess of amounts payable as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fees, expenses and indemnities of the servicer (including the servicing fee), the independent manager and the
trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• payments of interest and principal in accordance with the expected sinking fund schedule on the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• allocations to the capital subaccount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investment earnings on amounts in the capital subaccount released to us.

If the trustee receives insufficient collections of SAC charges for the SAC bonds for any payment date, and amounts in the collection account (and the applicable subaccounts of the collection account) are not sufficient to make up the shortfall, principal of any tranche of the SAC bonds may be paid later than expected, as described in this prospectus. The failure to make a scheduled payment of principal on a tranche of the SAC bonds because there are not sufficient funds in the collection account does not constitute a default or an event of default under

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the indenture, except for the failure to make the payment of principal due upon the final maturity of that tranche of SAC bonds.

The trustee will pay on each payment date to the SAC bondholders to the extent of available funds in the collection account, all payments of principal and interest then due on such SAC bonds (other than special payments as defined in the indenture). The trustee will make each such payment to the SAC bondholders, other than the final payment, on the applicable payment date. If the SAC bonds are ever issued in definitive certificated form, however, the final payment with respect to the SAC bonds will be made only upon presentation and surrender of such SAC bond at the office or agency of the trustee specified in the notice given by the trustee with respect to such final payment. The trustee will provide notice of the final payment to the SAC bondholders no later than five days prior to the final payment date, specifying that such final payment will be payable only upon presentation and surrender of such SAC bond and the place where such SAC bond may be presented and surrendered for payment.

The SAC bonds will originally be issued in book-entry form, and we do not expect that the SAC bonds will be issued in definitive certificated form. At the time, if any, we issue the SAC bonds in the form of definitive SAC bonds and not to The Depository Trust Company ("**DTC**") or its nominee, the trustee will make payments as described below under "Definitive Certificated SAC Bonds."

On each payment date, the amount to be paid as principal on a tranche of SAC bonds will equal without duplication:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the unpaid principal amount due on any SAC bonds whose final maturity date is on that payment date, plus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the unpaid principal amount of SAC bonds due upon acceleration following an event of default, plus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the unpaid and previously scheduled payments of principal of any tranche of SAC bonds, plus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the principal scheduled to be paid on the SAC bonds on that payment date;

but only to the extent funds are available in the collection account (including all applicable subaccounts) after payment of certain of our fees and expenses and after payment of interest as described in the section above.

However, we will not pay principal of a tranche of the SAC bonds on any payment date if making the payment would reduce the principal balance of such tranche to an amount lower than the amount specified in the expected amortization schedule for such tranche on that payment date. Any excess funds remaining in the collection account after payment of principal, interest, applicable fees and expenses and payments to the applicable subaccounts of the collection account will be retained in the excess funds subaccount until applied on a subsequent payment date.

The entire unpaid principal amount of each tranche of the SAC bonds will be due and payable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on the final maturity date of that tranche; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if an event of default under the indenture occurs and is continuing and the trustee or the holders of a majority
in principal amount of the SAC bonds have declared the SAC bonds to be immediately due and payable.

If there is a shortfall in the amounts available to make principal payments on a tranche of the SAC bonds that are due and payable at that tranche's final maturity date or upon an acceleration following an event of default under the indenture, the trustee will distribute principal from the collection account pro rata to each tranche of the SAC bonds based on the principal amount of each tranche then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal payments on the SAC bonds that are scheduled to be paid, and if more than one tranche is scheduled to be paid on such payment date, the trustee will distribute principal from the collection account sequentially in the numerical order of such tranches.

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However, the nature of our business will result in payment of principal upon an acceleration of the SAC bonds being made only as funds become available. Please read "Risk Factors—Risks Associated with the Unusual Nature of the SAC Property" and "—You may experience material payment delays or incur a loss on your investment in the SAC bonds because the source of funds for payment is limited" in this prospectus.

If any special payment date or other date specified herein for distribution of any payments to SAC bondholders is not a business day, payments scheduled to be made on such special payment date or other date may be made on the next succeeding business day, and no interest will accrue upon such payment during the intervening period. "Business day" means any day other than a Saturday, a Sunday or a day on which banking institutions in Richmond, Virginia, New York, New York or Columbus, Ohio, are, or DTC or the corporate trust office of the trustee is, required or authorized by law or executive order to remain closed.

Neither we nor APCo makes any representation or warranty that any amounts actually collected arising from SAC charges will in fact be sufficient to meet payment obligations on the SAC bonds or that assumptions made in calculating SAC charges will in fact be realized.

The expected amortization schedule below sets forth the principal balance that is scheduled to remain outstanding on each payment date for each tranche of the SAC bonds from the issuance date to the scheduled final payment date for that tranche. Similarly, the expected sinking fund schedule below sets forth the corresponding principal payment that is scheduled to be made on each payment date for each tranche of the SAC bonds from the issuance date to the scheduled final payment date for that tranche. In establishing these schedules, we have made the assumptions specified in the bullet points under the weighted average life sensitivity table below under "Weighted Average Life and Yield Considerations for the SAC Bonds," among other assumptions.

**Expected Amortization Schedule\*** 

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|:---|:---|:---|:---|:---|
| **Outstanding Principal Balance Per Tranche** | **Payment<br>Date** | **Tranche A-1** | **Tranche A-2** | **Tranche A-3** |
|  Initial Principal Amount |  | $450000000 | $325500000 | $600000000 |

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\* Preliminary, subject to change

On each payment date, the trustee will make principal payments to the extent the principal balance of each tranche of the SAC bonds exceeds the amount indicated for that payment date in the table above and to the extent of funds available in the collection account after payment of certain of our fees and expenses and after payment of interest. If sufficient funds are available on each payment date, principal payments for each tranche of the SAC bonds will be in the amounts indicated for each payment date in the expected sinking fund schedule below plus any previously scheduled but unpaid principal.

**Expected Sinking Fund Schedule\*** 

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|:---|:---|:---|:---|
| **Payment Date** | **Tranche A-1** | **Tranche A-2** | **Tranche A-3** |
|  **Total Payments** | $450000000 | $325500000 | $600000000 |

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\* Preliminary, subject to change

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We cannot assure you that principal payments will be made or that the principal balance of the SAC bonds will be reduced by the amounts indicated in the schedules above. Principal payments and the actual reduction in the principal balance of a tranche of the SAC bonds may occur more slowly. Principal payments and the actual reduction in the principal balance of a tranche of the SAC bonds will not occur more quickly than indicated in the above schedules, except that the total outstanding principal balance of and interest accrued on the SAC bonds may be accelerated upon an event of default under the indenture. The SAC bonds will not be in default if principal is not paid as specified in the schedules above unless the principal of any tranche of the SAC bonds is not paid in full on or before the final maturity date of that tranche.

**Redemption of the SAC Bonds** 

There are no redemption rights associated with the SAC bonds.

**SAC Bonds Will Be Issued in Book-Entry Form** 

The SAC bonds will be available to investors only in the form of book-entry SAC bonds. You may hold your bonds through DTC in the United States, Clearstream, or Euroclear in Europe. You may hold the SAC bonds directly with one of these systems if you are a participant in the system or indirectly through organizations that are participants.

*The Role of DTC, Clearstream and Euroclear.* Cede & Co., as nominee for DTC, will hold the global bond or bonds representing the SAC bonds. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream customers and Euroclear participants, respectively, through customers' securities accounts in Clearstream's and Euroclear's names on the books of their respective depositaries. These depositaries will, in turn, hold these positions in customers' securities accounts in the depositaries' names on the books of DTC.

*The Function of DTC.* DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("**Direct Participants**") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("**DTCC**"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("**Indirect Participants**"). The DTC Rules applicable to its participants are on file with the SEC. More information about DTC can be found at www.dtcc.com and www.dtc.org. The contents of such websites do not constitute a part of the registration statement of which this prospectus forms a part.

*The Function of Clearstream.* Clearstream is incorporated under the laws of Luxembourg. Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thereby eliminating the need for physical movement of securities. Transactions may be settled by Clearstream in any of various currencies, including United States dollars. Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and

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securities lending and borrowing. Clearstream also deals with domestic securities markets in various countries through established depositary and custodial relationships. Clearstream is registered as a bank in Luxembourg and therefore is subject to regulation by the Luxembourg Commission de Surveillance du Secteur Financier, which supervises Luxembourg banks. Clearstream's customers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations, among others, and may include the underwriters of the SAC bonds. Clearstream's U.S. customers are limited to securities brokers and dealers and banks. Clearstream has customers located in various countries. Indirect access to Clearstream is also available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream. Clearstream has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream and Euroclear.

*The Function of Euroclear.* The Euroclear System was created in 1968 in Brussels. Euroclear holds securities and book-entry interests in securities for Euroclear participants and facilitates the clearance and settlement of securities transactions between Euroclear participants, and between Euroclear participants and participants of certain other securities intermediaries through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of securities and any risk from lack of simultaneous transfers of securities and cash. Such transactions may be settled in any of various currencies, including United States dollars. Euroclear includes various other services, including, among other things, safekeeping, administration, clearance and settlement, securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below. Euroclear is operated by Euroclear Bank SA/NV. Euroclear participants include central banks and other banks, securities brokers and dealers and other professional financial intermediaries and may include the underwriters of the SAC bonds. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

*Terms and Conditions of Euroclear.* Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of Euroclear, and applicable Belgian law (collectively, the "**Terms and Conditions**"). These Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific securities to specific securities clearance accounts. Euroclear acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

*The Rules for Transfers Among DTC, Clearstream or Euroclear Participants.* Transfers between DTC participants will occur in accordance with DTC rules. Transfers between Clearstream customers or Euroclear participants will occur in the ordinary way in accordance with their applicable rules and operating procedures and will be settled using procedures applicable to conventional securities held in registered form.

Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream customers or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depositary; however, those cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines, which will be based on European time. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving SAC bonds in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream customers and Euroclear participants may not deliver instructions directly to Clearstream's and Euroclear's depositaries.

Because of time-zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a participant will be made during the subsequent securities settlement processing, dated the

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business day following the DTC settlement date, and those credits or any transactions in those securities settled during that processing will be reported to the relevant Clearstream customer or Euroclear participant on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

*DTC Will Be the Holder of the SAC Bonds.* SAC bondholders that are not Direct Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interest in, SAC bonds may do so only through Direct Participants and Indirect Participants. In addition, SAC bondholders will receive all distributions of principal of and interest on the SAC bonds from the trustee through the participants, who in turn will receive them from DTC. Under a book-entry format, SAC bondholders may experience some delay in their receipt of payments because payments will be remitted by the trustee to Cede & Co., as nominee for DTC. DTC will forward those payments to its Direct Participants, who thereafter will forward them to Indirect Participants or SAC bondholders. It is anticipated that the only "bondholder" will be Cede & Co., as nominee of DTC. The trustee will not recognize SAC bondholders as bondholders, as that term is used in the indenture, and SAC bondholders will be permitted to exercise the rights of bondholders only indirectly through the participants, who in turn will exercise the rights of SAC bondholders through DTC.

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers of book-entry certificates among participants on whose behalf it acts with respect to the SAC bonds and is required to receive and transmit distributions of principal and interest on the SAC bonds. Direct Participants and Indirect Participants with whom SAC bondholders have accounts with respect to the SAC bonds similarly are required to make book-entry transfers and receive and transmit those payments on behalf of their respective SAC bondholders. Accordingly, although SAC bondholders will not possess SAC bonds, SAC bondholders will receive payments and will be able to transfer their interests.

Because DTC can act only on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of a SAC bondholder to pledge SAC bonds to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of those bonds, may be limited due to the lack of a physical certificate for those SAC bonds.

DTC has advised us that it will take any action permitted to be taken by a SAC bondholder under the indenture only at the direction of one or more participants to whose account with DTC the SAC bonds are credited. Additionally, DTC has advised us that it will take those actions with respect to specified percentages of the collateral amount only at the direction of and on behalf of participants whose holdings include interests that satisfy those specified percentages. DTC may take conflicting actions with respect to other interests to the extent that those actions are taken on behalf of participants whose holdings include those interests.

Except as required by law, none of any underwriter, the servicer, APCo, the trustee, us or any other party will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the certificates held by Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any records relating to such beneficial interests.

*How SAC Bond Payments Will Be Credited by Clearstream and Euroclear.* Distributions with respect to SAC bonds held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream customers or Euroclear participants in accordance with the relevant system's rules and procedures, to the extent received by its depositary. Those distributions will be subject to tax reporting in accordance with relevant U.S. tax laws and regulations. Please read "Material U.S. Federal Income Tax Consequences" in this prospectus. Clearstream or the Euroclear operator, as the case may be, will take any other action permitted to be taken by a SAC bondholder under the indenture on behalf of a Clearstream customer or Euroclear participant only in accordance with its relevant rules and procedures and subject to its depositary's ability to effect those actions on its behalf through DTC.

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Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the SAC bonds among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform those procedures, and those procedures may be discontinued at any time.

**Definitive Certificated SAC Bonds** 

*The Circumstances That Will Result in the Issuance of Definitive Certificated SAC Bonds.* The SAC bonds will be issued in fully registered, certificated form to beneficial owners of SAC bonds or other intermediaries, rather than to DTC or its nominee, only under the circumstances provided in the indenture, which includes any event where:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we advise the trustee in writing that DTC is no longer willing or able to properly discharge its responsibilities
under any letter of representation executed by us in favor of DTC, and we are unable to locate a qualified successor,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we, at our option, advise the trustee in writing that we elect to terminate the book-entry system through DTC, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• after the occurrence of an event of default under the indenture, SAC bondholders representing at least a majority
of the outstanding principal balance of the SAC bonds maintained in book-entry form advise us, the trustee and DTC through the financial intermediaries and the DTC participants in writing that the continuation of a book-entry system through DTC, or
a successor to DTC, is no longer in the SAC bondholders' best interest.

*The Delivery of Definitive Certificated SAC Bonds.* Upon the occurrence of any event described in the immediately preceding paragraph (unless otherwise specified), we will be required to notify DTC, the trustee, and all affected beneficial owners of SAC bonds in writing of the occurrence of the event and of the availability through DTC of definitive certificated SAC bonds to such owners of SAC bonds. Upon surrender by DTC to the trustee of the global bond or bonds in the possession of DTC that had represented the applicable SAC bonds and receipt of instructions for re-registration, the trustee will authenticate and deliver definitive certificated SAC bonds to the beneficial owners, and the trustee will recognize the holders of the definitive certificate SAC bonds as bondholders under the indenture.

*The Payment Mechanism for Definitive Certificated SAC Bonds.* Payments of principal of, and interest on, definitive certificated SAC bonds will be made by the trustee, as paying agent, in accordance with the procedures set forth in the indenture. These payments will be made directly to holders of definitive certificated SAC bonds in whose names the definitive certificated SAC bonds were registered at the close of business on the related record date. The trustee will make the final payment of the SAC bonds, however, only upon presentation and surrender of the SAC bonds at the office or agency of the trustee specified in the notice given by the trustee of the final payment. The trustee will provide notice of the final payment to the SAC bondholders no later than five days prior to the final payment date, specifying the date set for the final payment and the amount of the payment.

*The Transfer or Exchange of Definitive Certificated SAC Bonds.* Definitive certificated SAC bonds will be transferable and exchangeable at the offices of the transfer agent and registrar, which will initially be U.S. Bank Trust Company, National Association. No service charge will be imposed for any registration of transfer or exchange, but we and the transfer agent and registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection with the transfer or exchange.

**Registration and Transfer of the SAC Bonds** 

We will only issue the SAC bonds in definitive form under limited circumstances as described above, which will be transferable and exchangeable as described above under "Definitive Certificated SAC Bonds." There will be no service charge for any registration or transfer of the SAC bonds, but the trustee may require the owner to pay a sum sufficient to cover any tax or other governmental charge.

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We will issue the SAC bonds in the minimum initial denominations and integral multiples set forth in this prospectus.

The trustee will make payments of interest and principal on each payment date to the SAC bondholders in whose names the SAC bonds were registered on the applicable record date.

**The Security for the SAC Bonds** 

To secure the payment of principal, premium, if any, and interest on, and any other amounts owed in respect of, the SAC bonds pursuant to the indenture, we will grant to the trustee for the benefit of the SAC bondholders a security interest in all of our right, title and interest, whether now owned or later acquired, in and to the following collateral, which collectively constitutes the SAC bond collateral under the indenture:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC charges related to the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights under the sale agreement and the bill of sale delivered by APCo pursuant to the sale agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights under the servicing agreement, the intercreditor agreement and joinder, the administration agreement
and any subservicing, agency, other intercreditor, administration or collection agreements executed in connection with the servicing agreement, the intercreditor agreement and joinder or the administration agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our rights in the collection account and all subaccounts of the collection account, including the general
subaccount, the capital subaccount and the excess funds subaccount and all cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried
therein or credited thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all rights to compel the servicer to file for and obtain periodic adjustments to the SAC charges or allocations
among customer classes in accordance with the Securitization Law, the financing order, the applicable true-up adjustment letters, the non-standard true-up adjustment rider (if applicable) and the securitization financing rider and any securitization financing rider adjustments filed in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment
property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all payments on or under, and all proceeds in respect of, any or all of the foregoing.

The security interest does not extend to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• return on invested capital on deposit with us that are required to be returned to APCo pursuant to the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cash that has been released pursuant to the terms of the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amounts deposited with us for payment of costs of issuance with respect to the SAC bonds (together with any
interest earnings thereon); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• proceeds from the sale of the SAC bonds that are required to pay (a) the purchase price for the SAC property
and paid pursuant to the sale agreement or (b) the costs of the issuance of the SAC bonds.

The Securitization Law provides that a valid and enforceable security interest in SAC property will attach and be perfected by the means set forth in § 56-249.8 E 2 of the Securitization Law. Specifically, § 56-249.8 E 2 b

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of the Securitization Law provides that a security interest in SAC property shall be created and enforceable when all of the following have occurred: (a) a financing order is issued; (b) value is received by the debtor or seller for such SAC property; (c) the debtor or seller has rights in such SAC property or the power to transfer rights in such SAC property; and (d) a security agreement granting such security interest is executed and delivered by the debtor or seller, the description of which shall be sufficient if the description refers to this section and the financing order creating the SAC property. Furthermore, § 56-249.8 E 2 c of the Securitization Law also provides that a security interest in SAC property shall attach without any physical delivery of collateral or other act and, upon the filing of a financing statement with the Virginia Commission, the lien of the security interest shall be valid, binding, and perfected against all parties having claims of any kind in tort, contract, or otherwise against the person granting the security interest, regardless of whether the parties have notice of the lien.

Upon perfection of a security interest by the filing of a financing statement under § 56-249.8 E 2 d of the Securitization Law, the Virginia Commission shall maintain such financing statement in the same manner that the Virginia Commission maintains financing statements filed by transmitting utilities under the Virginia Uniform Commercial Code.

**The Collection Account for the SAC Bonds** 

Under the indenture, we will establish a segregated trust account in the name of the trustee with the securities intermediary or at another eligible institution, for the SAC bonds (such account referred to herein as the "**collection account**"). The collection account will be under the sole dominion and exclusive control of the trustee. Funds received from collections of the applicable SAC charges will be deposited into the collection account. The collection account for the SAC bonds will be divided into the following subaccounts, which need not be separate bank accounts:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the general subaccount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the capital subaccount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the excess funds subaccount.

For administrative purposes, the subaccounts may be established by the trustee and the securities intermediary as separate accounts that will be recognized individually as subaccounts and collectively as the collection account. Unless otherwise provided in the indenture, amounts in the collection account for the SAC bonds not allocated to any other subaccount by the servicer will be allocated to the general subaccount. Unless the context indicates otherwise, references in this prospectus to the collection account for the SAC bonds include all of the subaccounts contained therein. All monies deposited from time to time in the collection account, all deposits therein pursuant to the indenture, and all investments made in eligible investments with these monies will be held by the trustee in the collection account as part of the collateral. The following institutions are "eligible institutions" for the establishment of the collection account:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the corporate trust department of the trustee or an affiliate thereof, so long as the trustee or such affiliate
have (a) either a short-term deposit or issuer rating from Moody's of at least "P-1" or a long-term unsecured debt or issuer rating from Moody's of at least "A2"; and
(b) a short-term deposit or issuer rating from S&P of at least "A-1" or a long-term unsecured debt or issuer rating from S&P of at least "A"; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a depository institution organized under the laws of the United States of America or any state (or any domestic
branch of a foreign bank) (a) that has either (i) a long-term unsecured debt or issuer rating of "AA-" or higher by S&P and "A2" or higher by Moody's, or (ii) a
short-term (bank deposit) or issuer rating of "A-1" or higher by S&P and "P-1" or higher by Moody's; and (b) whose deposits are
insured by the Federal Deposit Insurance Corporation;

provided, however, that if an eligible institution then being utilized for any purposes under the indenture or the series supplement no longer meets the definition of eligible institution, then the issuing entity shall replace

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such eligible institution within 60 days of such eligible institution no longer meeting the definition of eligible institution.

*Appropriate Investments for Funds in the Collection Account.* So long as no default or event of default has occurred and is continuing, all or a portion of the funds in the collection account for the SAC bonds must be invested by the trustee (in accordance with the written direction of the servicer) in any of the follow each of which is referred to as an eligible investment:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United
States of America;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of, or
bankers' acceptances issued by, any depository institution (including, the trustee or any of its affiliates, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any state thereof, and
subject to supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least "A-1" and "P-1" or their equivalents by each of S&P and Moody's, or such lower rating as will not result in the downgrading or withdrawal of
the ratings of the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. commercial paper (including commercial paper of the trustee or any of its affiliates, acting in its commercial
capacity, and other commercial paper issued by APCo or any of its affiliates), having, at the time of investment or contractual commitment to invest, a rating of at least "A-1" and "P-1" or their equivalents by each of S&P and Moody's or such lower rating as will not result in the downgrading or withdrawal of the ratings of the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. investments in money market funds having a rating in the highest investment category granted thereby (including
funds for which the trustee or any of its affiliates is investment manager or advisor) from Moody's and S&P;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the
United States of America or its agencies or instrumentalities, entered into with eligible institutions (as described above);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. repurchase obligations with respect to any security or whole loan entered into with an eligible institution or
with a registered broker/dealer acting as principal and that meets certain ratings criteria: (a) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act, the unsecured short-term debt
obligations of which are rated at least "P-1" by Moody's and "A-1+" by S&P at the time of entering into such repurchase obligation; or
(b) an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated at least "P-1" by Moody's and "A-1+" by S&P at the time of purchase so long as the obligations of such unrated broker/dealer are unconditionally
guaranteed by such non-bank or bank holding company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. any other investment permitted by each of the rating agencies.

Notwithstanding the foregoing: (a) no securities or investments that mature in 30 days or more will be eligible investments unless the issuer thereof has either a short-term unsecured debt rating of at least "P-1" from Moody's or a long-term unsecured debt rating of at least "A1" from Moody's; (b) no securities or investments described in clauses "2." through "4." above which have maturities of more than 30 days but less than or equal to three months will be eligible investments unless the issuer thereof has a long-term unsecured debt rating of at least "A1" from Moody's and a short-term unsecured debt rating of at least "P-1" from Moody's; (c) no securities or investments described in clauses "2." through "4." above which have maturities of more than three months will be eligible investments unless the issuing entity thereof has a long-term unsecured debt rating of at least "A1" from Moody's and a short-term unsecured debt rating of at least "P-1" from Moody's; (d) no

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securities or investments described in clauses "2." through "4." above which have a maturity of 60 days or less will be eligible investments unless such securities have a rating from S&P of at least "A-1"; and (e) no securities or investments described in clauses "2." through "4." above which have a maturity of 365 days or less will be eligible investments unless such securities have a rating from S&P of at least "AA-", "A-1+" or "AAAm".

*Remittances to the Collection Account.* On each remittance date, the servicer will remit all SAC charges estimated to have been collected, any indemnity amounts and any other proceeds of the SAC bond collateral securing the SAC bonds to the trustee for deposit in the collection account. Indemnity amount means any amount paid by the servicer or APCo to the trustee, for the trustee or on behalf of the SAC bondholders, in respect of indemnification obligations pursuant to the servicing agreement or the sale agreement. Please read "The Servicing Agreement" and "The Sale Agreement" in this prospectus. To the extent that the combined amounts remitted by a APCo customer are insufficient to satisfy amounts owed in respect of SAC charges relating to the SAC bonds or any other bonds being serviced by the servicer or for electricity service (other than late fees), the remitted amounts will be allocated pro rata among such SAC charges and electricity charges. Please read "The Servicing Agreement —Remittances to Collection Account" in this prospectus.

*General Subaccount.* Collected SAC charges and any indemnity amounts remitted to the trustee will be deposited into the general subaccount. On each payment date, the trustee will allocate amounts in the general subaccount among the other subaccounts as described under "How Funds in the Collection Account Will Be Allocated." Amounts in the general subaccount will be invested in the eligible investments described above in accordance with the written direction of the servicer.

*Capital Subaccount.* Upon the issuance of the SAC bonds, APCo will make a capital contribution to us in an amount equal to 0.50% of the initial principal amount of the SAC bonds, and such payment shall not come from the proceeds of the sale of the SAC bonds. We will pay this amount to the trustee for deposit into the capital subaccount which will be invested in eligible investments by the trustee in accordance with the written direction of the servicer. The trustee will draw on amounts in the capital subaccount to the extent that, in allocating funds in accordance with clauses 1 through 9 in "How Funds in the Collection Account Will Be Allocated," below, amounts on deposit in the general subaccount and, the excess funds subaccount are insufficient to make scheduled payments on the SAC bonds and payments of fees and expenses specified in clauses 1 through 9. The trustee will allocate collected SAC charges available on any payment date that are not necessary to pay amounts described in clauses 1 through 9 in "How Funds in the Collection Account Will Be Allocated," below, to the capital subaccount in an amount sufficient to replenish any amounts drawn from the capital subaccount (other than distributed investment earnings on the capital subaccount) and any shortfall of investment earnings on the capital subaccount. On each payment date, any excess investment earnings on the capital subaccount above the allowed rate of return shall be allocated to the excess funds subaccount.

*Excess Funds Subaccount.* The trustee will allocate collected SAC charges available on any payment date that are not necessary to pay clauses 1 through 11 in "How Funds in the Collection Account Will Be Allocated," below, to the excess funds subaccount. The trustee will invest amounts in the excess funds subaccount in eligible investments in accordance with the written direction of the servicer. On each payment date, the trustee will draw on the excess funds subaccount in allocating funds in accordance with clauses 1 through 11 in "How Funds in the Collection Account Will Be Allocated," below, to the extent that amounts on deposit in the general subaccount are insufficient to make scheduled payments on the SAC bonds and payments of fees and expenses specified in clauses 1 through 11.

**How Funds in the Collection Account Will Be Allocated** 

Amounts remitted by the servicer to the trustee with respect to the SAC bonds, including any amounts received by us relating to the indemnification obligations payable by the seller pursuant to the sale agreement or the servicer pursuant to the servicing agreement and all investment earnings on amounts in the general subaccount of the collection account will be deposited into the general subaccount. Investment earnings on

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amounts in the capital subaccount (other than excess investment earnings that are allocated to the excess funds subaccount) and the excess funds subaccount will be deposited into the capital subaccount and the excess funds subaccount, respectively.

On each payment date for the SAC bonds, the trustee shall apply all amounts on deposit in the collection account, including all investment earnings thereon, to pay the following amounts for the SAC bonds in the following priority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. all amounts owed by us to the trustee (including legal fees and expenses and outstanding indemnity amounts),
not to exceed $200,000 in any 12-month period; provided, however, that such cap shall be disregarded and inapplicable upon the acceleration of the SAC bonds following the occurrence of an event of default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. payment of the servicing fee relating to the SAC bonds with respect to such payment date, plus any unpaid
servicing fees relating to the SAC bonds from prior payment dates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. payment of the due and unpaid administration fees, which will be a fixed amount specified in the administration
agreement between us and APCo, and the due and unpaid fees of our independent managers, which will be in an amount specified in an agreement between us and our independent managers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. payment of all of our other ordinary and periodic operating expenses relating to the SAC bonds for such payment
date, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. payment of the interest then due on the SAC bonds, including any past-due interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. payment of the principal due to be paid on the SAC bonds on any final maturity date of a tranche or
acceleration upon an event of default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. payment of the principal then scheduled to be paid on a tranche of the SAC bonds pursuant to the expected
sinking fund schedule, including any previously unpaid scheduled principal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. payment of any unpaid fees, expenses and indemnity amounts owed to the trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic
documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. replenishment of the amount, if any, by which the required capital balance of the capital subaccount exceeds
the amount in the capital subaccount as of such payment date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. the return on invested capital to APCo then due and payable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. allocation of the remainder, if any, to the excess funds subaccount for distribution on subsequent payment
dates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. after the SAC bonds have been paid in full and discharged, and all of the other foregoing amounts have been
paid in full, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, released to us free and clear of the lien of the indenture and series supplement.

The amount of the annual servicer's fee referred to in clause 2 above shall be 0.05% of the aggregate initial principal amount of the SAC bonds. In the event of the appointment of a successor servicer that is not an affiliate of APCo, the servicing fee shall not, unless the Virginia Commission consents, exceed 0.60% of the initial aggregate principal amount of the SAC bonds. The amount of the annual administration fee referred to in clause 3 above shall be fixed at $100,000.

Interest means, for any payment date for any tranche of the SAC bonds, the sum, without duplication, of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an amount equal to the interest accrued on that tranche of SAC bonds at the applicable interest rate from the
prior payment date or, with respect to the first payment date, the amount of interest accrued since the issuance date;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any unpaid interest plus, to the fullest extent permitted by law, any interest accrued on this unpaid interest;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the SAC bonds have been declared due and payable, all accrued and unpaid interest thereon.

Principal means, with respect to any payment date, the sum, without duplication, of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of principal due as a result of the occurrence and continuance of an event of default and acceleration
of the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of principal of a tranche due on the applicable final maturity date of that tranche;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any unpaid and previously scheduled payments of principal of any tranche and overdue payments of principal of
such tranche(s); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of principal of any tranche scheduled to be paid on such payment date in accordance with the expected
sinking fund schedule.

If on any payment date funds in the general subaccount are insufficient to make the allocations or payments contemplated by clauses 1 through 10 of the first paragraph of this subsection with respect to the SAC bonds, the trustee will draw from amounts on deposit in the following subaccounts in the following order up to the amount of the shortfall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. from the excess funds subaccount for allocations and payments contemplated in clauses 1 through 10, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. from the capital subaccount for allocations and payments contemplated by clauses 1 through 9.

**How Funds in the Subaccounts Will Be Used Upon Repayment of the SAC Bonds** 

Upon the payment in full of all SAC bonds authorized in the financing order and the discharge of all obligations, including all financing costs and any fees, expenses and indemnity amounts due to any party, all remaining amounts in the collection account (including investment earnings) shall be released by the trustee to us for distribution to APCo. With regard to the remaining amounts in the collection account (excluding amounts in the capital subaccount and any unpaid return on invested capital due to APCo), APCo shall notify the Virginia Commission of the amount of such funds available for crediting to the benefit of customers. With regard to the amounts in the capital subaccount of the collection account, all such funds shall be released to us for distribution to, and retention by, APCo. Until such funds are returned by us to APCo, APCo may earn a rate of return on its capital investment in us equal to the authorized pre-tax weighted average cost of capital established in APCo's then most recent base rate case. Such rate of return shall be paid by us by means of periodic distributions that are funded first by the income earned through investment by the trustee in eligible investments, and second by any deficiency being collected through the true-up adjustments. Any actual earnings in excess of that rate will instead be credited to customers.

**Reports to SAC Bondholders** 

On or before each payment date, the trustee shall make available electronically on its reporting website to each of the SAC bondholders a statement provided and prepared by the servicer. This statement will include, to the extent applicable, the following information, as well as any other information so specified in the series supplement, as to the SAC bonds with respect to that payment date or the period since the previous payment date, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the payment to SAC bondholders allocable to principal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the payment to SAC bondholders allocable to interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the aggregate outstanding principal amount of the SAC bonds, before and after giving effect to any payments
allocated to principal reported above;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the difference, if any between the aggregate outstanding amount specified immediately above and the outstanding
amount specified in the amortization schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any other transfers and payments to be made on such payment date, including amounts paid to the trustee and to
the servicer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amounts on deposit in the capital subaccount and the excess funds subaccount, after giving effect to the
foregoing payments.

Please read "The Servicing Agreement—Evidence as to Compliance" in this prospectus.

**Website Disclosures** 

We will, to the extent permitted by and consistent with our legal obligations under applicable law, cause to be posted on a website associated with APCo, currently located at www.aep.com, periodic reports containing to the extent such information is reasonably available to us:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the final prospectus for the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a statement reporting the balances in the collection account and in each subaccount as of all payment dates and
as of the end of the year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the semi-annual servicer's certificate as required to be submitted pursuant to the servicing agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the monthly servicer's certificate as required to be submitted pursuant to the servicing agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the text (or a link to the website where a reader can find the text) of each filing of a true-up adjustment and the results of each such filing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any change in the long-term or short-term credit ratings of the servicer assigned by the rating agencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any material legislative enactment or regulatory order or rule directly relevant to the SAC bonds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any reports and other information that we are required to file with the SEC under the Exchange Act.

Information contained on AEP's website or that can be accessed through the website is not incorporated into and does not constitute a part of this registration statement.

**We and the Trustee May Modify the Indenture** 

*Modifications of the Indenture That Do Not Require Consent of SAC Bondholders.* Without the consent of any of the holders of the outstanding SAC bonds but with prior notice to the rating agencies, we and the trustee may execute a supplemental indenture for any of the following purposes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to correct or amplify the description of any property, including the collateral, or to better assure, convey and
confirm unto the trustee the collateral, or to subject additional property to the lien of the indenture and the series supplement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to evidence the succession, in compliance with the applicable provisions of the indenture, of another entity to
us, and the assumption by any applicable successor of our covenants contained in the indenture and in the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to add to our covenants, for the benefit of the holders of the SAC bonds, or to surrender any right or power
therein conferred upon us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to convey, transfer, assign, mortgage or pledge any property to or with the trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to cure any ambiguity or mistake, to correct or supplement any provision of the indenture or series supplement
which may be inconsistent with any other provision of the indenture or series supplement,

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to make any other provisions with respect to matters or questions arising under the indenture or series supplement; provided, however, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• this action shall not, as evidenced by an officer's certificate from us, adversely affect in any material
respect the interests of any SAC bondholder; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rating agency condition shall have been satisfied with respect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to evidence and provide for the acceptance of the appointment under the indenture by a successor trustee with
respect to the SAC bonds and to add to or change any of the provisions of the indenture as shall be necessary to facilitate the administration of the SAC bond collateral under the indenture by more than one trustee, pursuant to the requirements
specified in the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to modify, eliminate or add to the provisions of the indenture to the extent necessary to effect the
qualification of the indenture under the Trust Indenture Act and to add to the indenture any other provisions as may be expressly required by the Trust Indenture Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to evidence the final terms of the SAC bonds in the series supplement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to qualify the SAC bonds for registration with a clearing agency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to satisfy any rating agency requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to make any amendment to the indenture or the SAC bonds relating to the transfer and legending of the SAC bonds
to comply with applicable securities laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to conform the text of the indenture or the SAC bonds to any provisions of the registration statement filed by us
with the SEC with respect to the issuance of the SAC bonds to the extent that such provision was intended to be a verbatim recitation of a provision of the indenture of the SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to authorize the appointment of any fiduciary for the SAC bonds required or advisable with the listing on any
stock exchange and otherwise amend the indenture to incorporate changes requested or required by any governmental authority, stock exchange authority or fiduciary of the SAC bonds in connection with such listing.

*Additional Modifications to the Indenture That Do Not Require the Consent of SAC Bondholders.* We and the trustee may also, without the consent of any of the SAC bondholders, execute one or more other agreements supplemental to the indenture as long as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the supplemental agreement does not, as evidenced by an opinion of counsel of nationally recognized counsel
experienced in structured finance transactions, adversely affect in any material respect the interests of any SAC bondholder; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rating agency condition shall have been satisfied with respect thereto.

*Modifications to the Indenture That Require the Approval of the SAC Bondholders.* We and the trustee also may, with the consent of the holders of a majority of the outstanding amount of the SAC bonds of each tranche to be adversely affected, execute a supplemental indenture to add any provisions to, or change in any manner or eliminate any of the provisions of, the indenture or modify in any manner the rights of the SAC bondholders under the indenture. Under no circumstance may the supplemental indenture be modified without the consent of the holders of each SAC bond tranche affected thereby:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change the date of payment of any installment of principal of or premium, if any, or interest on any SAC bond of
such tranche, or reduce the principal amount thereof, the interest rate thereon or the premium, if any, with respect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change the provisions of the indenture and the series supplement relating to the application of collections on,
or the proceeds of the sale of, the SAC bond collateral to payment of principal of or premium, if any, or interest on the SAC bonds, or change any place of payment where, or the coin or currency in which, any SAC bond or any interest thereon is
payable;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce the percentage of the aggregate amount of the outstanding SAC bonds or of a tranche thereof, the consent
of the SAC bondholders of which is required for any supplemental indenture, or the consent of the SAC bondholders of which is required for any waiver of compliance with those certain provisions of the indenture specified therein or of certain
defaults specified therein and their consequences provided for in the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce the percentage of the outstanding amount of the SAC bonds required to direct the trustee to direct us to
sell or liquidate the collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• modify any provision of the section of the indenture relating to the consent of SAC bondholders with respect to
supplemental indentures or any provision of the other basic documents similarly specifying the rights of SAC bondholders to consent to modification thereof, except to increase any percentage specified therein or to provide that those provisions of
the indenture or the basic documents specified in the indenture cannot be modified or waived without the consent of each outstanding SAC bondholder affected thereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• modify any of the provisions of the indenture in a manner as to affect the calculation of the amount of any
payment of interest, principal or premium, if any, due on any SAC bond on any payment date (including the calculation of any of the individual components of such calculation) or change the expected sinking fund schedule or final maturity date of any
tranche of the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• decrease the required capital amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• permit the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to
any of the collateral for the SAC bonds or, except as otherwise permitted or contemplated in the indenture, terminate the lien of the indenture on any property at any time subject thereto or deprive the holder of any SAC bond of the security
provided by the lien of the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cause any material adverse U.S. federal income tax consequence to us, APCo, the managers, the trustee or the
then-existing SAC bondholders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impair the right to institute suit for the enforcement of the provisions of the indenture regarding payment or
application of funds.

*Enforcement of the Sale Agreement, the Administration Agreement, the Servicing Agreement and the Intercreditor Agreement and Joinder.* The indenture provides that we will take all lawful actions to enforce our rights under the sale agreement, the administration agreement, the servicing agreement, the intercreditor agreement and joinder and the other basic documents. The indenture also provides that we will take all lawful actions to compel or secure the performance and observance by APCo, the administrator and the servicer of their respective obligations to us under or in connection with the sale agreement, the administration agreement, the servicing agreement, the intercreditor agreement and joinder and the other basic documents. So long as no event of default occurs and is continuing, we may exercise any and all rights, remedies, powers and privileges lawfully available to us under or in connection with the sale agreement, the administration agreement, the servicing agreement and the intercreditor agreement and joinder; provided that such action shall not adversely affect the interests of the SAC bondholders in any material respect. However, if we or the servicer propose to amend, modify, waive, supplement, terminate or surrender in any material respect, or agree to any material amendment, modification, supplement, termination, waiver or surrender of, the process for adjusting the SAC charges, we must provide written notice to the trustee, and the trustee shall notify the SAC bondholders of such proposal. In addition, the trustee may consent to this proposal only with the written consent of the holders of a majority of the principal amount of the outstanding SAC bonds affected thereby and only if the rating agency condition is satisfied.

If an event of default occurs and is continuing, the trustee may, and, at the written direction of the holders of a majority of the outstanding amount of the SAC bonds affected thereby, shall exercise all of our rights, remedies, powers, privileges and claims against APCo, the administrator and servicer, under or in connection

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with the sale agreement, the servicing agreement, the administration agreement and the intercreditor agreement and joinder, and any right of ours to take this action shall be suspended.

*Modifications to the Sale Agreement, the Administration Agreement, the Intercreditor Agreement and joinder and the Servicing Agreement.* The sale agreement, the administration agreement, the intercreditor agreement and joinder and the servicing agreement, may be amended in accordance with the provisions thereof, so long as the rating agency condition is satisfied in connection therewith, at any time and from time to time, without the consent of the SAC bondholders if all conditions precedent for such amendment have been satisfied and such amendment is authorized and permitted by the terms of the agreement being amended, as evidenced by an opinion of counsel. Notwithstanding the foregoing, the sale agreement, the administration agreement and the servicing agreement may be amended in accordance with the provisions thereof with ten business days' prior written notice given to the rating agencies and with the prior written consent of the trustee (except that any amendment to the administration agreement or the sale agreement will not require the consent of the trustee), but without the consent any of the SAC bondholders, (a) to cure any ambiguity, to correct or supplement any provisions in the applicable agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in such agreement or of modifying in any manner the rights of the SAC bondholders; provided, however, that such action shall not adversely affect in any material respect the interests of any holder; or (b) to conform the provisions of the applicable agreement to the description of such agreement in the prospectus. In the case of an amendment described in the preceding sentence, the issuing entity shall furnish copies of such amendment to the rating agencies promptly after execution thereof.

*Notification of the Rating Agencies, the Trustee and the SAC Bondholders of any Modification.* 

If we, APCo or the servicer or any other party to the applicable agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any other amendment,
modification, waiver, supplement, termination or surrender of, the terms of the sale agreement or the servicing agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• waives timely performance or observance by APCo or the servicer under the sale agreement, the intercreditor
agreement and joinder, the administration agreement or the servicing agreement,

in each case in a way which would materially and adversely affect the interests of SAC bondholders, we must first notify the rating agencies of the proposed action and must promptly notify the trustee and the trustee shall notify the SAC bondholders on our behalf. The trustee will consent to this proposed amendment, modification, supplement or waiver only if the rating agency condition is satisfied and only with the written consent of the holders of a majority of the outstanding principal amount of the SAC bonds of materially and adversely affected thereby.

**What Constitutes an Event of Default on the SAC Bonds** 

An event of default with respect to the SAC bonds is defined in the indenture as being:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. a default in the payment of any interest on any SAC bond when the same becomes due and payable and the
continuation of this default for five business days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. a default in the payment of the then unpaid principal of any SAC bonds of a tranche on the final maturity date
for such tranche;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. a default in the observance or performance of any of our covenants or agreements made in the indenture, other
than those specifically dealt with in clause 1 or 2 above, or any of our representations or warranties made in the indenture or the series supplement or in any certificate or other writing delivered pursuant to the indenture or in connection with
the indenture proving to have been incorrect in any material respect as of the time when made, and if such default continues or is not cured for a

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period of 30 days after the earlier of (a) written notice of the default is given to us by the trustee or to us and the trustee by the holders of at least 25% of the outstanding principal amount of the SAC bonds or (b) the date we have actual notice of the default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. any representation or warranty made by us in the indenture or the series supplement, or in any certificate or
other writing delivered pursuant hereto or the series supplement or in connection therewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been eliminated or otherwise cured, 30 days after the earlier of (a) the date that there shall have been given, by registered or certified mail, us by the trustee or to us and
the trustee by the holders of SAC bonds representing at least 25 percent of the outstanding amount of the SAC bonds, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such
notice is a "Notice of Default" thereunder or (b) the date that we have actual knowledge of the default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of us or
any substantial part of the collateral in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of us or for any substantial part of the collateral, or ordering the winding-up or liquidation of our affairs, and such decree or order remains unstayed and in effect
for a period of 90 consecutive days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. the commencement by us of a voluntary case under any applicable U.S. federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by us to the entry of an order for relief in an involuntary case or proceeding under any such law, or the consent by us to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of us for any substantial part of the collateral, or the making by us of any general assignment for the benefit of creditors, or the failure by us generally to pay our debts as such
debts become due, or the taking of action by us in furtherance of any of the foregoing; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. any act or failure to act by the Commonwealth of Virginia or any of its agencies (including the Virginia
Commission), officers or employees that violates or is not in accordance with the pledge of the Commonwealth of Virginia in the Securitization Law. Please read "The Securitization Law" in this prospectus.

*Remedies Available Following an Event of Default.* If an event of default with respect to the SAC bonds, other than event number 7 above, occurs and is continuing, the trustee or holders holding not less than a majority in principal amount of the SAC bonds may declare the unpaid principal balance of SAC bonds, together with accrued interest, to be immediately due and payable. This declaration may, under the circumstances specified therein, be rescinded by the holders of a majority in principal amount of the SAC bonds. The nature of our business will result in payment of principal upon such a declaration being made as funds become available. Please read "Risk Factors— Risks Associated with the Unusual Nature of the SAC Property—Foreclosure of the trustee's lien on the SAC property might not be practical, and acceleration of the SAC bonds before maturity might have little practical effect" and "—You may experience material payment delays or incur a loss on your investment in the SAC bonds because the source of funds for payment is limited" in this prospectus.

In addition to acceleration of the SAC bonds described above, the trustee may exercise one or more of the following remedies upon an event of default (other than event number 7 above):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the trustee may institute proceedings in its own name and as trustee of an express trust for the collection of
all amounts then payable on the SAC bonds or under the indenture with respect to the SAC bonds, whether by declaration of acceleration or otherwise, and, subject to the limitations on recovery set forth in the indenture, enforce any judgment
obtained, and collect from us moneys adjudged due, upon the SAC bonds;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the trustee may institute proceedings from time to time for the complete or partial foreclosure of the
indenture with respect to the collateral securing the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. the trustee may exercise any remedies of a secured party under the Uniform Commercial Code or the
Securitization Law or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the trustee and the SAC bondholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. at the written direction of the holders of a majority in the principal amount of the SAC bonds, the trustee may
either sell all or a portion of the collateral securing the SAC bonds or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by applicable law provided that certain conditions set forth in
the indenture are met, or elect that we maintain possession of all or a portion of the collateral securing the SAC bonds pursuant to the terms of the indenture and continue to apply the SAC charges as if there had been no declaration of
acceleration; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. the trustee may exercise all of our rights, remedies, powers, privileges and claims against the seller,
administrator and the servicer under or in connection with the sale agreement, the administration agreement, the intercreditor agreement and joinder or the servicing agreement.

If event of default number 7 above occurs, the trustee may to the extent allowed by applicable law institute or participate in proceedings necessary to compel performance of or to enforce the pledge of either the Commonwealth of Virginia or the Virginia Commission and to collect any monetary damages incurred by the SAC bondholders or the trustee as a result of such event of default. This is the only remedy the trustee may exercise if this event of default has occurred.

*When the Trustee Can Sell the Collateral.* If the SAC bonds have been declared to be due and payable following an event of default, the trustee shall, at the written direction of the holders of a majority in principal amount of the SAC bonds, either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• subject to the paragraph immediately below, sell the collateral securing the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• elect to have us maintain possession of the collateral securing the SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• take such other remedial action as the trustee, at the written direction of the holders of a majority in
principal amount of the SAC bonds then outstanding and declared to have been due and payable, may direct and continue to apply distributions on the collateral securing the SAC bonds as if there had been no declaration of acceleration.

The trustee is prohibited from selling the collateral securing the SAC bonds following an event of default unless the final payment date of the SAC bonds has occurred or the SAC bonds have been declared due and payable and:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holders of 100% of the principal amount of the SAC bonds consent to the sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the proceeds of the sale or liquidation are sufficient to pay in full the principal of and premium, if any, and
accrued interest on the outstanding SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee determines that funds provided by the collateral securing the SAC bonds would not be sufficient on an
ongoing basis to make all payments on the SAC bonds as these payments would have become due if the SAC bonds had not been declared due and payable, and the trustee obtains the written consent of the holders of at least two-thirds of the aggregate outstanding principal amount of the SAC bonds.

*Right of SAC Bondholders to Direct Proceedings.* Subject to the provisions for indemnification and the limitations contained in the indenture, the holders of a majority in principal amount of the outstanding SAC bonds will have the right to direct the time, method and place of conducting any proceeding or any remedy

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available to the trustee or exercising any trust or power conferred on the trustee; provided that, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• this direction does not conflict with any rule of applicable law or with the indenture or the series supplement
and shall not involve the trustee in any personal liability or expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any direction to the trustee to sell or liquidate any of the collateral securing the SAC bonds shall be by the
holders of the SAC bonds representing not less than 100% of the outstanding SAC bonds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• so long as the conditions specified in the indenture have been satisfied and the trustee elects to retain the
collateral securing the SAC bonds pursuant to the indenture and elects not to sell or liquidate that collateral, any direction to the trustee to sell or liquidate the collateral securing the SAC bonds or any portion thereof by the holders
representing not less than 100% of the outstanding amount of the SAC bonds, shall be of no force and effect.

However, in case an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the holders of the SAC bonds if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee may take any other action deemed proper by the trustee that is not inconsistent with this direction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it reasonably believes it will not be indemnified to its satisfaction against any cost, expense or liabilities;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it determines that this action might materially adversely affect the rights of any SAC bondholder not consenting
to the action.

*Waiver of Default.* Prior to acceleration of the maturity of the SAC bonds, the holders of a majority in principal amount of the SAC bonds may, subject to certain conditions specified in the indenture, waive any default with respect to the SAC bonds. However, they may not waive a default in the payment of principal of or premium, if any, or interest on any of the SAC bonds or a default in respect of a covenant or provision of the indenture that cannot be modified without the waiver or consent of all of the holders of the outstanding SAC bonds.

*Limitation of Proceedings.* Under the indenture, no SAC bondholder will have the right to institute any proceeding, judicial or otherwise, or to avail itself of the right to foreclose on the SAC property or otherwise enforce the lien in the SAC property pursuant to the Securitization Law, unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder previously has given to the trustee written notice of a continuing event of default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holders of a majority in principal amount of the outstanding SAC bonds have made written request of the
trustee to institute the proceeding in its own name as trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or holders have offered the trustee indemnity satisfactory to the trustee against the costs, expenses
and liabilities to be incurred in complying with the request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee for 60 days after its receipt of the notice, request and offer of indemnity has failed to institute
the proceeding; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no direction inconsistent with this written request has been given to the trustee during the 60-day period referred to above by the holders of a majority in principal amount of the outstanding SAC bonds.

In addition, each of the trustee, the SAC bondholders and the servicer will covenant that it will not, prior to the date that is one year and one day after the termination of the indenture, acquiesce, petition or otherwise invoke or cause us or any manager to invoke against us or against our managers or our member or members any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law. By purchasing SAC bonds, each SAC bondholder will be deemed to have made this covenant.

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**Our Covenants** 

*Consolidation, Merger or Sale of Assets.* We will keep in effect our existence, rights and franchises as a limited liability company under Virginia law, provided that we may consolidate with, merge into or convert into another entity or sell substantially all of our assets to another entity if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the entity formed by or surviving the consolidation, merger or conversion or to whom substantially all of our
assets are sold is organized under the laws of the United States or any state thereof and expressly assumes by a supplemental indenture the due and punctual payment of the principal of and premium, if any, and interest on all outstanding SAC bonds
and the performance of our obligations under the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the entity formed by or surviving the consolidation, merger or conversion or to whom substantially all of our
assets are sold expressly assumes all obligations and succeeds to all of our rights under the sale agreement, the administration agreement, the servicing agreement and any other basic document specified in the indenture to which we are a party (or
under which we have rights) pursuant to an assignment and assumption agreement executed and delivered to the trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no default or event of default will have occurred and be continuing immediately after giving effect to the
merger, consolidation, conversion or sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prior notice will have been given to the rating agencies and the rating agency condition will have been satisfied
with respect to the merger, consolidation, conversion or sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have received an opinion of independent counsel to the effect that the merger, consolidation, conversion or
sale, will have no material adverse tax consequence to us or any SAC bondholder, complies with the indenture and all conditions precedent therein provided relating to the merger, consolidation, conversion or sale, and will result in the trustee
maintaining a continuing valid first priority perfected security interest in the collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• none of the SAC property, the financing order or our rights under the Securitization Law or the financing order
are impaired thereby; and

*Additional Covenants.* We will from time to time execute and deliver all documents, make all filings and take any other action necessary or advisable to, among other things, maintain and preserve the lien of the indenture and the priority thereof. We will not, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• permit the validity or effectiveness of the indenture or other basic documents to be impaired or the lien to be
amended, hypothecated, subordinated, terminated or discharged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• permit any person to be released from any covenants or obligations with respect to the SAC bonds except as
expressly permitted by the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• permit any lien, charge, claim, security interest, mortgage or other encumbrance, other than the lien of the
indenture, to be created on or extend to or otherwise arise upon or burden the collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• permit the lien of the indenture not to constitute a valid first priority perfected security interest in the
collateral securing the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except as expressly permitted by the indenture, the series supplement, or other basic documents, sell, transfer,
convey, exchange or otherwise dispose of any of our properties or assets, including those included in the collateral securing the SAC bonds unless in accordance with the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect
of, the SAC bonds, other than amounts properly withheld from such payments under the

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Internal Revenue Code of 1986, the Treasury regulations promulgated thereunder or other tax laws or assert any claim against any present or former SAC bondholder because of the payment of taxes levied or assessed upon any part of the collateral securing the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• terminate our existence, dissolve or liquidate in whole or in part, except as otherwise permitted by the
indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change our name, identity or structure or the location of our chief executive office or state of formation,
unless, at least ten business days prior to the effective date of any such change, we deliver to the trustee, with copies to the rating agencies, such documents, instruments or agreements, executed by us, as are necessary to reflect such change and
to continue the perfection of the security interest of the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• take any action which is the subject of a rating agency condition without satisfying the rating agency condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• elect to be classified as an association taxable as a corporation for federal income tax purposes or otherwise
take any action inconsistent with our treatment for federal income tax purposes as a disregarded entity not separate from our sole owner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except to the extent permitted by applicable law, voluntarily suspend or terminate our filing obligations with
the SEC as described in the indenture; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issue any debt obligations other than SAC bonds permitted by the indenture.

We may not engage in any business other than financing, purchasing, owning, administering, managing and servicing SAC property and the assets in the collateral securing the SAC bonds and the issuance of SAC bonds in the manner contemplated by the financing order and the indenture and other basic documents and activities incidental thereto.

We may not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the SAC bonds permitted by the indenture and any other indebtedness expressly permitted by or arising under the basic documents. Also, we may not guarantee or otherwise become contingently liable in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire, or agree contingently to acquire, any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other person, except as otherwise contemplated by the indenture, the sale agreement, or the servicing agreement. We may not, except as contemplated by the indenture, the sale agreement, the servicing agreement and related documents (or as contemplated by an additional financing order issued by the Virginia Commission to APCo), including our limited liability company agreement, make any loan or advance or credit to any person. We will not make any expenditure for capital assets or lease any capital asset other than the SAC property purchased from APCo pursuant to, and in accordance with, the sale agreement. We may not make any payments, distributions or dividends to any member in respect of its membership interest except in accordance with the indenture.

The servicer will deliver to the trustee the annual accountant's report, compliance certificates and reports regarding distributions and other statements required by the servicing agreement. Please read "The Servicing Agreement" in this prospectus.

**Access to the List of SAC Bondholders** 

Any SAC bondholder, or group of SAC bondholders, owning at least ten percent of the outstanding amount of the SAC bonds may, by written request to the trustee, obtain access to the list of all SAC bondholders maintained by the trustee for the purpose of communicating with other SAC bondholders with respect to their rights under the indenture or the SAC bonds; provided, that the trustee gives prior written notice to us of such request.

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**We Must File an Annual Compliance Statement** 

We will deliver to the trustee, the Virginia Commission and each rating agency not later than March 31 of each year (commencing with March 31, 2027), an officer's certificate stating, as to the responsible officer signing such officer's certificate, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a review of our activities during the preceding 12 months ended December 31, (or, in the case of the first
such officer's certificate, since the issuance date) and of performance under the indenture has been made; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to the best of such responsible officer's knowledge, based on such review, we have in all material respects
complied with all conditions and covenants under the indenture throughout such period, or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to the responsible officer and the nature
and status thereof.

**The Trustee Must Provide an Annual Report to All SAC Bondholders** 

If required by the Trust Indenture Act, the trustee will be required to make available electronically on its investor reporting website to all SAC bondholders a brief report. This report may state, in accordance with the requirements of the Trust Indenture Act, among other items:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee's eligibility and qualification to continue as the trustee under the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any amounts advanced by it under the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount, interest rate and maturity date of specific indebtedness owed by us to the trustee in the
trustee's individual capacity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the property and funds physically held by the trustee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action taken by it that materially affects the SAC bonds and that has not been previously reported.

**What Will Trigger Satisfaction and Discharge of the Indenture** 

The indenture will cease to be of further effect with respect to the SAC bonds, and the trustee, on our reasonable written demand and at our expense, will execute instruments acknowledging satisfaction and discharge of the indenture with respect to the SAC bonds, when:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• either all SAC bonds which have already been authenticated or delivered, with certain exceptions set forth in the
indenture, have been delivered to the trustee for cancellation or either scheduled final payment date has occurred with respect to all SAC bonds that have not been delivered to the trustee for cancellation or the SAC bonds will be due and payable on
their respective scheduled final payment dates within one year, and we have irrevocably deposited in trust with the trustee cash or U.S. government obligations specified in the indenture, in an amount sufficient to make payments of principal of and
premium, if any, and interest on the SAC bonds not theretofore delivered to the trustee for cancellation, ongoing financing costs and all other sums payable to us pursuant to the indenture with respect to the SAC bonds when scheduled to be paid and
to discharge the entire indebtedness on those SAC bonds not previously delivered to the trustee when due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have paid or caused to be paid all other sums payable by us under the indenture with respect to the SAC bonds;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have delivered to the trustee an officer's certificate, an opinion of external counsel, and if required
by the Trust Indenture Act or the trustee, a certificate from a firm of independent certified public accountants, each stating that there has been compliance with the conditions precedent in the indenture or relating to the satisfaction and
discharge of the indenture with respect to the SAC bonds.

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**Our Legal Defeasance and Covenant Defeasance Options** 

We may, at any time, terminate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all of our obligations under the indenture with respect to the SAC bonds, referred to herein as the legal
defeasance option; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our obligations to comply with some of the covenants in the indenture, including some of the covenants described
under "Our Covenants," referred to herein as our covenant defeasance option.

The legal defeasance option is our right to terminate at any time our obligations under the indenture with respect to the SAC bonds. The covenant defeasance option is our right at any time to terminate our obligations to comply with some of the covenants in the indenture. We may exercise the legal defeasance option with respect to the SAC bonds notwithstanding our prior exercise of the covenant defeasance option. If we exercise the legal defeasance option, the SAC bonds will be entitled to payment only from the funds or other obligations set aside under the indenture for payment thereof on the scheduled final payment date therefor as described below. The SAC bonds will not be subject to payment through acceleration prior to the scheduled final payment date. If we exercise the covenant defeasance option, the final payment of the SAC bonds may not be accelerated because of an event of default relating to a default in the observance or performance of our covenants or as described in "What Constitutes an Event of Default on the SAC bonds" above.

We may exercise the legal defeasance option or the covenant defeasance option with respect to SAC bonds only if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have irrevocably deposited or caused to be irrevocably deposited in trust with the trustee cash or U.S.
government obligations specified in the indenture that through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the SAC
bonds not theretofore delivered to the trustee for cancellation and ongoing financing costs and all other sums payable under the indenture by us with respect to the SAC bonds when scheduled to be paid and to discharge the entire indebtedness on the
SAC bonds when due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we deliver to the trustee a certificate from a nationally recognized firm of independent registered public
accountants expressing its opinion that the payments of principal of and interest on the deposited U.S. government obligations when due and without reinvestment plus any cash deposited in the defeasance subaccount will provide cash at times and in
sufficient amounts to pay in respect of the SAC bonds principal in accordance with the expected sinking fund schedule therefor, interest when due and all other sums payable by us under the indenture with respect to the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of the legal defeasance option, 95 days pass after the deposit is made and during the 95-day period no default relating to events of our bankruptcy, insolvency, receivership or liquidation occurs and is continuing at the end of the period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no default has occurred and is continuing on the day of this deposit and after giving effect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of an exercise of the legal defeasance option, we shall have delivered to the trustee an opinion of
external counsel stating that we have received from, or there has been published by, the Internal Revenue Service a ruling, or since the date of execution of the indenture, there has been a change in the applicable U.S. federal income tax law, and
in either case confirming that the holders of the SAC bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if the legal defeasance had not occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of an exercise of the covenant defeasance option, we shall have delivered to the trustee an opinion
of external counsel to the effect that the holders of the SAC bonds will not recognize income,

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gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred; <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we deliver to the trustee a certificate of one of our officers and an opinion of counsel, each stating that all
conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we deliver to the trustee an opinion of external counsel to the effect that (a) in a case under the
Bankruptcy Code in which APCo (or any of its affiliates, other than us) is the debtor, the court would hold that the deposited cash or U.S. government obligations would not be in the bankruptcy estate of APCo (or any of its affiliates, other than
us, that deposited the moneys or U.S. government obligations); and (b) in the event APCo (or any of its affiliates, other than us, that deposited the moneys or U.S. government obligations), were to be a debtor in a case under the Bankruptcy
Code, the court would not disregard the separate legal existence of APCo (or any of its affiliates, other than us, that deposited the moneys or U.S. government obligations) and us so as to order substantive consolidation under the Bankruptcy Code of
our assets and liabilities with the assets and liabilities of APCo or such other affiliate; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each rating agency has notified us and the trustee that the exercise of the proposed defeasance option will not
result in a downgrade or withdrawal of the then current rating of any then outstanding SAC bonds.

**No Recourse to Others** 

No recourse may be taken directly or indirectly, by the holders of the SAC bonds with respect to our obligations, or the obligations of the trustee, on the SAC bonds or under the indenture or the series supplement or any certificate or other writing delivered in connection therewith, against (a) us, other than from the SAC bond collateral; (b) any owner of a membership interest in us (including APCo); or (c) any shareholder, partner, owner, beneficiary, agent, officer, director or employee of the trustee, the managers or any owner of a membership interest in us (including APCo) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such person may have expressly agreed in writing.

Notwithstanding any provision of the indenture or the series supplement to the contrary, bondholders shall look only to the SAC bond collateral with respect to any amounts due to the SAC bondholders under the indenture and the SAC bonds, and, in the event such SAC bond collateral is insufficient to pay in full the amounts owed on the SAC bonds, shall have no recourse against us in respect of such insufficiency. Each bondholder by accepting a SAC bond specifically confirms the nonrecourse nature of these obligations, and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the SAC bonds.

**Governing Law** 

The indenture will be governed by the laws of the State of New York, provided that the creation, attachment and perfection of any liens created thereunder in the SAC property and all rights and remedies of the trustee, securities intermediary and the holders with respect to the SAC property shall be governed by the laws of the Commonwealth of Virginia.

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**THE TRUSTEE** 

U.S. Bank Trust Company, National Association, a national banking association ("**U.S. Bank Trust Co.**"), will be the trustee, and will act as the paying agent and registrar for the SAC bonds. U.S. Bank National Association ("**U.S. Bank N.A.**") made a strategic decision to reposition its corporate trust business by transferring substantially all of its corporate trust business to its affiliate, U.S. Bank Trust Co., a non-depository trust company (U.S. Bank N.A. and U.S. Bank Trust Co. are collectively referred to herein as "**U.S. Bank**"). Upon U.S. Bank Trust Co.'s succession to the business of U.S. Bank N.A., it became a wholly owned subsidiary of U.S. Bank N.A. The trustee will maintain the accounts of the issuing entity in the name of the trustee at U.S. Bank N.A.

U.S. Bancorp, with total assets exceeding $692 billion as of December 31, 2025, is the parent company of U.S. Bank, the fifth largest commercial bank in the United States. As of December 31, 2025, U.S. Bancorp operated over 2,000 branch offices in 26 states. A network of specialized U.S. Bancorp offices across the nation provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses, and institutions.

U.S. Bank has one of the largest corporate trust businesses in the country with office locations in 44 Domestic and 3 International cities. The indenture will be administered from U.S. Bank's corporate trust office located at 190 South LaSalle Street, 7th Floor, Chicago, Illinois 60603.

U.S. Bank has provided corporate trust services since 1924. As of December 31, 2025, U.S. Bank was acting as trustee with respect to over 158,000 issuances of securities with an aggregate outstanding principal balance of over $6.8 trillion. This portfolio includes corporate and municipal bonds, mortgage-backed and asset-backed securities and collateralized debt obligations.

The trustee shall make each monthly statement available to the bondholders via the trustee's internet website at https://pivot.usbank.com. SAC bondholders with questions may direct them to the trustee's bondholder services group at (800) 934-6802.

U.S. Bank serves or has served as trustee, paying agent and registrar on several issues of utility rate-payer backed securities.

U.S. Bank N.A. and other large financial institutions have been sued in their capacity as trustee or successor trustee for certain residential mortgage backed securities ("**RMBS**") trusts. The complaints, primarily filed by investors or investor groups against U.S. Bank N.A. and similar institutions, allege the trustees caused losses to investors as a result of alleged failures by the sponsors, mortgage loan sellers and servicers to comply with the governing agreements for these RMBS trusts. Plaintiffs generally assert causes of action based upon the trustees' purported failures to enforce repurchase obligations of mortgage loan sellers for alleged breaches of representations and warranties, notify securityholders of purported events of default allegedly caused by breaches of servicing standards by mortgage loan servicers and abide by a heightened standard of care following alleged events of default.

U.S. Bank N.A. denies liability and believes that it has performed its obligations under the RMBS trusts in good faith, that its actions were not the cause of losses to investors, that it has meritorious defenses, and it has contested and intends to continue contesting the plaintiffs' claims vigorously. However, U.S. Bank N.A. cannot assure you as to the outcome of any of the litigation, or the possible impact of these litigations on the trustee or the RMBS trusts.

On March 9, 2018, a law firm purporting to represent fifteen Delaware statutory trusts (the "**DSTs**") that issued securities backed by student loans (the "**Student Loans**") filed a lawsuit in the Delaware Court of Chancery against U.S. Bank N.A. in its capacities as indenture trustee and successor special servicer, and three

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other institutions in their respective transaction capacities, with respect to the DSTs and the Student Loans. This lawsuit is captioned The National Collegiate Student Loan Master Trust I, et al. v. U.S. Bank National Association, et al., C.A. No. 2018-0167-JRS (Del. Ch.) (the "NCMSLT Action"). The complaint, as amended on June 15, 2018, alleged that the DSTs have been harmed as a result of purported misconduct or omissions by the defendants concerning administration of the trusts and special servicing of the Student Loans. Since the filing of the NCMSLT Action, certain Student Loan borrowers have made assertions against U.S. Bank N.A. concerning special servicing that appear to be based on certain allegations made on behalf of the DSTs in the NCMSLT Action.

U.S. Bank N.A. has filed a motion seeking dismissal of the operative complaint in its entirety with prejudice pursuant to Chancery Court Rules 12(b)(1) and 12(b)(6) or, in the alternative, a stay of the case while other prior filed disputes involving the DSTs and the Student Loans are litigated. On November 7, 2018, the Court ruled that the case should be stayed in its entirety pending resolution of the first-filed cases. On January 21, 2020, the Court entered an order consolidating for pretrial purposes the NCMSLT Action and three other lawsuits pending in the Delaware Court of Chancery concerning the DSTs and the Student Loans, which remains pending.

U.S. Bank N.A. denies liability in the NCMSLT Action and believes it has performed its obligations as indenture trustee and special servicer in good faith and in compliance in all material respects with the terms of the agreements governing the DSTs and that it has meritorious defenses. It has contested and intends to continue contesting the plaintiffs' claims vigorously.

While the legal proceedings discussed above involve certain affiliates of the trustee, none of such legal proceedings are material to the holders.

The trustee may resign at any time upon 30 days' prior written notice to us. The holders of a majority in principal amount of the SAC bonds then outstanding may remove the trustee upon 30 days' prior written notice to the trustee and may appoint a successor trustee. We will remove the trustee if the trustee ceases to be eligible to continue in this capacity under the indenture, the trustee becomes a debtor in a bankruptcy proceeding or is adjudicated insolvent, a receiver, other public officer takes charge of the trustee or its property, the trustee becomes incapable of acting or the trustee fails to provide to us certain information we reasonably request which is necessary for us to satisfy our reporting obligations under the securities laws. If the trustee resigns or is removed or a vacancy exists in the office of trustee for any reason, we will be obligated promptly to appoint a successor trustee eligible under the indenture and notice of such appointment is required to be promptly given to each rating agency by the successor trustee. No resignation or removal of the trustee will become effective until acceptance of the appointment by a successor trustee. We are responsible for payment of the expenses associated with any such removal or resignation.

The trustee will at all times satisfy the requirements of the Trust Indenture Act and Rule 3a-7 under the Investment Company Act and have a combined capital and surplus of at least $50 million and a long-term debt or issuer rating of "Baa3" or better by Moody's and "BBB-" or better by S&P. If the trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another entity, the resulting, surviving or transferee entity will without any further action be the successor trustee; provided, however, that if such successor trustee is not eligible under the indenture, the successor trustee will be replaced in accordance with the terms of the indenture. We and our affiliates may, from time to time, maintain various banking, investment banking and trust relationships with the trustee and its affiliates. Please read "The Sale Agreement" and "The Servicing Agreement" in this prospectus.

The trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided that its conduct does not constitute willful misconduct, negligence or bad faith. The trustee shall not be deemed to have notice or knowledge of any default or event of default (other than a payment default) unless a responsible officer of the trustee has actual knowledge thereof or the trustee has received written notice thereof pursuant to the indenture. The trustee shall not be required to take

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any action it is directed to take under the indenture if the trustee determines in good faith that the action so directed is inconsistent with the indenture, any other basic document or applicable law, or would involve the trustee in personal liability. We have agreed to indemnify the trustee and its officers, directors, employees and agents against any and all loss, liability or expense (including reasonable attorney's fees and expenses, the fees of experts and agents and the reasonable fees, expenses and costs incurred in connection with any action, claim or suit brought to enforce the trustee's right to indemnification) incurred by it in connection with the administration of the trust and the performance of its duties under the indenture, the series supplement and other basic documents, provided that we are not required to pay any expense or indemnify against any loss, liability or expense incurred by the trustee through the trustee's own willful misconduct, negligence or bad faith, and in the case of the settlement of any action, proceeding or investigation, subject to the written consent of the issuing entity and certain other requirements.

We, APCo and our respective affiliates may from time to time enter into normal banking and trustee relationships with U.S. Bank Trust Company, National Association and its affiliates. No relationships currently exist or existed during the past two years between APCo, us and our respective affiliates, on the one hand, and U.S. Bank Trust Company, National Association and its affiliates, on the other hand, that would be outside the ordinary course of business or on terms other than would be obtained in an arm's length transaction with an unrelated third party.

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**WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE SAC BONDS** 

The amount of principal payments, the amount of each interest payment and the actual final payment date of each tranche of the SAC bonds and the weighted average life thereof will depend primarily on the timing of receipt of collected SAC charges by the trustee and the true-up mechanism. The aggregate amount of collected SAC charges and the rate of principal amortization on the SAC bonds will depend, in part, on actual energy usage and energy demands, and the rate of delinquencies and write-offs. The SAC charges are required to be adjusted from time to time based in part on the actual rate of collected SAC charges. However, we can give no assurance that the servicer will be able to forecast accurately actual electricity usage and the rate of delinquencies and write-offs or implement adjustments to the SAC charges that will cause collected SAC charges to be received at any particular rate. Please read "Risk Factors—Servicing Risks," "Other Risks Associated with an Investment in the SAC Bonds" and "APCo's Financing Order—True-Ups" in this prospectus.

If the servicer receives SAC charges at a slower rate than expected, the SAC bonds may be retired later than expected. Except in the event of the acceleration of the final payment date of the SAC bonds after an event of default, however, the SAC bonds will not be paid at a rate faster than that contemplated in the expected amortization schedule of the SAC bonds even if the receipt of collected SAC charges is accelerated. Instead, receipts in excess of the amounts necessary to amortize the SAC bonds in accordance with the applicable expected amortization schedules, to pay interest and related fees and expenses and to fund subaccounts of the collection account will be allocated to the excess funds subaccount. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a date that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the SAC bonds is received in later years, the SAC bonds may have a longer weighted average life.

**Weighted Average Life Sensitivity** 

Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The amount of principal payments on each tranche of the SAC bonds, the aggregate amount of each interest payment on each tranche of the SAC bonds and the actual final payment date of the SAC bonds will depend on the timing of the servicer's receipt of SAC charges from APCo's customers. Changes in the expected weighted average life of the SAC bonds in relation to variances in actual electricity consumption levels from forecast levels are shown below. Severe stress cases on electricity consumption result in very minor changes, if any, in the weighted average life.

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The SAC bonds may be retired later than expected. Except in the event of an acceleration of the expected amortization schedule of the SAC bonds after an event of default, however, the SAC bonds will not be paid at a rate faster than that contemplated in the expected amortization schedule even if the receipt of SAC charges collections is accelerated. Instead, receipts in excess of the amounts necessary to amortize the SAC bonds in accordance with the expected amortization schedule, to pay interest, ongoing transaction costs and any other related fees and expenses, and to fund deficiencies in the capital subaccount of the collection account will be allocated to the excess funds subaccount. Amounts on deposit in the excess funds subaccount will be taken into consideration in calculating the next true-up adjustment. Acceleration of the SAC bonds after an event of default in accordance with the terms thereof may result in payment of principal earlier than the scheduled final payment date. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a date that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the SAC bonds is received in later years, the SAC bonds may have a longer weighted average life.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Weighted Average Life Sensitivity** | **Weighted Average Life Sensitivity** | **Weighted Average Life Sensitivity** | **Weighted Average Life Sensitivity** |
| | | **-5%**<br>**(Standard Deviations from Mean)** | **-5%**<br>**(Standard Deviations from Mean)** | **-15%**<br>**(Standard Deviations from Mean)** | **-15%**<br>**(Standard Deviations from Mean)** |
| <br>**Tranche** | <br>**Expected Weighted<br>Average Life<br>(Years)** | **WAL (Years)** | **Change (days)\*** | **WAL (Years)** | **Change (days)\*** |
|  A-1 |  |  |  |  |  |
|  A-2 |  |  |  |  |  |
|  A-3 |  |  |  |  |  |

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\* Number is rounded to whole day.

There can be no assurance that the weighted average life of the SAC bonds will be as shown in the above table.

For the purposes of preparing the above chart, the following assumptions, among others, have been made: (a) in relation to the initial forecast, the forecast error stays constant over the life of the SAC bonds and is equal to an overestimate of electricity consumption of 5% (standard deviations from mean) or 15% (standard deviations from mean); (b) the servicer makes timely and accurate filings to make a true-up adjustment to the SAC charges at least annually; (c) customer write-off rates are held constant at %; (d) customers remit all SAC charges days after such charges are billed; (e) ongoing financing costs are equal to projections; (f) a permanent loss of all customers has not occurred; (g) there is no acceleration of the final maturity date of the SAC bonds; and (h) the issuance date of the SAC bonds is , 2026. There can be no assurance that the weighted average life of the SAC bonds will be as shown.

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**ESTIMATED ANNUAL FEES AND EXPENSES** 

Estimated initial annual fees and expenses payable from the SAC charges are shown below. For the priorities in application of funds under the indenture and the series supplement, please refer to "Description of the SAC Bonds—How Funds in the Collection Account Will Be Allocated" in this prospectus.

As set forth in the table below, we are obligated to pay fees to the trustee, APCo, as servicer, APCo, as administrator and our independent manager. We are also obligated to pay APCo an annual return on its invested capital. The following table illustrates these arrangements:

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| | | |
|:---|:---|:---|
| **Recipient** | **Source of Payment** | **Estimated Fees and Expenses Payable** |
| Trustee | SAC charges and investment earnings | $7,500 per annum, plus certain additional expenses and indemnities, if applicable |
| Servicer | SAC charges and investment earnings | $687,750 per annum (so long as APCo is servicer), payable in installments on each payment date, plus reimbursable expenses |
| Administrator | SAC charges and investment earnings | $100,000 per annum (so long as APCo is servicer), payable in installments on each payment date, plus reimbursable expenses |
| Independent managers | SAC charges and investment earnings | $1,500 per annum |
| APCo return on invested capital | SAC charges and investment earnings | Initially, $670,556 per annum<sup>(1)</sup> |

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(1) APCo's return on invested capital is equal to the authorized pre-tax weighted average cost of capital established in its most recent base rate case.

If APCo or any of its affiliates is not the servicer, an amount agreed upon by the successor servicer and the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds), provided, that the fee will not, unless the Virginia Commission consents, exceed 0.60% of the initial principal amount of the SAC bonds on an annualized basis.

The SAC charges will also be used by the trustee for the payment of our other financing costs and expenses relating to the SAC bonds, such as accounting and audit fees, rating agency fees and legal fees.

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**THE SALE AGREEMENT** 

The following summary describes particular material terms and provisions of the sale agreement pursuant to which we will purchase the SAC property from APCo. We have filed the form of the sale agreement with the SEC as an exhibit to the registration statement of which this prospectus forms a part, and we urge you to read such document in its entirety.

**APCo's Sale and Assignment of the SAC Property** 

In connection with the issuance of the SAC bonds, APCo, as the seller, will offer and sell the SAC property to us pursuant to the terms and conditions of the sale agreement. The sale of the SAC property to us by APCo will be financed through the corresponding issuance of the SAC bonds. Pursuant to the sale agreement, APCo will sell, assign and otherwise transfer to us concurrently with the issuance and sale of the SAC bonds to the underwriters, without recourse, except as expressly provided therein, its rights, title and interests in and to the SAC property created or arising under the financing order. The SAC property will represent all rights, title and interests of APCo under the financing order that are sold and transferred to us pursuant to the sale agreement and the related bill of sale, including the right to impose, bill, charge, collect and receive the SAC charges authorized in the financing order, the right to obtain periodic adjustments to the SAC charges as provided in the financing order and all revenues, collections, claims, rights to payments, payments, money or proceeds of or arising from the SAC charges as related to the SAC property, as the same may be adjusted from time to time, regardless of whether such revenues, collections, claims, rights to payment, payments, money, or proceeds are imposed, billed, charged, collected or received with, or maintained together with or commingled with, other revenues, collections, claims, rights to payment, payments, money or proceeds. We will apply a portion of the net proceeds that we receive from the sale of the SAC bonds to the purchase of the SAC property.

As provided by the Securitization Law, our purchase of the SAC property from APCo will be pursuant to the sale agreement, which will expressly provide that such transfer is an absolute transfer and true sale, and is not a pledge of or secured transaction, and all title and ownership to the SAC property will pass to us. Under the Securitization Law, the characterization of the sale as an absolute transfer and true sale shall not be affected or impacted by an occurrence of any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Commingling of SAC charges with other amounts occurs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo retains a partial or residual interest, including an equity interest in the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo retains any right to recover costs associated with taxes, franchise fees, or license fees imposed on the
collection of SAC charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any recourse we have against APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo has any right or obligation to repurchase the SAC charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any indemnification obligations of APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo acts as a collector of the SAC charges on behalf of us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo acts as the servicer of the SAC charges or the existence of any contract that authorizes or requires APCo,
to the extent that any interest in SAC property is sold or assigned, to agree with us or any financing party that APCo will continue to operate its system to provide service to its customers, will collect amounts in respect of SAC charges for the
benefit and account of us or such financing party, and will account for and remit such amounts to or for the account of us or such financing party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo treats the transfer as a financing for tax, financial reporting or other purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC bondholders are granted or provided a preferred right to the SAC property or credit enhancement by APCo
or its affiliates with respect to the SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any application of the formula-based true-up mechanism.

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Under the Securitization Law, as of the effective date of a financing order, the SAC property is approved and, upon transfer of the SAC property to us, the SAC property shall be created, and shall consist of (a) all rights and interests of APCo or its successors or assignees under the financing order, including the right to impose, bill, charge, collect and receive SAC charges authorized in financing order and as the servicer to obtain true-up adjustments to such charges as provided in the financing order, and (b) all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the rights and interests specified in the financing order, regardless of whether such revenues, collections, claims, rights to payment, payments, money or proceeds are imposed, billed, charged, collected or received with, or maintained together with or commingled with other revenues, collections, rights to payment, payments, money or proceeds. The creation of SAC property is conditioned upon, and shall he simultaneous with, the sale or other transfer of the SAC property to us, and the issuance of the SAC bonds and the pledge of the SAC Property to secure the SAC bonds.

Upon the issuance of a financing order, the execution and delivery of the related sale agreement and bill of sale and the filing of a financing statement under the Securitization Law, our purchase of the SAC property from APCo will be perfected as against all third persons, including subsequent judicial or other lien creditors.

If such sale, transfer, assignment, setting over and conveyance is held by any court of competent jurisdiction not to be a true sale as provided in 56-249.8 E 3 a of the Securitization Law, then such sale, assignment and transfer shall be treated as a pledge of the SAC property and as the creation of a security interest (within the meaning of the Securitization Law and the Uniform Commercial Code) in the SAC property and, without prejudice to the position that APCo has absolutely transferred all of the rights in the SAC property to us.

Our records and computer systems, and those of APCo, will reflect the sale and assignment of APCo's rights and interests under the financing order to us. However, we expect that the SAC bonds will be reflected as debt on APCo's financial statements. In addition, we anticipate that the SAC bonds will be treated as debt of APCo for federal income tax purposes. Please read "Material U.S. Federal Income Tax Consequences" in this prospectus.

**Conditions to the Sale of the SAC Property** 

APCo's obligation to sell, and our obligation to purchase, the SAC property on the issuance date, are both subject to and conditioned upon the satisfaction or waiver of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on or prior to the issuance date, APCo must deliver to us a duly executed bill of sale identifying the SAC
property to be conveyed on that date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on or prior to the issuance date, APCo must receive the financing order creating the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance date, APCo must not be insolvent and will not have been made insolvent by such sale of the SAC
property, and APCo must not be aware of any pending insolvency with respect to itself;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance date, (a) the representations and warranties of APCo in the sale agreement must be true
and correct with the same force and effect as if made on the closing date (except to the extent that they relate to an earlier date); (b) no breach by APCo of its covenants in the sale agreement shall exist; and (c) no default by the servicer
shall have occurred and be continuing under the servicing agreement, as certified by APCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance date, (a) we must have sufficient funds available to pay the purchase price for the SAC
property to be conveyed on such date; and (b) all conditions to the issuance of the SAC bonds intended to provide such funds set forth in the indenture must have been satisfied or waived;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on or prior to the issuance date, APCo must have taken all action required to transfer ownership of the SAC

grant the trustee a first priority perfected security interest in the

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SAC bond collateral securing the SAC bonds and maintain such security interest as of the issuance date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo must deliver to each rating agency and to us any opinion of counsel requested by the ratings agencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo must deliver to the trustee any opinion of counsel requested by the trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on and as of the issuance date, each of the basic documents must be in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC bonds must have received a rating or ratings required by the financing order;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have received the purchase price in funds immediately available on the issuance date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the issuance advice letter must have been provided to the Virginia Commission in accordance with the financing
order, and the Virginia Commission must not have issued a disapproval letter directing that the SAC bonds not be issued; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• APCo must deliver to the trustee and to us an officers' certificate confirming the satisfaction of each of
these conditions.

**APCo's Representations and Warranties** 

In the sale agreement, APCo, as seller, will make representations and warranties to us, as of the issuance date, to the effect, among other things, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller is a corporation duly organized and validly existing and is in good standing under the laws of the
Commonwealth of Virginia, with the requisite corporate or other power and authority to own its properties as such properties are owned on the issuance date and to conduct its business as such business is conducted by it on the issuance date, and has
the requisite corporate or other power and authority to obtain the Financing Order and own the rights and interests under the Financing Order and to sell and assign those rights and interests to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller is duly qualified to do business and is in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business require such qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be
reasonably likely to have a material adverse effect on the seller's business, operations, assets, revenues or properties);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller has the requisite corporate or other power and authority to execute and deliver the sale agreement and
to carry out its terms and the execution, delivery and performance of the sale agreement have been duly authorized by all necessary action on the part of the seller under its organizational or governing documents and laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the sale agreement constitutes a legal, valid and binding obligation of the seller enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors' or secured parties' rights generally from time to time in effect
and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the consummation by the seller of the transactions contemplated by the sale agreement and the fulfillment by the
seller of the terms thereof do not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• conflict with or result in any breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time) a default under, the seller's organizational documents, or any indenture, mortgage, credit agreement or other agreement or instrument to which the seller is a party or by which it or any of its property is bound;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• result in the creation or imposition of any lien upon any of the seller's properties pursuant to the terms
of any such indenture, agreement or other instrument (other than any lien that may be granted in our favor or any lien created in favor of the trustee for the benefit of the SAC bondholders pursuant to the Securitization Law or any lien that may be
granted under the basic documents); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• violate in any material respect any existing law or any existing order, rule or regulation applicable to the
seller of any governmental authority having jurisdiction over the seller or its properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• there are no proceedings pending and, to the seller's knowledge, there are no proceedings threatened and,
to the seller's knowledge, there are no investigations pending or threatened, before any governmental authority having jurisdiction over the seller or its properties involving or relating to the seller or us the or, to the seller's
knowledge, any other person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• asserting the invalidity of the Securitization Law, the Financing Order, the sale agreement, any of the other
basic documents or the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• seeking to prevent the issuance of the SAC bonds or the consummation of any of the transactions contemplated by
the sale agreement or any of the other basic documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• seeking any determination or ruling that could reasonably be expected to materially and adversely affect the
performance by the seller of its obligations under, or the validity or enforceability of the Securitization Law, the Financing Order, the sale agreement, any of the other basic documents or the SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• seeking to adversely affect the federal income tax or state income or franchise tax classification of the SAC
bonds as debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except for Uniform Commercial Code financing statement filings under the Uniform Commercial Code and the
Securitization Law, no approval, authorization, consent, order or other action of, or filing with, any governmental authority is required in connection with the execution and delivery by the seller of the sale agreement, the performance by the
seller of the transactions contemplated hereby or the fulfillment by the seller of the terms hereof, except those that have been obtained or made and those that the seller, in its capacity as servicer under the servicing agreement, is required to
make in the future pursuant to the servicing agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no portion of the SAC property has been sold, transferred, assigned or pledged or otherwise conveyed by the
seller to any person other than us, and no security agreement, financing statement, or equivalent security or lien instrument listing the seller as debtor covering all or any part of the SAC property is on file or of record in any jurisdiction,
except such as many have been filed, recorded or made in favor of us or the trustee in connection with the basic documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller has not authorized the filing of and is not aware (after due inquiry) of any Uniform Commercial Code
financing statement against it that includes a description of collateral including the SAC property other than:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any financing statement filed, recorded or made in favor of us or the trustee in connection with the basic
documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any financing statement being amended in connection with the intercreditor agreement to expressly exclude the SAC
property from the description of collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller is not aware (after due inquiry) of any judgment or tax lien filings against either the seller or us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance date, immediately prior to the sale of the SAC property pursuant to the sale agreement, the
seller is the original and the sole owner of the SAC property free and clear of all liens and rights of any other person, and no offsets, defenses or counterclaims exist or have been asserted with respect thereto;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on the issuance date, immediately upon the sale under the sale agreement, the SAC property shall be validly
transferred, sold, conveyed and assigned to us, we will own the SAC property free and clear of all liens (except for liens created in favor of the trustee for the benefit of the holders pursuant to the Securitization Law or any lien that may be
granted under the basic documents) necessary in any jurisdiction to give us a perfected ownership interest (subject to any lien created in favor of the trustee, for the benefit of the SAC bondholders, pursuant to the Securitization Law and any lien
that may be granted under the basic documents) in the SAC property have been made or taken and all filings and action to be made or taken by the seller to perfect the security interest in the SAC property granted by Seller to us (subject to any lien

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on the issuance date, under the laws of the Commonwealth of Virginia and the United States in effect on such
date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the financing order pursuant to which the rights and interests of the seller, including the right to impose,
bill, charge, collect and receive the SAC charges, and to which the SAC property transferred on such date have been created, is final and non-appealable and is in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance of the SAC bonds, the SAC bonds are entitled to the protection of the Securitization Law and,
accordingly, the financing order, the SAC charges and the issuance advice letter are not revocable by the Virginia Commission;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance of the SAC bonds, the SAC charges are in full force and effect and not subject to modification
by the Virginia Commission except as provided under § 56-249.8 K of the Securitization Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the process by which the financing order creating the SAC property transferred on such date was adopted and
approved, and the financing order and the issuance advice letter and securitization financing rider themselves, comply with all applicable laws, rules and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the issuance advice letter and the securitization financing rider relating to the SAC property transferred on
such date have been filed in accordance with the financing order creating the SAC property transferred on such date and an officer of the seller has provided the certification to the Virginia Commission required by the issuance advice letter; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no other approval, authorization, consent, order or other action of, or filing with any governmental authority is
required in connection with the creation of the SAC property transferred on such date, except those that have been obtained or made;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• under the Securitization Law, the Commonwealth of Virginia has pledged pursuant to § 56-249.8 K of the Securitization Law that it will not take any action to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• alter the provisions of the Securitization Law that authorize the Virginia Commission to create an irrevocable
contract right or chose in action by the issuance of the financing order, to create securitized asset cost property in the form of SAC property, and to make the securitized asset cost charges imposed by the financing order in the form of the SAC
charges irrevocable, binding, or non-bypassable charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• take or permit any action that impairs or would impair the value of the SAC property or the security for the SAC
bonds or revises the securitized asset costs for which recovery is authorized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in any way impair the rights and remedies of the SAC bondholders, assignees, and other financing parties related
thereto; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except as permitted by § 56-249.8 K of the Securitization Law,
reduce, alter, or impair SAC charges that are to be imposed, billed, charged, collected, and remitted for the benefit of such SAC bondholders, assignees, and financing parties until any and all principal, interest, premium,

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financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related SAC bonds have been paid and performed in full;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• subject to the clause below regarding assumptions used in calculating the charges as of the issuance date, all
written information, as amended or supplemented from time to time, provided by the seller to us with respect to the SAC property (including the expected amortization schedule, the financing order and the issuance advice letter relating to the SAC
property) is true and correct in all material respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the issuance date, based upon the information available to the seller on such date, the assumptions used in
calculating the SAC charges are reasonable and are made in good faith; however, notwithstanding the foregoing, the seller makes no representation or warranty, express or implied, that amounts actually collected arising from those SAC charges will in
fact be sufficient to meet the payment obligations on the related SAC bonds or that the assumptions used in calculating such SAC charges will in fact be realized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• upon the effectiveness of the financing order and the issuance advice letter with respect to the SAC property,
and the transfer of the SAC property pursuant to the sale agreement and the filing of the appropriate notice of transfer with the Secretary of the Commonwealth of the Commonwealth of Virginia:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rights and interests of the seller under the financing order, including the right to impose, bill, charge,
collect and receive the SAC charges authorized in the financing order, will become "securitized asset cost property" in accordance with § 56.249.8 E 1 a, of the Securitization Law and as defined in the financing order;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property will constitute an existing, present intangible property right or interest therein vested in us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property will include (a) the right, title and interest of the seller in the financing order and the
SAC charges and (b) the right to obtain periodic adjustments (with respect to adjustments, in the manner and with the effect provided in the servicing agreement) of such SAC charges, and the rates and other charges authorized by the financing
order and all revenues, collections, claims, rights to payments, payments, money or proceeds of or arising from the SAC charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the owner of the SAC property will be legally entitled to impose, bill, charge, collect and receive SAC charges
in the aggregate sufficient to pay the interest on and principal of the SAC bonds in accordance with the indenture, to pay the fees and expenses of servicing the SAC bonds, to replenish the capital subaccount to the required capital level until the
SAC bonds are paid in full or until the last date permitted for the collection of payments in respect of the SAC charges under the financing order, whichever is earlier, and the customer class allocation percentage methodology in the financing order
does not prohibit the owner of the SAC property from obtaining adjustments and effecting allocations to the SAC charges in order to collect payments of such amounts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the SAC property will not be subject to any lien other than any lien created in favor of the trustee for the
benefit of the SAC bondholders pursuant to the Securitization Law or any lien that may be granted under the basic documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as of the date of issuance, the information describing the seller under the caption "The Depositor, Seller,
Initial Servicer and Sponsor" in this prospectus is true and correct in all material respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• there is no order by any court providing for the revocation, alteration, limitation or other impairment of the
Securitization Law, the financing order, the issuance advice letter, the SAC property or the charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the financing order; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• after giving effect to the sale of the SAC property under the sale agreement, APCo:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is solvent and expects to remain solvent;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is adequately capitalized to conduct its business and affairs considering its size and the nature of its business
and intended purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is not engaged and does not expect to engage in a business for which its remaining property represents an
unreasonably small portion of its capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reasonably believes that it will be able to pay its debts as they become due; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is able to pay its debts as they mature and does not intend to incur, or believes that it will not incur,
indebtedness that it will not be able to repay at its maturity.

The seller will not make any representation or warranty, express or implied, that billed charges will be actually collected from customers.

Certain of the representations and warranties that the seller makes in the sale agreement involve conclusions of law. The seller makes those representations and warranties not on the basis that the seller purports to be a legal expert or to be rendering legal advice, but rather to reflect the parties' good faith understanding of the legal basis on which the parties are entering into the sale agreement and the other basic documents and the basis on which the SAC bondholders are purchasing the SAC bonds, and to reflect the parties' agreement that, if such understanding turns out to be incorrect or inaccurate, the seller will be obligated to indemnify us and its permitted assigns (to the extent required by and in accordance with the sale agreement), and that we and along with seller's permitted assigns will be entitled to enforce any rights and remedies under the basic documents, on account of such inaccuracy to the same extent as if the seller had breached any other representations or warranties thereunder.

The representations and warranties made by the seller will survive the execution and delivery of the sale agreement. The seller will not be in breach of any representation or warranty as a result of any change in law occurring after the issuance date including by means of any legislative enactment, constitutional amendment or voter initiative that renders any of the representations or warranties untrue.

**APCo's Covenants** 

In the sale agreement, APCo will make the following covenants:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• So long as the SAC bonds are outstanding, APCo (a) will keep in full force and effect its existence and
remain in good standing under the laws of the jurisdiction of its organization; (b) will obtain and preserve its qualification to do business in each jurisdiction in which it operates, in each case to the extent that in each such jurisdiction
such existence or qualification is or shall be necessary to protect the validity and enforceability of the sale agreement, the other basic documents to which it is a party and each other instrument or agreement necessary or appropriate to the proper
administration of the sale agreement and the transactions contemplated hereby or to the extent necessary for it to perform its obligations thereunder; and (c) will continue to operate its electric transmission and distribution system to provide
service to its customers (or, if transmission and distribution are split, to provide distribution service directly to its customers);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Except for the conveyances under the sale agreement or any lien under the Securitization Law in favor of the
trustee for the benefit of the SAC bondholders and any lien that may be granted under the basic documents the seller will not sell, pledge, assign or transfer, or grant, create, incur, assume or suffer to exist any lien on, any of the SAC property,
or any interest therein, and the seller will defend the right, title and interest of us and of the trustee on behalf of the SAC bondholders, in, to and under the SAC property against all claims of third parties claiming through or under the seller.
The seller also covenants that, in its capacity as seller, it will not at any time assert any lien against, or with respect to, any of the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In the event that the seller receives any SAC charge collections or other payments in respect of the SAC charges
or the proceeds thereof other than in its capacity as the servicer, the seller agrees to pay to

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the servicer, on behalf of us, all payments received by it in respect thereof as soon as practicable after receipt thereof. Prior to such remittance to the servicer by the seller, the seller agrees that such amounts are held by it in trust for us and the trustee. If the seller becomes a party to: (a) any future sale agreement selling to any other affiliate property consisting of charges similar to the SAC charge sold pursuant to the sale agreement, payable by customers pursuant to the Securitization Law or any similar law; or (b) another future trade receivables purchase and sale arrangement or similar arrangement, or an extension to any such existing arrangement, under which seller sells all or any portion of its accounts receivables, in each case the seller and the other parties to such arrangement shall enter into an amendment or joinder to the intercreditor agreement to acknowledge the rights of the seller, us and any future seller and issuer; <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller will notify us and the trustee promptly after becoming aware of any lien on any of the SAC property,
other than the conveyances under the sale agreement, or any lien under the basic documents or under the Securitization Law or the Uniform Commercial Code in favor of the trustee for the benefit of the SAC bondholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller agrees to comply with its organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental authority applicable to it, except to the extent that failure to so comply would not materially adversely affect our or the trustee's interests in the SAC property or under the basic documents
to which the seller is a party or the seller's performance of its obligations under the basic documents to which the seller is a party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• So long as any of the SAC bonds are outstanding, the seller will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• treat the SAC property as our property for all purposes other than for financial reporting, state or federal
regulatory or tax purposes, and treat the SAC bonds as debt for all purposes and specifically as debt of us, other than for financial reporting, state or federal regulatory or tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• solely for the purposes of U.S. federal taxes and, to the extent consistent with applicable state, local and
other tax law, for purposes of state, local and other taxes, the seller agrees to treat the SAC bonds as indebtedness of the seller (as the sole owner of us) secured by the SAC bond collateral unless otherwise required by appropriate taxing
authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• disclose in its financial statements that we and not the seller are the owner of the SAC property and that our
assets are not available to pay creditors of the seller or its affiliates (other than us);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not own or purchase any SAC bonds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• disclose the effects of all transactions between us and the seller in accordance with generally accepted
accounting principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller agrees that, upon the sale by the seller of SAC property to us pursuant to the sale agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to the fullest extent permitted by law, including, applicable Virginia Commission's regulations and the
Securitization Law, we will have all of the rights originally held by the seller with respect to the SAC property, including the right (subject to the terms of the servicing agreement) to exercise any and all rights and remedies to collect any
amounts payable by any customer in respect of the SAC property, notwithstanding any objection or direction to the contrary by the seller (and the seller agrees not to make any such objection or to take any such contrary action); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any payment by any customer directly to us shall discharge such customer's obligations, if any, in respect
of the SAC property to the extent of such payment, notwithstanding any objection or direction to the contrary by the seller.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• So long as any of the SAC bonds are outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in all proceedings relating directly or indirectly to the SAC property, the seller shall affirmatively certify
and confirm that it has sold all of its rights and interests in and to such property (other than for financial reporting or tax purposes);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller shall not make any statement or reference in respect of the SAC property that is inconsistent with our
ownership interest (other than for financial accounting or tax purposes or as required by state or federal regulatory purposes);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller shall not take any action in respect of the SAC property except solely in its capacity as the servicer
thereof pursuant to the servicing agreement or as otherwise contemplated by the basic documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seller shall not sell "securitized asset cost property" or other similar property under a
separate "financing order" in connection with the issuance of additional "securitized asset cost bonds" or other similar bonds (each term as defined in the Securitization Law) unless the rating agency condition shall have
been satisfied; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• neither the seller nor us will take any action, file any tax return, or make any election inconsistent with the
treatment of us, for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, for purposes of state, local and other taxes, as a disregarded entity that is not separate from the seller (or, if relevant,
from another sole owner of us).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller will execute and file the filings required by law to fully preserve, maintain, protect and perfect our
ownership interest in and the trustee's lien on the SAC property, including all filings required under the Securitization Law and the Uniform Commercial Code relating to the transfer of the ownership of the rights and interests related to the
SAC bonds under the financing order by the seller to us and the pledge of the SAC property to the trustee. The seller will institute any action or proceeding necessary to compel performance by the Virginia Commission, the Commonwealth of Virginia or
any of their respective agents of any of their obligations or duties under the Securitization Law, the financing order or any issuance advice letter. The seller also will take those legal or administrative actions, including defending against or
instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, in each case, as may be reasonably necessary (a) to protect us, the SAC bondholders and the trustee from claims, state actions or other
actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation or warranty of the seller in the sale agreement and (b) to block or overturn any attempts to cause a repeal of, modification
of or supplement to the Securitization Law, the financing order, any issuance advice letter or the rights of SAC bondholders by legislative enactment or constitutional amendment that would be materially adverse to us, the trustee or the SAC
bondholder or which would otherwise cause an impairment of our rights or those of the SAC bondholders and the trustee. The costs of any such actions or proceedings will be payable by the seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Even if the sale agreement or the indenture is terminated, the seller will not, prior to the date which is one
year and one day after the termination of the indenture and payment in full of the SAC bonds or any other amounts owed under the indenture, petition or otherwise invoke or cause us to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against us under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official or any substantial part
of our property, or ordering the winding up or liquidation of our affairs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• So long as any of the SAC bonds are outstanding, the seller will, and will cause each of its subsidiaries to, pay
all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues if the failure to pay any such taxes,
assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on SAC property;

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provided that no such tax need be paid if the seller or any of its affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the seller or such affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles; <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller will not withdraw the filing of any issuance advice letter with the Virginia Commission;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller will make all reasonable efforts to keep the securitization financing rider in full force and effect
at all times;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Promptly after obtaining knowledge of any breach in any material respect (without regard to any materiality
qualifier contained in such representation, warranty or covenant) of its representations, warranties or covenants in the sale agreement, the seller will notify us, the trustee, the Virginia Commission and the rating agencies in writing of the
breach;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The seller will use the proceeds of the sale of the SAC property in accordance with the financing order and the
Securitization Law; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Upon request by us, the seller shall execute and deliver such further instruments and do such further acts as may
be reasonably necessary to carry out more effectually the provisions and purposes of the sale agreement.

**APCo's Obligation to Indemnify Us and the Trustee and to Take Legal Action** 

Under the sale agreement, APCo is obligated to indemnify us and the trustee (for itself and on behalf of the bondholders) and each of our and the trustee's officers, directors, employees and agents against:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any and all taxes (other than any taxes imposed on the SAC bondholders solely as a result of their ownership of
the SAC bonds) that may at any time be imposed on or asserted against any of those persons under existing law as of the issuance date as a result of (a) the sale of the SAC property by the seller to us, the acquisition or holding of the SAC
property by us, or the issuance and sale by us of the SAC bonds, (b) our ownership and assignment of the SAC property, the issuance and sale by us of the SAC bonds or the other transactions contemplated in the basic documents, including any
franchise, sales, gross receipts, general corporation, tangible personal property, privilege or license taxes, but excluding any taxes imposed as a result of a failure of that person to withhold or remit taxes with respect to payments on any SAC
bond, in the event and to the extent such taxes are not recoverable as ongoing financing costs, it being understood that the SAC bondholders will be entitled to enforce their rights against APCo solely through a cause of action brought for their
benefit by the trustee in accordance with the terms of the indenture; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all liabilities, obligations, claims, damages, payments, costs or expenses of any kind whatsoever that may be
imposed on or asserted against any such person, together with any reasonable and documented costs and expenses incurred by that person, in each case as a result of APCo's breach of any of its representations, warranties or covenants contained
in the sale agreement.

However, APCo is not required to indemnify the trustee or related parties against any liabilities, obligations, claims, damages, payments, costs or expenses incurred by them through their own willful misconduct, bad faith or gross negligence. APCo is not required to indemnify a party for any amount paid or payable by such party in the settlement of any action, proceeding or investigation without the prior written consent of APCo which consent shall not be unreasonably withheld.

These indemnification obligations will rank equally in right of payment with other general unsecured obligations of APCo.

The sale agreement will also require APCo to institute any action or proceeding necessary to compel performance by the Virginia Commission, the Commonwealth of Virginia or any of their respective agents, of

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any of their obligations or duties under the Securitization Law, the financing order or the issuance advice letter. Except for the foregoing and subject to APCo's further covenant to fully preserve, maintain and protect our interests in the SAC property, APCo will not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under the sale agreement.

**Successors to APCo** 

Any entity (a) into which the seller may be merged, converted or consolidated (by operation of law or otherwise), (b) that may result from any merger, conversion or consolidation to which the seller shall be a party, (c) that may succeed to the properties and assets of the seller substantially as a whole, (d) which is a successor entity resulting from the division of the seller into two or more entities, or (e) which otherwise succeeds to all or substantially all of the electric transmission and distribution business of the seller, in each case may assume the rights and obligations of APCo under the sale agreement. If transmission and distribution are not provided by a single entity after any such transaction, the entity which provides wire service directly to customers may assume APCo's rights and obligations under the sale agreement. So long as the conditions of any such assumption are met, APCo will automatically be released from its obligations under the sale agreement. Such conditions include that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• immediately after giving effect to such transaction, no representation, warranty or covenant made in the sale
agreement by APCo will have been breached in any material respect, and no servicer default, to the extent that APCo is the servicer, and no event that, after notice or lapse of time, or both, would become a servicer default will have occurred and be
continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the successor must execute an agreement of assumption to perform all of the obligations of the seller under the
sale agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rating agencies will have received prior written notice of the transaction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• officers' certificates and opinions of counsel specified in the sale agreement will have been delivered to
us and the trustee.

**Amendment** 

The sale agreement may be amended in writing by the seller and us with ten business days' prior written notice given to the rating agencies to (a) cure any ambiguity, to correct or supplement any provisions in the sale agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in the sale agreement or of modifying in any manner the rights of the SAC bondholders; provided, however, that we and the trustee shall receive an officer's certificate stating that the execution of such amendment shall not adversely affect in any material respect the interests of any SAC bondholder without the consent of the SAC bondholders of not less than a majority of the outstanding principal amount of the SAC bonds; or (b) conform the provisions hereof to the description of the sale agreement in this prospectus. Promptly after the execution of any such amendment or consent, we will furnish copies of such amendment or consent to each of the rating agencies.

In addition, the sale agreement may be amended in writing by the seller and us with: (a) prior written consent of the trustee; (b) the satisfaction of the rating agency condition; and (c) if any amendment would adversely affect in any material respect the interest of any SAC bondholders, the consent of the SAC bondholders of not less than a majority of the outstanding principal amount of the SAC bonds.

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**THE SERVICING AGREEMENT** 

The following summary describes the material terms and provisions of the servicing agreement pursuant to which the servicer will undertake to service the SAC property. We have filed the form of the servicing agreement with the SEC as an exhibit to the registration statement of which this prospectus forms a part, and we urge you to read such document in its entirety.

**Servicing Procedures** 

The servicer, as our agent, will manage, service and administer, and bill and collect payments in respect of the SAC property according to the terms of the servicing agreement. The servicer's duties will include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. management, servicing and administration of the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. obtaining meter reads, calculating usage, billing, collections and posting of all payments in respect of SAC
property (including the SAC charges);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. responding to inquiries by customers, the Virginia Commission, or any other governmental authority with respect
to the SAC property (including the SAC charges);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. investigating and handling delinquencies (and furnishing reports with respect to such delinquencies to us),
processing and depositing collections and making periodic remittances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. furnishing periodic reports to us, the trustee and the rating agencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. making all required filings with the Virginia Commission and taking such other action as may be necessary to
perfect our ownership interests in and the trustee's first priority lien on and security interest, in the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. making all required filings and taking such other action as may be necessary to perfect and maintain the
perfection and priority of the trustee's lien on and security interest in all SAC bond collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. selling, as our agent, defaulted or written-off accounts in accordance
with the servicer's usual and customary practices and taking all necessary action in connection with the true-up adjustments; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. performing such other duties as may be specified under the financing order to be performed by the servicer.

The servicer is required to notify us, the trustee and the rating agencies in writing if it becomes aware of any requirement of law or Virginia Commission regulations promulgated after the execution of the servicing agreement that have a material adverse effect on the servicer's ability to perform its duties under the servicing agreement. The servicer is also authorized to execute and deliver documents and to make filings and participate in proceedings on our behalf.

In addition, upon our reasonable request or the reasonable request of the trustee, any rating agency or the Virginia Commission, the servicer will provide to us, the trustee, the applicable rating agency or the Virginia Commission, public financial information or any material information regarding the SAC property to the extent it is reasonably available to the servicer without undue cost or burden, as may be reasonably necessary and permitted by law to enable us, the trustee or the rating agencies to monitor the servicer's performance (provided, however, that any such request by the trustee will not create an obligation for the trustee to monitor the servicer's performance) and, so long as any SAC bonds are outstanding, within a reasonable time after written request thereof, any information available to the servicer or reasonably obtainable by it without undue cost or burden that is necessary to calculate the SAC charges applicable to each customer class. The servicer will also prepare any reports required to be filed by us with the SEC and will cause to be delivered required opinions of counsel to the effect that all filings necessary to preserve and protect the interests of the trustee in the SAC property have been made.

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**Servicing Standards and Covenants** 

The servicing agreement will require the servicer, in servicing and administering the SAC property, to employ or cause to be employed procedures and exercise or cause to be exercised the same care and diligence it customarily employs and exercises with respect to similar assets for its own account and, if applicable, for others.

The servicing agreement will require the servicer to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. manage, service, administer and make collections in respect of the SAC property with reasonable care and in
material compliance with applicable requirements of law, including all applicable regulations of the Virginia Commission, using the same degree of care and diligence that the service exercises with respect to similar assets for its own account, and
if applicable, for others;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. follow customary standards, policies and procedures in performing its duties that are customary in the electric
transmission and distribution industry in the Commonwealth of Virginia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. use all reasonable efforts, consistent with its customary servicing procedures, to enforce, and maintain rights
in respect of, the SAC property and to impose, bill, charge, collect, receive and adjust the SAC charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. comply with all requirements of law including all applicable regulations of the Virginia Commission applicable
to and binding on it relating to the SAC property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. file and maintain the effectiveness of Uniform Commercial Code financing statements with respect to the
property transferred under the sale agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. take such other action on our behalf to ensure that the lien of the trustee on the SAC bond collateral remains
perfected and of first priority.

The servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of all or any portion of the SAC property, which, in the servicer's judgment, may include the taking of legal action, at our expense but subject to the priority of payments set forth in the indenture.

The servicer is responsible for instituting any proceeding to compel performance by the Commonwealth of Virginia or the Virginia Commission of their respective obligations under the Securitization Law, the financing order, any issuance advice letter, any true-up adjustment or any tariff. The servicer is also responsible for instituting any proceeding or administrative actions as may be reasonably necessary to block or overturn any attempts to cause a repeal of, modification of, judicial invalidation of, or supplement to, the Securitization Law or the financing order which would be detrimental to the interests of the SAC bondholders or which would cause an impairment of the rights of us or the SAC bondholders. In any proceedings related to the exercise of the power of eminent domain by any municipality to acquire a portion of APCo's electric distribution facilities, the servicer shall assert that the court ordering such condemnation must treat such municipality as a successor to APCo under the Securitization Law and financing order. The servicing agreement also designates the servicer as the custodian of our records and documents. The servicing agreement requires the servicer to indemnify us, our independent managers and the trustee (for itself and for your benefit) for any negligent act or omission relating to the servicer's duties as custodian, except in the case of willful misconduct, bad faith or negligence of us, any independent manager or the trustee. The servicing agreement also requires the servicer to indemnify customers for any loss that results from the service's breach of the servicing agreement.

**SAC Charge Adjustment Process** 

*Mandatory True-Ups.* Among other things, the servicing agreement will require the servicer to file true-up adjustment requests at least annually to correct any under-collections or over-collections and to ensure the projected recovery of amounts sufficient to provide timely payment of principal and interest on the SAC bonds and all other financing costs (including any necessary replenishment of the capital subaccount). For more

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information on the true-up process, please read "APCo's Financing Order—True-Ups." These adjustment requests are to be based on actual collected SAC charges and updated assumptions by the servicer as to projected future usage during the next period, expected delinquencies and write-offs and future payments and expenses relating to the SAC property and the SAC bonds. The servicer agrees to calculate these adjustments to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• correct any under-collections or over-collections; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to ensure the projected recovery of amounts sufficient to provide timely payment of the scheduled principal of
and interest on the SAC bonds and all other financing costs (including any necessary replenishment of the capital subaccount), consistent with the methodology described in the financing order.

The servicer will agree to file adjustment requests on each calculation date for us as specified in the servicing agreement. In accordance with the financing order, the Virginia Commission staff has 30 days to approve the adjustments. Any adjustment to the allocation of SAC charges among customer classes may only be made through a non-standard true-up adjustment, which requires a proposed effective date of at least 30 days after the filing. The adjustments to the SAC charges are expected to occur on each applicable adjustment date.

*Semi-Annual or Quarterly True-Ups*. The servicer will implement a semi-annual adjustment (and, beginning 12 months prior to the scheduled final payment date of the last maturing tranche of the SAC bonds, quarterly) if the servicer forecasts that SAC charge collections during the current calculation period will be insufficient:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to make all scheduled payments of principal, interest, and other amounts in respect of the SAC bonds on a timely
basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to replenish any draws upon the capital subaccount; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to pay ongoing financing costs on a timely basis.

*Interim True-Ups.* The servicer may also make interim true-up adjustments more frequently at any time during the term of the SAC bonds:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the servicer forecasts that SAC charge collections during the then current calculation period will be
insufficient to make all scheduled payments of principal, interest and other financing costs in respect of the SAC bonds on a timely basis; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to replenish any draws upon the capital subaccount.

*Non-Standard True-Up*. Upon the occurrence of a significant and sustained change (as defined in the following sentence), the servicer may submit a non-standard true-up adjustment rider to the Virginia Commission to reallocate SAC charges among customer classes.

A "**significant and sustained change**" is deemed to have occurred if the forecasted load of any customer class for the upcoming remittance period is projected to increase or decrease by ten percent or more compared to the original projected load for that class as set forth in the financing order or in the most recent application of the true-up mechanism and such changes are projected to be sustained. The non-standard true-up adjustment rider will include the proposed allocation among customer classes, supporting data and analysis demonstrating the magnitude and expected duration of the load shift, the resulting impact on class allocations, and a proposed effective date that is at least 30 days after the filing date of the rider. If the Virginia Commission approves the non-standard true-up adjustment rider or does not object for the reasons described in the financing order within the applicable 30-day response period, the servicer will implement the adjustment as of the proposed effective date. If the Virginia Commission objects for the reasons described in the financing order within that period, the servicer may revise and resubmit the rider to address the Virginia Commission's stated reasons. Any non-standard true-up will not be implemented if it would cause a suspension, withdrawal or downgrade of any then-current credit rating of the SAC bonds.

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**Remittances to Collection Account** 

The servicer will remit estimated collection payments on the SAC charges to the trustee for deposit to the general subaccount of the collection account each business day. For a description of the allocation of the deposits, please read "Description of the SAC Bonds—How Funds in the Collection Account will be Allocated" in this prospectus. Until SAC charge collections are remitted to the collection account, the servicer will not be required to segregate those amounts from its general funds. Please read "Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer" in this prospectus.

The servicer will remit to the trustee SAC charge collections based on its estimated system-wide charge-off percentage and the average number of days outstanding of bills. No less often than annually, the servicer will reconcile remittances of estimated payments arising from SAC charges with actual SAC charge payments received by the servicer to more accurately reflect the amount of billed SAC charges that should have been remitted, based on the amounts actually received. To the extent the remittances of estimated payments arising from the SAC charge exceed the amounts that should have been remitted based on actual system-wide charge-offs, the servicer will be entitled to receive a payment from us in an amount equal to the excess remittance, or to withhold the excess amount from any subsequent remittance to the trustee. To the extent the remittances of estimated payments arising from the SAC charges are less than the amount that should have been remitted, the servicer will remit the amount of the shortfall to the trustee within five business days. Although the servicer will remit estimated payments arising from the SAC charges to the trustee, the servicer is not obligated to make any payments on the SAC bonds.

In the event that the servicer makes changes to its current computerized customer information system which would allow the servicer to track actual SAC charge payments and/or otherwise monitor payment and collection activity more efficiently or accurately than is being done today, the servicing agreement will allow the servicer to substitute actual remittance procedures for the estimated remittance procedures described above and otherwise modify the remittance procedures described above as may be appropriate in the interests of efficiency, accuracy, cost and/or system capabilities. However, the servicer will not be allowed to make any modification or substitution that will materially adversely affect the SAC bondholders. The servicer must also give written notice to us, the trustee and the rating agencies of any such computer system changes no later than 60 business days after the date on which all retail customer accounts are billed on the new system.

**Servicer Compensation** 

The servicer will be entitled to receive an annual servicing fee until the retirement of the SAC bonds in an amount equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 0.05% of the aggregate initial principal amount of the SAC bonds; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if neither APCo nor any of its affiliates is the servicer, an amount agreed upon by the successor servicer and
the trustee (acting at the written direction of the holders of a majority in principal amount of the SAC bonds) not to, unless the Virginia Commission consents, exceed 0.60% of the aggregate initial principal amount of all outstanding SAC bonds.

The servicing fee shall be paid to the servicer by the trustee, semi-annually, with half of the servicing fee being paid on each payment date (which amount will be pro-rated for the first and final payment date) in accordance with the priorities of payment set forth in indenture.

In addition, the servicer shall be entitled to be reimbursed by us for filing fees and fees and expenses for printing, attorneys, accountants or other professional services retained by, and other incremental out-of-pocket third-party costs of, incurred for us and paid for by the servicer (or procured by the servicer on behalf of us and paid for by the servicer) to meet our obligations under the basic documents. The servicing fee for the SAC bonds, together with any portion of the servicing fee that remains unpaid from prior payment dates, will be paid solely to

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the extent funds are available therefor as described under "Description of the SAC Bonds—How Funds in the Collection Account Will Be Allocated" in this prospectus. The servicing fee for the SAC bonds will be paid prior to the payment of or provision for any amounts in respect of interest on and principal of the SAC bonds.

**APCo's Representations and Warranties as Servicer** 

In the servicing agreement, the servicer will represent and warrant, as of the issuance date of the SAC bonds or as of such other dates as expressly provided below, among other things, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the servicer is duly organized and validly existing and is in good standing under the laws of the Commonwealth
of Virginia, with the requisite corporate or other power and authority to own its properties as such properties are owned on the issuance date and to conduct its business as such business is conducted by it on the issuance date, and to execute,
deliver and carry out the terms of the servicing agreement and the intercreditor agreement (and joinder), and had at all relevant times, and has, the requisite power, authority and legal right to service the SAC property and to hold the SAC property
records as custodian;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the servicer is duly qualified to do business and is in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the SAC property as required by the servicing agreement and the intercreditor agreement (and joinder))
requires such qualifications, licenses or approvals (except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the servicer's business, operations, assets, revenues or properties or to its
servicing of the SAC property);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. the execution, delivery and performance of the servicing agreement have been duly authorized by all necessary
action on the part of the servicer under its organizational or governing documents and laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. each of the Servicing Agreement and the intercreditor agreement (and joinder) constitutes a legal, valid and
binding obligation of the servicer enforceable against the servicer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors'
rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. the consummation of the transactions contemplated by the servicing agreement and the intercreditor agreement
(and joinder) (to the extent applicable to the servicer's responsibilities thereunder) and the fulfillment of the terms of each will not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time) a default under, the organizational documents of the servicer, or any indenture or other agreement or instrument to which the servicer is a party or by which it or any of its property is bound, nor (a) result in the
creation or imposition of any lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than any lien or security interest that may be granted under the basic documents or any lien created
pursuant to § 56-249.8 E 2 of the Securitization Law); or (b) violate any existing law or any existing order, rule or regulation applicable to the servicer of any governmental authority having
jurisdiction over the servicer or its properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. there are no proceedings pending and, to the servicer's knowledge, there are no proceedings threatened
and, to the servicer's knowledge, there are no investigations pending or threatened, before any governmental authority having jurisdiction over the servicer or its properties involving or relating to the servicer or us or, to the
servicer's knowledge, any other person: (a) asserting the invalidity of the servicing agreement or any of the other basic documents; (b) seeking to prevent the issuance of the SAC bonds or the consummation of any of the transactions
contemplated by the servicing agreement or any of the other basic documents; (c) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the servicer of its obligations under,
or the validity or enforceability of, the servicing agreement, any of the other basic documents or the SAC

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bonds; or (d) seeking to adversely affect the U.S. federal income tax or state income or franchise tax classification of the SAC bonds as debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. except for the filings to be made under the Securitization Law, no governmental approval, authorization,
consent, order or other action of, or filing with, any governmental authority is required in connection with the execution and delivery by the servicer of the servicing agreement or the intercreditor agreement (and joinder), the performance by the
servicer of the transactions contemplated thereby or the fulfillment by the servicer of the terms of each, except those that have been obtained or made, those that the servicer is required to make in the future pursuant to the true-up adjustments and those that the servicer may need to file in the future to continue the effectiveness of any financing statement filed under the Securitization Law and the Uniform Commercial Code; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. each report and certificate delivered in connection with the issuance advice letter or delivered in connection
with any filing made to the Virginia Commission by the servicer on behalf of us with respect to the SAC charges or the true-up adjustments will constitute a representation and warranty by the servicer that
each such report or certificate, as the case may be, is true and correct in all material respects; <u>provided</u>, <u>however</u>, that, to the extent any such report or certificate is based in part upon or contains assumptions, forecasts or other
predictions of future events, the representation and warranty of the Servicer with respect thereto will be limited to the representation and warranty that such assumptions, forecasts or other predictions of future events are reasonable based upon
historical performance (and facts known to the servicer on the date such report or certificate is delivered).

The servicer is not responsible for, and shall have no liability as a result of, any action, decision, ruling or other determination, made or not made, or any delay (other than any delay resulting from the servicer's failure to make any filings required to implement the true-up adjustments as required by the servicing agreement in a timely and correct manner or any breach by the servicer of its duties under the servicing agreement that adversely affects the SAC property or in connection with any true-up adjustment or the approval of any revised SAC charges and the scheduled adjustments thereto) by the Virginia Commission in any way related to the SAC property or in connection with any true-up adjustments.

Except to the extent that the servicer is liable under its indemnification obligations under the servicing agreement, the servicer shall have no liability relating to the calculation of any revised SAC charges and the scheduled adjustments thereto, including as a result of any inaccuracy of any of the assumptions made in such calculation regarding expected energy usage volume and the weighted average days outstanding, write-offs and our estimated expenses and fees, so long as the servicer has acted in good faith and has not acted in a grossly negligent manner in connection therewith.

Under the servicing agreement, the servicer will agree to indemnify, defend and hold harmless us, the trustee (for itself and on behalf of the SAC bondholder) and any independent manager, and each of their respective trustees, officers, directors, employees and agents against any and all liabilities, obligations, losses, damages, payments and claims, and reasonable costs or expenses, of any kind whatsoever that may be imposed upon, incurred by or asserted against any of those persons as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer's willful misconduct, bad faith or gross negligence in the performance of its duties or
observance of its covenants under the servicing agreement or its reckless disregard of its obligations and duties under the servicing agreement or intercreditor agreement (and joinder);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer's breach in any material respects of any of its representations and warranties contained in
the servicing agreement or the intercreditor agreement (and joinder) that results in a servicer default; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any litigation or related expenses relating to the servicer's status or obligations as servicer (other than
any proceeding the servicer is required to institute under the servicing agreement).

The servicer will not be liable to any such party, however, for any reasonable costs, reasonable expenses, obligations, payments, claims, losses, damages and liabilities of any kind whatsoever, resulting from the willful

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misconduct, bad faith or gross negligence of the party seeking indemnification or resulting from a breach of a representation or warranty made by such person seeking indemnification hereunder in any of the basic documents that gives rise to the servicer's breach. The indemnities described above will survive any repeal of, modification of, or supplement to, or judicial invalidation of, the Securitization Law or the financing order and shall survive the resignation or removal of the trustee or any independent manager or the termination of the servicing agreement and shall include reasonable out-of-pocket fees and expenses of investigation and litigation (including reasonable attorney's fees and expenses and the reasonable fees, out-of-pocket expenses and costs incurred in connection with any action, claim or suit brought to enforce the trustee's right to indemnification).

The servicer will release us, our managers and the trustee from any and all claims whatsoever relating to the SAC property or the servicer's servicing activities with respect thereto, other than actions, claims, and demands arising from bad faith, willful misconduct or negligence of the parties.

The Virginia Commission will enforce the servicer's obligations imposed by the financing order, the Virginia Commission's applicable substantive rules, and applicable statutory provisions.

**The Servicer Will Provide Statements to Us, the Virginia Commission and the Trustee** 

Not later than five servicer business days prior to each payment date or special payment date, the servicer will deliver a draft of a written report to the trustee, which shall include all of the following information (to the extent applicable), with respect to such payment date or special payment date or the period since the previous payment date, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the payment to SAC bondholders allocable to principal, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the payment to SAC bondholders allocable to interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the aggregate outstanding amount of the SAC bonds, before and after giving effect to any payments allocated to
principal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the difference, if any, between the aggregate outstanding amount of the SAC bonds and the outstanding amount
specified in the expected amortization schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any other transfers and payments to be made on such payment date or special payment date, including amounts paid
to the trustee and to the servicer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amounts on deposit in the capital subaccount and the excess funds subaccount, after giving effect to the
foregoing payments.

On or prior to each payment date or special payment date, the servicer will deliver the final written report described above to us, the Virginia Commission and the rating agencies.

**The Servicer Will Provide Assessments Concerning Compliance with the Servicing Agreement** 

The servicing agreement will provide that the servicer will furnish annually to us, the Virginia Commission, the trustee and the rating agencies, on or before March 31 of each year, beginning March 31, 2027 or, if earlier, on the date on which APCo's annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, certificates from a responsible officer of the servicer, containing and certifying as to the statements of compliance required by Item 1122(a) (or any successor or similar items or rule) and Item 1123 containing (or any successor or similar items or rule) of Regulation AB, during the preceding 12 months ended December 31 (or preceding period since the closing date of the issuance of the SAC bonds in the case of the first statement).

The servicing agreement will also provide that a firm of independent certified public accountants will furnish to us, the Virginia Commission, the trustee and the rating agencies, on or before March 31 of each year,

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beginning March 31, 2027, or, if earlier, on the date on which APCo's annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, a report, a report regarding the servicer's assessment of compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB during the immediately preceding 12 months ended December 31, in accordance with paragraph (b) of Rule 13a-18 and Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB, identifying the results of such procedures and including any exceptions noted. This report, which is referred to in this prospectus as the "annual accountant's report," will state that the accounting firm has performed certain procedures, agreed between the servicer and such accountants, in connection with the servicer's compliance with its obligations under the sale agreement during the preceding calendar year, identifying the results of the procedures and including any exceptions to the procedures relating to the servicing of the SAC property.

The servicing agreement will also require that the servicer prepare and submit to the Director of the Division of Utility Accounting and Finance of the Virginia Commission, no later than March 31 of each year (or such other date as may be required by the Virginia Commission or the financing order), an annual report covering the prior year. This report, which is referred to in this prospectus as the "commission annual report," shall be submitted by the servicer in electronic format, with all schedules and supporting data provided in Microsoft Excel format, as required by the financing order. The commission annual report shall include the following information for the reporting period, itemized by month and by dollar amount, and by FERC account where applicable a schedule:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• of the SAC charges collected by the servicer from customers and remitted to us, by month and by dollar amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that quantifies the fees paid by us to the servicer, by type of fee, by month, by FERC account where the proceeds
from each fee are recorded on the servicer's books, and by dollar amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that quantifies the servicer's internal and external costs to carry out its responsibilities under the
servicing agreement and the administration agreement, by agreement, by type of cost, by month, by FERC account where each cost is recorded on the servicer's books, and by dollar amount; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that quantifies any other charges or fees to or from the servicer and us, by type of charge or fee, by month, by
FERC account where each charge or fee is recorded on the servicer's books, and by dollar amount.

The commission annual report shall (a) be certified by a responsible officer of the servicer as to its accuracy and completeness and (b) include such additional information as the Virginia Commission may reasonably request from time to time in connection with the administration and oversight of the SAC charges, provided that such information is reasonably available to the servicer without undue cost or burden.

**Matters Regarding APCo as the Servicer** 

The servicing agreement will provide that APCo may not resign from the obligations and duties imposed on it as servicer unless APCo delivers an opinion of external counsel that the performance of its duties under the servicing agreement shall no longer be permissible under applicable law. A resignation by APCo as servicer will not become effective until a successor servicer has assumed the servicing obligations and duties of APCo under the servicing agreement.

Except as expressly provided in the servicing agreement, neither the servicer, nor any of its directors, officers, employees and agents will be liable to us or any other person for any action taken or for refraining from taking any action pursuant to the servicing agreement or for good faith errors in judgment. However, the servicer, its directors, officers, employees, and agents will be liable to the extent this liability is imposed by reason of their willful misconduct, bad faith or gross negligence in the performance of their duties or by reason of reckless disregard of obligations and duties under the servicing agreement or the intercreditor agreement. The servicer and any of its directors, officers, employees or agents may rely in good faith on the advice of counsel or on any

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document, prima facie properly executed and submitted by any person respecting any matters under the servicing agreement.

Under the servicing agreement, any person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• into which the servicer may be merged, converted or consolidated and which is a jurisdictional successor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that may result from any merger, conversion or consolidation to which the servicer shall be a party and which is
a jurisdictional successor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that may succeed to the properties and assets of the servicer in the Commonwealth of Virginia substantially as a
whole;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• which results from the division of the servicer into two or more persons and which is a jurisdictional successor;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is otherwise a jurisdictional successor,

which person in any of the foregoing cases executes an agreement of assumption to perform all of the obligations of the servicer as set forth in the servicing agreement, shall be the successor to the Servicer under this Agreement without further act on the part of any of the parties to this Agreement; provided, however, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• immediately after giving effect to such transaction, no representation or warranty made pursuant to the servicing
agreement shall have been breached and no servicer default and no event which, after notice or lapse of time, or both, would become a servicer default shall have occurred and be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer shall have delivered to us and the trustee an officer's certificate and an opinion of counsel
from external counsel stating that such consolidation, conversion, merger, division or succession and such agreement of assumption complies with the servicing agreement and that all conditions precedent, if any, provided for in the servicing
agreement relating to such transaction have been complied with;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer shall have delivered to us, the trustee and the rating agencies an opinion of counsel, from external
counsel of the servicer, either (a) stating that, in the opinion of such counsel, all filings to be made by the servicer, including filings with the Virginia Commission pursuant to the Securitization Law and the Uniform Commercial Code, have
been executed (if applicable) and filed and are in full force and effect that are necessary to fully preserve, perfect and maintain the priority of the interests of us and the liens of the trustee in the SAC property and reciting the details of such
filings or (b) stating that, in the opinion of such counsel, no such action shall be necessary to maintain such interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer shall have delivered to us, the trustee and the rating agencies an opinion of counsel from
independent tax counsel stating that, for U.S. federal income tax purposes, such consolidation, conversion, merger, division or succession and such agreement of assumption will not result in a material U.S. federal income tax consequence to us or
the SAC bondholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the servicer shall have given the rating agencies prior written notice of such transaction.

So long as the conditions of any such assumptions are met, then the prior servicer will automatically be released from its obligations under the servicing agreement. The servicing agreement will permit the servicer to appoint any person to perform any or all of its obligations under the servicing agreement. However, unless the appointed person is an affiliate of APCo, the appointment must satisfy the rating agency condition. In all cases where an agent is appointed, the servicer will remain obligated and liable under the servicing agreement.

**Events Constituting a Default by the Servicer** 

Servicer defaults under the servicing agreement if any one or more of the following events shall occur and be continuing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. any failure by the servicer to remit to the collection account, on behalf of us, any required remittance that
shall continue unremedied for a period of five business days after the earlier of the date on which

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(a) written notice of such failure is received by either servicer us or the trustee; or (b) such failure is actually known by a responsible officer of the servicer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. any failure on the part of the servicer to duly observe or to perform in any material respect any covenants or
agreements of the servicer as set forth in the servicing agreement (other than as provided above or in this bullet "2."), or any other basic document to which it is a party, which failure shall (a) materially and adversely affect
the rights of the SAC bondholders; and (b) continue unremedied for a period of 60 days after the earlier of the date on which (i) written notice of such failure, requiring the same to be remedied, shall have been given to the servicer by
us (with a copy to the trustee) or to the servicer by the trustee or (ii) such failure is actually known by a responsible officer of the servicer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. any failure in any material respect by the servicer duly to perform its obligations to implement the true-up mechanism in the time and manner set forth therein, which failure continues unremedied for a period of five business days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. any representation or warranty made by the servicer in the servicing agreement or any basic document proven to
have been incorrect in any material respect when made, which has a material adverse effect on the SAC bondholders and which material adverse effect continues unremedied for a period of 60 days after the earlier of the date on which
(a) written notice thereof, requiring the same to be remedied, shall have been delivered to the servicer (with a copy to the trustee) by us or the trustee or (b) such failure is actually known to a responsible officer of the servicer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. certain events of bankruptcy, insolvency or liquidation of the servicer.

**The Trustee's Rights if the Servicer Defaults** 

In the event a servicer default under the servicing agreement remains unremedied, the trustee, acting under the indenture may (if it is actually known by a responsible officer of the trustee) or, upon the written instruction of the holders evidencing not less than a majority of the outstanding amount of the SAC bonds, shall, in each case by notice then given in writing to the servicer (and to the trustee if given by the SAC bondholders) terminate all the rights and obligations of the servicer under the servicing agreement, other than the servicer's indemnification obligation and obligation to continue performing its functions as servicer until a successor servicer is appointed. Please read "The Servicing Agreement—The Replacement of APCo as Servicer with a Successor Servicer" in this prospectus.

In addition, when a servicer defaults, the bondholders of the SAC bonds (subject to the provisions of the indenture) and the trustee as beneficiary of any lien permitted by the Securitization Law will be entitled to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. apply to the Virginia Commission or the court of the City of Richmond, Virginia, for sequestration and payment
of revenues arising with respect to the SAC property; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. foreclose on or otherwise enforce the lien on and security interests in any SAC property.

Please read "Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer" and "How a Bankruptcy May Affect Your Investment" in this prospectus.

**Waiver of Past Defaults** 

The trustee, acting at the written direction of the holders evidencing not less than a majority of the outstanding amount of the SAC bonds, may waive in writing any default by the servicer in the performance of its obligations in the servicing agreement and the associated consequences thereto, except where the default was due to failure by the servicer of making any required deposits to the collection account in accordance with the servicing agreement. Upon any such waiver of a past default, such default shall cease to exist, and any servicer default arising therefrom shall be deemed to have been remedied for every purpose of the servicing agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto. Promptly after the execution of any such waiver, the servicer shall furnish copies of such waiver to each of the rating agencies. The Replacement of APCo as Servicer with a Successor Servicer.

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In the event of the Servicer's removal upon an event of default or resignation, the trustee shall upon the written direction and with the consent of the holders of at least a majority of the outstanding amount of the SAC bonds, shall, appoint a successor servicer with our prior written consent thereto (which consent shall not be unreasonably withheld), and the successor servicer shall accept its appointment by a written assumption in form reasonably acceptable to us and the trustee (acting at the written direction of the holders of at least a majority of the outstanding amount of the SAC bonds) and provide prompt written notice of such assumption to us and the rating agencies. If a successor servicer that is not an affiliate of APCo is appointed, the annual servicing fee may be increased to a level not to, unless the Virginia Commission consents, exceed 0.60% of the aggregate initial principal amount of the SAC bonds, paid semi-annually.

**The Obligations of a Successor Servicer** 

If for any reason a third party assumes or succeeds to the role of the servicer under the servicing agreement, the servicing agreement will require the predecessor servicer to cooperate with us, the trustee and the successor servicer in terminating the predecessor servicer's rights and responsibilities under the servicing agreement, including the transfer to the successor servicer all documentation pertaining to the SAC property and all cash amounts then held by the predecessor servicer for remittance or subsequently acquired.

The servicing agreement will provide that, in the event the successor servicer is appointed as a result of a servicer default by the predecessor servicer, all reasonable costs and expenses (including reasonable attorney's fees and expenses) incurred in connection with transferring the SAC property records to the successor servicer and amending the servicing agreement to reflect such succession as servicer pursuant to the servicing agreement shall be paid by the predecessor servicer upon presentation of reasonable documentation of such costs and expenses. In all other cases, all reasonable costs and expenses (including reasonable attorneys' fees and expenses) incurred by the servicer in connection with transferring servicing responsibilities to the successor servicer shall be paid by us or the successor servicer from SAC charge collections available under the indenture, following presentation of reasonable documentation of such costs and expenses.

**Amendment** 

The servicing agreement may be amended in writing by each of the servicer and us with the prior written consent of the trustee and the satisfaction of the rating agency condition; provided that any such amendment may not adversely affect in any material respect the interests of any holder of SAC bonds without the consent of the holders of not less than a majority of the outstanding principal amount of the SAC bonds. Promptly after the execution of any such amendment or consent, we will furnish copies of such amendment or consent to each of the rating agencies.

In addition, the servicing agreement may be amended in writing by the servicer and us with ten business days' prior written notice given to the rating agencies and the trustee, without the consent of any of the SAC bondholders, (a) to cure any ambiguity, to correct or supplement any provisions in the servicing agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in the servicing agreement or of modifying in any manner the rights of the SAC bondholders; provided, however, that such action shall not, as evidenced by an officer's certificate of the seller delivered to us and the trustee, adversely affect in any material respect the interests of any SAC bondholders; or (b) to conform the provisions of the servicing agreement to this prospectus. Promptly after the execution of any such amendment or consent, we will furnish copies of such amendment or consent to each of the rating agencies.

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**HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT** 

*Challenge to True Sale Treatment.* APCo will represent and warrant that the transfer of the SAC property in accordance with the sale agreement constitutes a true and valid sale and assignment of the SAC property by APCo to us. It will be a condition of closing for the sale of the SAC property pursuant to the sale agreement that APCo will take the appropriate actions under the Securitization Law, including filing a notice of transfer of an interest in the SAC property, to perfect this sale. The Securitization Law provides that a transfer of SAC property by an electric utility to an assignee which the parties have in the governing documentation expressly stated to be a sale or other absolute transfer, in a transaction approved in a financing order, shall be treated as an absolute transfer of all the transferor's right, title and interest, as in a "true sale" under applicable creditors' rights principles, and not as a pledge or other financing, of the relevant SAC property. We and APCo will treat such a transaction as a sale under applicable law. However, we expect that the SAC bonds will be reflected as debt on AEP's consolidated financial statements. In addition, we anticipate that the SAC bonds will be treated as debt of APCo for federal income tax purposes. See "The Securitization Law—APCo and Other Utilities May Securitize Securitized Asset Costs and Related Financing and Ongoing Costs" and "Material U.S. Federal Income Tax Consequences." In the event of a bankruptcy of a party to the sale agreement, if a party in interest in the bankruptcy were to take the position that the transfer of the SAC property to us pursuant to that sale agreement was a financing transaction and not a true sale under applicable creditors' rights principles, there can be no assurance that a court would not adopt this position. Even if a court did not ultimately recharacterize the transaction as a financing transaction, the mere commencement of a bankruptcy of APCo and the attendant possible uncertainty surrounding the treatment of the transaction could result in delays in payments on the SAC bonds.

In that regard, we note that the bankruptcy court in *In re: LTV Steel Company, Inc., et al.*, 274 B.R. 278 (Bankr. N. D. Oh. 2001) issued an interim order that observed that a debtor, LTV Steel Company, which had previously entered into securitization arrangements with respect both to its inventory and its accounts receivable may have "at least some equitable interest in the inventory and receivables, and that this interest is property of the Debtor's estate... sufficient to support the entry of" an interim order permitting the debtor to use proceeds of the property sold in the securitization. 274 B.R. at 285. The court based its decision in large part on its view of the equities of the case.

LTV and the securitization investors subsequently settled their dispute over the terms of the interim order and the bankruptcy court entered a final order in which the parties admitted and the court found that the pre-petition transactions constituted "true sales." The court did not otherwise overrule its earlier ruling. The LTV memorandum opinion serves as an example of the pervasive equity powers of bankruptcy courts and the importance that such courts may ascribe to the goal of reorganization, particularly where the assets sold are integral to the ongoing operation of the debtor's business.

Even if creditors did not challenge the sale of SAC property as a true sale, a bankruptcy filing by APCo could trigger a bankruptcy filing by us with similar negative consequences for bondholders. In a recent bankruptcy case, *In re General Growth Properties, Inc.*, 406 B.R. 171 (Bankr. S.D.N.Y. 2009), General Growth Properties, Inc. filed for bankruptcy protection, along with many of its direct and indirect subsidiaries. Those subsidiaries included many entities that had been organized as special purpose vehicles. The bankruptcy court upheld the validity of the filings of these special purpose subsidiaries as bankruptcy debtors and allowed the subsidiaries, over the objections of their own creditors, to use the creditors' cash collateral to fund loans to the parent debtor, General Growth Properties, Inc., for its general corporate purposes. The creditors received court-determined adequate protection in the form of current interest payments and replacement liens to mitigate any diminution in value resulting from the use of the cash collateral, but the opinion serves as a reminder that bankruptcy courts may subordinate legal rights of creditors to the interests of facilitation of the reorganization of a debtor.

We and APCo have attempted to mitigate the impact of a possible recharacterization of a sale of SAC property as a financing transaction under applicable creditors' rights principles. The sale agreement will provide

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that if the transfer of the applicable SAC property is thereafter recharacterized by a court as a financing transaction and not a true sale, the transfer by APCo will be deemed to have granted to us on behalf of ourselves and the trustee a first priority security interest in all APCo's right, title and interest in and to the SAC property and all proceeds thereof. In addition, the sale agreement will require the filing of a notice of security interest in the SAC property and the proceeds thereof in accordance with the Securitization Law. As a result of this filing, we would be a secured creditor of APCo and entitled to recover against the collateral or its value. This does not, however, eliminate the risk of payment delays or reductions and other adverse effects caused by a APCo bankruptcy. Further, if, for any reason, a SAC property notice is not filed under the Securitization Law or we fail to otherwise perfect our interest in the SAC property, and the transfer is thereafter deemed not to constitute a true sale, we would be an unsecured creditor of APCo.

The Securitization Law provides that the creation, granting, perfection and enforcement of liens and security interests in the SAC property are governed by the Securitization Law and not by the Virginia Uniform Commercial Code (except, as to perfection, with respect to the filing of financing statements in places specified in the Virginia Uniform Commercial Code and to conformity of the form of financing statements with provisions of the Virginia Uniform Commercial Code). Under the Securitization Law, a valid and enforceable lien and security interest in the SAC property may be created only by a financing order issued under the Securitization Law and the execution and delivery of a security agreement with a holder of the SAC bonds or a trustee or agent for the holder that refers to the specific financing order that created the SAC property. The security interest attaches automatically from the time value is received for the SAC bonds. Upon perfection through the filing of notice with a Virginia Uniform Commercial Code filing officer pursuant to rules established by the Secretary of the Commonwealth of Virginia, under Virginia law the security interest shall be a continuously perfected lien and security interest in the SAC property, with priority in the order of filing and take precedence over any subsequent judicial or other lien creditor.

None of this, however, mitigates the risk of payment delays and other adverse effects caused by a APCo bankruptcy. Further, if, for any reason, a SAC property notice is not filed under the Securitization Law or we fail to otherwise perfect our interest in the SAC property sold pursuant to the sale agreement, and the transfer is thereafter deemed not to constitute a true sale, we would be an unsecured creditor of APCo.

*Consolidation of APCo and Us.* If APCo were to become a debtor in a bankruptcy case, a party in interest might attempt to substantively consolidate the assets and liabilities of APCo and us. We and APCo have taken steps to attempt to minimize this risk. Please read "Appalachian Power Recovery Funding LLC, The Issuing Entity" in this prospectus. However, no assurance can be given that if APCo were to become a debtor in a bankruptcy case, a court would not order that our assets and liabilities be substantively consolidated with those of APCo. Substantive consolidation would result in payment of the claims of the beneficial owners of the SAC bonds to be subject to substantial delay and to adjustment in timing and/or amount under a plan of reorganization in a bankruptcy case.

*Status of SAC Property as Current Property.* APCo will represent in the sale agreement, and the Securitization Law provides, that the SAC property sold pursuant to the sale agreement constitutes a present contract right. Nevertheless, no assurance can be given that, in the event of a bankruptcy of APCo, a court would not rule that the SAC property comes into existence only as APCo's customers use electricity.

If a court were to accept the argument that the SAC property comes into existence only as APCo's customers use electricity, no assurance can be given that a security interest in favor of the bondholders of the SAC bonds would attach to the SAC charges in respect of electricity consumed after the commencement of the bankruptcy case or that the SAC property has been sold to us. If it were determined that the SAC property had not been sold to us, and the security interest in favor of the SAC bondholders did not attach to the SAC charges in respect of electricity consumed after the commencement of the bankruptcy case, then we would have an unsecured claim against APCo. If so, there would be delays and/or reductions in payments on the SAC bonds. Whether or not a court determined that SAC property had been sold to us pursuant to the sale agreement, no

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assurances can be given that a court would not rule that any SAC charges relating to electricity consumed after the commencement of the bankruptcy could not be transferred to us or the trustee.

In addition, in the event of a bankruptcy of APCo, a party in interest in the bankruptcy could assert that we should pay, or that we should be charged for, a portion of APCo's costs associated with the associated electricity consumption of which gave rise to the SAC charge receipts used to make payments on the SAC bonds.

Regardless of whether APCo is the debtor in a bankruptcy case, if a court were to accept the argument that the SAC property sold pursuant to the sale agreement comes into existence only as customers use electricity, a tax or government lien or other nonconsensual lien on property of APCo arising before future SAC property came into existence could have priority over our interest in the SAC property. Adjustments to the SAC charges may be available to mitigate this exposure, although there may be delays in implementing these adjustments.

*Estimation of Claims; Challenges to Indemnity Claims.* If APCo were to become a debtor in a bankruptcy case, claims, including indemnity claims, by us or the trustee against APCo as seller under the sale agreement and the other documents executed in connection therewith would be unsecured claims and would be subject to being discharged in the bankruptcy case. In addition, a party in interest in the bankruptcy may request that the bankruptcy court estimate any contingent claims that we or the trustee have against APCo. That party may then take the position that these claims should be estimated at zero or at a low amount because the contingency giving rise to these claims is unlikely to occur. If a court were to hold that the indemnity provisions were unenforceable, we would be left with a claim for actual damages against APCo based on breach of contract principles. The actual amount of these damages would be subject to estimation and/or calculation by the court.

No assurances can be given as to the result of any of the above-described actions or claims. Furthermore, no assurance can be given as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving APCo.

*Enforcement of Rights by the Trustee.* Upon an event of default under the indenture, the Securitization Law permits the trustee to enforce the security interest in the SAC property sold pursuant to the sale agreement in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the Virginia Commission to order the sequestration and payment to holders of the SAC bonds of all revenues arising from the SAC charges. There can be no assurance, however, that the Virginia Commission or a district court judge would issue this order after a seller bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee may under the indenture seek an order from the bankruptcy court lifting the automatic stay with respect to this action by the Virginia Commission or a district court judge and an order requiring an accounting and segregation of the revenues arising from the SAC property sold pursuant to the sale agreement. There can be no assurance that a court would grant either order.

*Bankruptcy of the Servicer.* The servicer is entitled to commingle the SAC charges that it receives with its own funds until each date on which the servicer is required to remit funds to the trustee as specified in the servicing agreement. The Securitization Law provides that the relative priority of a lien created under the Securitization Law is not defeated or adversely affected by the commingling of SAC charges arising with respect to the SAC property with funds of the electric utility. In the event of a bankruptcy of the servicer, a party in interest in the bankruptcy might assert, and a court might rule, that the SAC charges commingled by the servicer with its own funds and held by the servicer, prior to and as of the date of bankruptcy, were property of the servicer as of that date, and are therefore property of the servicer's bankruptcy estate, rather than our property. If the court so rules, then the court would likely rule that the trustee has only a general unsecured claim against the servicer for the amount of commingled SAC charges held as of that date and could not recover the commingled SAC charges held as of the date of the bankruptcy.

However, the court rules on the ownership of the commingled SAC charges, the automatic stay arising upon the bankruptcy of the servicer could delay the trustee from receiving the commingled SAC charges held by the

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servicer as of the date of the bankruptcy until the court grants relief from the stay. A court ruling on any request for relief from the stay could be delayed pending the court's resolution of whether the commingled SAC charges are our property or are property of the servicer, including resolution of any tracing of proceeds issues.

In the event of the servicer's removal or resignation, the servicing agreement will provide that the trustee shall, upon the instruction of the holders of a majority of the outstanding principal amount of the SAC bonds and our prior written consent thereto (which consent shall not be unreasonably withheld), appoint a successor servicer that qualifies as such. Please read "The Servicing Agreement—The Replacement of APCo as Servicer with a Successor Servicer" in this prospectus. If, within 30 days after the delivery of the termination notice, a new servicer shall not have been appointed and accepted such appointment, the trustee may, or, upon the direction of the holders of a majority of the outstanding principal amount of the SAC bonds, shall, in each case petition the Virginia Commission or a court of competent jurisdiction to appoint a qualifying successor servicer. However, the automatic stay in effect during a servicer bankruptcy might delay or prevent a successor servicer's replacement of the servicer. Even if a successor servicer may be appointed and may replace the servicer, a successor may be difficult to obtain and may not be capable of performing all of the duties that APCo as servicer was capable of performing. Furthermore, should the servicer enter into bankruptcy, it may be permitted to stop acting as the servicer.

*Bankruptcy of APCo.* APCo is not required initially upon collection to segregate the SAC charges it collects from its general funds. The Securitization Law provides that our rights to the SAC property are not affected by the commingling of these funds with other funds. In a bankruptcy of APCo, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Securitization Law and does not recognize our right to receive the collected SAC charges that are commingled with other funds of APCo prior to or as of the date of bankruptcy. If so, the collected SAC charges held by APCo as of the date of bankruptcy would not be available to us to pay amounts owed on the SAC bonds. In this case, we would have only a general unsecured claim against APCo for those amounts.

In addition, the bankruptcy of APCo may cause a delay in or prohibition of enforcement of various rights against APCo, including rights to require payments by APCo, rights to recover preferential payments made by APCo prior to bankruptcy, rights to require APCo to comply with financial provisions of the Securitization Law or other state laws, rights to terminate contracts with APCo and rights that are conditioned on the bankruptcy, insolvency or financial condition of APCo.

Other risks relating to bankruptcy may be found in "Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer."

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**USE OF PROCEEDS** 

Upon the issuance of the SAC bonds, we will use the net proceeds from the sale of the SAC bonds (after payment of upfront financing costs) to pay to APCo the purchase price of APCo's rights under the financing order, which are the SAC property. In accordance with the financing order, APCo will use the proceeds it receives from the sale of the SAC property to reduce its recoverable securitized asset costs and pay down short-term debt, including the repayment of a portion of the loans outstanding under the Credit Agreement, dated May 26, 2025, by and among APCo as borrower, Truist Bank as administrative agent, and the other financial institutions party thereto from time to time (the "***APCo Credit Agreement***").

As of February 18, 2026, borrowings under the APCo Credit Agreement totaled $425,000,000. Such borrowings bear interest based at a floating rate (adjusted term secured overnight financing rate (SOFR) plus 1.15% per annum). The APCo Credit Agreement matures on November 23, 2026. The proceeds of the portion of the loans under the APCo Credit Agreement that may be repaid with the ultimate proceeds of this offering were used for general corporate purposes.

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**PLAN OF DISTRIBUTION** 

Subject to the terms and conditions in the underwriting agreement among us, APCo and the representatives of the underwriters, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, Jefferies LLC, Morgan Stanley & Co. LLC and SMBC Nikko Securities America, Inc., we have agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal amount of the SAC bonds listed opposite each underwriter's name below:

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| | | | |
|:---|:---|:---|:---|
| **Underwriter** | **Tranche A-1** | **Tranche A-2** | **Tranche A-3** |
|  Goldman Sachs & Co. LLC | $— |  |  |
|  J.P. Morgan Securities LLC | $— |  |  |
|  RBC Capital Markets, LLC | $— |  |  |
|  Jefferies LLC | $— |  |  |
|  Morgan Stanley & Co. LLC | $— |  |  |
|  SMBC Nikko Securities America, Inc. | $— |  |  |
|  Total | $450000000 | 325500000 | 600000000 |

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Under the underwriting agreement, the underwriters will take and pay for all of the SAC bonds we offer, if any is taken. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

**The Underwriters' Sales Price for the SAC Bonds** 

The SAC bonds sold by the underwriters to the public will be initially offered at the prices to the public set forth on the cover of this prospectus. The underwriters propose initially to offer the SAC bonds to dealers at such prices, less a selling concession not to exceed the percentage listed below. The underwriters may allow, and dealers may reallow, a discount not to exceed the percentage listed below.

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| | | |
|:---|:---|:---|
|  | **Selling<br>Concession** | **Reallowance<br>Discount** |
|  Tranche A-1% |  |  |
|  Tranche A-2% |  |  |
|  Tranche A-3% |  |  |

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After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.

**No Assurance as to Resale Price or Resale Liquidity for the SAC Bonds** 

The SAC bonds are a new issue of securities with no established trading market. They will not be listed on any securities exchange. The underwriters have advised us that they intend to make a market in the SAC bonds, but they are not obligated to do so and may discontinue market making at any time without notice. We cannot assure you that a liquid trading market will develop for the SAC bonds.

**Various Types of Underwriter Transactions That May Affect the Price of the SAC Bonds** 

The underwriters may engage in overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the SAC bonds in accordance with Regulation M under the Exchange Act. Overallotment transactions involve syndicate sales in excess of the offering size, which create a syndicate short position. Stabilizing transactions are bids to purchase the SAC bonds, which are permitted, so long as the stabilizing bids do not exceed a specific maximum price. Syndicate covering transactions involve

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purchases of the SAC bonds in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the SAC bonds originally sold by the syndicate member are purchased in a syndicate covering transaction. These overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the SAC bonds to be higher than they would otherwise be. Neither we, APCo, the trustee, our managers nor any of the underwriters represent that the underwriters will engage in any of these transactions or that these transactions, if commenced, will not be discontinued without notice at any time.

Certain of the underwriters and their affiliates have in the past provided, and may in the future from time to time provide, investment banking and general financing and banking services to APCo and its affiliates for which they have in the past received, and in the future may receive, customary fees. Goldman Sachs & Co. LLC, as structuring agent, has rendered certain structuring services to us for which it was compensated. In addition, each underwriter may from time to time take positions in the SAC bonds. In accordance with FINRA Rule 5110 the reimbursement of expenses are deemed underwriting compensation in connection with the offering.

We estimate that the registrants' total expenses of the offering will be $.

We and APCo have agreed to indemnify the underwriters against some liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the SAC bonds, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters, including the validity of the SAC bonds and other conditions contained in the underwriting agreement, such as receipt of ratings confirmations, officers' certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject offers in whole or in part.

We expect to deliver the SAC bonds against payment for the SAC bonds on or about the date specified in the last paragraph of the cover page of this prospectus, which will be the business day following the date of pricing of the SAC bonds. Since trades in the secondary market generally settle in one business day, purchasers who wish to trade SAC bonds on the date of pricing or the succeeding two business days will be required, by virtue of the fact that the SAC bonds initially will settle in T+ , to specify alternative settlement arrangements to prevent a failed settlement.

**Conflicts of Interest** 

Certain of the underwriters or their affiliates are lenders or may hold a portion of short-term debt that APCo intends to repay from the proceeds it will receive from the sale of the SAC property. In such event, it is possible that one or more of the underwriters or their affiliates could receive more than 5% of the net proceeds of this offering, and in that case such underwriter could be deemed to have a conflict of interest under FINRA Rule 5121. In the event of any such conflict of interest, such underwriter would be required to conduct the distribution of SAC bonds in accordance with FINRA Rule 5121. If the distribution is conducted in accordance with FINRA Rule 5121, such underwriter would not be permitted to sell to an account over which it exercises discretionary authority without first receiving specific written approval from the account holder.

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**AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS** 

We are a wholly-owned subsidiary of APCo. APCo is a wholly-owned operating subsidiary of AEP. One of the underwriters, Goldman Sachs & Co. LLC, also provided advisory services to APCo in connection with the financing order proceeding and received a $300,000 fee for such services. Each of the sponsor, the initial servicer and the depositor may maintain other banking relationships in the ordinary course with U.S. Bank Trust Company, National Association, the trustee, and its affiliate, U.S. Bank National Association in its separate capacity as securities intermediary.

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**MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES** 

**General** 

The following is a general discussion of the anticipated material U.S. federal income tax consequences of the ownership and disposition of the SAC bonds. Except as specifically provided below with respect to non-U.S. holders (as defined below), this discussion does not address the tax consequences to persons other than initial purchasers who are U.S. holders (as defined below) that acquire SAC bonds at original issue for cash equal to the issue price of those bonds and hold their SAC bonds as capital assets within the meaning of Section 1221 of the Internal Revenue Code, and it does not address all of the tax consequences relevant to investors that are subject to special treatment under the United States federal income tax laws (*e.g.*, life insurance companies, tax-exempt organizations, financial institutions, dealers in securities, S corporations, taxpayers subject to the alternative minimum tax provisions of the Internal Revenue Code, broker-dealers, persons who hold the SAC bonds as part of a hedge, straddle, "synthetic security" or other integrated investment, risk reduction or constructive sale transaction and persons required to accelerate the recognition of any item of gross income with respect to the notes' evidencing the SAC bonds as a result of such income being recognized on an "applicable financial statement" (within the meaning of Section 451(b) of the Internal Revenue Code)). This discussion is general in nature and does not address all U.S. federal income taxes relevant to a holder's specific circumstances or the consequences to holders under state, local or foreign tax laws. Please read "Material Virginia Income Tax Considerations" in this prospectus. Each beneficial owner of a SAC bond, by acquiring a beneficial interest, agrees to treat such SAC bond as indebtedness of APCo to the extent consistent with applicable federal, state, local and other tax purposes unless otherwise required by appropriate taxing authorities.

This summary is based on current provisions of the Internal Revenue Code, the Treasury Regulations promulgated and proposed thereunder, judicial decisions and published administrative rulings and pronouncements of the IRS and interpretations thereof. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions, statements and conclusions set forth in this discussion. We have not, and do not intend to seek, any ruling from the IRS with respect to the statements made and conclusions reached in this summary.

*U.S. Holder and Non-U.S. Holder Defined* 

A "U.S. holder" means a beneficial owner of a SAC bond that, for U.S. federal income tax purposes, is (a) a citizen or individual resident of the United States; (b) a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (c) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (d) a trust, if (i) a court in the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (ii) it has a valid election in place to be treated as a United States person. A "non-U.S. holder" means a beneficial owner of a SAC bond that is not a U.S. holder but does not include (a) an entity or arrangement treated as a partnership for U.S. federal income tax purposes; (b) a former citizen of the United States; or (c) a former resident of the United States.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes is a holder of a SAC bond, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partners are encouraged to consult their tax advisors about the particular U.S. federal income tax consequences applicable to them. Similarly, former citizens and former residents of the United States are encouraged to consult their tax advisors about the particular U.S. federal income tax consequences that may be applicable to them.

ALL PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISERS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING AND DISPOSING OF SAC BONDS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR OTHER LAWS.

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**Income Tax Status of the SAC Bonds and Us as Issuing Entity** 

Based on Revenue Procedure 2005-62, 2005-2 CB 507, as modified by Revenue Procedure 2024-15, 2024-12 I.R.B. 717 and certain representations from us, including a representation by us that we will not make, or allow there to be made, any election to the contrary, Sidley Austin LLP, counsel to APCo and us, expects to render its opinion that for U.S. federal income tax purposes, (1) we will not be considered an entity separate from our sole member, APCo, and (2) the SAC bonds will be treated as debt obligations of APCo. This opinion is based on certain representations made by us and APCo, on the application of current law to the facts as established by the indenture and other relevant documents and assumes compliance with the indenture and such other documents as in effect on the date of issuance of the SAC bonds.

**Tax Consequences to U.S. Holders** 

*Payments of Interest.* Stated interest on the SAC bonds generally will be taxable to a U.S. holder as ordinary income at the time such interest is received or accrued, in accordance with such U.S. holder's method of accounting for U.S. federal income tax purposes. This discussion assumes that the SAC bonds will not be considered to be issued with original issue discount ("**OID**"). OID is generally defined as any excess of the stated price the U.S. holder will receive upon redemption of the bond at the bond's maturity, less the price the U.S. holder pays to purchase the bond, if this difference is equal to or greater than a de minimis amount. If any series or portion of SAC bonds is issued with OID, prospective U.S. holders will be so informed in the related prospectus, and should thereafter consult their tax adviser to determine the federal, state, local and foreign income and any other tax consequences.

*Sale, Exchange, Redemption, Retirement or Other Taxable Disposition of the SAC Bonds.* If there is a sale, exchange, redemption, retirement or other taxable disposition of a SAC bond, a U.S. holder generally will recognize taxable gain or loss equal to the difference between (a) the amount of cash and the fair market value of any other property received (other than amounts attributable to, and taxable as, accrued stated interest) and (b) the holder's adjusted tax basis in the SAC bond. A U.S. holder's adjusted tax basis in a SAC bond generally will equal its cost, reduced by any payments reflecting principal previously received with respect to the bond. Gain or loss generally will be capital gain or loss if the SAC bond is held as a capital asset, and will be long-term capital gain or loss if the SAC bond was held for more than one year at the time of the sale, exchange, redemption, retirement or other taxable disposition. If a U.S. holder sells a SAC bond between interest payment dates, a portion of the amount received will reflect interest that has accrued on the SAC bond but that has not yet been paid by the sale date and, to the extent that amount has not already been included in the U.S. holder's income, it will be treated as ordinary interest income and not as capital gain.

*3.8% Tax on "Net Investment Income"* 

Certain U.S. holders will be subject to an additional 3.8% tax on all or a portion of their "net investment income," which may include the interest payments and any taxable gain realized with respect to a SAC bond, to the extent of their net investment income that, when added to their other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for a married individual filing a joint return (or a surviving spouse), or $125,000 for a married individual filing a separate return. U.S. holders are encouraged to consult their tax advisors with respect to this tax.

*Information Reporting and Backup Withholding* 

Information reporting generally will apply to payments of interest on, and the proceeds of the sale, exchange, redemption, retirement or other taxable disposition of, the SAC bonds, and backup withholding will apply to such payments unless a U.S. holder provides to the applicable withholding agent its taxpayer identification number, certified under penalties of perjury, as well as certain other information or otherwise establish an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts

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withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS. U.S. holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for establishing such an exemption.

**Tax Consequences to Non-U.S. Holders** 

*Payments of Interest* 

Subject to the discussion below (see "—Information Reporting and Backup Withholding" and "—The Foreign Account Tax Compliance Act"), payments of interest on the SAC bonds to a non-U.S. holder generally will be exempt from U.S. federal income and withholding tax under the "portfolio interest" exemption if the interest is not effectively connected with the non-U.S. holder's U.S. trade or business, the non-U.S. holder properly certifies as to its non-U.S. status, as described below, and the non-U.S. holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• does not actually or constructively own, including through an interest in AEP, 10% or more of the total combined
voting power of all classes of APCo stock entitled to vote;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is not a bank whose receipt of interest is in connection with an extension of credit made pursuant to a loan
agreement entered into in the ordinary course of business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is not a "controlled foreign corporation" for U.S. federal income tax purposes that is related to us
or APCo, actually or constructively.

The portfolio interest exemption applies only if the non-U.S. holder appropriately certifies as to its non-U.S. status to the applicable withholding agent. A holder generally can meet this certification requirement by providing a properly executed IRS Form W-8BEN or W-8BEN-E, as applicable (or appropriate substitute or successor form) to the applicable withholding agent. If the non-U.S. holder holds the SAC bonds through a financial institution or other agent acting on its behalf, it may be required to provide appropriate certifications to its agent. The agent then generally will be required to provide appropriate certifications to the applicable withholding agent, either directly or through other intermediaries.

If the non-U.S. holder cannot satisfy the requirements described above, payments of interest made to the non-U.S. holder will be subject to U.S. federal withholding tax, currently at a 30% rate, unless (1) it provides the applicable withholding agent with a properly executed IRS Form W-8BEN or W-8BEN-E, as applicable (or appropriate substitute or successor form) claiming an exemption from (or a reduction of) withholding under an applicable income tax treaty or (2) the payments of interest are effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States) and it meets the certification requirements described below (see "Income or Gain Effectively Connected with a U.S. Trade or Business").

The certifications described above must be provided to the applicable withholding agent prior to the payment of interest and must be updated periodically. Non-U.S. holders that do not timely provide the applicable withholding agent with the required certification, but that qualify for an exemption or a reduced rate under an applicable income tax treaty, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders should consult their tax advisors regarding the U.S. federal income tax consequences of owning and disposing of the SAC bonds, including their entitlement to benefits under any applicable income tax treaty.

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*Sale, Exchange, Redemption or Other Taxable Disposition of the SAC Bonds* 

Subject to the discussion below (see "—Information Reporting and Backup Withholding"), a non-U.S. holder generally will not be subject to United States federal income or withholding tax on gain realized on the sale, redemption, exchange, retirement or other taxable disposition of SAC bonds, unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the gain is effectively connected with the conduct by the non-U.S. holder
of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the non-U.S. holder is an individual who is present in the United States
for 183 days or more during the taxable year and certain other requirements are met.

If you are a non-U.S. holder described in the first bullet point above, you generally will be subject to U.S. federal income tax as described below (see "—Income or Gain Effectively Connected with a U.S. Trade or Business"). If you are a non-U.S. holder described in the second bullet point above, you generally will be subject to U.S. federal income tax at a 30% rate (or a lower applicable income tax treaty rate) on the gain derived from the sale, redemption, exchange, retirement or other taxable disposition, which may be offset by certain U.S.-source capital losses, unless an applicable income tax treaty provides otherwise.

To the extent any portion of the amount realized on the sale, redemption, exchange, retirement or other taxable disposition of a SAC bond is attributable to accrued but unpaid interest on the SAC bond, this amount will generally be taxed in the same manner as described above in "—Withholding Tax on Payments of Interest."

*Income or Gain Effectively Connected with a U.S. Trade or Business* 

If any interest on the SAC bonds or gain from a sale, redemption, exchange, retirement or other taxable disposition of the SAC bonds is effectively connected with a U.S. trade or business conducted by a non-U.S. holder, then the non-U.S. holder generally will be subject to U.S. federal income tax on such interest or gain on a net income basis in the same manner as a U.S. holder (unless an applicable income tax treaty provides otherwise). If interest received with respect to the SAC bonds is effectively connected income, the U.S. federal withholding tax described above will not apply (assuming appropriate certification is provided) unless an applicable income tax treaty provides otherwise. A non-U.S. holder generally can meet the certification requirements by providing a properly executed IRS Form W-8ECI (or other applicable form) to the applicable withholding agent. In addition, if the non-U.S. holder is a corporation for U.S. federal income tax purposes, that portion of its earnings and profits that is attributable to such effectively connected income or gain, subject to certain adjustments, may be subject to a "branch profits tax" at a 30% rate (or a lower applicable income tax treaty rate).

*Information Reporting and Backup Withholding* 

Payments to a non-U.S. holder of interest on a SAC bond, and amounts withheld from such payments, if any, generally will be required to be reported to the IRS and may also be made available to the tax authorities of the country in which a non-U.S. holder is a tax resident under the provisions of an applicable income tax treaty or agreement. Backup withholding generally will not apply to payments of interest to a non-U.S. holder if the certification described in "—Payments of Interest" above is provided by the non-U.S. holder, or the non-U.S. holder otherwise establishes an exemption.

Proceeds from a sale, exchange, redemption, retirement or other taxable disposition of a SAC bond effected by the U.S. office of a U.S. or non-U.S. broker will be subject to information reporting requirements and backup withholding unless a non-U.S. holder properly certifies, under penalties of perjury, as to its non-U.S. status and certain other conditions are met, or an exemption is otherwise established. Information reporting and backup withholding generally will not apply to any proceeds from a sale, exchange, redemption, retirement or other

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taxable disposition of a SAC bond effected outside the United States by a non-U.S. office of a broker, unless such broker has certain connections to the United States, in which case information reporting, but not backup withholding, may apply unless certain other conditions are met, or an exemption is otherwise established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a credit against a non-U.S. holder's U.S. federal income tax liability, if any, and may entitle a non-U.S. holder to a refund, provided the required information is timely furnished to the IRS.

*The Foreign Account Tax Compliance Act* 

The Foreign Account Tax Compliance Act ("**FATCA**") generally imposes a U.S. federal withholding tax (separate and apart from, but without duplication of, the withholding tax described above) at a rate of 30% on payments of U.S. source interest on, and the gross proceeds from a disposition of, certain debt obligations paid to certain non-U.S. entities, including certain foreign financial institutions and investment funds (including, in some instances, where such an entity is acting as an intermediary), unless such non-U.S. entity complies with certain withholding and reporting requirements. Pursuant to proposed U.S. Treasury Regulations (upon which taxpayers are permitted to rely until they are revoked or final U.S. Treasury Regulations are issued), this withholding tax generally will not apply to the gross proceeds from a sale or other disposition of instruments, such as the SAC bonds, that produce U.S. source interest. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States with respect to these rules may be subject to different rules. Under certain circumstances, a beneficial owner of a SAC bond may be eligible for a refund or credit of such taxes. Prospective purchasers are encouraged to consult their tax advisors regarding the application of FATCA in their particular circumstances.

The preceding discussion of certain U.S. federal income tax consequences is for general information only and is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state, local and non-U.S. tax consequences of acquiring, owning and disposing of the SAC bonds, including the consequences of any proposed change in applicable laws.

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**MATERIAL VIRGINIA INCOME TAX CONSEQUENCES** 

Assuming that the SAC bonds will be treated as debt obligations of APCo for U.S. federal income tax purposes, interest paid on the SAC bonds generally will be taxed for Virginia income tax purposes consistently with its taxation for U.S. federal income tax purposes and such interest received by an entity or person not otherwise subject to Virginia corporate or individual income tax will not be subject to Virginia income tax. Troutman Pepper Locke LLP, expects to issue an opinion, that, for Virginia income tax purposes (1) assuming that the issuing entity is treated as an entity that is disregarded from APCo for federal income tax purposes, we will not be treated as a taxable entity separate and apart from APCo, our sole member, and (2) assuming that the SAC bonds are treated as indebtedness for federal income tax purposes, the SAC bonds will constitute indebtedness of APCo, assuming, in each case, that such treatment applies for U.S. federal income tax purposes. These opinions are not binding on any taxing authority or any court, and there can be no assurance that contrary positions may not be taken by any taxing authority.

This discussion is based on current provisions of the Virginia tax statutes and regulations, judicial decisions and administrative interpretations and rulings. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions set forth in this discussion.

The discussion under "Material Virginia Income Tax Consequences" is for general information only and may not be applicable depending upon a bondholder's particular situation. It is recommended that prospective bondholders consult their own tax advisors with respect to the tax consequences to them of the acquisition, ownership and disposition of the SAC bonds, including the tax consequences under federal, state, local, non-U.S. and other tax laws and the effects of changes in such laws. Please read "Material U.S. Federal Income Tax Consequences" in this prospectus.

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**ERISA CONSIDERATIONS** 

**General** 

The Employee Retirement Income Security Act of 1974, known as ERISA, and Section 4975 of the Internal Revenue Code impose certain requirements on employee benefit plans and other arrangements subject to ERISA or Section 4975 of the Internal Revenue Code. ERISA and the Internal Revenue Code also impose certain requirements on fiduciaries of such plans in connection with the investment of the assets of the plans. For purposes of this discussion, "plans" include "employee benefit plans" as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, "plans" as defined in Section 4975(e)(1) of the Internal Revenue Code that is subject to Section 4975 of the Internal Revenue Code, including individual retirement accounts and annuities and Keogh plans, as well as entities that are deemed to hold plan assets of any of the foregoing by virtue of such employee benefit plan's or plan's investment in the entity, including some collective investment funds and insurance company general or separate accounts in which the assets of those plans, accounts or arrangements are invested. A fiduciary of an investing plan is any person who in connection with the assets of the plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• has discretionary authority or control over the management or disposition of assets; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provides investment advice for a fee.

Some plans, such as governmental plans, and certain church plans, and the fiduciaries of those plans, are not subject to ERISA requirements. Accordingly, assets of these plans may be invested in the SAC bonds without regard to the ERISA considerations described below, subject to the provisions of other applicable law, including a federal, state, local or other law that is similar to the fiduciary responsibility provisions of Title I of ERISA or the prohibited transaction provisions of Title I of ERISA or Section 4975 of the Internal Revenue Code (any such law, "applicable similar law" and these plans, ("**other-law plans**")). For example, a governmental plan which is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Internal Revenue Code, however, is subject to the prohibited transaction rules in Section 503 of the Internal Revenue Code.

ERISA imposes certain general fiduciary requirements on fiduciaries, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investment prudence and diversification; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the investment of the assets of the plan in accordance with the documents governing the plan.

In considering an investment in the SAC bonds, the fiduciary of a plan should determine whether the investment is in accordance with the documents and instruments governing the plan and the applicable provisions of ERISA or the Internal Revenue Code relating to the fiduciary's duties to the plan, including, but not limited to, the duties of investment prudence and diversification, and delegation of control under ERISA, and the prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code.

Section 406 of ERISA and Section 4975 of the Internal Revenue Code also prohibit a broad range of transactions involving the assets of a plan and persons who have certain specified relationships to the plan, referred to as "parties in interest," as defined under ERISA or "disqualified persons" as defined under Section 4975 of the Internal Revenue Code unless a statutory or administrative exemption is available. The types of transactions that are prohibited include but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales, exchanges or leases of property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loans or other extensions of credit; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the furnishing of goods or services.

Certain persons that participate in a prohibited transaction may be subject to an excise tax under Section 4975 of the Internal Revenue Code or a penalty imposed under Section 502(i) of ERISA, unless a statutory or administrative exemption is available. In addition, the persons involved in the prohibited transaction

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may have to cancel or unwind the transaction and pay an amount to the plan for any losses realized by the plan or profits realized by these persons. In addition, individual retirement accounts involved in the prohibited transaction may be disqualified which would result in adverse tax consequences to the owner of the account.

**Regulation of Assets Included in a Plan** 

A fiduciary's investment of the assets of a plan in the SAC bonds may cause our assets to be deemed assets of the investing plan. United States Department of Labor regulations at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA (collectively, the "**plan asset regulations**"), provide that the assets of an entity will be deemed to be assets of a plan that purchases an interest in the entity if the interest that is purchased by the plan is an equity interest, equity participation by benefit plan investors is "significant" within the meaning of the plan asset regulations and none of the other exceptions contained in the plan asset regulations applies. An equity interest is defined in the plan asset regulations as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is no authority directly on point, it is anticipated that the SAC bonds will be treated as indebtedness under local law without any substantial equity features.

If the SAC bonds were deemed to be equity interests in us and none of the exceptions contained in the plan asset regulations were applicable, then our assets would be considered to be assets of any plans that purchase the SAC bonds. The extent to which the SAC bonds are owned by benefit plan investors will not be monitored. If our assets were deemed to constitute "plan assets" of investing plans pursuant to the plan asset regulations, transactions we might enter into, or may have entered into in the ordinary course of business, might constitute non-exempt prohibited transactions under ERISA and/or Section 4975 of the Internal Revenue Code.

In addition and without regard to whether the SAC bonds are characterized as other than equity interests in us for purposes of the plan asset regulations, the acquisition, holding or disposition of the SAC bonds by or on behalf of a plan could give rise to a prohibited transaction if we or the trustee, APCo, any other servicer, AEP, any underwriter or certain of their affiliates is or becomes a party in interest or disqualified person with respect to an investing plan unless the transaction qualifies for relief under a prohibited transaction exemption. Each purchaser of the SAC bonds will be deemed to have represented and warranted that its acquisition, holding and disposition of the SAC bonds will not result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code.

**Prohibited Transaction Exemptions** 

If you are a fiduciary of a plan or any other person proposing to acquire the SAC bonds on behalf of, or using assets of, a plan, before purchasing any SAC bonds, you should consider and consult with counsel as to whether the acquisition, holding and disposition of the SAC bonds may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code and if so, whether any prohibited transaction exemption may provide relief for such transactions. In particular, you should consider and consult with counsel as to the availability of one of the Department of Labor's prohibited transaction class exemptions, referred to as PTCEs, or one of the statutory exemptions provided by ERISA or Section 4975 of the Internal Revenue Code, which include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PTCE 75-1, which exempts certain transactions between a plan and certain
broker-dealers, reporting dealers and banks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PTCE 84-14, which exempts certain transactions effected on behalf of a
plan by a "qualified professional asset manager";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PTCE 90-1, which exempts certain transactions between insurance company
separate accounts and parties in interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PTCE 91-38, which exempts certain transactions between bank collective
investment funds and parties in interest;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PTCE 95-60, which exempts certain transactions between insurance company
general accounts and parties in interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• PTCE 96-23, which exempts certain transactions effected on behalf of a
plan by an "in-house asset manager"; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the statutory service provider exemption provided by Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Internal Revenue Code, which exempts certain transactions between plans and parties in interest that are parties in interest solely by reason of providing services to a plan or having a relationship to a service
provider to the plan and are not fiduciaries with respect to the transaction.

We cannot provide any assurance that any of these class exemptions or statutory exemptions will apply with respect to any particular investment in the SAC bonds by, or on behalf of, a plan or, even if it were deemed to apply, that any exemption would apply to all transactions that may occur in connection with the investment. Even if one of these class exemptions or statutory exemptions were deemed to apply, SAC bonds may not be purchased with assets of any plan if we or the trustee, APCo, any other servicer, AEP, any underwriter or any of their affiliates:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• has investment discretion over the assets of the plan used to purchase the SAC bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• has authority or responsibility to give, or regularly gives, investment advice regarding the assets of the plan
used to purchase the SAC bonds, for a fee and under an agreement or understanding that the advice will serve as a primary basis for investment decisions for the assets of the plan, and will be based on the particular investment needs of the plan; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is an employer maintaining or contributing to the plan.

**Consultation with Counsel and Representation** 

The sale of the SAC bonds to a plan will not constitute a representation by us or the trustee, APCo, any other servicer, AEP, any underwriter or any of their affiliates that such an investment meets all relevant legal requirements relating to investments by such plans or other-law plans generally or by any particular plan or other-law plan, or that such an investment is appropriate for such plans or other-law plans generally or for a particular plan or other-law plan.

If you are a fiduciary or any other person which proposes to purchase the SAC bonds on behalf of or with assets of a plan, you should consider your general fiduciary obligations under ERISA and you should consult with your legal counsel as to the potential applicability of ERISA and/or the Internal Revenue Code to any investment and the availability of any prohibited transaction exemption in connection with any investment. In addition, if you are a fiduciary or any other person acting on behalf of, or using assets of, an other-law plan, you should consider and consult with legal counsel as to whether the acquisition, holding and disposition of the recovery bonds by, on behalf of, or using assets of, an other-law plan would violate any applicable similar law.

By acquiring any interest in the SAC bonds, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (1) it is not a plan or an other-law plan and is not acting on behalf of, or using assets of, a plan or other-law plan to acquire or hold the SAC bonds or (2) its acquisition, holding and disposition of the SAC bonds will not, in the case of a plan, constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code or, in the case of an other-law plan, constitute or result in a violation of applicable similar law.

This summary is based on current provisions of ERISA, the Internal Revenue Code, the regulations thereunder and other related guidance. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions, statements and conclusions set forth in this discussion.

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**LEGAL PROCEEDINGS** 

Except as disclosed in this document, there are no legal or governmental proceedings pending against us, the sponsor, seller, trustee, or servicer, or of which any property of the foregoing is subject, that is material to the holders of the SAC bonds. See "The Trustee" in this prospectus for a discussion of certain legal proceedings involving certain affiliates of the trustee, none of which are material to holders of the SAC bonds.

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**RATINGS FOR THE SAC BONDS** 

We expect that the SAC bonds will receive credit ratings from at least two NRSROs. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning NRSRO. Each rating should be evaluated independently of any other rating. No person or entity is obligated to maintain the rating on the SAC bonds and, accordingly, we can give no assurance that the ratings assigned to the SAC bonds upon initial issuance will not be lowered or withdrawn by a NRSRO at any time thereafter. If a rating of the SAC bonds is lowered or withdrawn, the liquidity of the SAC bonds may be adversely affected. In general, ratings address credit risk and do not represent any assessment of any particular amount of principal payments on the SAC bonds other than the payment in full of the SAC bonds by the final maturity date, as well as the timely payment of interest.

Under Rule 17g-5 under the Exchange Act, NRSROs providing the sponsor with the requisite certification will have access to all information posted on a website by the sponsor for the purpose of determining the initial rating and monitoring the rating after the SAC bonds issuance date. As a result, an NRSRO other than the hired NRSRO may issue Unsolicited Ratings, which may be lower, and could be significantly lower, than the ratings assigned by the hired NRSROs. The Unsolicited Ratings may be issued prior to, or after, the SAC bonds issuance date. Issuance of any Unsolicited Rating will not affect the issuance of the SAC bonds. Issuance of an Unsolicited Rating lower than the ratings assigned by the hired NRSROs on the SAC bonds might adversely affect the value of the SAC bonds and, for regulated entities, could affect the status of the SAC bonds as a legal investment or the capital treatment of the SAC bonds. Investors in the SAC bonds should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO.

A portion of the fees paid by APCo to a NRSRO that is hired to assign a rating on the SAC bonds is contingent upon the issuance of the SAC bonds. In addition to the fees paid by APCo to a NRSRO at closing, APCo will pay a fee to the NRSRO for ongoing surveillance for so long as the SAC bonds are outstanding. However, no NRSRO is under any obligation to continue to monitor or provide a rating on the SAC bonds.

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**WHERE YOU CAN FIND MORE INFORMATION** 

To the extent that we are required by law to file such reports and information with the SEC under the Exchange Act, we will file annual and current reports and other information with the SEC. We are incorporating by reference any future filings we or the sponsor, but solely in its capacity as our sponsor, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering of the SAC bonds, excluding any information that is furnished to, and not filed with, the SEC. These reports will be filed under our own name as issuing entity. Under the indenture, we may voluntarily suspend or terminate our filing obligations as issuing entity with the SEC, to the extent permitted by applicable law.

This prospectus is part of a registration statement we and APCo have filed with the SEC relating to SAC bonds. This prospectus describes the material terms of some of the documents we have filed as exhibits to the registration statement. However, this prospectus does not contain all of the information contained in the registration statement and the exhibits.

Information filed with the SEC can be inspected at the SEC's Internet site located at http://www.sec.gov. You may also obtain a copy of our filings with the SEC at no cost, by writing to or telephoning us at the following address:

**Appalachian Power Recovery Funding LLC** 

1051 E Cary St., Suite 1100

Richmond, VA 23219

Our SEC Securities Act file number is 333- 293890 and 333-293890-01

We or APCo as depositor will also file with the SEC all of the periodic reports we or the depositor are required to file under the Exchange Act and the rules, regulations or orders of the SEC thereunder; however, neither we nor APCo as depositor intend to file any such reports relating to the SAC bonds following completion of the reporting period required by Rule 15d-1 or Regulation 15D under the Exchange Act, unless required by law. Unless specifically stated in the report, the reports and any information included in the report will neither be examined nor reported on by an independent public accountant. A more detailed description of the information to be included in these periodic reports, please read "Description of the SAC Bonds—Website" in this prospectus.

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**INCORPORATION BY REFERENCE** 

The SEC allows us to "incorporate by reference" into this prospectus information we or the depositor file with the SEC. This means we can disclose important information to you by referring you to the documents containing the information. The information we incorporate by reference is considered to be part of this prospectus, unless we update or supersede that information with information that we or the depositor file subsequently that is incorporated by reference into this prospectus. We are incorporating into this prospectus any future distribution report on Form 10-D, current report on Form 8-K or any amendment to any such report which we or APCo, solely in its capacity as our depositor, make with the SEC until the offering of the SAC bonds is completed. These reports will be filed under our own name as issuing entity. Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any separately filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus.

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**INVESTMENT COMPANY ACT AND VOLCKER RULE MATTERS** 

Section 619 of the Dodd-Frank Act and its implementing regulations, commonly known as the "**Volcker Rule**", prevent "banking entities" from (1) engaging in "proprietary trading", (2) acquiring or retaining any "ownership interest" in, or sponsoring, a "covered fund" and (3) entering into certain relationships with a "covered fund" (as such terms are defined in the Volcker Rule). A "covered fund" does not include an issuer that may rely on an exclusion or exemption from the definition of "investment company" under the Investment Company Act other than the exclusions contained in Sections 3(c)(1) or 3(c)(7) of the Investment Company Act. We have been structured so as not to be a "covered fund" under the Volcker Rule.

The issuing entity is not registered or required to be registered as an "investment company" under the Investment Company Act. In making this determination, the issuing entity will be relying on an exclusion or exemption under the Investment Company Act contained in Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. Investors that constitute "banking entities" should carefully review and familiarize themselves with the Volcker Rule and should consult their own legal advisors regarding the effects of the Volcker Rule on such investors and their investment in the SAC bonds.

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**RISK RETENTION** 

This offering of the SAC bonds is a public utility securitization exempt from the risk retention requirements imposed by Section 15G of the Exchange Act due to the exemption provided in Rule 19(b)(8) of Regulation RR.

For information regarding the requirements of the EU Securitization Regulation and the UK Securitization Framework as to risk retention and other matters, please read "Risk Factors—Other Risks Associated with an Investment in the SAC Bonds—Regulatory provisions affecting certain investors could adversely affect the liquidity and the regulatory treatment of investments in the SAC bonds" in this prospectus.

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**LEGAL MATTERS** 

Certain legal matters relating to us and the issuance of the SAC bonds will be passed upon for APCo and us by Sidley Austin LLP, special counsel to APCo and us. Certain other legal matters relating to the issuance of the SAC bonds will be passed on by Richards, Layton & Finger, P.A., special Delaware counsel to us, by Troutman Pepper Locke LLP, special Virginia counsel to APCo and us, and by Hunton Andrews Kurth LLP, counsel to the underwriters. From time to time, Hunton Andrews Kurth LLP acts as counsel to our affiliates for some matters. Certain legal matters relating to the federal income tax consequences of the issuance of the SAC bonds will be passed upon for us by Sidley Austin LLP. Certain legal matters relating to the Virginia income tax consequences of the issuance of the SAC bonds will be passed upon for us by Troutman Pepper Locke LLP.

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**GLOSSARY OF DEFINED TERMS** 

The following definitions are used in this prospectus:

*Adjustment requests* means with regard to the SAC charges, a request filed by the servicer with the Virginia Commission requesting modifications to the SAC charges.

*AEP* means American Electric Power Company, Inc.

*AEP Credit* means AEP Credit, Inc., or its successor.

*AEP Receivables Purchase Agreement* means that certain Fourth Amended and Restated Receivables Purchase Agreement, dated as of June 25, 2014, among AEP Credit, American Electric Power Service Corporation, the Receivables Agent and the other entities party thereto as purchasers, as the same may be amended, supplemented or modified from time to time.\*

*APCo* means Appalachian Power Company.

*APCo Receivables Agency Agreement* means the Third Amended and Restated Agency Agreement, dated August 25, 2004, among APCo, AEP Credit and the Receivables Agent, as the same may be amended, supplemented or modified from time to time.\*

*APCo Receivables Purchase Agreement* means the Third Amended and Restated Purchase Agreement, dated August 25, 2004, between APCo and AEP Credit, as the same may be amended, supplemented or modified from time to time.\*

*Bankruptcy Code* means Title 11 of the United States Code, as amended.

*Basic documents* means the administration agreement, the sale agreement, the intercreditor agreement and joinder, the servicing agreement, the indenture, the series supplement, the bill of sale given by APCo, as the seller, to us, the notes evidencing the SAC bonds, and the certificate of incorporation of the issuing entity, the initial limited liability company agreement of the issuing entity and the amended and restated limited liability company agreement of the issuing entity.

*Business day* means any day other than a Saturday, a Sunday or a day on which banking institutions in Richmond, Virginia, New York, New York, or Columbus, Ohio are, or DTC is, authorized or obligated by law, regulation or executive order to remain closed.

*Capital subaccount* means that subaccount of the collection account into which the seller will contribute capital in an amount equal to 0.50% of the initial principal amount of the SAC bonds.

*Clearstream* means Clearstream Banking S.A.

*Collection account* means the one or more segregated trust accounts relating to the SAC bonds designated the collection account and held by the trustee at U.S. Bank National Association under the indenture. The collection account shall initially be divided into subaccounts, which need not be separate accounts: a general subaccount, a capital subaccount, an excess funds subaccount and one or more class subaccounts, if any, for the SAC bonds as specified in any Series Supplement.

*Competent Authority* means a competent authority determined in accordance with the Securitization Regulations.

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*Customers, retail customers or Virginia Commission-jurisdictional area retail customers* means all existing and future Virginia Commission-jurisdictional area retail customers that receive electric service within APCo's geographic service territory in the Commonwealth of Virginia (including the partially exempt customers) that have not opted out (to the extent eligible to opt out under the Securitization Law) and are therefore subject to the SAC charges, irrespective of the generation supplier of such retail customers. Pursuant to the Securitization Law, certain retail customers of APCo whose demand exceeded five megawatts during the calendar year prior to the filing of APCo's petition for a financing order with the Virginia Commission were eligible to opt out of financing their pro rata obligation for SAC charges by providing written notice to APCo within 30 days of such filing. The time period for eligible customers to exercise this opt-out right has expired, and no customer provided APCo with the written notice required to do so. Accordingly, the maximum principal amount of SAC bonds authorized to be issued was not reduced by any customer opt-out payments. Under the Securitization Law and Section 56-577 A 6 of the Code of Virginia, partially exempt customers are exempt from the portion of the SAC charges representing the undepreciated Amos and Mountaineer plant balances. Because the partially exempt customers do not currently pay APCo's generation charges, they are not included in the customer base to which the plant-balance portion of the SAC charges is allocated, but they do remain subject to the portion of the SAC charges attributable to storm restoration costs and upfront financing costs.

*Depositor* means APCo.

*Designee* means the person, as appointed by the Virginia Commission, who is authorized to approve, by concurrence, the final terms, structuring and pricing of the transaction as set forth in the issuance advice letter.

*Direct Participants* means DTC's participants.

*Dodd-Frank Act* means the Dodd-Frank Wall Street Reform and Consumer Protection Act.

*DTC* means The Depository Trust Company, New York, New York, and its nominee holder, Cede & Co.

*DTCC* means The Depository Trust & Clearing Corporation.

*Due Diligence Requirements* means the EU Due Diligence Requirements and the UK Due Diligence Requirements.

*EEA* means the European Economic Area.

*ERISA* means the Employee Retirement Income Security Act of 1974, as amended.

*EU Due Diligence Requirements* means the diligence requirements under Article 5 of the EU Securitization Regulation or any replacement provision included in the EU Securitization Regulation from time to time.

*EU Retention Requirements* means the risk retention requirements under Article 6(1) of the EU Securitization Regulation or any replacement provision included in the EU Securitization Regulation from time to time.

*EU Securitization Regulation* means the EU Retention Requirements, the EU Transparency Requirements and the EU Due Diligence Requirements.

*EU Transparency Requirements* means the disclosure requirements under Article 7 of the EU Securitization Regulation or any replacement provision included in the EU Securitization Regulation from time to time.

*Euroclear* means Euroclear Bank SA/NV.

*Excess funds subaccount* means that subaccount of the collection account into which funds are collected by the servicer in excess of amounts necessary to make the payments specified on a given payment date.

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*Exchange Act* means the Securities Exchange Act of 1934, as amended.

*FATCA* means the Foreign Account Tax Compliance Act.

*FCA* means the UK's Financial Conduct Authority

*FCA DD Rules* means SECN 4, as amended from time to time.

*FCA Handbook* means the handbook of rules and guidance adopted by the FCA.

*FCA RR Rules* means SECN 5, as amended from time to time.

*FCA Transparency Rules* means SECN 6, SECN 11 (including its Annexes) and SECN 12 (including its Annexes), in each case as amended from time to time.

*Financing order* means an order issued by the Virginia Commission on November 24, 2025, to APCo (Financing Order Case No. PUR-2025-00116) which, among other things, governs the amount of the SAC bonds that may be issued and terms for collections of the SAC charges.

*FSMA* means the UK's Financial Services and Markets Act 2000, as amended from time to time.

*General subaccount* means that subaccount that will hold funds held in the collection account that are not held in the other subaccounts of the collection account.

*Hired NRSRO* means the NRSRO hired by APCo.

*Indenture* means the indenture to be entered into between us and the trustee and the securities intermediary, providing for the issuance of the SAC bonds, as the same may be amended and supplemented from time to time by one or more indentures supplemental thereto.

*Indirect Participants* means participants accessing the DTC system, including both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly.

*Internal Revenue Code* means the Internal Revenue Code of 1986, as amended.

*Investment Company Act* means the Investment Company Act of 1940, as amended.

*IRS* means the Internal Revenue Service of the United States.

*Issuance date* means the date the SAC bonds are issued and sold to the underwriters.

*Issuing entity* means Appalachian Power Recovery Funding LLC.

*kWh* means kilowatt-hour.

*Moody's* means Moody's Investors Service, Inc. or any successor in interest. References to Moody's are effective so long as Moody's is a rating agency.

*MW* means megawatts*.* 

*MWh* means megawatt-hour.

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*Nonbypassable* refers to the right of the servicer to collect the SAC charges from all existing and future customers of APCo, subject to certain limitations specified in the financing order.

*Non-standard true-up adjustment* means an adjustment to the allocation of SAC charges among customer classes that the servicer may request from the Virginia Commission when it determines there has been, or will be, a significant and sustained change in the forecasted load of one or more customer classes. A "*significant and sustained change*" occurs if the forecasted load of any customer class for the upcoming remittance period is projected to increase or decrease by ten percent or more compared to the original projection in the financing order or the most recent true-up (or non-standard true-up) filing, and that change is expected by the servicer to continue.

*NRSRO* means a nationally recognized statistical rating organization.

*OID* means original issue discount.

*OPS DD Rules* means Regulations 32B, 32C and 32D of SR 2024, as amended from time to time.

*Payment date* means the date or dates on which interest and principal are to be payable on the SAC bonds.

*Plan asset regulations* means United States Department of Labor regulations at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.

*PRA* means the UK Prudential Regulation Authority.

*PRA DD Rules* means Article 5 of Chapter 2 of the Securitisation Part of the PRA Rulebook, as amended from time to time.

*PRA Rulebook* means the rulebook of published policy of the PRA.

*PRA Securitization Rules* means the Securitization Part of the PRA Rulebook.

*Rating agencies* means Moody's, and S&P. If no such organization (or successor) is any longer in existence, "rating agency" shall be a NRSRO or other comparable person designated by us, written notice of which designation shall be given to the trustee and the servicer.

*Rating agency condition* means, with respect to any action, at least ten business days' prior written notification to each rating agency of such action, and written confirmation from each of S&P and Moody's to the servicer, the trustee and us that such action will not result in a suspension, reduction or withdrawal of the then current rating by such rating agency of the SAC bonds and that prior to the taking of the proposed action no other rating agency shall have provided written notice to us that such action has resulted or would result in the suspension, reduction or withdrawal of the then current rating of the SAC bonds; provided, that, if within such ten business day period, any rating agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such rating agency is reviewing and considering the notification, then (a) we shall be required to confirm that such rating agency has received the rating agency condition request, and if it has, promptly request the related rating agency condition confirmation and (b) if the rating agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five business days following such second request, the applicable rating agency condition requirement shall not be deemed to apply to such rating agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a rating agency's right to review or consent).

*Receivables Agent* means JPMorgan Chase Bank, N.A., or its successor, in its capacity as administrative agent under the AEP Receivables Purchase Agreement.

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*Record date* means the date or dates with respect to each payment date on which it is determined the person in whose name each SAC bond is registered will be paid on the respective payment date.

*Regulation AB* means the rules of the SEC promulgated under Subpart 229.1100-Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time.

*S&P* means S&P Global Ratings, a division of S&P Global Inc. or any successor in interest. References to S&P are effective so long as S&P is a rating agency.

*SAC bonds* means, unless the context requires otherwise, the Series 2026-A Senior Secured SAC Bonds offered pursuant to this prospectus.

*SAC charges* means, with regard to APCo, the nonbypassable amounts to be charged for the use or availability of electric services, approved by the Virginia Commission in the financing order and collected by the servicer, its successors, assignees or other collection agents as provided in the financing order to recover qualified costs pursuant to the financing order.

*SAC property* means all of APCo's rights and interest under the financing order (including, without limitation, rights to impose, bill, charge, collect and receive the "securitized asset cost charge" (as defined in the Securitization Law) approved in the financing order) issued by the Virginia Commission on November 24, 2025 (Case No. PUR-2025-00116) pursuant to the Securitization Law, except the rights of APCo to earn and receive a rate of return on its invested capital in us, to receive administration and servicer fees, or to use APCo's remaining portion of those proceeds.

*Sale agreement* means the sale agreement to be entered into between us and APCo, pursuant to which APCo sells, and we purchase the SAC property, as the same may be amended, supplemented or modified from time to time.

*SEC* means the U.S. Securities and Exchange Commission.

*Securities Act of 1933* means the Securities Act of 1933, as amended.

*Securities intermediary* means U.S. Bank National Association and its successors in interest.

*Securitization Law* means § 56-249.8 of the Code of Virginia, providing for a financing mechanism through which certain electric utilities can use securitization financing for securitized asset costs.

*Securitization Regulations* means the EU Securitization Regulation and the UK Securitization Framework.

*Securitized asset costs* means the costs of an electric utility recoverable through the issuance of SAC bonds, including the costs of issuing, supporting and servicing the SAC bonds.

*Seller* means APCo.

*Servicer* means APCo, acting as the initial servicer, and any successor or assignee servicer, which will service the SAC property under the servicing agreement.

*Servicing agreement* means the servicing agreement to be entered into between us and APCo, as the same may be amended and supplemented from time to time, pursuant to which APCo, as the initial servicer, undertakes to service the SAC property, as the same may be amended, supplemented or modified from time to time.

*Sponsor* means APCo.

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##### [**Table of Contents**](#toc)
*SR 2024* means the Securitization Regulations 2024 (SI 2024/102), as amended.

*Terms and Conditions* with regard to Euroclear means the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of Euroclear, and applicable Belgian law.

*Treasury Regulations* means proposed or issued regulations promulgated from time to time under the Internal Revenue Code.

*True-up adjustment or true-up mechanism* means a provision required by the financing order whereby the servicer will apply to the Virginia Commission for adjustments to the SAC charges, including, where applicable, adjustments implemented through the non-standard true-up adjustment, based on actual collected SAC charges and updated assumptions by the servicer as to future collections of SAC charges. The Virginia Commission will approve properly filed adjustments. Any corrections for mathematical or clerical errors will be reflected in the next true-up.

*Trust Indenture Act* means the Trust Indenture Act of 1939, as amended.

*Trustee* means U.S. Bank Trust Company, National Association and its successors in interest.

*UK Due Diligence Requirements* means the requirements under the PRA DD Rules, the FCA DD Rules and the OPS DD Rules.

*UK Securitization Framework* means the SR 2024, PRA Securitization Rules and the SECN of the FCA Handbook.

*UK Retention Requirements* means the requirements under the FCA RR Rules.

*UK Transparency Requirements* means the requirements under the FCA Transparency Rules.

*Uniform Commercial Code* means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

*Unsolicited Ratings* means ratings on the SAC bonds issued by an NRSRO other than the hired NRSRO.

*Virginia Commission* means the State Corporation Commission of the Commonwealth of Virginia.

\* The registrants do not believe the terms of the APCo Receivables Purchase Agreement, the APCo Receivables Agency Agreement, or the AEP Receivables Purchase Agreement are material to the issuing entity, which is not a party to the agreements, or the bond issuance more generally. The issuing entity is a party to the intercreditor agreement as a result of the joinder to the intercreditor agreement, each of which are included as exhibits to this registration statement. 

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##### [**Table of Contents**](#toc)
**$1,375,500,000 Series 2026-A Senior Secured SAC Bonds** 

**Appalachian Power Company** 

**Sponsor, Depositor and Initial Servicer** 

**Appalachian Power Recovery Funding LLC** 

**Issuing Entity** 

***Joint Book-Running Managers***

---

| | | |
|:---|:---|:---|
| **Goldman Sachs & Co. LLC**<br> *(Structuring Advisor)* | **J.P. Morgan** | **RBC Capital Markets** |

---

***Co-Managers***

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| | | |
|:---|:---|:---|
| **Jefferies LLC** | **Morgan Stanley** | **SMBC Nikko** |

---

Through and including , 2026 (the 90th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and when offering an unsold allotment or subscription.

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##### [**Table of Contents**](#toc)
**PART II** 

**Information Not Required in Prospectus** 

**Item 12. Other Expenses of Issuance and Distribution** 

The following table sets forth the various expenses expected to be incurred by the registrants in connection with the issuance and distribution of the securities being registered by this prospectus, other than underwriting discounts and commissions. All amounts are estimated except the Securities and Exchange Commission registration fee.

---

| | |
|:---|:---|
|  Securities and Exchange Commission<br>registration fee | $189956.55 |
|  Printing expenses | $200000.0 |
|  Trustee fees and expenses | $60000.0 |
|  Legal fees and expenses | $2500000.0 |
|  Accounting fees and expenses | $150000.0 |
|  Rating Agencies' fees and expenses | $1681625.0 |
|  Structuring agent fees and expenses | $300000.0 |
|  Miscellaneous fees and expenses | $64365.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $5145946.55 |

---

**Item 13. Indemnification of Directors and Officers** 

**APPALACHIAN POWER RECOVERY FUNDING LLC** 

Section 18-108 of the Delaware Limited Liability Company Act provides that subject to such standards and restrictions, if any, as are set forth in the limited liability company agreement of a limited liability company, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Under the limited liability company agreement of Appalachian Power Recovery Funding LLC, we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person is or was a member, manager, officer, employee or agent of ours, to the fullest extent permitted by law, against any liability incurred in connection with such action, suit or proceeding, except for liabilities arising from such person's own fraud, gross negligence or willful misconduct.

**APPALACHIAN POWER COMPANY** 

The By-laws of APCo (as amended and restated, the "**By-laws**") provide that APCo shall indemnify any person who was or is a party to any threatened, pending or completed action, suit or proceeding because such person is or was a director, officer or employee of APCo or is or was serving at the request of APCo as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability in connection with such proceeding if (a) such person conducted him or herself in good faith; (b) such person believed, in the case of conduct in such person's official capacity with APCo, that his or her conduct was in the best interests of APCo, and, in all other cases, that his or her conduct was at least not opposed to its best interests; (c) with respect to any criminal action or proceeding, such person had no reasonable cause to believe his or her conduct was unlawful; and (d) such person was not grossly negligent or guilty of willful misconduct. Such indemnification in connection with a proceeding by or in the right of APCo is limited to reasonable expenses incurred in connection with the proceeding. Any such indemnification (unless ordered by a court) shall be made by APCo only as authorized in the specific case upon a determination that indemnification of the director is proper in the circumstances because such person has met the applicable standard of conduct.

Section 13.1-698 of the Code of Virginia provides that unless limited by the articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of

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##### [**Table of Contents**](#toc)
any proceeding to which such person was a party because such person is or was a director of the corporation against expenses incurred in connection with such proceeding. Section 13.1-699 of the Code of Virginia provides that a corporation may pay for or reimburse reasonable expenses incurred by a director who is a party to such a proceeding in advance of final disposition of such proceeding if the director furnishes the corporation a signed written undertaking by or on behalf of the director to repay any funds advanced (a) if the director is not entitled to mandatory indemnification under Section 13.1.698 of the Code of Virginia and (b) it is ultimately determined under Sections 13.1.700.1 or 13.1-701 of the Code of Virginia that the director has not met the relevant standard of conduct. Section 13.1-700.1 of the Code of Virginia provides procedures which allow directors to apply to a court for an order directing advances, reimbursement or indemnification.

Section 13.1-702 of the Code of Virginia provides that unless limited by the articles of incorporation, (a) officers are entitled to mandatory indemnification under Section 13.1-698 of the Code of Virginia and to apply for court ordered indemnification under Section 13.1-700.1 of the Code of Virginia to the same extent as a director, and (b) that a corporation may indemnify and advance expenses to an officer to the same extent as to a director. Section 13.1-704 of the Code of Virginia provides that any corporation shall have the power to make any further indemnity to any director or officer that may be authorized by the articles of incorporation or any bylaw made by the stockholders or any resolution adopted, before or after the event, by the stockholders, except an indemnity against willful misconduct or a knowing violation of criminal law. Any such provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be deemed, unless the articles of incorporation or any such bylaw or resolution expressly provides otherwise, also to obligate the corporation to advance funds to pay for or reimburse expenses to the fullest extent permitted by law except that the applicable standard shall be conduct that does not constitute willful misconduct or a knowing violation of criminal law.

The above is a general summary of certain provisions of APCo's By-laws and the Code of Virginia and is subject in all respects to the specific and detailed provisions of APCo's By-laws and the Code of Virginia.

**Item 14. Exhibits** 

List of Exhibits

---

| | |
|:---|:---|
| **EXHIBIT<br>NO.** | **DESCRIPTION OF EXHIBIT** |
| &nbsp;&nbsp;&nbsp;&nbsp;1.1 | [Form of Underwriting Agreement\*\*](d44535dex11.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.1 | [Certificate of Formation of Appalachian Power Recovery Funding LLC\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex31.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.2 | [Limited Liability Company Agreement of Appalachian Power Recovery Funding LLC\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex32.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;3.3 | [Amended and Restated Limited Liability Company Agreement of Appalachian Power Recovery Funding LLC\*\*](d44535dex33.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;4.1 | [Form of Indenture between Appalachian Power Recovery Funding LLC and the Trustee (including the forms of the SAC bonds and form of Series Supplement)\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex41.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;5.1 | [Opinion of Sidley Austin LLP with respect to legality\*\*](d44535dex51.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;8.1 | [Opinion of Sidley Austin LLP with respect to federal tax matters\*\*](d44535dex81.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;8.2 | [Opinion of Troutman Pepper Locke LLP with respect to Virginia tax matters\*\*](d44535dex82.htm) |
| 10.1 | [Form of Servicing Agreement between Appalachian Power Recovery Funding LLC and Appalachian Power Company, as Servicer\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex101.htm) |
| 10.2 | [Form of Purchase and Sale Agreement between Appalachian Power Recovery Funding LLC and Appalachian Power Company, as Seller\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex102.htm) |
| 10.3 | [Form of Administration Agreement between Appalachian Power Recovery Funding LLC and Appalachian Power Company, as Administrator\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex103.htm) |

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##### [**Table of Contents**](#toc)

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| | |
|:---|:---|
| **EXHIBIT<br>NO.** | **DESCRIPTION OF EXHIBIT** |
| 10.4 | [Intercreditor Agreement among AEP Credit, Inc., JPMorgan Chase Bank, N.A., and each indenture trustee, servicer and issuer party thereto from time to time, dated as of September 7, 2022, and amended and restated as of December 9, 2024\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex104.htm) |
| 10.5 | [Form of Intercreditor Joinder between Appalachian Power Company, Appalachian Power Recovery Funding LLC, U.S. Bank Trust Company, National Association, AEP Credit, Inc., and JPMorgan Chase Bank, N.A.\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex105.htm) |
| 23.1 | Consent of Sidley Austin LLP (included as part of its opinions filed as Exhibits [5.1](d44535dex51.htm), [8.1](d44535dex81.htm) and [99.2](d44535dex992.htm))\*\* |
| 23.2 | Consent of Troutman Pepper Locke LLP (included as part of its opinions filed as Exhibits [8.2](d44535dex82.htm) and [99.3](d44535dex993.htm))\*\* |
| 23.3 | [Consent of Independent Managers\*\*](d44535dex233.htm) |
| 24.1 | [Power of Attorney of Appalachian Power Company\*\*](d44535dex241.htm) |
| 24.2 | [Power of Attorney of Appalachian Power Recovery Funding LLC\*\*](d44535dex242.htm) |
| 25.1 | [Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of U.S. Bank Trust Company, National Association\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex251.htm) |
| 99.1 | [Financing Order\*](http://www.sec.gov/Archives/edgar/data/6879/000119312526083197/d44535dex991.htm) |
| 99.2 | [Form of Opinion of Sidley Austin LLP with respect to U.S. constitutional matters\*\*](d44535dex992.htm) |
| 99.3 | [Form of Opinion of Troutman Pepper Locke LLP with respect to Virginia constitutional matters\*\*](d44535dex993.htm) |
| 107 | [Filing Fee Table\*\*](d44535dexfilingfees.htm) |

---

\* Previously filed with the Registration Statement on Form SF-1 of Appalachian Power Company and Appalachian Power Recovery Funding LLC (File Nos. 333-293890 and 333-293890-01) filed on February 27, 2026.

\*\* Filed herewith.

Pursuant to Item 601(a)(1)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request.

**Item 15. Undertakings** 

The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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##### [**Table of Contents**](#toc)
The undersigned registrants hereby undertake that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the annual report pursuant to section 13(a) or section 15(d) of the Exchange Act of a third party that is incorporated by reference in the registration statement in accordance with Item 1100(c)(1) of Regulation AB (17 CFR 229.1100(c)(1)) shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrants hereby undertake to file an application for the purpose of determining the eligibility of the trustee to act under Subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the U.S. Securities and Exchange Commission under Section 305(b)(2) of the Act.

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##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on the 1st day of May, 2026.

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| | |
|:---|:---|
| **APPALACHIAN POWER COMPANY** | **APPALACHIAN POWER COMPANY** |
|  By: | /s/ Trevor I Mihalik |
|  Name: | Trevor I. Mihalik |
|  Title: | Chief Financial Officer |

---

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | | |
|:---|:---|:---|:---|
| **Signature** | **Signature** | **Title** | **Date** |
| **(i) Principal Executive Officer:** | **(i) Principal Executive Officer:** |  |  |
| William J. Fehrman\* | William J. Fehrman\* | Chief Executive Officer | May 1, 2026 |
| **(ii) Principal Financial Officer:** | **(ii) Principal Financial Officer:** |  |  |
| /s/ Trevor I. Mihalik<br> Trevor I. Mihalik | /s/ Trevor I. Mihalik<br> Trevor I. Mihalik | Chief Financial Officer | May 1, 2026 |
| **(iii) Principal Accounting Officer:** | **(iii) Principal Accounting Officer:** |  |  |
| /s/ Kate Dixon<br> Kate Dixon | /s/ Kate Dixon<br> Kate Dixon | Chief Accounting Officer | May 1, 2026 |
| **(iv) A Majority of the Directors:** | **(iv) A Majority of the Directors:** |  |  |
| Robert B. Berntsen\*<br> William J. Fehrman\*<br> Trevor I. Mihalik\*<br> Brian R. Abraham\* | Robert B. Berntsen\*<br> William J. Fehrman\*<br> Trevor I. Mihalik\*<br> Brian R. Abraham\* | Directors | May 1, 2026 |
| By:\*<br>| /s/ Trevor I. Mihalik |  | May 1, 2026 |
| Name: | Trevor I. Mihalik |  |  |
| Title: | Attorney-in-Fact |  |  |

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##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on the 1st day of May, 2026.

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| | |
|:---|:---|
| **APPALACHIAN POWER RECOVERY FUNDING LLC** | **APPALACHIAN POWER RECOVERY FUNDING LLC** |
|  By: | /s/ Matthew D. Fransen |
|  Name: | Matthew D. Fransen |
|  Title: | Manager |

---

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| Trevor I. Mihalik\* | Manager | May 1, 2026 |
| /s/ Matthew D. Fransen<br> Matthew D. Fransen | Manager | May 1, 2026 |
| Franz D. Messner\* | Manager | May 1, 2026 |
| Sean Emerick\* | Manager | May 1, 2026 |
| William Bleier\* | Manager | May 1, 2026 |

---

---

| | | |
|:---|:---|:---|
| By:\*<br>| /s/ Matthew D. Fransen | May 1, 2026 |
| Name: | Matthew D. Fransen |  |
| Title: | Attorney-in-Fact |  |

---

## Exhibit 1.1

**Exhibit 1.1** 

**APPALACHIAN POWER RECOVERY FUNDING LLC** 

**APPALACHIAN POWER COMPANY** 

**$[ ]SERIES 2026-A SENIOR SECURED SAC BONDS** 

**UNDERWRITING AGREEMENT** 

**[ ], 2026** 

To the Representatives named in Schedule I hereto

of the Underwriters named in Schedule II hereto

Ladies and Gentlemen:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Introduction</u>. Appalachian Power Recovery Funding LLC, a Delaware limited liability company (the "<u>Issuer</u>"), proposes to issue and sell $[ ]aggregate principal amount of its Series 2026-A Senior Secured SAC Bonds (the "<u>Bonds</u>"), identified in Schedule I hereto. The Issuer and Appalachian Power Company, a Virginia corporation and the Issuer's direct parent ("<u>APCO</u>"), hereby confirm their agreement with the several Underwriters (as defined below) as set forth herein.

The term "Underwriters" as used herein shall be deemed to mean the entity or several entities named in Schedule II hereto and any underwriter substituted as provided in Section 7 hereof and the term "<u>Underwriter</u>" shall be deemed to mean any one of such Underwriters. If the entity or entities listed in Schedule I hereto as representatives (the "<u>Representatives</u>") are the same as the entity or entities listed in Schedule II hereto, then the terms "Underwriters" and "Representatives", as used herein, shall each be deemed to refer to such entity or entities. All obligations of the Underwriters hereunder are several and not joint. If more than one entity is named in Schedule I hereto, any action under or in respect of this underwriting agreement ("<u>Underwriting Agreement</u>") may be taken by such entities jointly as the Representatives or by one of the entities acting on behalf of the Representatives and such action will be binding upon all the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Description of the Bonds</u>. The Bonds will be issued pursuant to an indenture to be dated as of [ ], 2026, as supplemented by a series supplement thereto (as so supplemented, the "<u>Indenture</u>"), between the Issuer and U.S. Bank Trust Company, National Association, a national banking association as indenture trustee (the "<u>Indenture Trustee</u>") and U.S. Bank National Association as securities intermediary (the "<u>Securities Intermediary</u>"). The Bonds will be senior secured obligations of the Issuer and will be supported by securitized asset cost property (as more fully described in the Financing Order issued on November 24, 2025 (the "Financing Order") by the State Corporation Commission of the Commonwealth of Virginia (the "<u>Virginia Commission</u>") relating to the Bonds, (the "<u>SAC Property</u>"), to be sold to the Issuer by APCO pursuant to the SAC Property Sale Agreement, to be dated on or about [ ], 2026, between APCO and the Issuer (the "<u>Sale Agreement</u>"). The SAC Property securing the Bonds will be serviced pursuant to the SAC Property Servicing Agreement, to be dated on or about [ ], 2026, between APCO, as servicer, and the Issuer, as owner of the SAC Property sold to it pursuant to the Sale Agreement (the "<u>Servicing Agreement</u>").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Representations and Warranties of the Issuer</u>. The Issuer represents and warrants to the several Underwriters that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The offer and sale of the Bonds have been registered on Form SF-1 pursuant to guidance from the Securities and Exchange Commission (the "<u>Commission</u>") and in accordance with such guidance the Issuer and the Bonds meet the requirements for the use of Form SF-1 under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"). The Issuer, in its capacity as co-registrant and issuing entity with respect to the Bonds, and APCO, in its capacity as co-registrant and as sponsor for the Issuer, have prepared and filed with the Commission a registration statement on such form on February 27, 2026 (Registration Statement Nos. 333-293890 and 333-293890-01), [as amended by Amendment No. 1 thereto dated [ ], 2026], including a prospectus (the "<u>Registration Statement</u>"), for the registration under the Securities Act of up to $[ ], aggregate principal amount of the Bonds. The Registration Statement has been declared effective by the Commission and no stop order suspending such effectiveness has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Issuer, threatened by the Commission. References herein to the term "Registration Statement" shall be deemed to refer to the Registration Statement, including any amendment thereto, and any information in a prospectus as amended or supplemented as of the Effective Date (as defined below), deemed or retroactively deemed to be a part thereof pursuant to Rule 430A under the Securities Act ("<u>Rule 430A</u>") that has not been superseded or modified. "Registration Statement" without reference to a time means the Registration Statement as of the Applicable Time (as defined below), which the parties agree is the time of the first contract of sale (as used in Rule 159 under the Securities Act) for the Bonds, and shall be considered the "<u>Effective Date</u>" of the Registration Statement relating to the Bonds. Information contained in a form of prospectus (as amended or supplemented as of the Effective Date) that is deemed retroactively to be a part of the Registration Statement pursuant to Rule 430A shall be considered to be included in the Registration Statement as of the time specified in Rule 430A. The final prospectus relating to the Bonds, as filed with the Commission pursuant to Rule 424(b) under the Securities Act, is referred to herein as the "<u>Final Prospectus</u>"; and the most recent preliminary prospectus that omitted information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act and that was used after the initial effectiveness of the Registration Statement and prior to the Applicable Time (as defined below) is referred to herein as the "<u>Pricing Prospectus</u>". The Pricing Prospectus and the Issuer Free Writing Prospectuses (as defined below) identified in Section B of Schedule III, together with the Intex File (as defined below) hereby considered together, are referred to herein as the "<u>Pricing Package</u>".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) (i) At the earliest time after the filing of the Registration Statement that the Issuer or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act) of the Bonds and (ii) at the date hereof, the Issuer was not an "ineligible issuer", as defined under Rule 405 under the Securities Act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At the time the Registration Statement initially became effective, at the time of each amendment (whether by post-effective amendment, incorporated report or form of prospectus) and on the Effective Date relating to the Bonds, the Registration Statement fully complied, and the Final Prospectus, both as of its date and at the Closing Date, and the Indenture, at the Closing Date, will fully comply, in all material respects with the applicable provisions of the Securities Act and the Trust Indenture Act of 1939, as amended (the "<u>Trust Indenture Act</u>"), respectively, and, in each case, the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at each of the aforementioned dates, did not and will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Final Prospectus, both as of its date and at the Closing Date, will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the foregoing representations and warranties in this paragraph (c) shall not apply to statements or omissions made in reliance upon and in conformity with any Underwriter Information as defined in Section 11(b) below or to any statements in or omissions from any Statements of Eligibility on Form T-1 (or amendments thereto) of the Indenture Trustee under the Indenture filed as exhibits to the Registration Statement or to any statements or omissions made in the Registration Statement or the Final Prospectus relating to The Depository Trust Company's ("<u>DTC</u>") Book-Entry System that are based solely on information contained in published reports of DTC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) As of the Applicable Time, as of its date, and on the date of its filing, the Pricing Prospectus, each Issuer Free Writing Prospectus (as defined below) (other than the Pricing Term Sheet, as defined in Section 5(b) below) and the Intex file, did and do not include any untrue statement of a material fact or omit (with respect to each Issuer Free Writing Prospectus or the Intex file, when taken together with the Pricing Prospectus) to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that the principal amount of the Bonds, the initial principal balance, the scheduled final payment date, the final maturity date, the expected average life and related sensitivity data, proceeds to the Issuer, underwriters' allocation, selling concession, reallowance, discounts, issuance date, the expected amortization schedule and the expected sinking fund schedule described in the Pricing Prospectus were subject to completion or change based on market conditions and the interest rate, price to the public and underwriting discounts and commissions as well as certain other information dependent on the foregoing and other pricing related information was not included in the Pricing Prospectus). The Pricing Package, at the Applicable Time, did not, and at all subsequent times through the completion of the offer and the sale of the Bonds on the Closing Date will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The two preceding sentences do not apply to statements in or omissions from the Pricing Prospectus, the Pricing Term Sheet or any other Issuer Free Writing Prospectus in reliance

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upon and in conformity with any Underwriter Information. "Issuer Free Writing Prospectus" means any "issuer free writing prospectus," as defined in Rule 433(h) under the Securities Act, relating to the Bonds, in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Issuer's records pursuant to Rule 433(g) under the Securities Act. References to the term "Free Writing Prospectus" shall mean a free writing prospectus, as defined in Rule 405 under the Securities Act. "Intex File" means the files available at the Intex deal titled "[ ]" concerning the characteristics of the Bonds or the SAC Property. References to the term "Applicable Time" mean [ ] PM, Eastern Time, on the date hereof, except that if, subsequent to such Applicable Time, the Issuer, APCO and the Underwriters have determined that the information contained in the Pricing Prospectus or any Issuer Free Writing Prospectus issued prior to such Applicable Time included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and the Issuer, APCO and the Underwriters have agreed to terminate the old purchase contracts and have entered into new purchase contracts with purchasers of the Bonds, then "Applicable Time" will refer to the first of such times when such new purchase contracts are entered into. The Issuer represents, warrants and agrees that it has treated and agrees that it will treat each of the free writing prospectuses listed on Schedule III hereto as an Issuer Free Writing Prospectus, and that each such Issuer Free Writing Prospectus has fully complied and will fully comply with the applicable requirements of Rules 164 and 433 under the Securities Act, including timely Commission filing where required, legending and record keeping.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the offer and sale of the Bonds on the Closing Date or until any earlier date that the Issuer or APCO notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development the result of which is that such Issuer Free Writing Prospectus conflicts or would conflict with the information then contained in the Registration Statement or includes or would include an untrue statement of a material fact or, when considered together with the Pricing Prospectus, omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) APCO or the Issuer has promptly notified or will promptly notify the Representatives and (ii) APCO or the Issuer has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Issuer has been duly formed and is validly existing as a limited liability company in good standing under the Delaware Limited Liability Company Act, as amended, with full limited liability company power and authority to execute, deliver and perform its obligations under this Underwriting Agreement, the Bonds, the Sale Agreement, the Servicing Agreement, the Indenture, the amended and restated limited liability company operating agreement of the Issuer dated as of April 30, 2026 (the "<u>LLC Agreement</u>"), the Joinder Agreement (as defined below) to the intercreditor agreement made as of September 7, 2022 and amended and restated as of December 9, 2024 (the "<u>Intercreditor Agreement</u>") by and among (a) each Person designated in an Effective Joinder (as defined in the Intercreditor Agreement) (i) as a "Company" (as defined in the Intercreditor Agreement), (ii) as a "Receivables Sub-Servicer" (as defined in the Intercreditor Agreement), and (iii) as a "Securitization Property Servicer" (as defined in the Intercreditor Agreement); (b) each Person designated in an Effective Joinder as a "Bond Issuer" (as defined in the Intercreditor Agreement); (c) each Person designated in an Effective Joinder as an "indenture trustee" (as defined in the Intercreditor Agreement); (d) AEP Credit, Inc., a Delaware corporation (the "<u>Receivables Buyer</u>"); and (e) JPMorgan Chase Bank, N.A., as Receivables Administrative Agent (as defined in the Intercreditor Agreement) for the Receivables Purchasers referred to in the Intercreditor Agreement and as Control Agent (as defined in the Intercreditor Agreement), the joinder to the Intercreditor Agreement (the "<u>Joinder Agreement</u>") dated as of the Closing Date, by and among (i) APCO, in its individual capacity, as the initial Securitization Property Servicer of the SAC Property, and as the Receivables Sub-Servicer, (ii) the Indenture Trustee, and (iii) the Issuer, the administration agreement to be dated the Closing Date between the Issuer and APCO (the "<u>Administration Agreement</u>") and the other agreements and instruments contemplated by the Pricing Prospectus (collectively, the "<u>Issuer Documents</u>") and to own its properties and conduct its business as described in the Pricing Prospectus; the Issuer has been duly qualified as a foreign limited liability company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where failure to so qualify or to be in good standing would not have a material adverse effect on the business, properties or financial condition of the Issuer; the Issuer has conducted and will conduct no business in the future that would be inconsistent with the description of the Issuer's business set forth in the Pricing Prospectus; the Issuer is not a party to or bound by any agreement or instrument other than the Issuer Documents and other agreements or instruments incidental to its formation and the Rating Agency Letters (as defined below); the Issuer has no material liabilities or obligations other than those arising out of the transactions contemplated by the Issuer Documents and as described in the Pricing Prospectus; APCO is the beneficial owner of all of the limited liability company interests of the Issuer; and based on current law, the Issuer is not classified as an association taxable as a corporation for United States federal income tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The issuance and sale of the Bonds by the Issuer, the purchase of the SAC Property by the Issuer from APCO and the consummation of the transactions herein contemplated by the Issuer, and the fulfillment of the terms hereof on the part of the Issuer to be fulfilled, will not result in a breach of any of the terms or provisions of, or constitute a default under the Issuer's articles of organization or limited liability company operating agreement (collectively, the "<u>Issuer Charter Documents</u>"), or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is now a party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) This Underwriting Agreement has been duly authorized, executed and delivered by the Issuer, which has the necessary limited liability company power and authority to execute, deliver and perform its obligations under this Underwriting Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Issuer (i) is not in violation of the Issuer Charter Documents, (ii) is not in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, except for any such defaults that would not, individually or in the aggregate, have a material adverse effect on its business, property or financial condition, and (iii) is not in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject, except for any such violations that would not, individually or in the aggregate, have a material adverse effect on its business, property or financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Indenture has been duly authorized by the Issuer, and, on the Closing Date, will have been duly executed and delivered by the Issuer and will be a valid and binding instrument, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law; and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy. On the Closing Date, the Indenture will (i) comply as to form in all material respects with the requirements of the Trust Indenture Act and (ii) conform in all material respects to the description thereof in the Pricing Prospectus and Final Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Bonds have been duly authorized by the Issuer for issuance and sale to the Underwriters pursuant to this Underwriting Agreement and, when executed by the Issuer and authenticated by the Indenture Trustee in accordance with the Indenture and delivered to the Underwriters against payment therefor in accordance with the terms of this Underwriting Agreement, will constitute valid and binding obligations of the Issuer entitled to the benefits of the Indenture and enforceable against the Issuer in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law; and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy, and the Bonds conform in all material respects to the description thereof in the Pricing Prospectus and Final Prospectus. The Issuer has all requisite limited liability company power and authority to issue, sell and deliver the Bonds in accordance with and upon the terms and conditions set forth in this Underwriting Agreement and in the Pricing Prospectus and Final Prospectus.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) There is no litigation or governmental proceeding to which the Issuer is a party or to which any property of the Issuer is subject or which is pending or, to the knowledge of the Issuer, threatened against the Issuer that (i) could reasonably be expected to, individually or in the aggregate, have a material adverse effect on the performance by the Issuer of any of the Issuer Documents or the consummation of any of the transactions contemplated thereby or (ii) could reasonably be expected to have a material adverse effect on the Issuer's business, property or financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Other than the filing of the issuance advice letter and non-action on the part of the Virginia Commission contemplated by Ordering Paragraph 10 of the Financing Order, no approval, authorization, consent or order of any public board or body (except such as have been already obtained and other than in connection or in compliance with the provisions of applicable blue-sky laws or securities laws of any state, as to which the Issuer makes no representations or warranties), is legally required for the issuance and sale by the Issuer of the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The Issuer is not, and, after giving effect to the sale and issuance of the Bonds and the application of the proceeds thereof as described in the Pricing Prospectus and the Final Prospectus, will not be an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "<u>1940 Act</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The Issuer will rely on an exclusion or exemption from the definition of "investment company" under the 1940 Act under Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the Issuer. The Issuer is not a "covered fund" for purposes of regulations adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The nationally recognized accounting firm which has performed certain procedures with respect to certain statistical and structural information contained in the Pricing Prospectus and the Final Prospectus, is an independent public accounting firm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Each of the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement, the Joinder Agreement, the Administration Agreement and LLC Agreement has been duly authorized by the Issuer, and when executed and delivered by the Issuer on or prior to the Closing Date and the other parties thereto, will constitute a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) The Issuer has complied with the written representations, acknowledgements and covenants (the "<u>17g-5 Representations</u>") relating to compliance with Rule 17g-5 under the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>") set forth in the (i) undertaking letter related to the Bonds by APCO to Moody's (as defined below) and (ii) undertaking letter related to the Bonds from APCO to S&P (as defined below, and together with Moody's, the "<u>Rating Agencies</u>") and the Issuer (collectively, the "<u>Rating Agency Letters</u>"), other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) The Issuer will comply, and has complied, in all material respects, with its diligence and disclosure obligations in respect to the Bonds under Rule 193 of the Securities Act and Items 1111(a)(7) and 1111(a)(8) of Regulation AB under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) The Bonds are not subject to the risk retention requirements imposed by Section 15G of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Representations and Warranties of APCO</u>. APCO represents and warrants to the several Underwriters that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) APCO, in its capacity as co-registrant and sponsor for the Issuer and with respect to the Bonds, meets the requirements to use Form SF-1 under the Securities Act and has filed with the Commission the Registration Statement for the registration under the Securities Act of up to $[ ] aggregate principal amount of the Bonds. The Registration Statement has been declared effective by the Commission and no stop order suspending such effectiveness has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of APCO, threatened by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) (i) At the earliest time after the filing of the Registration Statement that APCO or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act) of the Bonds and (ii) the date hereof, APCO was not and is not an "ineligible issuer" as defined in Rule 405 under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At the time the Registration Statement initially became effective, at the time of each amendment (whether by post-effective amendment, incorporated report or form of prospectus) and on the Effective Date relating to the Bonds, the Registration Statement fully complied, and the Final Prospectus, both as of its date and at the Closing Date, and the Indenture, at the Closing Date, will fully comply in all material respects with the applicable requirements of the Securities Act and the Trust Indenture Act, respectively, and, in each case, the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at each of the aforementioned dates, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Final Prospectus, both as of its date and at the Closing Date, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that the foregoing representations and warranties in this paragraph (c) shall not apply to statements or omissions made in reliance upon and in conformity with

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any Underwriter Information or to any statements in or omissions from any Statement of Eligibility on Form T-1, or amendments thereto, of the Indenture Trustee under the Indenture filed as exhibits to the Registration Statement or to any statements or omissions made in the Registration Statement or the Final Prospectus relating to DTC's Book-Entry System that are based solely on information contained in published reports of DTC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) As of the Applicable Time, as of its date, and on the date of its filing the Pricing Prospectus and each Issuer Free Writing Prospectus (other than the Pricing Term Sheet) and the Intex File, did and do not include any untrue statement of a material fact or omit (with respect to each Issuer Free Writing Prospectus or the Intex file, when taken together with the Pricing Prospectus) to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that the principal amount of the Bonds, the initial principal balance, the scheduled final payment date, the final maturity date, the expected average life and related security data proceeds to the Issuer, underwriters' allocation, selling concession, reallowance discounts, issuance date, the expected amortization schedule and the expected sinking fund schedule described in the Pricing Prospectus were subject to completion or change based on market conditions, and the interest rate, price to the public and underwriting discounts and commissions as well as certain other information dependent on the foregoing and other pricing related information was not included in the Pricing Prospectus). The Pricing Package, at the Applicable Time, did not, and at all subsequent times through the completion of the offer and the sale of the Bonds on the Closing Date, will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The two preceding sentences do not apply to statements in or omissions from the Pricing Prospectus, the Pricing Term Sheet or any other Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information. APCO represents, warrants and agrees that it has treated and agrees that it will treat each of the free writing prospectuses listed on Schedule III hereto as an Issuer Free Writing Prospectus, and that each such Issuer Free Writing Prospectus has fully complied and will fully comply with the applicable requirements of Rules 164 and 433 under the Securities Act, including timely Commission filing where required, legending and record keeping.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the offer and sale of the Bonds on the Closing Date or until any earlier date that the Issuer or APCO notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development the result of which is that such Issuer Free Writing Prospectus conflicts or would conflict with the information then contained in the Registration Statement or includes or would include an untrue statement of a material fact or, when considered together with the Pricing Prospectus, omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) APCO or the Issuer has promptly notified or will promptly notify the Representatives

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and (ii) APCO or the Issuer has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with any Underwriter Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) APCO has been duly formed and is validly existing as a corporation in good standing under the laws of the jurisdiction of its formation, has the corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and as set forth in or contemplated by the Pricing Prospectus, and is qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not have a material adverse effect on the business, property or financial condition of APCO and its subsidiaries considered as a whole, and has all requisite power and authority to sell SAC Property as described in the Pricing Prospectus and to otherwise perform its obligation under any Issuer Document to which it is a party. APCO is the beneficial owner of all of the limited liability company interests of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) APCO has no significant subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The transfer by APCO of all of its rights and interests under the Financing Order relating to the Bonds to the Issuer and the consummation of the transactions herein contemplated by APCO, and the fulfillment of the terms hereof on the part of APCO to be fulfilled, will not result in a breach of any of the terms or provisions of, or constitute a default under, APCO's composite of amended and restated certificate of incorporation or bylaws (collectively, the "<u>APCO Charter Documents</u>"), or in a material breach of any of the terms of, or constitute a material default under, any indenture, mortgage, deed of trust or other agreement or instrument to which APCO is now a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) This Underwriting Agreement has been duly authorized, executed and delivered by APCO, which has the necessary corporate power and authority to execute, deliver and perform its obligations under this Underwriting Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) APCO (i) is not in violation of the APCO Charter Documents, (ii) is not in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, except for any such defaults that would not, individually or in the aggregate, have a material adverse effect on the business, property or financial condition of APCO and its subsidiaries considered as a whole, and (iii) is not in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject, except for any such violations that would not, individually or in the aggregate, have a material adverse effect on the business, property or financial condition of APCO and its subsidiaries considered as a whole.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Except as set forth or contemplated in the Pricing Prospectus, there is no litigation or governmental proceeding to which APCO or any of its subsidiaries is a party or to which any property of APCO or any of its subsidiaries is subject or which is pending or, to the knowledge of APCO, threatened against APCO or any of its subsidiaries that would reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the Issuer's business, property, or financial condition or on APCO's ability to perform its obligations under the Sale Agreement and the Servicing Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Other than the filing of the issuance advice letter and non-action on the part of the Virginia Commission contemplated by Ordering Paragraph 10 of the Financing Order, no approval, authorization, consent or order of any public board or body (except such as have been already obtained and other than in connection or in compliance with the provisions of applicable blue-sky laws or securities laws of any state, as to which APCO makes no representations or warranties), is legally required for the issuance and sale by the Issuer of the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) APCO is not and after giving effect to the sale and issuance of the Bonds, neither APCO nor the Issuer will be, an "investment company" within the meaning of the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Relying on an exclusion or exemption from the definition of "investment company" under the 1940 Act under Rule 3a-7 under the Investment Company Act, although additional exclusions or exemptions may be available, the Issuer is not a "covered fund" for purposes of the regulations adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Each of the Sale Agreement, the Servicing Agreement, the Administration Agreement, the Joinder Agreement and the Intercreditor Agreement (by execution of the Joinder Agreement), will have been prior to the Closing Date duly and validly authorized by APCO, and when executed and delivered by APCO and the other parties thereto will constitute a valid and legally binding obligation of APCO, enforceable against APCO in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and limitations on enforceability of rights to indemnification by federal or state securities laws or regulations or by public policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) There are no Virginia transfer taxes related to the transfer of the SAC Property or the issuance and sale of the Bonds to the Underwriters pursuant to this Underwriting Agreement required to be paid at or prior to the Closing Date by APCO or the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) The nationally recognized accounting firm referenced in Sections 3(p) and 9(s) is a firm of independent public accountants with respect to APCO as required by the Securities Act and the rules and regulations of the Commission thereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) APCO, in its capacity as sponsor with respect to the Bonds, has caused the Issuer to comply with the 17g-5 Representations, other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) APCO will comply, and has complied, in all material respects, with its diligence and disclosure obligations in respect to the Bonds under Rule 193 of the Securities Act and Items 1111(a)(7) and 1111(a)(8) of Regulation AB.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) Neither APCO nor any of its subsidiaries nor, to the knowledge of APCO, any director, officer, agent or employee of APCO or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("<u>OFAC</u>"); and APCO will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) The Bonds are not subject to the risk retention requirements imposed by Section 15G of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Investor Communications.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Issuer and APCO represent and agree that, unless they obtain the prior consent of the Representatives, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Issuer and APCO and the Representatives, it has not made and will not make any offer relating to the Bonds that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a "free writing prospectus," required to be filed by the Issuer or APCO, as applicable, with the Commission or retained by the Issuer or APCO, as applicable, under Rule 433 under the Securities Act; provided that the prior written consent of the parties hereto shall be deemed to have been given in respect of the preliminary term sheet relating to the Bonds dated May [ ], 2026 (the "Preliminary Term Sheet") and the Pricing Term Sheet and each other Free Writing Prospectus identified in Schedule III hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) APCO and the Issuer (or the Representatives at the direction of the Issuer) will prepare a final pricing term sheet relating to the Bonds (the "<u>Pricing Term Sheet</u>"), containing only information that describes the final pricing terms of the Bonds and otherwise in a form consented to by the Representatives, and will file the Pricing Term Sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date such final pricing terms have been established for all classes of the offering of the Bonds. The Pricing Term Sheet is an Issuer Free Writing Prospectus for purposes of this Underwriting Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each Underwriter may provide to investors one or more of the Free Writing Prospectuses, including the Pricing Term Sheet, subject to the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) An Underwriter shall not convey or deliver any Written Communication (as defined herein) to any person or entity in connection with the initial offering of the Bonds, unless such Written Communication (A) constitutes a prospectus satisfying the requirements of Rule 430A under the Securities Act, or (B)(i) is made in reliance on Rule 134 under the Securities Act, is an Issuer Free Writing Prospectus listed on Schedule III hereto or is an Underwriter Free Writing Prospectus (as defined below) and (ii) such Written Communication is preceded or accompanied by a prospectus satisfying the requirements of Section 10(a) of the Securities Act. "<u>Written Communication</u>" has the same meaning as that term is defined in Rule 405 under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) An "Underwriter Free Writing Prospectus" means any free writing prospectus that contains only preliminary or final terms of the Bonds and is not required to be filed by APCO or the Issuer pursuant to Rule 433 under the Securities Act and that contains information substantially the same as the information contained in the Pricing Prospectus, the Preliminary Term Sheet or Pricing Term Sheet (including, without limitation, (A) the class, size, rating, price, CUSIPs, coupon, yield, spread, benchmark, status and/or legal maturity date of the Bonds, the weighted average life, expected first and final scheduled payment dates, trade date, settlement date, transaction parties, credit enhancement, logistical details related to the location and timing of access to the roadshow, ERISA eligibility, legal investment status and payment window of one or more classes of Bonds and (B) a column or other entry showing the status of the subscriptions for the Bonds, both for the Bonds as a whole and for each Underwriter's retention, and/or expected pricing parameters of the Bonds).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Each Underwriter shall comply with all applicable laws and regulations in connection with the use of Free Writing Prospectuses and the Pricing Term Sheet, including but not limited to Rules 164 and 433 under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) All Free Writing Prospectuses provided to investors, whether or not filed with the Commission, shall bear a legend including substantially the following statement:

The Issuer and APCO have filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Issuer and APCO have filed with the SEC for more complete information about the Issuer and APCO and the offering. You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, the Issuer, any Underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Goldman Sachs & Co. LLC toll-free at 1-866-471-2526, by calling J.P. Morgan Securities LLC toll-free at 1-800-408-1016, or by calling RBC Capital Markets, LLC toll-free at 1-866-375-6829.

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The Issuer and the Representatives shall have the right to require additional specific legends or notations to appear on any Free Writing Prospectus, the right to require changes regarding the use of terminology and the right to determine the types of information appearing therein with the approval of, in the case of the Issuer, Representatives and, in the case of the Representatives, the Issuer (which in either case shall not be unreasonably withheld).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Each Underwriter covenants with the Issuer and APCO that after the Final Prospectus is available such Underwriter shall not distribute any written information concerning the Bonds to an investor unless such information is preceded or accompanied by the Final Prospectus or by notice to the investor that the Final Prospectus is available for free by visiting EDGAR on the SEC website at <u>www.sec.gov</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Each Underwriter covenants that if an Underwriter shall use an Underwriter Free Writing Prospectus that contains information in addition to (x) "issuer information", including information with respect to APCO, as defined in Rule 433(h)(2) under the Securities Act or (y) the information in the Pricing Package, the liability arising from its use of such additional information shall be the sole responsibility of the Underwriter using such Underwriter Free Writing Prospectus unless the Underwriter Free Writing Prospectus (or any information contained therein) was consented to in advance by APCO; provided, however, that, for the avoidance of doubt, this clause (vi) shall not be interpreted as tantamount to the indemnification obligations contained in Section 11(b) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Purchase and Sale</u>. On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Issuer shall sell to each of the Underwriters, and each Underwriter shall purchase from the Issuer, at the time and place herein specified, severally and not jointly, at the purchase price set forth in Schedule I hereto, the principal amount of the Bonds set forth opposite such Underwriter's name in Schedule II hereto. The Underwriters agree to make a public offering of the Bonds. The Issuer shall pay (in the form of a discount to the principal amount of the offered Bonds) to the Underwriters a commission equal to $[ ].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Time and Place of Closing</u>. Delivery of the Bonds against payment of the aggregate purchase price therefor by wire transfer in federal funds shall be made at the place, on the date and at the time specified in Schedule I hereto, or at such other place, time and date as shall be agreed upon in writing by the Issuer and the Representatives. The hour and date of such delivery and payment are herein called the "<u>Closing Date</u>". The Bonds shall be delivered to DTC or to U.S. Bank National Association, as custodian for DTC, in fully registered global form registered in the name of Cede & Co., for the respective accounts specified by the Representatives not later than the close of business on the business day preceding the Closing Date or such other time as may be agreed upon by the Representatives. The Issuer agrees to make the Bonds available to the Representatives for checking purposes not later than 1:00 P.M. New York Time on the last business day preceding the Closing Date at the place specified for delivery of the Bonds in Schedule I hereto, or at such other place as the Issuer may specify.

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If any Underwriter shall fail or refuse to purchase and pay for the aggregate principal amount of Bonds that such Underwriter has agreed to purchase and pay for hereunder, the Issuer shall immediately give notice to the other Underwriters of the default of such Underwriter, and the other Underwriters shall have the right within 24 hours after the receipt of such notice to determine to purchase, or to procure one or more others, who are members of the Financial Industry Regulatory Authority ("<u>FINRA</u>") (or, if not members of the FINRA, who are not eligible for membership in the FINRA and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with the FINRA's Conduct Rules) and satisfactory to the Issuer, to purchase, upon the terms herein set forth, the aggregate principal amount of Bonds that the defaulting Underwriter had agreed to purchase. If any non-defaulting Underwriter or Underwriters shall determine to exercise such right, such Underwriter or Underwriters shall give written notice to the Issuer of the determination in that regard within 24 hours after receipt of notice of any such default, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Issuer shall determine. If in the event of such a default no non-defaulting Underwriter shall give such notice, then this Underwriting Agreement may be terminated by the Issuer, upon like notice given to the non-defaulting Underwriters, within a further period of 24 hours. If in such case the Issuer shall not elect to terminate this Underwriting Agreement it shall have the right, irrespective of such default:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to require each non-defaulting Underwriter to purchase and pay for the respective aggregate principal amount of Bonds that it had agreed to purchase hereunder as hereinabove provided and, in addition, the aggregate principal amount of Bonds that the defaulting Underwriter shall have so failed to purchase up to an aggregate principal amount of Bonds equal to one-ninth (1/9) of the aggregate principal amount of Bonds that such non-defaulting Underwriter has otherwise agreed to purchase hereunder, and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to procure one or more persons, reasonably acceptable to the Representatives, who are members of the FINRA (or, if not members of the FINRA, who are not eligible for membership in the FINRA and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with the FINRA's Conduct Rules), to purchase, upon the terms herein set forth, either all or a part of the aggregate principal amount of Bonds that such defaulting Underwriter had agreed to purchase or that portion thereof that the remaining Underwriters shall not be obligated to purchase pursuant to the foregoing clause (a).

In the event the Issuer shall exercise its rights under (a) and/or (b) above, the Issuer shall give written notice thereof to the non-defaulting Underwriters within such further period of 24 hours, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Issuer shall determine.

In the computation of any period of 24 hours referred to in this Section 7, there shall be excluded a period of 24 hours in respect of each Saturday, Sunday or legal holiday that would otherwise be included in such period of time.

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Any action taken by the Issuer or APCO under this Section 7 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Underwriting Agreement. Termination of this Underwriting Agreement pursuant to Section 7 shall be without any liability on the part of the Issuer, APCO or any non-defaulting Underwriter, except as otherwise provided in Sections 8(a)(vi) and 11 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Covenants.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Covenants of the Issuer</u>. The Issuer covenants and agrees with the several Underwriters that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Issuer will upon request promptly deliver to the Representatives and Counsel to the Underwriters a conformed copy of the Registration Statement, certified by an officer of the Issuer to be in the form as originally filed and all amendments thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Issuer will deliver to the Underwriters, as soon as practicable after the date hereof, as many copies of the Pricing Prospectus and Final Prospectus as they may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Issuer will cause or has caused the Final Prospectus to be filed with the Commission pursuant to Rule 424 under the Securities Act as soon as practicable and will advise the Underwriters of any stop order suspending the effectiveness of the Registration Statement or preventing the use of the Registration Statement or the institution of any proceeding therefor of which Issuer shall have received notice. The Issuer will use its reasonable best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. The Issuer has complied and will comply with Rule 433 and Rule 163B under the Securities Act in connection with the offering of the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If, during such period of time (not exceeding nine months) after the Final Prospectus has been filed with the Commission pursuant to Rule 424 under the Securities Act as in the opinion of Counsel for the Underwriters (as defined below) a prospectus covering the Bonds is required by law to be delivered in connection with sales by an Underwriter or dealer (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), any event relating to or affecting the Issuer, the Bonds or the SAC Property or of which the Issuer shall be advised in writing by the Representatives shall occur that in the Issuer's reasonable judgment after consultation with Counsel for the Underwriters (as defined below) should be set forth in a supplement to, or an amendment of the Pricing Package or the Final Prospectus in order to make the Pricing Package or the Final Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Issuer will, at its expense, amend or supplement the Pricing Package or the Final Prospectus by either (A) preparing and furnishing to the Underwriters at the Issuer's expense a reasonable number of copies of a supplement or supplements or an

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amendment or amendments to the Pricing Package or the Final Prospectus or (B) making an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act, which will supplement or amend the Pricing Package or the Final Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Pricing Package or the Final Prospectus is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then such Underwriters shall assume the expense of preparing and furnishing any such amendment or supplement. The Issuer will also fulfill its obligations set out in Section 3(e) above. The Issuer will advise the Underwriters promptly in writing when any supplement to the Pricing Package, the Final Prospectus or any amendment to the Final Prospectus has been filed or distributed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Issuer will furnish such proper information as may be lawfully required and otherwise cooperate in qualifying the Bonds for offer and sale under the blue-sky laws of the states of the United States as the Representatives may designate; provided that the Issuer shall not be required to qualify as a foreign limited liability company or dealer in securities, to file any consents to service of process under the laws of any jurisdiction, or meet any other requirements deemed by the Issuer to be unduly burdensome.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Issuer or APCO will, except as herein provided, pay or cause to be paid all expenses and taxes (except transfer taxes) in connection with (i) the preparation and filing by it of the Registration Statement, Pricing Prospectus and Final Prospectus (including any amendments and supplements thereto) and any Issuer Free Writing Prospectuses, (ii) the issuance and delivery of the Bonds as provided in Section 7 hereof (including, without limitation, reasonable fees and disbursements of Counsel for the Underwriters and all trustee and rating agency fees), (iii) the qualification of the Bonds under blue-sky laws (including counsel fees not to exceed $15,000), (iv) the printing and delivery to the Underwriters of reasonable quantities of the Registration Statement and, except as provided in Section 8(a)(iv) hereof, of the Pricing Package and Final Prospectus. If the obligation of the Underwriters to purchase the Bonds terminates in accordance with the provisions of Sections 7 (but excluding terminations arising thereunder out of an Underwriter default), 9, 10 or 12 hereof, the Issuer or APCO (i) will reimburse the Underwriters for the reasonable fees and disbursements of Counsel for the Underwriters, and (ii) will reimburse the Underwriters for their reasonable out-of-pocket expenses, such out-of-pocket expenses in an aggregate amount not exceeding $200,000, incurred in contemplation of the performance of this Underwriting Agreement. The Issuer shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) During the period from the date of this Underwriting Agreement to the date that is five days after the Closing Date, the Issuer will not, without the prior written consent of the Representatives, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any asset-backed securities (other than the Bonds).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) To the extent, if any, that any rating necessary to satisfy the condition set forth in Section 9(w) of this Underwriting Agreement is conditioned upon the furnishing of documents or the taking of other actions by the Issuer on or after the Closing Date, the Issuer shall furnish such documents and take such other actions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) For a period from the date of this Underwriting Agreement until the retirement of the Bonds or until such time as the Underwriters shall cease to maintain a secondary market in the Bonds, whichever occurs first, the Issuer shall file with the Commission, and to the extent permitted by and consistent with the Issuer's obligations under applicable law, make available on the website associated with the Issuer's parent, such periodic reports, if any, as are required (without regard to the number of holders of Bonds to the extent permitted by and consistent with the Issuer's obligations under applicable law) from time to time under Section 13 or Section 15(d) of the Exchange Act; provided that the Issuer shall not voluntarily suspend or terminate its filing obligations with the Commission unless permitted under applicable law and the terms of the Basic Documents. The Issuer shall also, to the extent permitted by and consistent with the Issuer's obligations under applicable law, include in the periodic and other reports to be filed with the Commission as provided above or posted on the website associated with the Issuer's parent, such information as required by Section 3.07(g) of the Indenture with respect to the Bonds. To the extent that the Issuer's obligations are terminated or limited by an amendment to Section 3.07(g) of the Indenture, or otherwise, such obligations shall be correspondingly terminated or limited hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) The Issuer and APCO will not file any amendment to the Registration Statement or amendment or supplement to the Final Prospectus or amendment or supplement to the Pricing Package during the period when a prospectus relating to the Bonds is required to be delivered under the Securities Act, without prior notice to the Underwriters, or to which Hunton Andrews Kurth LLP, who are acting as counsel for the Underwriters ("<u>Counsel for the Underwriters</u>"), shall reasonably object by written notice to APCO and the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) So long as any of the Bonds are outstanding, the Issuer will furnish to the Representatives, if and to the extent not posted on EDGAR or the Issuer or its affiliate's website, (A) as soon as available, a copy of each report of the Issuer filed with the Commission under the Exchange Act or mailed to the Bondholders (to the extent such reports are not publicly available on the Commission's website), (B) upon request, a copy of any filings with the Virginia Commission pursuant to the Financing Order including, but not limited to, any issuance advice letter or any routine or non-routine True-Up Adjustment filings, and (C) from time to time, any information concerning the Issuer as the Representatives may reasonably request.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) So long as the Bonds are rated by any Rating Agency, the Issuer will comply with the 17g-5 Representations, other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Covenants of APCO</u>. APCO covenants and agrees with the several Underwriters that, to the extent that the Issuer has not already performed such act pursuant to Section 8(a):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To the extent permitted by applicable law and the agreements and instruments that bind APCO, APCO will use its reasonable best efforts to cause the Issuer to comply with the covenants set forth in Section 8(a) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) APCO will use its reasonable best efforts to prevent the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement and, if issued, to obtain as soon as possible the withdrawal thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If, during such period of time (not exceeding nine months) after the Final Prospectus has been filed with the Commission pursuant to Rule 424 under the Securities Act as in the opinion of Counsel for the Underwriters a prospectus covering the Bonds is required by law to be delivered in connection with sales by an Underwriter or dealer (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), any event relating to or affecting APCO, the Bonds or the SAC Property or of which APCO shall be advised in writing by the Representatives shall occur that in APCO's reasonable judgment after consultation with Counsel for the Underwriters should be set forth in a supplement to, or an amendment of, the Pricing Package or the Final Prospectus in order to make the Pricing Package or the Final Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), APCO will cause the Issuer, at APCO's or the Issuer's expense, to amend or supplement the Pricing Package or the Final Prospectus by either (A) preparing and furnishing to the Underwriters at APCO's or the Issuer's expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Pricing Package or the Final Prospectus or (B) causing the Issuer to make an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act, which will supplement or amend the Pricing Package or the Final Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Pricing Package or the Final Prospectus is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then such Underwriters shall assume the expense of preparing and furnishing any such amendment or supplement. APCO will also fulfill its obligations set out in Section 4(d). APCO will cause the Issuer to advise the Representatives promptly in writing when any supplement to the Pricing Package, the Final Prospectus or any amendment to the Final Prospectus has been filed or distributed.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) During the period from the date of this Underwriting Agreement to the date that is five days after the Closing Date, APCO will not, without the prior written consent of the Representatives, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any asset-backed securities (other than the Bonds).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) APCO will cause the proceeds for the issuance and sale of the Bonds to be applied for the purposes described in the Pricing Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) As soon as practicable, but not later than 16 months, after the date hereof, APCO will make generally available (by posting on its website or otherwise) to its security holders, an earnings statement (which need not be audited) that will satisfy the provisions of Section 11(a) of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) To the extent, if any, that any rating necessary to satisfy the condition set forth in Section 9(w) of this Underwriting Agreement is conditioned upon the furnishing of documents or the taking of other actions by APCO on or after the Closing Date, APCO shall furnish such documents and take such other actions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) The initial SAC Charge will be calculated in accordance with the Financing Order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) APCO will not file any amendment to the Registration Statement or amendment or supplement to the Final Prospectus or amendment or supplement to the Pricing Package during the period when a prospectus relating to the Bonds is required to be delivered under the Securities Act, without prior notice to the Underwriters or to which Counsel for the Underwriters shall reasonably object by written notice to APCO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) So long as any of the Bonds are outstanding, APCO, in its capacity as sponsor with respect to the Bonds, will cause the Issuer to furnish to the Representatives, if and to the extent not posted on EDGAR or APCO or its affiliate's website, (A) upon request, a copy of any filings with the Virginia Commission pursuant to the Financing Order including, but not limited to any issuance advice letter, any routine or non-routine true-up adjustment filings, and (B) from time to time, any public financial information in respect of APCO, or any material information regarding the SAC Property to the extent it is reasonably available (other than confidential or proprietary information) concerning the Issuer as the Representatives may reasonably request.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) So long as the Bonds are rated by a Rating Agency, APCO, in its capacity as sponsor with respect to the Bonds, will cause the Issuer to comply with the 17g-5 Representations, other than (x) any noncompliance of the 17g-5 Representations that would not have a material adverse effect on the rating of the Bonds or the Bonds or (y) any noncompliance arising from the breach by an Underwriter of the representations and warranties and covenants set forth in Section 13 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Conditions to the Obligations of the Underwriters</u>. The obligations of the Underwriters to purchase the Bonds shall be subject to the accuracy of the representations and warranties on the part of the Issuer and APCO contained in this Underwriting Agreement, on the part of APCO contained in Article III of the Sale Agreement, and on the part of APCO contained in Section 6.01 of the Servicing Agreement as of the Closing Date, to the accuracy of the statements of the Issuer and APCO made in any certificates pursuant to the provisions hereof, to the performance by the Issuer and APCO of their obligations hereunder, and to the following additional conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Final Prospectus shall have been filed with the Commission pursuant to Rule 424 under the Securities Act prior to 5:30 P.M., New York time, on the second business day after the date of this Underwriting Agreement. In addition, all material required to be filed by the Issuer or APCO pursuant to Rule 433(d) under the Securities Act that was prepared by either of them or that was prepared by any Underwriter and timely provided to the Issuer or APCO shall have been filed with the Commission within the applicable time period prescribed for such filing by such Rule 433(d) under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date; and the Underwriters shall have received one or more certificates, dated the Closing Date and signed by an officer of APCO and the Issuer, as appropriate, to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before, or to the knowledge of APCO or the Issuer, as the case may be, threatened by, the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Hunton Andrews Kurth LLP, counsel for the Underwriters, shall have furnished to the Representatives their written opinion, dated the Closing Date, with respect to the issuance and sale of the Bonds, the Indenture, the other Issuer Documents, the Registration Statement and other related matters; and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Richards, Layton & Finger, P.A., Delaware counsel for the Issuer, shall have furnished to the Representatives their written opinion, in form and substance reasonably satisfactory to the Representatives and Counsel for the Underwriters, dated the Closing Date, regarding the filing of a voluntary bankruptcy petition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Richards, Layton & Finger, P.A., Delaware counsel for the Issuer, shall have furnished to the Representatives their written opinion, in form and substance reasonably satisfactory to the Representatives and Counsel for the Underwriters, dated the Closing Date, regarding certain Delaware Uniform Commercial Code matters.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Richards, Layton & Finger, P.A., Delaware counsel for the Issuer, shall have furnished to the Representatives their written opinion, in form and substance reasonably satisfactory to the Representatives and Counsel for the Underwriters, dated the Closing Date, regarding certain Delaware limited liability company matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Troutman Pepper Locke LLP, special Virginia counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding Virginia corporate matters and the filing of a voluntary bankruptcy petition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Troutman Pepper Locke LLP, special Virginia counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding enforceability, certain Virginia perfection and priority issues and certain Virginia Uniform Commercial Code matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Sidley Austin LLP, counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain aspects of the transactions contemplated by the Issuer Documents, including the Indenture and the Trustee's security interest under the Uniform Commercial Code, certain corporate matters and certain federal tax matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Sidley Austin LLP, counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding securities laws matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Sidley Austin LLP, counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, i) to the effect that a court sitting in bankruptcy would not order the substantive consolidation of the assets and liabilities of the Issuer with those of APCO in connection with a bankruptcy, reorganization or other insolvency proceeding involving APCO, ii) that if APCO were to become a debtor in such insolvency proceeding, such court would hold that the SAC Property is not property of the estate of APCO and iii) regarding certain bankruptcy and creditor's rights matters relating to the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Troutman Pepper Locke LLP, special Virginia counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain Virginia constitutional matters relating to the SAC Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Troutman Pepper Locke LLP, special Virginia counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, with respect to the characterization of the transfer of the SAC Property by APCO to the Issuer as a "true sale" for Virginia law purposes.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Sidley Austin LLP, counsel for the Issuer and APCO, shall have furnished to the Representatives its written respective opinions, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain federal constitutional matters relating to the SAC Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Chapman and Cutler LLP, counsel for the Indenture Trustee, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain matters relating to the Indenture Trustee and the Securities Intermediary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) Sidley Austin LLP, counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain bankruptcy matters relating to the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Troutman Pepper Locke LLP, Virginia regulatory counsel for the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain Virginia regulatory issues.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) Troutman Pepper Locke LLP, special Virginia counsel to the Issuer and APCO, shall have furnished to the Representatives their written opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives, regarding certain Virginia tax matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) On or before the date of this Underwriting Agreement and on or before the Closing Date, a nationally recognized accounting firm reasonably acceptable to the Representatives shall have furnished to the Representatives one or more reports regarding certain calculations and computations relating to the Bonds, in form or substance reasonably satisfactory to the Representatives, in each case in respect of which the Representatives shall have made specific requests therefor and shall have provided acknowledgment or similar letters to such firm reasonably necessary in order for such firm to issue such reports.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Pricing Prospectus and the Final Prospectus, there shall not have been any change specified in the letters required by subsection (s) of this Section 9 which is, in the judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Bonds as contemplated by the Registration Statement and the Final Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) The LLC Agreement, the Administration Agreement, the Intercreditor Agreement, the Joinder Agreement, the Sale Agreement, the Servicing Agreement and the Indenture and any amendment or supplement to any of the foregoing shall have been executed and delivered.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Since the respective dates as of which information is given in each of the Registration Statement and in the Pricing Prospectus and as of the Closing Date there shall have been no (i) material adverse change in the business, property or financial condition of APCO and its subsidiaries, taken as a whole, whether or not in the ordinary course of business, or of the Issuer or (ii) adverse development concerning the business or assets of APCO and its subsidiaries, taken as a whole, or of the Issuer which would be reasonably likely to result in a material adverse change in the prospective business, property or financial condition of APCO and its subsidiaries, taken as a whole, whether or not in the ordinary course of business, or of the Issuer or (iii) development which would be reasonably likely to result in a material adverse change, in the SAC Property, the Bonds or the Financing Order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) At the Closing Date, (i) the Bonds shall be rated at least the ratings set forth in the Pricing Term Sheet by Moody's Investors Service, Inc. ("<u>Moody's</u>") and Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ("<u>S&P</u>"), respectively, and the Issuer shall have delivered to the Underwriters a letter from each such rating agency, or other evidence satisfactory to the Underwriters, confirming that the Bonds have such ratings, and (ii) neither Moody's nor S&P shall have, since the date of this Underwriting Agreement, downgraded or publicly announced that it has under surveillance or review, with possible negative implications, its ratings of the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) The Issuer and APCO shall have furnished or caused to be furnished to the Representatives at the Closing Date certificates of officers of APCO and the Issuer, reasonably satisfactory to the Representatives, as to the accuracy of the representations and warranties of the Issuer and APCO herein, in the Sale Agreement, Servicing Agreement and the Indenture at and as of the Closing Date, as to the performance by the Issuer and APCO of all of their obligations hereunder to be performed at or prior to such Closing Date, as to the matters set forth in subsections (b) and (v) of this Section and as to such other matters as the Representatives may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) An issuance advice letter, in a form consistent with the provisions of the Financing Order, shall have been filed with the Virginia Commission and shall have become effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) On or prior to the Closing Date, the Issuer shall have delivered to the Representatives evidence, in form and substance reasonably satisfactory to the Representatives, that appropriate filings have been or are being made in accordance with the "Securitization Law," as codified at Va. Code 56-249.8 E.2., the Financing Order and other applicable law reflecting the grant of a security interest by the Issuer in the collateral relating to the Bonds to the Indenture Trustee, including the filing of the requisite notices in the office of the Secretary of State of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) On or prior to the Closing Date, APCO shall have funded the capital subaccount of the Issuer with cash in an amount equal to $[ ].

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) The Issuer and APCO shall have furnished or caused to be furnished or agree to furnish to the Rating Agencies at the Closing Date such opinions and certificates as the Rating Agencies shall have reasonably requested prior to the Closing Date.

Any opinion letters delivered on the Closing Date to the Rating Agencies beyond those being delivered to the Underwriters above shall either (x) include the Underwriters as addressees or (y) be accompanied by reliance letters addressed to the Underwriters referencing such letters.

If any of the conditions specified in this Section 9 shall not have been fulfilled when and as provided in this Underwriting Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Underwriting Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and Counsel for the Underwriters, all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Issuer in writing or by telephone or facsimile confirmed in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Conditions of Issuer's Obligations</u>. The obligation of the Issuer to deliver the Bonds shall be subject to the conditions that no stop order suspending the effectiveness of the Registration Statement shall be in effect at the Closing Date and no proceeding for that purpose shall be pending before, or threatened by, the Commission at the Closing Date and the issuance advice letter described in Section 9(y) shall have become effective. In case these conditions shall not have been fulfilled, this Underwriting Agreement may be terminated by the Issuer upon notice thereof to the Underwriters. Any such termination shall be without liability of any party to any other party except as otherwise provided in Sections 8(a)(vi) and 11 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Indemnification and Contribution.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) APCO and the Issuer, jointly and severally, shall indemnify, defend and hold harmless each Underwriter, each Underwriter's officers and directors and each person who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or Exchange Act or any other statute or common law and shall reimburse each such Underwriter and controlling person for any reasonable legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) as and when incurred by them in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Pricing Prospectus, each Issuer Free Writing Prospectus, the Pricing Package, the Final Prospectus or, in each case, any amendment or supplement thereto, collectively, or any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading or (iii) any information

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prepared by or on behalf of APCO or the Issuer and provided to the Underwriters; provided, however, that the indemnity agreement contained in this Section 11 shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, in each case if such statement or omission was made in reliance upon and in conformity with any Underwriter Information (as defined in Section 11(b) hereof), or arising out of, or based upon, statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility under the Trust Indenture Act of the Indenture Trustee with respect to any indenture qualified pursuant to the Registration Statement; provided, further that the indemnity agreement contained in this Section 11 shall not inure to the benefit of any Underwriter (or of any officer or director of such Underwriter or of any person controlling such Underwriter within the meaning of Section 15 of the Securities Act) on account of any such losses, claims, damages, liabilities, expenses or actions, joint or several, arising from the sale of the Bonds to any person to whom such Underwriter has sold Bonds if a copy of the Pricing Prospectus (including any amendment or supplement thereto if any amendments or supplements thereto shall have been furnished to the Underwriters reasonably prior to the time of the sale involved) shall not have been given or sent to such person by or on behalf of such Underwriter at the time of or prior to the sale of the Bonds to such person unless the alleged omission or alleged untrue statement was not corrected in the Pricing Prospectus (including any amendment or supplement thereto if any amendments or supplements thereto have been furnished to the Underwriters reasonably prior to the time of the sale involved) at the time of such sale. The indemnity agreement of APCO and the Issuer contained in this Section 11 and the representations and warranties of the Issuer and APCO contained in Sections 3 and 4 hereof shall remain operative and in full force and effect regardless of any termination of this Underwriting Agreement or of any investigation made by or on behalf of any Underwriter, its officers or its directors or any such controlling person, and shall survive the delivery of the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Underwriter shall severally and not jointly indemnify, defend and hold harmless APCO and the Issuer, each of APCO's and Issuer's respective officers, directors, and managers, and each person who controls the Issuer or APCO within the meaning of Section 15 of the Securities Act, from and against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act or any other statute or common law and shall reimburse each of them for any reasonable legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) as and when incurred by them in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with the Underwriter Information or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Final Prospectus, each Issuer Free Writing Prospectus, the Pricing Package, collectively, or any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; if such statement or omission was made in reliance

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upon and in conformity with the Underwriter Information. The only such information furnished to APCO by the Underwriters in writing expressly for use in such foregoing documents is set forth in Schedule IV hereto (the "<u>Underwriter Information</u>"). The indemnity agreement of the respective Underwriters contained in this Section 11 and the representations and warranties of the Underwriters contained in Sections 5 and 13 hereof shall remain operative and in full force and effect regardless of any termination of this Underwriting Agreement or of any investigation made by or on behalf of APCO or the Issuer, their directors, managers or officers, any such Underwriter, or any such controlling person, and shall survive the delivery of the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) APCO, the Issuer and the several Underwriters each shall, upon the receipt of notice of the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought under (a) or (b) above, but the failure to notify such indemnifying party or parties of any such action shall not relieve such indemnifying party or parties from any liability hereunder to the extent such indemnifying party or parties is/are not materially prejudiced as a result of such failure to notify and in any event shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party or parties and reasonably satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of such action, such indemnifying party will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them; provided, however, if the defendants in any such action (including impleaded parties) include both the indemnified party and the indemnifying party and counsel for the indemnifying party shall have reasonably concluded that there may be a conflict of interest involved in the representation by a single counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, whose reasonable fees and expenses shall be paid by such indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (in addition to local counsel) representing the indemnified parties who are parties to such action). Each of APCO, the Issuer and the several Underwriters agrees that without the other party's prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Underwriting Agreement, unless such settlement, compromise or consent (i) includes an unconditional release of such other party from all liability arising out of such claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such other party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the indemnification provided for in subparagraph (a) or (b) above shall be unavailable to or insufficient to hold harmless an indemnified party, each indemnifying party agrees to contribute to such indemnified party with respect to any and all losses, claims, damages, liabilities and expenses for which each such indemnification provided for in subparagraph (a) or (b) above shall be unavailable or insufficient, in such proportion as shall be appropriate to reflect (i) the relative benefits received by APCO and the Issuer on the one hand and the Underwriters on the other hand from the offering of the Bonds pursuant to this Underwriting Agreement or (ii) if an allocation solely on the basis provided by clause (i) is not permitted by applicable law or is inequitable or against public policy, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of each indemnifying party on the one hand and the indemnified party on the other in connection with the statements or omissions which have resulted in such losses, claims, damages, liabilities and expenses and (iii) any other relevant equitable considerations; provided, however, that no indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party not guilty of such fraudulent misrepresentation. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or the indemnified party and each such party's relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. APCO, the Issuer and each of the Underwriters agree that it would not be just and equitable if contributions pursuant to this subparagraph (d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 11, no Underwriter shall be required to contribute in excess of the amount equal to the excess of (i) the total underwriting discount and commissions received by it, over (ii) the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. The obligations of each Underwriter to contribute pursuant to this Section 11 are several and not joint and shall be in the same proportion as such Underwriter's obligation to underwrite Bonds is to the total number of Bonds set forth in Schedule II hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Termination</u>. This Underwriting Agreement may be terminated, at any time prior to the Closing Date with respect to the Bonds by the Representatives by written notice to the Issuer if after the date hereof and at or prior to the Closing Date (a) trading in securities on the New York Stock Exchange ("<u>NYSE</u>") shall have been generally suspended by the Commission or by the NYSE, (b) there shall have occurred any material outbreak or escalation of hostilities (including without limitation, an act of terrorism), declaration by the United States of a national emergency or war or other national or international calamity or crisis, including, but not limited to, a material escalation of hostilities that existed prior to the date of this Underwriting Agreement, (c) a material adverse change in the financial markets in the United States or (d) a general banking moratorium shall have been declared by Federal or New York State authorities, and the effect of any such event specified in clause (a), (b), (c) or (d) above on the financial markets of the United States shall be such as to materially and adversely affect, in the reasonable judgment of the Representatives, their ability to proceed with the public offering or the delivery of the Bonds on the terms and in the manner contemplated by the Final Prospectus. Any termination hereof pursuant to this Section 12 shall be without liability of any party to any other party except as otherwise provided in Sections 8(a)(vi) and 11 hereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Representations, Warranties and Covenants of the Underwriters</u>. The Underwriters, severally and not jointly, represent, warrant and agree with the Issuer and APCO that, unless the Underwriters obtained, or will obtain, the prior written consent of the Issuer or APCO, the Representatives (x) have not delivered, and will not deliver, any Rating Information (as defined below) to any Rating Agency until and unless the Issuer or APCO advises the Underwriters that such Rating Information is posted to password-protected website maintained by the Servicer pursuant to paragraph (a)(3)(iii)(B) of Rule 17g-5 under the Exchange Act in the same form as it will be provided to such Rating Agency, and (y) have not participated, and will not participate, with any Rating Agency in any oral communication of any Rating Information without the participation of a representative of the Issuer or APCO. For purposes of this Section 13, "<u>Rating Information</u>" means any information provided to a Rating Agency for the purpose of determining an initial credit rating on the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Absence of Fiduciary Relationship</u>. Each of the Issuer and APCO acknowledges and agrees that the Underwriters are acting solely in the capacity of an arm's length contractual counterparty to the Issuer and APCO with respect to the offering of the Bonds contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Issuer or APCO. Additionally, none of the Underwriters is advising the Issuer or APCO as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Issuer and APCO shall consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Issuer or APCO with respect thereto. Any review by the Underwriters of the Issuer or APCO, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Issuer or APCO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Notices</u>. All communications hereunder will be in writing and may be given by United States mail, courier service, telecopy, telefax or facsimile (confirmed by telephone or in writing in the case of notice by telecopy, telefax or facsimile) or any other customary means of communication, and any such communication shall be effective when delivered, or if mailed, three days after deposit in the United States mail with proper postage for ordinary mail prepaid, and if sent to the Representatives, to them at the addresses specified in Schedule I hereto, and if sent to APCO, to it at 1 Riverside Plaza Columbus, Ohio 43215-2373 Attention: Treasurer, Email: CorporateFinance@aep.com; and if sent to the Issuer, to it at 1051 E. Cary St., Suite 1100 Richmond, Virginia 23219, Attention: Manager, Email: CorporateFinance@aep.com. The parties hereto, by notice to the others, may designate additional or different addresses for subsequent communications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Successors</u>. This Underwriting Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 11 hereof, and no other person will have any right or obligation hereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>Applicable Law</u>. This Underwriting Agreement will be governed by and construed in accordance with the laws of the State of New York.

THIS UNDERWRITING AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT, THE RELATIONSHIPS OF THE PARTIES AND/OR THE INTERPRETATIONS AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW). EACH OF THE PARTIES HERETO HEREBY AGREES TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS UNDERWRITING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <u>Counterparts</u>. This Underwriting Agreement may be signed in any number of counterparts, each of which shall be deemed an original, which taken together shall constitute one and the same instrument. The words "execution," "signed," "signature," "delivery," and words of like import in or relating to this Underwriting Agreement or any document to be signed in connection with this Underwriting Agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. <u>Integration</u>. This Underwriting Agreement supersedes all prior agreements and understandings (whether written or oral) among the Issuer, APCO and the Underwriters, or any of them, with respect to the subject matter hereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. <u>Recognition of the U.S. Special Resolution Regimes</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Underwriting Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Underwriting Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Underwriting Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Underwriting Agreement were governed by the laws of the United States or a state of the United States.

"***BHC Act Affiliate***" has the meaning assigned to the term "affiliate" in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

"***Covered Entity***" means any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a "covered FSI" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

"***Default Right***" has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

"***U.S. Special Resolution Regime***" means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among APCO, the Issuer and the several Underwriters.

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| |
|:---|
| Very truly yours, |
| APPALACHIAN POWER COMPANY |
| By: |
| Name: |
| Title: |
| APPALACHIAN POWER RECOVERY FUNDING LLC |
| By: |
| Name: |
| Title: |

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| | |
|:---|:---|
| The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives on behalf of the Underwriters as of the date specified in Schedule I hereto. | The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives on behalf of the Underwriters as of the date specified in Schedule I hereto. |
| GOLDMAN SACHS & CO. LLC | GOLDMAN SACHS & CO. LLC |
| By: |  |
| Name: | Steven Moffitt |
| Title: | Managing Director |
| J.P. MORGAN SECURITIES LLC | J.P. MORGAN SECURITIES LLC |
| By: |  |
| Name: | Mark Gilmore |
| Title: | Managing Director |
| RBC CAPITAL MARKETS, LLC | RBC CAPITAL MARKETS, LLC |
| By: |  |
| Name: | Eric Schwarz |
| Title: | Director |

---

------

SCHEDULE I

Underwriting Agreement dated [ ], 2026

Registration Statement Nos. 333-293890 and 333-293890-01

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| | |
|:---|:---|
| Representatives: | Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC. |
|  | c/o Goldman Sachs & Co. LLC |
| Address: | 200 West Street, 7th Floor |
|  | New York, New York 10282 |
| Attention: | Steven Moffitt |
| c/o J.P. Morgan Securities LLC | c/o J.P. Morgan Securities LLC |
| Address: | 270 Park Avenue – 4<sup>th</sup> Floor |
|  | New York, New York 10017 |
| Attention: | Mark Gilmore |
| c/o RBC Capital Markets, LLC | c/o RBC Capital Markets, LLC |
| Address: | Brookfield Place |
|  | 200 Vesey Street, 8th Floor |
|  | New York, New York 10281 |
| Attention: | Eric Schwarz |

---

---

| | |
|:---|:---|
| **Title, Purchase Price and Description of Bonds:** | **Title, Purchase Price and Description of Bonds:** |
| Title: | Appalachian Power Recovery Funding LLC Series 2026-A Senior Secured SAC Bonds, |

---

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Principal**<br> **Amount**<br> **Offered** | **Interest**<br> **Rate** | **Initial Price to**<br> **Public** | **Underwriting<br>Discounts**<br> **and<br>Commissions** | **Proceeds to**<br> **Issuer (Before**<br> **Expenses)** |
| Tranche A-1 Bond | $[ ] | [ ]% | [ ]% | [ ]% | $[ ] |
| Tranche A-2 Bond | $[ ] | [ ]% | [ ]% | [ ]% | $[ ] |
| Tranche A-3 Bond | $[ ] | [ ]% | [ ]% | [ ]% | $[ ] |

---

------

---

| | |
|:---|:---|
| Original Issue Discount (if any): | $[ ] |
| Redemption provisions: |  |
| Other provisions: |  |
| Closing Date, Time and Location: | [ ], 2026, 9:00 a.m.; offices of Sidley Austin LLP, 1100 Louisiana Street, Suite 5900, Houston, Texas 77002 and simultaneously in the offices of Hunton Andrews Kurth LLP, 200 Park Avenue, New York, New York 10166 |

---

------

**SCHEDULE II** 

**Principal Amount of Bonds to be Purchased** 

---

| | | | |
|:---|:---|:---|:---|
| **Underwriter** | **Tranche A-1** | **Tranche A-2** | **Tranche A-3** |
|  Goldman Sachs & Co. LLC | $[] | $[] | $[] |
|  J.P. Morgan Securities LLC | [] | [] | [] |
|  RBC Capital Markets, LLC | [] | [] | [] |
|  Jefferies LLC | [] | [] | [] |
|  Morgan Stanley & Co. LLC | [] | [] | [] |
|  SMBC Nikko Securities America, Inc. | [] | [] | [] |
|  **Total** | $**[** **]** | $**[** **]** | $**[** **]** |

---

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**SCHEDULE III** 

**Schedule of Issuer Free Writing Prospectuses** 

A. Free Writing Prospectuses not required to be filed

Electronic Road Show, [ ], 2026 through [ ], 2026

B. Free Writing Prospectuses required to be filed pursuant to Rule 433

Preliminary Term Sheet, dated [ ], 2026

Pricing Term Sheet, dated [ ], 2026

------

**SCHEDULE IV** 

**Descriptive List of Underwriter Provided Information** 

A. <u>Pricing Prospectus</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) under the heading "PLAN OF DISTRIBUTION" in the Preliminary Prospectus: (i) the paragraph immediately under "The Underwriters' Sales Price for the SAC Bonds"; (ii) the third sentence under the caption "No Assurance as to Resale Price or Resale Liquidity for the SAC Bonds"; (iii) the entire first full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the SAC Bonds" (except the last sentence thereof); and (iv) the second sentence of the second full paragraph and the last sentence of the fifth full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the SAC Bonds"; and (b) under the heading "OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE SAC BONDS" in the Preliminary Prospectus, the first sentence under the caption "The absence of a secondary market for the SAC Bonds might limit your ability to resell the SAC Bonds."

B. <u>Final Prospectus</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) under the heading "PLAN OF DISTRIBUTION" in the Prospectus: (i) the paragraph immediately under "The Underwriters' Sales Price for the SAC Bonds"; (ii) the third sentence under the caption "No Assurance as to Resale Price or Resale Liquidity for the SAC Bonds"; (iii) the entire first full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the SAC Bonds" (except the last sentence thereof); and (iv) the second sentence of the second full paragraph and the last sentence of the fifth full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the SAC Bonds"; and (b) under the heading "OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE SAC BONDS" in the Prospectus, the first sentence under the caption "The absence of a secondary market for the SAC Bonds might limit your ability to resell the SAC Bonds."

## Exhibit 3.3

**Exhibit 3.3**

**AMENDED AND RESTATED** 

**LIMITED LIABILITY COMPANY AGREEMENT** 

**OF** 

**APPALACHIAN POWER RECOVERY FUNDING LLC** 

Dated and Effective as of

April 30, 2026

------

<u>**TABLE OF CONTENTS**</u> 

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| | |
|:---|:---|
|  | Page |
|  ARTICLE I GENERAL PROVISIONS | 1 |
|  SECTION 1.01 <u>Definitions</u> | 1 |
|  SECTION 1.02 <u>Sole Member; Registered Office and Agent</u> | 2 |
|  SECTION 1.03 <u>Other Offices</u> | 3 |
|  SECTION 1.04 <u>Name</u> | 3 |
|  SECTION 1.05 <u>Purpose; Nature of Business Permitted; Powers</u> | 3 |
|  SECTION 1.06 <u>Limited Liability Company Agreement; Certificate of Formation</u> | 5 |
|  SECTION 1.07 <u>Separate Existence</u> | 5 |
|  SECTION 1.08 <u>Limitation on Certain Activities</u> | 9 |
|  SECTION 1.09 <u>No State Law Partnership</u> | 10 |
|  ARTICLE II CAPITAL | 10 |
|  SECTION 2.01 <u>Initial Capital</u> | 10 |
|  SECTION 2.02 <u>Additional Capital Contributions</u> | 10 |
|  SECTION 2.03 <u>Capital Account</u> | 11 |
|  SECTION 2.04 <u>Interest on Capital Account</u> | 11 |
|  ARTICLE III ALLOCATIONS; BOOKS | 11 |
|  SECTION 3.01 <u>Allocations of Income and Loss</u> | 11 |
|  SECTION 3.02 <u>Company to be Disregarded for Tax Purposes</u> | 12 |
|  SECTION 3.03 <u>Books of Account; Fiscal Year</u> | 12 |
|  SECTION 3.04 <u>Access to Accounting Records</u> | 12 |
|  SECTION 3.05 <u>Annual Tax Information</u> | 12 |
|  SECTION 3.06 <u>Internal Revenue Service Communications</u> | 12 |
|  ARTICLE IV MEMBER | 12 |
|  SECTION 4.01 <u>Powers</u> | 12 |
|  SECTION 4.02 <u>Compensation of Member</u> | 14 |
|  SECTION 4.03 <u>Other Ventures</u> | 14 |
|  SECTION 4.04 <u>Actions by the Member</u> | 14 |
|  ARTICLE V OFFICERS | 14 |
|  SECTION 5.01 <u>Designation; Term; Qualifications</u> | 14 |
|  SECTION 5.02 <u>Removal and Resignation</u> | 16 |
|  SECTION 5.03 <u>Vacancies</u> | 16 |
|  SECTION 5.04 <u>Compensation</u> | 16 |

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i

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| | |
|:---|:---|
|  | Page |
|  ARTICLE VI MEMBERSHIP INTEREST | 16 |
|  SECTION 6.01 <u>General</u> | 16 |
|  SECTION 6.02 <u>Distributions</u> | 16 |
|  SECTION 6.03 <u>Rights on Liquidation, Dissolution or Winding Up</u> | 17 |
|  SECTION 6.04 <u>Redemption</u> | 17 |
|  SECTION 6.05 <u>Voting Rights</u> | 17 |
|  SECTION 6.06 <u>Transfer of Membership Interests</u> | 17 |
|  SECTION 6.07 <u>Admission of Transferee as Member</u> | 17 |
|  ARTICLE VII MANAGERS | 18 |
|  SECTION 7.01 <u>Managers</u> | 18 |
|  SECTION 7.02 <u>Powers of the Managers</u> | 19 |
|  SECTION 7.03 <u>Compensation; Reimbursement of Expenses</u> | 20 |
|  SECTION 7.04 <u>Removal of Managers</u> | 21 |
|  SECTION 7.05 <u>Resignation of Manager</u> | 21 |
|  SECTION 7.06 <u>Vacancies</u> | 21 |
|  SECTION 7.07 <u>Meetings of the Managers</u> | 21 |
|  SECTION 7.08 <u>Electronic Communications</u> | 21 |
|  SECTION 7.09 <u>Committees of Managers</u> | 22 |
|  SECTION 7.10 <u>Limitations on Independent Managers</u> | 22 |
|  ARTICLE VIII EXPENSES | 22 |
|  SECTION 8.01 <u>Expenses</u> | 22 |
|  ARTICLE IX PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP | 23 |
|  SECTION 9.01 <u>Existence</u> | 23 |
|  SECTION 9.02 <u>Dissolution</u> | 24 |
|  SECTION 9.03 <u>Accounting</u> | 24 |
|  SECTION 9.04 <u>Certificate of Cancellation</u> | 24 |
|  SECTION 9.05 <u>Winding Up</u> | 24 |
|  SECTION 9.06 <u>Order of Payment of Liabilities Upon Dissolution</u> | 25 |
|  SECTION 9.07 <u>Limitations on Payments Made in Dissolution</u> | 25 |
|  SECTION 9.08 <u>Limitation on Liability</u> | 25 |
|  ARTICLE X INDEMNIFICATION | 25 |
|  SECTION 10.01 <u>Indemnity</u> | 25 |
|  SECTION 10.02 <u>Indemnity for Actions By or In the Right of the Company</u> | 26 |
|  SECTION 10.03 <u>Indemnity If Successful</u> | 26 |
|  SECTION 10.04 <u>Expenses</u> | 26 |
|  SECTION 10.05 <u>Advance Payment of Expenses</u> | 27 |
|  SECTION 10.06 <u>Other Arrangements Not Excluded</u> | 27 |

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ii

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| | |
|:---|:---|
|  | Page |
|  ARTICLE XI MISCELLANEOUS PROVISIONS | 27 |
|  SECTION 11.01 <u>No Bankruptcy Petition; Dissolution</u> | 27 |
|  SECTION 11.02 <u>Amendments</u> | 28 |
|  SECTION 11.03 <u>Governing Law</u> | 29 |
|  SECTION 11.04 <u>Headings</u> | 29 |
|  SECTION 11.05 <u>Severability</u> | 29 |
|  SECTION 11.06 <u>Assigns</u> | 29 |
|  SECTION 11.07 <u>Enforcement by Each Independent Manager</u> | 29 |
|  SECTION 11.08 <u>Waiver of Partition; Nature of Interest</u> | 29 |
|  SECTION 11.09 <u>Benefits of Agreement; No Third-Party Rights</u> | 30 |
|  SECTION 11.10 <u>Notices to Indenture Trustee and Rating Agencies</u> | 30 |
|  SECTION 11.11 <u>Electronic Signatures</u> | 30 |

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SCHEDULES, EXHIBITS AND APPENDIX

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| | |
|:---|:---|
| Schedule A | Schedule of Capital Contribution of Member |
| Schedule B | Initial Managers |
| Schedule C | Initial Officers |
| Exhibit A | Management Agreement |
| Appendix A | Definitions |

---

iii

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**AMENDED AND RESTATED** 

**LIMITED LIABILITY COMPANY AGREEMENT OF** 

**APPALACHIAN POWER RECOVERY FUNDING LLC** 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this "<u>Agreement</u>") of APPALACHIAN POWER RECOVERY FUNDING LLC, a Delaware limited liability company (the "<u>Company</u>"), is made and entered into as of April 30, 2026, by APPALACHIAN POWER COMPANY, a Virginia corporation (including any additional or successor members of the Company other than Special Members, the "<u>Member</u>") and the Managers (as defined herein).

WHEREAS, the Member has caused to be filed a Certificate of Formation with the Secretary of State of the State of Delaware to form the Company under and pursuant to the LLC Act and has entered into a Limited Liability Company Agreement of the Company, dated as of January 19, 2026 (the "<u>Original LLC Agreement</u>"); and

WHEREAS, in accordance with the LLC Act, the undersigned desire to enter into this Agreement to amend and restate in its entirety the Original LLC Agreement and to set forth the rights, powers and interests of the Member with respect to the Company and its Membership Interest therein and to provide for the management of the business and operations of the Company.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the undersigned, intending to be legally bound, hereby amend and restate in its entirety the Original LLC Agreement, and hereby agree, as follows:

ARTICLE I

GENERAL PROVISIONS

SECTION 1.01 <u>Definitions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in Appendix A attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The words "hereof," "herein," "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Article, Section, Schedule, Exhibit, Annex, Appendix and Attachment references contained in this Agreement are references to Articles, Sections, Schedules, Exhibits, Annexes, Appendixes and Attachments in or to this Agreement unless otherwise specified; and the terms "<u>includes</u>" and "<u>including</u>" shall mean "includes without limitation" and "including without limitation," respectively.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Non-capitalized terms used herein which are defined in the Securitization Law shall, as the context requires, have the meanings assigned to such terms in the Securitization Law, but without giving effect to amendments to the Securitization Law after the date hereof that have a material adverse effect on the Company or the Bondholders.

SECTION 1.02 <u>Sole Member; Registered Office and Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The initial sole member of the Company shall be Appalachian Power Company, a Virginia corporation, or any successor as sole member pursuant to <u>Sections</u> <u>1.02(c)</u>, <u>6.06</u> and <u>6.07</u>. The initial registered office and registered agent of the Company in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, New Castle County. The Member may change said registered office and registered agent from one location to another in the State of Delaware. The Member shall provide written notice of any such change to the Indenture Trustee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon the transfer or assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee or an additional member of the Company pursuant to <u>Sections 6.06</u> and <u>6.07</u>), each Person acting as an Independent Manager (as defined herein) pursuant to the terms of this Agreement shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement, and (ii) such successor has also accepted its appointment as an Independent Manager pursuant to this Agreement; <u>provided</u>, <u>however</u>, the Special Members shall automatically cease to be members of the Company upon the admission to the Company of a substitute Member. Each Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets (and no Special Member shall be treated as a member of the Company for federal income tax purposes). Pursuant to Section 18-301 of the LLC Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company. A Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the LLC Act, each Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including the merger, consolidation, division or conversion of the Company. In order to implement the admission to the Company of each Special Member, each Person acting as an Independent Manager pursuant to this Agreement shall execute a counterpart to this Agreement and a counterpart to the Management Agreement in the form attached hereto as <u>Exhibit A</u>.

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Prior to its admission to the Company as Special Member, each Person acting as an Independent Manager pursuant to this Agreement shall not be a member of the Company. A "Special Member" means, upon such Person's admission to the Company as a member of the Company pursuant to this <u>Section</u> <u>1.02(b)</u>, a Person acting as an Independent Manager, in such Person's capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this Agreement. For purposes of this Agreement, a Special Member is not included within the defined term "Member."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company may admit additional Members with the affirmative vote of both (i) a majority of the Managers that are not an Independent Manager and (ii) each Independent Manager. Notwithstanding the preceding sentence, it shall be a condition to the admission of any additional Member that the sole Member shall have received an opinion of outside tax counsel (as selected by the Member in form and substance reasonably satisfactory to the Member and the Indenture Trustee) that the admission of such additional Member shall not cause the Company to be treated, for federal income tax purposes, as having more than one "sole owner" and that the Company shall not be treated, for federal income tax purposes, as an entity separate from such "sole owner."

SECTION 1.03 <u>Other Offices</u>. The Company may have an office at 1051 East Cary St., Suite 1100, Richmond, Virginia 23219, or at any other offices that may at any time be established by the Member at any place or places within or outside the State of Delaware. The Member shall provide notice to the Indenture Trustee of any change in the location of the Company's office.

SECTION 1.04 <u>Name</u>. The name of the Company shall be "Appalachian Power Recovery Funding LLC". The name of the Company may be changed from time to time by the Member with ten (10) days' prior written notice to the Managers and the Indenture Trustee, and the filing of an appropriate amendment to the Certificate of Formation with the Secretary of State as required by the LLC Act.

SECTION 1.05 <u>Purpose; Nature of Business Permitted; Powers</u>. The Company is intended to qualify as an "Assignee" as defined in Section 56-249.8.A of the Securitization Law. The purposes for which the Company is formed are limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) purchase, acquire, own, hold, administer, service or enter into agreements regarding the receipt and servicing of SAC Property and the other SAC Bond Collateral, along with certain other related assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) manage, sell, assign, pledge, collect amounts due on or otherwise deal with the SAC Property and the other SAC Bond Collateral and related assets to be so acquired in accordance with the terms of the Basic Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) negotiate, authorize, execute, deliver, assume the obligations under, and perform its duties under, the Basic Documents and any other agreement or instrument or document relating to the activities set forth in <u>clauses (a)</u> and <u>(b)</u> above; <u>provided</u>, that each party to any such agreement under which material obligations are imposed upon the Company shall covenant that it shall not, prior to the date which is one year and one day

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after the termination of the Indenture and the payment in full of the SAC Bonds and any other amounts owed under the Indenture, acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company; or ordering the winding up or liquidation of the affairs of the Company; and <u>provided</u>, <u>further</u>, that the Company shall be permitted to incur additional indebtedness or other liabilities payable to service providers and trade creditors in the ordinary course of business in connection with the activities permitted under this <u>Section</u> <u>1.05</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) file with the U.S. Securities and Exchange Commission one or more registration statements, including any pre-effective or post-effective amendments thereto and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (including any prospectus supplement, prospectus and exhibits contained therein) and file such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents necessary or desirable to register the SAC Bonds under the securities or "Blue Sky" laws of various jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) authorize, execute, deliver, issue and register the SAC Bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) make payments on the SAC Bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) pledge its interest in SAC Property and other SAC Bond Collateral to the Indenture Trustee under the Indenture in order to secure the SAC Bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) distributing amounts released to the Member, subject to any requirements in the Basic Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) engage in any lawful act or activity and exercise any powers permitted to limited liability companies formed under the laws of the State of Delaware that, in either case, are incidental to, or necessary, suitable or convenient for the accomplishment of the above-mentioned purposes.

The Company shall engage only in any activities related to the foregoing purposes or required or authorized by the terms of the Basic Documents or other agreements referenced above. The Company shall have all powers reasonably incidental, necessary, suitable or convenient to effect the foregoing purposes, including all powers granted under the LLC Act. The Company may issue the SAC Bonds pursuant to the Financing Order. The Company is hereby authorized to execute, deliver and perform, and the Member, any Manager (other than an Independent Manager), or any officer of the Company, acting singly or collectively, on behalf of the Company, are hereby authorized to execute and deliver the SAC Bonds, the Basic Documents and all registration statements, underwriting agreements, documents, agreements, certificates or financing statements contemplated thereby or related thereto, all without any further act, vote, consent or approval of any Member, Manager or other Person, notwithstanding any other

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provision of this Agreement, the LLC Act, or other applicable law, rule or regulation. Notwithstanding any other provision of this Agreement, the LLC Act or other applicable law, any Basic Document executed prior to the date hereof by any Member, Manager or officer on behalf of the Company is hereby ratified and approved in all respects. The authorization set forth in the two preceding sentences shall not be deemed a restriction on the power and authority of the Member or any Manager, including any Independent Manager, to enter into other agreements or documents on behalf of the Company as authorized pursuant to this Agreement and the LLC Act. The Company shall possess and may exercise all the powers and privileges granted by the LLC Act or by any other law or by this Agreement, together with any powers incidental thereto, insofar as such powers and privileges are incidental, necessary, suitable or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.

SECTION 1.06 <u>Limited Liability Company Agreement; Certificate of Formation</u>. This Agreement shall constitute a "limited liability company agreement" within the meaning of the LLC Act. Paula Haynes, as an authorized person within the meaning of the LLC Act, has caused a certificate of formation of the Company to be executed and filed in the office of the Secretary of State of the State of Delaware on November 12, 2025 (such execution and filing being hereby ratified and approved in all respects). Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, her powers as an "authorized person" ceased, and the Member thereupon became the designated "authorized person" and shall continue as the designated "authorized person" with the meaning of the LLC Act. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation of the Company as provided in the LLC Act.

SECTION 1.07 <u>Separate Existence</u>. Except for financial reporting purposes (to the extent required by generally accepted accounting principles) and for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, the Member and the Managers shall take all steps necessary to continue the identity of the Company as a separate legal entity and to make it apparent to third Persons that the Company is an entity with assets and liabilities distinct from those of the Member, Affiliates of the Member or any other Person, and that, the Company is not a division of any of the Affiliates of the Company or any other Person. In that regard, and without limiting the foregoing in any manner, the Company shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) maintain the assets of the Company in such a manner that it is not costly or difficult to segregate, identify or ascertain its individual assets from those of any other Person, including any Affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) conduct all transactions with Affiliates on an arm's-length basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) not guarantee, become obligated for or pay the debts of any Affiliate or hold the credit of the Company out as being available to satisfy the obligations of any Affiliate or other Person (nor, except as contemplated in the Basic Documents, indemnify any Person for losses resulting therefrom), nor, except as contemplated in the Basic Documents, have any of its obligations guaranteed by any Affiliate or hold the Company out as responsible for the debts of any Affiliate or other Person or for the decisions or

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actions with respect to the business and affairs of any Affiliate, nor seek or obtain credit or incur any obligation to any third party based upon the creditworthiness or assets of any Affiliate or any other Person (i.e. other than based on the assets of the Company) nor allow any Affiliate to do such things based on the credit of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) except as expressly otherwise permitted hereunder or under any of the Basic Documents, not permit the commingling or pooling of the Company's funds or other assets with the funds or other assets of any Affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) maintain separate deposit and other bank accounts and funds (separately identifiable from those of the Member or any other Person) to which no Affiliate has any access (except APCo, solely in its capacity as Servicer or as Administrator), which accounts shall be maintained in the name and, to the extent not inconsistent with applicable federal tax law, with the tax identification number of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) maintain full books of accounts and records (financial or other) and financial statements separate from those of its Affiliates or any other Person (except as described herein with respect to tax purposes and financial reporting), prepared and maintained in accordance with generally accepted accounting principles (including, all resolutions, records, agreements or instruments underlying or regarding the transactions contemplated by the Basic Documents or otherwise) and audited annually by an independent accounting firm which shall provide such audit to the Indenture Trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) pay its own liabilities out of its own funds, including fees and expenses of the Administrator pursuant to the Administration Agreement and the Servicer pursuant to the Servicing Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) not hire or maintain any employees, but shall compensate (either directly or through reimbursement of the Company's allocable share of any shared expenses) all consultants, agents and Affiliates, to the extent applicable, for services provided to the Company by such consultants, agents or Affiliates, in each case, from the Company's own funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) allocate fairly and reasonably the salaries of and the expenses related to providing the benefits of officers or managers shared with the Member, any Special Member or any Manager;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) allocate fairly and reasonably any overhead shared with the Member, any Special Member or any Manager;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) pay from its own bank accounts for accounting and payroll services, rent, lease and other expenses (or the Company's allocable share of any such amounts provided by one or more other Affiliates) and not have such operating expenses (or the Company's allocable share thereof) paid by any Affiliates, provided, that the Member shall be permitted to pay the initial organization expenses of the Company and certain of the expenses related to the transactions contemplated by the Basic Documents as provided therein;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) maintain adequate capitalization to conduct its business and affairs considering the Company's size and the nature of its business and intended purposes and, after giving effect to the transactions contemplated by the Basic Documents, refrain from engaging in a business for which its remaining property represents an unreasonably small capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) conduct all of the Company's business (whether in writing or orally) solely in the name of the Company through the Member and the Company's Managers, officers and agents and hold the Company out as an entity separate from any Affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) not make or declare any distributions of cash or property to the Member except in accordance with appropriate limited liability company formalities and only consistent with sound business judgment to the extent that it is permitted pursuant to the Basic Documents and not violative of any applicable law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) otherwise practice and adhere to all limited liability company procedures and formalities to the extent required by this Agreement or all other appropriate constituent documents and the laws of its state of formation and all other appropriate jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) not appoint an Affiliate or any employee of an Affiliate as an agent of the Company, except as otherwise permitted in the Basic Documents (although such Persons can qualify as a Manager or as an officer of the Company);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) not acquire obligations or securities of or make loans or advances to or pledge its assets for the benefit of any Affiliate, the Member or any Affiliate of the Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) not permit the Member or any Affiliate to acquire obligations of or make loans or advances to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) except as expressly provided in the Basic Documents, not permit the Member or any Affiliate to guarantee, pay or become liable for the debts of the Company nor permit any such Person to hold out its creditworthiness as being available to pay the liabilities and expenses of the Company nor, except for the indemnities in this Agreement and the Basic Documents, indemnify any Person for losses resulting therefrom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) maintain separate minutes of the actions of the Member and the Managers, including the transactions contemplated by the Basic Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) cause (i) all written and oral communications, including letters, invoices, purchase orders, and contracts, of the Company to be made solely in the name of the Company, (ii) the Company to have its own tax identification number (to the extent not inconsistent with applicable federal tax law), stationery, checks and business forms, separate from those of any Affiliate, (iii) all Affiliates not to use the stationery or business forms of the Company, and cause the Company not to use the stationery or business forms of any Affiliate, and (iv) all Affiliates not to conduct business in the name of the Company, and cause the Company not to conduct business in the name of any Affiliate;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) direct creditors of the Company to send invoices and other statements of account of the Company directly to the Company and not to any Affiliate and cause the Affiliates to direct their creditors not to send invoices and other statements of accounts of such Affiliates to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) cause the Member to maintain as official records all resolutions, agreements, and other instruments underlying or regarding the transactions contemplated by the Basic Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) disclose, and cause the Member to disclose, in its financial statements the effects of all transactions between the Member and the Company in accordance with generally accepted accounting principles, and in a manner which makes it clear that (i) the Company is a separate legal entity, (ii) the assets of the Company (including the SAC Property transferred to the Company pursuant to the Sale Agreement) are not assets of any Affiliate and are not available to pay creditors of any Affiliate and (iii) neither the Member nor any other Affiliate is liable or responsible for the debts of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) except as described herein with respect to tax purposes and financial reporting, treat and cause the Member to treat the transfer of SAC Property from the Member to the Company as a sale under the Securitization Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) except as described herein with respect to tax purposes and financial reporting, describe and cause each Affiliate to describe the Company, and hold the Company out as a separate legal entity and not as a division or department of any Affiliate, and promptly correct any known misunderstanding regarding the Company's identity separate from any Affiliate or any Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) so long as any of the SAC Bonds are outstanding, treat the SAC Bonds as debt for all purposes and specifically as debt of the Company, other than for financial reporting, state or federal regulatory or tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) solely for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the SAC Bonds are outstanding, treat the SAC Bonds as indebtedness of the Member secured by the SAC Bond Collateral unless otherwise required by appropriate taxing authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) file its own tax returns, if any, as may be required under applicable law, to the extent (i) not part of a consolidated group filing a consolidated return or returns or (ii) not treated as a division or disregarded entity for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) maintain its valid existence in good standing under the laws of the State of Delaware and maintain its qualification to do business under the laws of such other jurisdictions as its operations require;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) not form, or cause to be formed, any subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) comply with all laws applicable to the transactions contemplated by this Agreement and the Basic Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) cause the Member to observe in all material respects all limited liability company procedures and formalities, if any, required by its constituent documents and the laws of its state of formation and all other appropriate jurisdictions.

Failure of the Company, or the Member or any Manager on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Member or the Managers.

SECTION 1.08 <u>Limitation on Certain Activities</u>. Notwithstanding any other provisions of this Agreement, the Company, and the Member or Managers on behalf of the Company, shall not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) engage in any business or activity other than as set forth in <u>Article I</u> hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) without the affirmative vote or consent of its Member and the affirmative vote or consent of all of the Managers, including each Independent Manager, file a voluntary bankruptcy petition or any other petition for relief with respect to the Company under the Bankruptcy Code or similar law, consent to the institution of insolvency or bankruptcy proceedings against the Company or otherwise institute insolvency or bankruptcy proceedings with respect to the Company or take any limited liability company action in furtherance of any such filing or institution of a proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) without the affirmative vote or consent of all Managers, including each Independent Manager, and then only to the extent permitted by the Basic Documents, convert, merge or consolidate with any other Person or sell all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) take any action, file any tax return, or make any election inconsistent with the treatment of the Company, for purposes of federal income taxes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) incur any indebtedness or assume or guarantee any indebtedness of any Person (other than the indebtedness incurred under the Basic Documents);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) without the affirmative vote or consent of all Managers, including each Independent Manager, amend the organizational documents of the Company, including this Agreement, in a manner that would adversely affect the bankruptcy-remote status of the Company or the interests of the Bondholders;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) issue any bonds other than the SAC Bonds contemplated by the Basic Documents; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) to the fullest extent permitted by law, without the affirmative vote or consent of its Member and the affirmative vote or consent of all Managers, including each Independent Manager, execute any dissolution, liquidation, or winding up of the Company.

<u>provided however</u>, that neither the Member nor any Manager may authorize the taking of any of the foregoing actions described in clauses <u>(b)</u>, <u>(c)</u>, <u>(f)</u> or <u>(h)</u> of this <u>Section</u> <u>1.08</u> unless there are at least two Independent Managers then serving in such capacity and such Independent Managers have consented thereto.

So long as any of the SAC Bonds are outstanding, the Company and the Member shall give written notice to each applicable Rating Agency of any action described in <u>clauses (b)</u>, <u>(c)</u>, <u>(f)</u> or <u>(h)</u> of this <u>Section</u> <u>1.08</u> which is taken by or on behalf of the Company with the required affirmative vote or consent of the Member and all Managers, including each Independent Manager, as therein described.

SECTION 1.09 <u>No State Law Partnership</u>. No provisions of this Agreement shall be deemed or construed to constitute a partnership (including a limited partnership) or joint venture, or the Member a partner or joint venturer of or with any Manager or the Company, for any purposes.

ARTICLE II

CAPITAL

SECTION 2.01 <u>Initial Capital</u>. The initial capital of the Company shall be the sum of cash contributed to the Company by the Member (the "<u>Capital Contribution</u>") in the amount set out opposite the name of the Member on <u>Schedule A</u> hereto, as amended from time to time and incorporated herein by this reference.

SECTION 2.02 <u>Additional Capital Contributions</u>. The assets of the Company are expected to generate a return sufficient to satisfy all obligations of the Company under this Agreement and the Basic Documents and any other obligations of the Company. It is expected that no capital contributions to the Company will be necessary after the purchase of the SAC Property. On or prior to the date of issuance of the SAC Bonds, the Member shall make an additional contribution to the Company in an amount equal to at least 0.50% of the initial principal amount of the SAC Bonds or such greater amount as agreed to by the Member in connection with the issuance by the Company of the SAC Bonds, which amount the Company shall deposit into the capital subaccount established by the Indenture Trustee as provided in the Indenture. No capital contribution by the Member to the Company will be made for the purpose of mitigating losses on SAC Property that has previously been transferred to the Company, and all capital contributions shall be made in accordance with all applicable limited liability company procedures and requirements, including proper record keeping by the Member and the Company. Each capital contribution will be acknowledged by a written receipt signed by any one of the Managers. The Managers acknowledge and agree that, notwithstanding anything in this

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Agreement to the contrary, such additional contribution will be invested only in investments eligible pursuant to the Basic Documents, and all income earned thereon shall be allocated or paid by the Indenture Trustee in accordance with the provisions of the Indenture.

SECTION 2.03 <u>Capital Account</u>. A Capital Account shall be established and maintained for the Member on the Company's books (the "<u>Capital Account</u>").

SECTION 2.04 <u>Interest on Capital Account</u>. Except as provided in the Securitization Law, the Financing Order and the Basic Documents (which may provide for payment of investment earnings on the Capital Account), no interest shall be paid or credited to the Member on its Capital Account or upon any undistributed profits left on deposit with the Company. Except as provided herein or by law, the Member shall have no right to demand or receive the return of its Capital Contribution.

ARTICLE III

ALLOCATIONS; BOOKS

SECTION 3.01 <u>Allocations of Income and Loss</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Book Allocations</u>. The net income and net loss of the Company shall be allocated entirely to the Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Tax Allocations</u>. Because the Company is not making (and will not make) an election to be treated as an association taxable as a corporation under Section 301.7701-3(a) of the Treasury Regulations, and because the Company is a business entity that has a single owner and is not a corporation, it is expected to be disregarded as an entity separate from its owner for federal income tax purposes under Section 301.7701-3(b)(1) of the Treasury Regulations. Accordingly, all items of income, gain, loss, deduction and credit of the Company for all taxable periods will be treated for federal income tax purposes, and for state and local income and other tax purposes to the extent permitted by applicable law, as realized or incurred directly by the Member. To the extent not so permitted, all items of income, gain, loss, deduction and credit of the Company shall be allocated entirely to the Member as permitted by applicable tax law, and the Member shall pay (or indemnify the Company, the Indenture Trustee and each of their officers, managers, employees or agents for, and defend and hold harmless each such person from and against its payment of) any taxes levied or assessed upon all or any part of the Company's property or assets based on existing law as of the date hereof, including any sales, gross receipts, general corporation, personal property, privilege, franchise or license taxes (but excluding any taxes imposed as a result of a failure of such person to properly withhold or remit taxes imposed with respect to payments on any SAC Bond), in the event and to the extent such taxes are not recoverable as Ongoing Financing Costs. The Indenture Trustee (on behalf of the Secured Parties) shall be a third party beneficiary of the Member's obligations set forth in this <u>Section</u> <u>3.01</u>, it being understood that Bondholders shall be entitled to enforce their rights against the Member under this <u>Section</u> <u>3.01</u> solely through a cause of action brought for their benefit by the Indenture Trustee.

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SECTION 3.02 <u>Company to be Disregarded for Tax Purposes</u>. The Company shall comply with the applicable provisions of the Code and the applicable Treasury Regulations thereunder in the manner necessary to effect the intention of the Member that the Company be treated, for federal income tax purposes, as a disregarded entity that is not separate from the Member pursuant to Treasury Regulations Section 301.7701-1 et seq. and that the Company be accorded such treatment until its dissolution pursuant to <u>Article IX</u> hereof and shall take all actions, and shall refrain from taking any action, required by the Code or Treasury Regulations thereunder in order to maintain such status of the Company. In addition, for federal income tax purposes, the Company may not claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the SAC Bonds (other than amounts properly withheld from such payments under the Code or other tax laws) or assert any claim against any present or former Bondholder by reason of the payment of the taxes levied or assessed upon any part of the SAC Bond Collateral.

SECTION 3.03 <u>Books of Account</u><u>; Fiscal Year</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Books of Account</u>. At all times during the continuance of the Company, the Company shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with generally accepted accounting principles, using the fiscal year and taxable year of the Member. In addition, the Company shall keep all records required to be kept pursuant to the LLC Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fiscal Year</u>. The Company shall use the accounting year and taxable year of the Member. At the time of execution of this Agreement, the accounting year and taxable year is the calendar year.

SECTION 3.04 <u>Access to Accounting Records</u>. All books and records of the Company shall be maintained at any office of the Company or at the Company's principal place of business, and the Member, and its duly authorized representative, shall have access to them at such office of the Company and the right to inspect and copy them at reasonable times.

SECTION 3.05 <u>Annual Tax Information</u>. The Managers shall cause the Company to deliver to the Member all information necessary for the preparation of the Member's federal income tax return.

SECTION 3.06 <u>Internal Revenue Service Communications</u>. The Member shall communicate and negotiate with the U.S. Internal Revenue Service on any U.S. federal tax matter on behalf of the Member and the Company.

ARTICLE IV

MEMBER

SECTION 4.01 <u>Powers</u>. Subject to the provisions of this Agreement and the LLC Act, all powers shall be exercised by or under the authority of, and the business and affairs of the Company shall be controlled by, the Member pursuant to <u>Section</u> <u>4.04</u>. The Member may delegate any or all such powers to the Managers. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Member shall have the following powers:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To select and remove the Managers and all officers and agents of the Company, prescribe such powers and duties for them as may be consistent with the LLC Act and other applicable law and this Agreement, fix their compensation, and require from them security for faithful service; <u>provided</u>, that, except as provided in <u>Section</u> <u>7.06</u>, at all times during when any SAC Bonds are outstanding and the Indenture remains in full force and effect (and otherwise in accordance with the Indenture) the Company shall have at least two Independent Managers. Prior to the issuance of any SAC Bonds, the Member shall appoint at least two (2) Independent Managers. An "<u>Independent Manager</u>" means a Manager that is a natural person and who (1) has prior experience as an independent director, independent manager or independent member, (2) is employed by a nationally-recognized company that provides professional independent managers or independent directors and other corporate services in the ordinary course of its business, (3) is duly appointed as an Independent Manager and (4) is not and has not been for at least five years from the date of his or her appointment, and will not while serving as an Independent Manager, be any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a member, partner, equityholder, manager, director, officer or employee of the Company or any of its
equityholders or Affiliates (other than as an independent director, independent manager or special member of the Company or an Affiliate of the Company that is required by a creditor to be a single purpose bankruptcy remote entity);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a creditor, supplier or service provider (including provider of professional services) to the Company, the
Member or any of their respective equityholders or Affiliates (other than a nationally-recognized company that routinely provides professional independent managers or independent directors and other corporate services to the Company, the Member or
any of its Affiliates in the ordinary course of its business);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor,
supplier or service provider; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) a Person that controls (whether directly, indirectly or otherwise) any of the Persons described in clauses (i),
(ii) or (iii) above;

<u>provided</u>, that the indirect or beneficial ownership of stock of the Member or its Affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an Independent Manager. A natural person who otherwise satisfies the foregoing definition and satisfies subparagraph (i) by reason of being the independent manager or independent director of a "special purpose entity" affiliated with the Company shall be qualified to serve as an Independent Manager of the Company, provided that the fees that such individual earns from serving as an independent manager or independent director of Affiliates of the Company in any given year constitute in the

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aggregate less than five percent (5%) of such individual's annual income for that year. For purposes of this paragraph, a "<u>special purpose entity</u>" is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve such entity's separateness that are substantially similar to the Special Purpose Provisions (as hereinafter defined) of this Agreement. Promptly following any resignation or replacement of any Independent Manager, the Member shall give written notice to each applicable Rating Agency and to the Indenture Trustee of any such resignation or replacement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to <u>Sections 1.07</u> and <u>1.08</u> and <u>Article VII</u> hereof, to conduct, manage and control the affairs and business of the Company, and to make such rules and regulations therefor consistent with the LLC Act and other applicable law and this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To change the registered agent and office of the Company in Delaware from one location to another; to fix and locate from time to time one or more other offices of the Company; and to designate any place within or outside of the State of Delaware for the conduct of the business of the Company.

SECTION 4.02 <u>Compensation of Member</u>. To the extent permitted by applicable law, the Company shall have authority to reimburse the Member for out-of-pocket expenses incurred by the Member in connection with its service to the Company. It is understood that the compensation paid to the Member under the provisions of this <u>Section</u> <u>4.02</u> shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered an Ongoing Financing Cost of the Company subject to the limitations on such expenses set forth in the Financing Order.

SECTION 4.03 <u>Other Ventures</u>. Notwithstanding any duties (including fiduciary duties) otherwise existing at law or in equity, it is expressly agreed that the Member, the Managers and any Affiliates, officers, directors, managers, stockholders, partners or employees of the Member, may engage in other business ventures of any nature and description, whether or not in competition with the Company, independently or with others, and the Company shall not have any rights in and to any independent venture or activity or the income or profits derived therefrom.

SECTION 4.04 <u>Actions by the Member</u>. All actions of the Member may be taken by written resolution of the Member which shall be signed on behalf of the Member by an authorized officer of the Member and filed with the records of the Company.

ARTICLE V

OFFICERS

SECTION 5.01 <u>Designation; Term; Qualifications</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Officers</u>. The Managers may, from time to time, designate one or more Persons to be officers of the Company. Any officer so designated shall have such title and authority and perform such duties as the Managers may, from time to time, delegate to them. Each officer shall hold office for the term for which such officer is designated and until its

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successor shall be duly designated and shall qualify or until its death, resignation or removal as provided in this Agreement. Any Person may hold any number of offices. No officer need be a Manager, the Member, a Delaware resident, or a United States citizen. The Member hereby appoints the Persons identified on <u>Schedule C</u> to be the officers of the Company as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>President</u>. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Managers, shall be responsible for the general and active management of the business of the Company and shall see that all orders and resolutions of the Managers are carried into effect. The President or any other officer authorized by the President or the Managers may execute all contracts, except: (i) where required or permitted by law or this Agreement to be otherwise signed and executed, including <u>Section</u> <u>1.08</u>; and (ii) where signing and execution thereof shall be expressly delegated by the Managers to some other officer or agent of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Vice President</u>. In the absence of the President or in the event of the President's inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Managers, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents, if any, shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Secretary and Assistant Secretary</u>. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Managers and record all the proceedings of the meetings of the Company and of the Managers in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or shall cause to be given, notice of all meetings of the Member, if any, and special meetings of the Managers, and shall perform such other duties as may be prescribed by the Managers or the President, under whose supervision the Secretary shall serve. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Managers (or if there be no such determination, then in order of their designation), shall, in the absence of the Secretary or in the event of the Secretary's inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Treasurer and Assistant Treasurer</u>. The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Manager. The Treasurer shall disburse the funds of the Company as may be ordered by the Manager, taking proper vouchers for such disbursements, and shall render to the President and to the Managers, at its regular meetings or when the Managers so require, an account of all of the Treasurer's transactions and of the financial condition of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Managers (or if there be no such determination, then in the order of their

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designation), shall, in the absence of the Treasurer or in the event of the Treasurer's inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Officers as Agents</u>. The officers of the Company, to the extent their powers as set forth in this Agreement or otherwise vested in them by action of the Managers are not inconsistent with this Agreement, are agents of the Company for the purpose of the Company's business and, subject to <u>Section</u> <u>1.08</u>, the actions of the officers taken in accordance with such powers shall bind the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Duties of Managers and Officers</u>. Except to the extent otherwise provided herein, each Manager (other than the Independent Managers) and officer of the Company shall have a fiduciary duty of loyalty and care similar to that of directors and officers of business corporations organized under the General Corporation Law of the State of Delaware.

SECTION 5.02 <u>Removal and Resignation</u>. Any officer of the Company may be removed as such, with or without cause, by the Managers at any time. Any officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Managers.

SECTION 5.03 <u>Vacancies</u>. Any vacancy occurring in any office of the Company may be filled by the Managers.

SECTION 5.04 <u>Compensation</u>. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Managers. Such compensation shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.

ARTICLE VI

MEMBERSHIP INTEREST

SECTION 6.01 <u>General</u>. "<u>Membership Interest</u>" means the limited liability company interest of the Member in the Company. The Membership Interest constitutes personal property and, subject to <u>Section</u> <u>6.06</u>, shall be freely transferable and assignable in whole but not in part upon registration of such transfer and assignment on the books of the Company in accordance with the procedures established for such purpose by the Managers of the Company.

SECTION 6.02 <u>Distributions</u>. The Member shall be entitled to receive, out of the assets of the Company legally available therefor, distributions payable in cash in such amounts, if any, as the Managers shall declare, subject to the priority of payment provisions in the Indenture. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to the Member on account of its interest in the Company if such distribution would violate Section 18-607 of the LLC Act or any other applicable law or any Basic Document.

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SECTION 6.03 <u>Rights on Liquidation, Dissolution or Winding Up</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event of any liquidation, dissolution or winding up of the Company, the Member shall be entitled to all remaining assets of the Company available for distribution to the Member after satisfaction (whether by payment or reasonable provision for payment) of all liabilities, debts and obligations of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Neither the sale of all or substantially all of the property or business of the Company, nor the merger or consolidation of the Company into or with another Person or other entity, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purpose of this <u>Section</u> <u>6.03</u>.

SECTION 6.04 <u>Redemption</u>. The Membership Interest shall not be redeemable.

SECTION 6.05 <u>Voting Rights</u>. Subject to the terms of this Agreement, the Member shall have the sole right to vote (or consent) on all matters as to which members of a limited liability company shall be entitled to vote (or consent) pursuant to the LLC Act and other applicable law.

SECTION 6.06 <u>Transfer of Membership Interests</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Member may transfer its Membership Interest, in whole but not in part, but the transferee shall not be admitted as a Member except in accordance with <u>Section</u> <u>6.07</u>. Until the transferee is admitted as a Member, the Member shall continue to be the sole member of the Company (subject to <u>Section</u> <u>1.02</u>) and to be entitled to exercise any rights or powers of a Member of the Company with respect to the Membership Interest transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the fullest extent permitted by law, any purported transfer of any Membership Interest in violation of the provisions of this Agreement shall be wholly void and shall not effectuate the transfer contemplated thereby. Notwithstanding anything contained herein to the contrary and to the fullest extent permitted by law, the Member may not transfer any Membership Interest in violation of any provision of this Agreement or in violation of any applicable federal or state securities laws.

SECTION 6.07 <u>Admission of Transferee as Member</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A transferee of a Membership Interest desiring to be admitted as a Member must execute a counterpart of, or an agreement adopting, this Agreement and, except as permitted by paragraph (b) below, shall not be admitted without unanimous affirmative vote or consent of the Managers, which vote or consent must include the affirmative vote or consent of each Independent Manager. Upon admission of the transferee as a Member, the transferee shall have the rights, powers and duties and shall be subject to the restrictions and liabilities of the Member under this Agreement and the LLC Act. The transferee shall also be liable, to the extent of the Membership Interest transferred, for the unfulfilled obligations, if any, of the transferor Member to make capital contributions to the Company, but shall not be obligated for liabilities unknown to the transferee at the time such transferee was admitted as a Member and that could not be ascertained from this Agreement. Except as set forth in paragraph (b) below, whether or not the transferee of a Membership Interest becomes a Member, the Member transferring the Membership Interest is not released from any liability to the Company under this Agreement or the LLC Act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The approval of the Managers, including each Independent Manager, shall not be required for the transfer of the Membership Interest from the Member to any successor pursuant to <u>Section</u> <u>5.02</u> of the Sale Agreement or the admission of such Person as a Member. Once the transferee of a Membership Interest pursuant to this paragraph (b) becomes a Member, the prior Member shall cease to be a member of the Company and shall be released from any liability to the Company under this Agreement and the LLC Act.

ARTICLE VII

MANAGERS

SECTION 7.01 <u>Managers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to <u>Sections 1.07</u>, <u>1.08</u> and <u>4.01</u>, the business and affairs of the Company shall be managed by or under the direction of two or more Managers designated by the Member. Subject to the terms of this Agreement, the Member may determine at any time in its sole and absolute discretion the number of Managers. Subject in all cases to the terms of this Agreement, the authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, upon notice to all Managers; <u>provided</u>, that, except as provided in <u>Section</u> <u>7.06</u>, from and after the issuance of the SAC Bonds, the Company shall have at least two (2) Independent Managers at all times during when any SAC Bonds are outstanding and the Indenture remains in full force and effect (and otherwise in accordance with the Indenture). The initial number of Managers shall be five (5), two (2) of which shall be Independent Managers. Each Manager designated by the Member shall hold office until a successor is elected and qualified or until such Manager's earlier death, resignation, expulsion or removal. Each Manager shall execute and deliver the Management Agreement in the form attached hereto as <u>Exhibit A</u>. Managers need not be a Member. The initial Managers designated by the Member are listed on <u>Schedule B</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Manager shall be designated by the Member and shall hold office for the term for which designated and until a successor has been designated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as otherwise provided in <u>Section</u> <u>7.02</u> with respect to an Independent Manager, the Managers shall be obliged to devote only as much of their time to the Company's business as shall be reasonably required in light of the Company's business and objectives. Subject to <u>Section</u> <u>7.02</u>, each Manager shall perform his or her duties as a Manager in good faith, in a manner he or she reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent Person in a like position would use under similar circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as otherwise provided in this Agreement, the Managers shall act by the affirmative vote or consent of a majority of the Managers. Notwithstanding the foregoing or any contrary provision of this Agreement, the vote or consent of each Independent Manager shall only be required for actions of the Managers with respect to which the terms of this Agreement

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expressly require the consent of an Independent Manager, including without limitation, as expressly required in <u>Section</u> <u>1.02(c)</u>, <u>Section</u> <u>1.08(b)</u>, <u>Section</u> <u>1.08(c)</u>, <u>Section</u> <u>1.08(g)</u>, <u>Section</u> <u>6.07(a)</u>, <u>Section</u> <u>9.02(a)</u> and <u>Section</u> <u>11.02(a)</u>, and any other actions of the Managers shall be taken, and a quorum of the Managers shall be calculated, as if each Independent Manager is not a Manager. Each Manager (other than the Independent Manager) shall have the authority to sign duly authorized agreements and other instruments on behalf of the Company without the joinder of any other Manager.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subject to the terms of this Agreement, any action may be taken by the Managers without a meeting and without prior notice if authorized by the written consent of a majority of the Managers (or such greater number as is required by this Agreement), which written consent shall be filed with the records of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Every Manager is an agent of the Company for the purpose of its business, and the act of every Manager, including the execution in the Company name of any instrument for carrying on the business of the Company, binds the Company, unless such act is in contravention of this Agreement or unless the Manager so acting otherwise lacks the authority to act for the Company and the Person with whom he or she is dealing has knowledge of the fact that he or she has no such authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) To the extent permitted by law, the Managers shall not be personally liable for the Company's debts, obligations or liabilities.

SECTION 7.02 <u>Powers of the Managers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the terms of this Agreement, the Managers shall have the right and authority to take all actions which the Managers deem incidental, necessary, suitable or convenient for the day-to-day management and conduct of the Company's business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Independent Manager may not delegate their duties, authorities or responsibilities hereunder. If any Independent Manager resigns, dies or becomes incapacitated, or such position is otherwise vacant, no action requiring the unanimous affirmative vote or consent of the Managers shall be taken until a successor Independent Manager is appointed by the Member and qualifies and approves such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To the fullest extent permitted by law, including Section 18-1101(c) of the LLC Act, and notwithstanding any duty otherwise existing at law or in equity, the Independent Managers shall consider only the interests of the Company, including its creditors, in acting or otherwise voting on the matters referred to in <u>Section</u> <u>1.08</u>. Except for duties to the Company as set forth in the immediately preceding sentence (including duties to the Member and the Company's creditors solely to the extent of their respective economic interests in the Company but excluding (i) all other interests of the Member, (ii) the interests of other Affiliates of the Company, and (iii) the interests of any group of Affiliates of which the Company is a part), the Independent Managers shall not have any fiduciary duties to the Member, any Manager or any other Person bound by this Agreement; <u>provided</u>, <u>however</u>, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. To the fullest extent permitted by law, including Section 18-1101(e) of the LLC Act, an Independent Manager shall not be liable to

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the Company, the Member or any other Person bound by this Agreement for breach of contract or breach of duties (including fiduciary duties), unless the Independent Manager acted in bad faith or engaged in willful misconduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) No Independent Manager shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subject to the terms of this Agreement, the Managers may exercise all powers of the Company and do all such lawful acts and things as are not prohibited by the LLC Act, other applicable law or this Agreement directed or required to be exercised or done by the Member. All duly authorized instruments, contracts, agreements and documents providing for the acquisition or disposition of property of the Company shall be valid and binding on the Company if executed by one or more of the Managers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding the terms of <u>Section</u> <u>7.01</u>, <u>7.07</u> or <u>7.09</u> or any provision of this Agreement to the contrary, (x) no meeting or vote or consent with respect to any action described in <u>clauses (b)</u>, <u>(c)</u> or <u>(g)</u> of <u>Section</u> <u>1.08</u> or any amendment to any of the Special Purpose Provisions (as hereinafter defined) shall be conducted unless each Independent Manager is present and (y) neither the Company nor the Member, any Manager or any officer on behalf of the Company shall (i) take any action described in <u>clauses (b)</u>, <u>(c)</u> or <u>(g)</u> of <u>Section</u> <u>1.08</u> unless each Independent Manager has consented thereto or (ii) adopt any amendment to any of the Special Purpose Provisions unless each Independent Manager has consented thereto. The vote or consent of an Independent Manager with respect to any such action or amendment shall not be dictated by the Member or any other Manager or officer of the Company.

SECTION 7.03 <u>Compensation</u><u>; Reimbursement of Expenses</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall pay each Independent Manager an annual fee in an amount equal to $1,500 per year or such other amount as shall be determined from time to time by the Managers other than the Independent Managers (the "<u>Independent Manager Fee</u>"). Such fees shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order. Each Manager, including each Independent Manager, is hereby deemed to be a "manager" within the meaning 18-101(12) of the LLC Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the extent permitted by applicable law, the Company may reimburse any Manager, directly or indirectly, for out-of-pocket expenses incurred by such Manager in connection with his or her services rendered to the Company. Such reimbursement shall be determined by the Managers without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.

SECTION 7.04 <u>Removal of Managers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to <u>Section</u> <u>4.01</u>, the Member may remove (i) any Manager, other than an Independent Manager, with or without cause at any time and (ii) any Independent Manager with Cause at any time, in each case whether at a meeting called expressly for that purpose or by any other method allowed for Member action.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to <u>Sections 4.01</u> and <u>7.05</u>, any removal of a Manager shall become effective on such date as may be specified by the Member and in a notice delivered to any remaining Managers or the Manager designated to replace the removed Manager (except that it shall not be effective on a date earlier than the date such notice is delivered to the remaining Managers or the Manager designated to replace the removed Manager). Should a Manager be removed who is also the Member, the Member shall continue to participate in the Company as the Member and receive its share of the Company's income, gains, losses, deductions and credits pursuant to this Agreement.

SECTION 7.05 <u>Resignation of Manager</u>. A Manager other than an Independent Manager may resign as a Manager at any time by thirty (30) days' prior notice to the Member. An Independent Manager may not withdraw or resign as a Manager of the Company without the consent of the Member. No resignation or removal of an Independent Manager, and no appointment of a successor Independent Manager, shall be effective until such successor (i) shall have accepted his or her appointment as an Independent Manager by a written instrument, which may be a counterpart signature page to the Management Agreement, and (ii) shall have executed a counterpart to this Agreement.

SECTION 7.06 <u>Vacancies</u>. Subject to <u>Section</u> <u>4.01</u>, any vacancies among the Managers may be filled by the Member. In the event of a vacancy in the position of an Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent Manager. Notwithstanding anything to the contrary contained in this Agreement, no Independent Manager shall be removed or replaced unless the Company provides the Indenture Trustee with no less than two (2) Business Days' prior written notice of (a) any proposed removal of such Independent Manager, and (b) the identity of the proposed replacement Independent Manager, together with a certification that such replacement Independent Manager satisfies the requirements for an Independent Manager set forth in this Agreement.

SECTION 7.07 <u>Meetings of the Managers</u>. The Managers may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Managers may be held without notice at such time and at such place as shall from time to time be determined by the Managers. Special meetings of the Managers may be called by the President on not less than one day's notice to each Manager by telephone, facsimile, mail, email or any other means of communication, and special meetings shall be called by the President or Secretary in like manner and with like notice upon the written request of any one or more of the Managers.

SECTION 7.08 <u>Electronic Communications</u>. The Managers, or any committee designated by the Managers, may participate in meetings of the Managers, or any committee, by means of telephone or video conference, internet conferencing software or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in Person at the meeting. If all the participants are participating by telephone or video conference, internet conferencing software or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.

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SECTION 7.09 <u>Committees of Managers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Managers may, by resolution passed by a majority of the Managers, designate one or more committees, each committee to consist of one or more of the Managers. The Managers may designate one or more Managers as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another Manager to act at the meeting in the place of any such absent or disqualified member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any such committee, to the extent provided in a resolution of the Managers, shall have and may exercise all the
powers and authority of the Managers in the management of the business and affairs of the Company. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Managers. Each
committee shall keep regular minutes of its meetings and report the same to the Managers when required.

SECTION 7.10 <u>Limitations on Independent Managers</u>. All right, power and authority of each Independent Manager shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement.

ARTICLE VIII

EXPENSES

SECTION 8.01 <u>Expenses</u>. Except as otherwise provided in this Agreement or the other Basic Documents, the Company shall be responsible for all expenses and the allocation thereof including without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all expenses incurred by the Member or its Affiliates in organizing the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) all expenses related to the business of the Company and all routine administrative expenses of the Company, including the maintenance of books and records of the Company, the preparation and dispatch to the Member of checks, financial reports, tax returns and notices required pursuant to this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) all expenses incurred in connection with any litigation or arbitration involving the Company (including the cost of any investigation and preparation) and the amount of any judgment or settlement paid in connection therewith;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) all expenses for indemnity or contribution payable by the Company to any Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) all expenses incurred in connection with the collection of amounts due to the Company from any Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) all expenses incurred in connection with the preparation of amendments to this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) all expenses incurred in connection with the liquidation, dissolution and winding up of the Company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) all expenses otherwise allocated in good faith to the Company by the Managers.

ARTICLE IX

PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP

SECTION 9.01 <u>Existence</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall have a perpetual existence, unless dissolved in accordance with this Agreement. So long as any of the SAC Bonds are outstanding, the Member shall not be entitled to consent to the dissolution of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding any provision of this Agreement, the Bankruptcy of the Member or Special Member will not cause such Member or Special Member, respectively, to cease to be a member of the Company, and upon the occurrence of such an event, the business of the Company shall continue without dissolution. For purposes of this Section 9.01(b), "Bankruptcy" means, with respect to any Person (A) if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (B) if one-hundred and twenty (120) days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, the proceeding has not been dismissed or if within ninety (90) days after the appointment without such Person's consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within ninety (90) days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of "Bankruptcy" is intended to replace and shall supersede and replace the definition of "Bankruptcy" set forth in Sections 18-101(1) and 18-304 of the LLC Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company

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(other than a continuation of the Company without dissolution upon an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to <u>Sections 6.06</u> and <u>6.07</u>), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company or the Member in the Company.

SECTION 9.02 <u>Dissolution</u>. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of the earliest of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) subject to <u>Section</u> <u>1.08</u>, the election to dissolve the Company made in writing by the Member and each Manager, including each Independent Manager, as permitted under the Basic Documents and after the discharge in full of the SAC Bonds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the termination of the legal existence of the last remaining member of the Company or the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company unless the business of the Company is continued without dissolution in a manner permitted by the LLC Act or this Agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the entry of a decree of judicial dissolution of the Company pursuant to Section 18-802 of the LLC Act.

SECTION 9.03 <u>Accounting</u>. In the event of the dissolution, liquidation and winding-up of the Company, a proper accounting shall be made of the Capital Account of the Member and of the net income or net loss of the Company from the date of the last previous accounting to the date of dissolution.

SECTION 9.04 <u>Certificate of Cancellation</u>. As soon as possible following the occurrence of any of the events specified in <u>Section</u> <u>9.02</u> and the completion of the winding up of the Company, the Person winding up the business and affairs of the Company, as an authorized person, shall cause to be executed a Certificate of Cancellation of the Certificate of Formation and file the Certificate of Cancellation of the Certificate of Formation as required by the LLC Act.

SECTION 9.05 <u>Winding Up</u>. Upon the occurrence of any event specified in <u>Section</u> <u>9.02</u>, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Member, or if there is no Member, the Managers, shall be responsible for overseeing the winding up and liquidation of the Company, shall take full account of the liabilities of the Company and its assets, shall either cause its assets to be sold or distributed, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in <u>Section</u> <u>9.06</u>.

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SECTION 9.06 <u>Order of Payment of Liabilities Upon Dissolution</u>. After determining that all debts and liabilities of the Company, including all contingent, conditional or unmatured liabilities of the Company, in the process of winding-up, including, without limitation, debts and liabilities to the Member in the event it is a creditor of the Company to the extent otherwise permitted by law, have been paid or adequately provided for, the remaining assets shall be distributed in cash or in kind to the Member.

SECTION 9.07 <u>Limitations on Payments Made in Dissolution</u>. Except as otherwise specifically provided in this Agreement, the Member shall only be entitled to look solely to the assets of the Company for the return of its positive Capital Account balance and shall have no recourse for its Capital Contribution and/or share of net income (upon dissolution or otherwise) against any Manager.

SECTION 9.08 <u>Limitation on Liability</u>. Except as otherwise provided by the LLC Act and except as otherwise characterized for tax and financial reporting purposes, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member or Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or a Manager.

ARTICLE X

INDEMNIFICATION

SECTION 10.01 <u>Indemnity</u>. Subject to the provisions of <u>Section</u> <u>10.04</u> hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Company, by reason of the fact that such Person is or was a Manager, Member, officer, controlling Person, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, partnership, corporation, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with the action, suit or proceeding if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such Person's conduct was unlawful; <u>provided</u> that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person's fraud, gross negligence or willful misconduct or, in the case of an Independent Manager, bad faith or willful misconduct.

SECTION 10.02 <u>Indemnity for Actions By or In the Right of the Company</u>. Subject to the provisions of <u>Section</u> <u>10.04</u> hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the rights of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member, Manager,

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officer, controlling Person, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by such Person in connection with the defense or settlement of the actions or suit if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company; <u>provided</u> that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person's fraud, gross negligence or willful misconduct or, in the case of an Independent Manager, bad faith or willful misconduct. Indemnification may not be made for any claim, issue or matter as to which such Person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the Person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

SECTION 10.03 <u>Indemnity If Successful</u>. To the fullest extent permitted by law, the Company shall indemnify any Person who is or was a Manager, Member, officer, controlling Person, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise against expenses, including reasonable attorneys' fees, actually and reasonably incurred by him or her in connection with the defense of any action, suit or proceeding referred to in <u>Sections 10.01</u> and <u>10.02</u> or in defense of any claim, issue or matter therein, to the extent that such Person has been successful on the merits.

SECTION 10.04 <u>Expenses</u>. Any indemnification under <u>Sections 10.01</u> and <u>10.02</u>, as well as the advance payment of expenses permitted under <u>Section</u> <u>10.05</u> unless ordered by a court or advanced pursuant to <u>Section</u> <u>10.05</u> below, must be made by the Company only as authorized in the specific case upon a determination that indemnification of the Manager, Member, officer, controlling Person, legal representative or agent is proper in the circumstances. The determination must be made:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) by the Member if the Member was not a party to the act, suit or proceeding; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if the Member was a party to the act, suit or proceeding by independent legal counsel in a written opinion.

SECTION 10.05 <u>Advance Payment of Expenses</u>. The expenses of each Person who is or was a Manager, Member, officer, controlling Person, legal representative or agent, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company as they are incurred

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and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such Person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such Person is not entitled to be indemnified by the Company. The provisions of this <u>Section</u> <u>10.05</u> shall not affect any rights to advancement of expenses to which personnel other than the Member or the Managers (other than each Independent Manager) may be entitled under any contract or otherwise by law.

SECTION 10.06 <u>Other Arrangements Not Excluded</u>. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this <u>Article X</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) does not exclude any other rights to which a Person seeking indemnification or advancement of expenses may be entitled under any agreement, decision of the Member or otherwise, for either an action of any Person who is or was a Manager, Member, officer, controlling Person, legal representative or agent, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, in the official capacity of such Person or an action in another capacity while holding such position, except that indemnification and advancement, unless ordered by a court pursuant to <u>Section</u> <u>10.05</u> above, may not be made to or on behalf of such Person if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) continues for a Person who has ceased to be a Member, Manager, officer, legal representative or agent and inures to the benefit of the successors, heirs, executors and administrators of such a Person.

ARTICLE XI

MISCELLANEOUS PROVISIONS

SECTION 11.01 <u>No Bankruptcy Petition; Dissolution</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenant and agree (or shall be deemed to have hereby covenanted and agreed) that, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of the SAC Bonds and any other amounts owed under the Indenture, it will not acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company; provided, however, that nothing in this <u>Section</u> <u>11.01</u> shall constitute a waiver of any right to indemnification, reimbursement or other payment from the Company pursuant to this Agreement. This <u>Section</u> <u>11.01</u> is not intended to apply to the filing of a voluntary bankruptcy petition on behalf of the Company which is governed by <u>Section</u> <u>1.08</u> of this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenants and agrees (or shall be deemed to have hereby covenanted and agreed) that, until the termination of the Indenture and the payment in full of the SAC Bonds and any other amounts owed under the Indenture, the Member, such Special Member and such Manager will not consent to, or make application for, or institute or maintain any action for, the dissolution of the Company under Section 18-801 or 18-802 of the LLC Act or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the Member, any Special Member or any Manager takes action in violation of this <u>Section</u> <u>11.01</u>, the Company agrees that it shall file an answer with the court or otherwise properly contest the taking of such action and raise the defense that the Member, the Special Member or Manager, as the case may be, has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The provisions of this <u>Section</u> <u>11.01</u> shall survive the termination of this Agreement and the resignation, withdrawal or removal of the Member, any Special Member or any Manager. Nothing herein contained shall preclude participation by the Member, any Special Member or a Manager in assertion or defense of its claims in any such proceeding involving the Company.

SECTION 11.02 <u>Amendments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The power to alter, amend or repeal this Agreement shall be only with the written consent of the Member, <u>provided</u>, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company shall not alter, amend or repeal any provision of <u>Sections 1.02(b)</u> and <u>(c)</u>, <u>1.05</u>, <u>1.07</u>, <u>1.08</u>, <u>3.01(b)</u>, <u>3.02</u>, <u>4.01</u>, <u>6.06</u>, <u>6.07</u>, <u>7.01</u>, <u>7.02</u>, <u>7.04</u>, <u>7.05</u>, <u>7.06</u>, <u>7.10</u>, <u>9.01</u>, <u>9.02</u>, <u>11.02</u>, <u>11.03</u> and <u>11.08</u> of this Agreement or the definition of "Independent Manager" contained herein or the requirement that at all times after the issuance of the Bonds the Company have at least two (2) Independent Managers (collectively,
the " <u>Special Purpose Provisions</u> ") without, in each case, the affirmative vote or consent of a majority of the Managers, which vote or consent must include the affirmative vote of each Independent Manager; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Company may amend <u>Sections</u> <u>5.04</u>, and <u>7.03</u> of this Agreement.

So long as any of the SAC Bonds are outstanding, the Company and the Member shall give written notice to each applicable Rating Agency and to the Indenture Trustee of any amendment to this Agreement. The effectiveness of any amendment of the Special Purpose Provisions shall be subject to the Rating Agency notice conditions set forth in the Basic Documents (other than an amendment which is necessary: (i) to cure any ambiguity or (ii) to correct or supplement any such provision in a manner consistent with the intent of this Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company's power to alter or amend the Certificate of Formation shall be vested in the Member. Upon obtaining the approval of any amendment, supplement or restatement as to the Certificate of Formation, the Member on behalf of the Company shall cause a Certificate of Amendment or Amended and Restated Certificate of Formation to be prepared, executed and filed in accordance with the LLC Act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding anything in this Agreement to the contrary, including <u>Sections 11.02(a)</u> and <u>(b)</u>, unless any SAC Bonds have been issued and remain outstanding, the Member may, without the need for any consent or action of, or notice to, any other Person, including any Manager, any officer, the Indenture Trustee or any Rating Agency, alter, amend or repeal this Agreement in any manner.

SECTION 11.03 <u>Governing Law</u>. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 11.04 <u>Headings</u>. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

SECTION 11.05 <u>Severability</u>. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 11.06 <u>Assigns</u>. Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the Member, and its permitted successors and assigns.

SECTION 11.07 <u>Enforcement by Each Independent Manager</u>. Notwithstanding any other provision of this Agreement, the Member agrees that this Agreement constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by each Independent Manager in accordance with its terms.

SECTION 11.08 <u>Waiver of Partition; Nature of Interest</u>. Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each of the Member and the Special Members hereby irrevocably waives any right or power that such Person might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company. The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to this Agreement.

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SECTION 11.09 <u>Benefits of Agreement; No Third</u><u>-Party Rights</u>. Except for the Indenture Trustee with respect to the Special Purpose Provisions and Persons entitled to indemnification hereunder, none of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of the Member or Special Member. Nothing in this Agreement shall be deemed to create any right in any Person (other than the Indenture Trustee with respect to the Special Purpose Provisions and Persons entitled to indemnification hereunder) not a party hereto, and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person.

SECTION 11.10 <u>Notices to Indenture Trustee and Rating Agencies</u>. Any notice or other communication required to be given hereunder to the Indenture Trustee or a Rating Agency shall be in writing and addressed to the notice address specified in the Indenture for the Indenture Trustee or such Rating Agency, as applicable.

SECTION 11.11 <u>Electronic Signatures</u>. Each party hereto agrees that this Agreement may be electronically signed, that any digital or electronic signatures appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability and admissibility, and that delivery of any such electronic signature to, or a signed copy of, this Agreement may be made by facsimile, email or other electronic transmission (including via DocuSign or other similar method).

(*Signatures follow.*)

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IN WITNESS WHEREOF, this Agreement is hereby executed by the undersigned as the sole Member of the Company and is effective as of the date first written above.

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| | |
|:---|:---|
| **APPALACHIAN POWER COMPANY** | **APPALACHIAN POWER COMPANY** |
| By: | /s/ Franz D. Messner |
|  | Name: Franz D. Messner |
|  | Title: Assistant Treasurer |

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| |
|:---|
| ACKNOWLEDGED AND AGREED: |
| Trevor I. Mihalik, |
| as Manager |
| /s/ Trevor I. Mihalik |
| Matthew D. Fransen, |
| as Manager |
| /s/ Matthew D. Fransen |
| Franz D. Messner, |
| as Manager |
| /s/ Franz D. Messner |
| Sean Emerick, |
| as Independent Manager |
| /s/ Sean Emerick |
| William Bleier, |
| as Independent Manager |
| /s/ William Bleier |

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*Signature Page to*

*A&R Limited Liability Company Agreement*

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SCHEDULE A

SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER

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| | | | |
|:---|:---|:---|:---|
| MEMBER'S<br> NAME | CAPITAL<br>CONTRIBUTION | MEMBERSHIP<br>INTEREST<br>PERCENTAGE | CAPITAL<br>ACCOUNT |
|  Appalachian Power Company | $100 | 100% | $100 |

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SCHEDULE A

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SCHEDULE B

INITIAL MANAGERS

1. Trevor I. Mihalik

2. Matthew D. Fransen

3. Franz D. Messner

4. Sean Emerick

5. William Bleier

SCHEDULE B

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SCHEDULE C

INITIAL OFFICERS

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| | |
|:---|:---|
| Name | Office |
| Trevor I. Mihalik | President |
| Heather M. Whitney | Controller and Chief Accounting Officer |
| Matthew D. Fransen | Vice President and Treasurer |
| Robert B. Berntsen | Vice President and Secretary |
| Marc B. Hunter | Assistant Treasurer |
| Franz D. Messner | Assistant Treasurer |
| David C. House | Assistant Secretary |
| William E. Johnson | Assistant Secretary |

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SCHEDULE C

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EXHIBIT A

MANAGEMENT AGREEMENT

April 30, 2026

Appalachian Power Recovery Funding LLC

1051 East Cary St., Suite 1100

Richmond, Virginia 23219

Re: <u>Management Agreement — Appalachian Power Recovery Funding LLC</u>

Ladies and Gentlemen:

For good and valuable consideration, each of the undersigned Persons, who have been designated as managers of Appalachian Power Recovery Funding LLC, a Delaware limited liability company (the "<u>Company</u>"), in accordance with the Amended and Restated Limited Liability Company Agreement of the Company, dated as of April 30, 2026 (as it may be amended, restated, supplemented or otherwise modified from time to time, the "<u>LLC Agreement</u>"), hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Each of the undersigned accepts such Person's rights and authority as a Manager under the LLC Agreement and agrees to perform and discharge such Person's duties and obligations as a Manager under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such Person's successor as a Manager is designated or until such Person's resignation or removal as a Manager in accordance with the LLC Agreement. Each of the undersigned agrees and acknowledges that he or she has been designated as a "manager" of the Company within the meaning of the Delaware Limited Liability Company Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Until one year and one day has passed since the date that the last obligation under the Basic Documents was paid, to the fullest extent permitted by law, each of the undersigned agrees, solely in his or her capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

EXHIBIT A

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Capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.

This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument. Each party hereto agrees that this Management Agreement may be electronically signed, that any digital or electronic signatures appearing on this Management Agreement are the same as handwritten signatures for the purposes of validity, enforceability and admissibility, and that delivery of any such electronic signature to, or a signed copy of, this Management Agreement may be made by facsimile, email or other electronic transmission (including via DocuSign or other similar method).

(*Signatures follow*.)

EXHIBIT A

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IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

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| |
|:---|
| <u>/s/ Trevor I. Mihalik</u> |
| Trevor I. Mihalik |
| <u>/s/ Matthew D. Fransen</u> |
| Matthew D. Fransen |
| <u>/s/ Franz D. Messner</u> |
| Franz D. Messner |
| <u>/s/ Sean Emerick</u> |
| Sean Emerick |
| <u>/s/ William Bleier</u> |
| William Bleier |

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EXHIBIT A

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APPENDIX A

DEFINITIONS

As used in this Agreement, the following terms have the following meanings:

"<u>Administration Agreement</u>" means the administration agreement to be entered into between the Company and the Administrator pursuant to which the Administrator will provide certain management services to the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Administrator</u>" means APCo, as the initial "Administrator" under the Administration Agreement, or any successor "Administrator" to the extent permitted under the Administration Agreement.

"<u>Affiliate</u>" means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"<u>Agreement</u>" has the meaning set forth in the preamble to this Agreement.

"<u>APCo</u>" means Appalachian Power Company, a Virginia corporation, and any of its successors or permitted assigns.

"<u>Bankruptcy Code</u>" means Title 11 of the United States Code (11 U.S.C. §§ 101 <u>et seq</u>.), as amended from time to time.

"<u>Basic Documents</u>" means the Indenture, the Administration Agreement, the Sale Agreement, the Bill of Sale, the Certificate of Formation, this Agreement, the Servicing Agreement, the Intercreditor Agreement, the Letter of Representations, the Underwriting Agreement and all other documents and certificates delivered in connection therewith.

"<u>Bankruptcy</u>" is defined in Section 9.01(b) of this Agreement.

"<u>Bill of Sale</u>" means the bill of sale given by APCo, as Seller, in connection with the sale of the SAC Property pursuant to the Sale Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Bondholder</u>" means the Person in whose name a SAC Bond is registered.

"<u>Capital Account</u>" is defined in <u>Section</u> <u>2.03</u> of this Agreement.

"<u>Capital Contribution</u>" is defined in <u>Section</u> <u>2.01</u> of this Agreement.

"<u>Cause</u>" means, with respect to an Independent Manager, (i) acts or omissions by such Independent Manager that constitute willful disregard of, or willful misconduct, bad faith or gross negligence with respect to, such Independent Manager's duties under or in connection with

APPENDIX A

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this Agreement, (ii) that such Independent Manager has engaged in or has been charged with or has been indicted or convicted for any crime or crimes of fraud or other acts constituting a crime under any law applicable to such Independent Manager, (iii) that such Independent Manager has breached its fiduciary duties of loyalty or care as and to the extent of such duties in accordance with the terms of the Company's organizational documents, (iv) there is a material increase in the fees charged by such Independent Manager or a material change to such Independent Manager's terms of service, (v) such Independent Manager is unable to perform his or her duties as Independent Manager due to death, disability, incapacity or other cause, or (vi) such Independent Manager no longer meets the criteria specified in the definition of Independent Manager.

"<u>Certificate of Formation</u>" means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on November 12, 2025 pursuant to which the Company was formed, as amended and/or amended and restated from time to time.

"<u>Code</u>" means the Internal Revenue Code of 1986, as amended.

"<u>Collection Account</u>" means the account established and maintained by the Indenture Trustee in accordance with the Indenture and any subaccounts contained therein.

"<u>Commission</u>" means the State Corporation Commission of the Commonwealth of Virginia, or any Governmental Authority succeeding to the duties of such agency.

"<u>Company</u>" has the meaning set forth in the preamble to this Agreement.

"<u>Financing Order</u>" means the Financing Order dated November 24, 2025, issued by the Commission pursuant to the Securitization Law in Case No. 2025-00116 authorizing the creation of the SAC Property.

"<u>Governmental Authority</u>" means any nation or government, any federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

"<u>Indenture</u>" means the Indenture to be entered into between the Company and the Indenture Trustee authorizing the issuance of the SAC Bonds, as originally executed and, as from time to time supplemented or amended by any supplements or indentures supplemental thereto entered into pursuant to the applicable provisions of the Indenture, as so supplemented or amended, or both, and shall include the forms and terms of the SAC Bonds established thereunder.

"<u>Indenture Trustee</u>" means a third-party financial company or bank to be designated as indenture trustee under the Indenture for the benefit of the Secured Parties, or any successor indenture trustee under the Indenture.

"<u>Independent Manager</u>" is defined in <u>Section</u> <u>4.01(a)</u> of this Agreement.

"<u>Independent Manager Fee</u>" is defined in <u>Section</u> <u>4.01(a)</u> of this Agreement.

APPENDIX A

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"<u>Intercreditor Agreement</u>" means the Intercreditor Agreement, dated as of September 7, 2022, as amended and restated as of December 9, 2024, by and among AEP Credit, Inc., JPMorgan Chase Bank, N.A., as administrative agent and control agent, and the issuers, servicers and indenture trustees from time-to-time party thereto, as modified by the Intercreditor Joinder.

"<u>Intercreditor Joinder</u>" means the joinder to the Intercreditor Agreement to be entered into by and among APCo, the Company, the Indenture Trustee, AEP Credit Inc., and JPMorgan Chase Bank, N.A., as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Letter of Representations</u>" means any applicable agreement between the Company and an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended, pertaining to the SAC Bonds, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>LLC Act</u>" means the Delaware Limited Liability Company Act (6 Del.C. §18-101, et seq.), as amended.

"<u>Manager</u>" means each manager, including any Independent Manager, of the Company, each in such person's capacity as a manager of the Company, under this Agreement.

"<u>Member</u>" has the meaning set forth in the preamble to this Agreement.

"<u>Membership Interest</u>" is defined in <u>Section</u> <u>6.01</u> of this Agreement.

"<u>Ongoing Financing Cost</u>" means the costs of servicing the SAC Bonds over their life allowed to be recovered as a component of SAC Charges under the Financing Order.

"<u>Operating Expenses</u>" means all unreimbursed fees, costs and expenses of the Company, including all amounts owed by the Company to the Indenture Trustee or the applicable securities intermediary (including indemnities, legal fees and expenses) or any Manager, the servicing fee, the administration fee, reimbursable expenses, the Independent Manager Fee and any other fees relating to the SAC Bonds payable by the Company to the Independent Managers, administrative expenses, including, legal and accounting fees, Rating Agency fees, any franchise fees, license fees or other taxes owed by the Company, including any imposed on SAC Charges or on investment income in the Collection Account (to the extent of the Company's interest), and any other costs and expenses of the Company or APCo specified as being Operating Expenses in the Basic Documents.

"<u>Original LLC Agreement</u>" has the meaning set forth in the preamble to this Agreement.

"<u>Person</u>" means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or Governmental Authority.

"<u>Rating Agency</u>" with respect to the SAC Bonds, means each of Moody's Investors Service, Inc. and S&P Global Ratings, a division of S&P Global Inc., or any successors thereto, which provides a rating with respect to the SAC Bonds. If no such organization or successor is

APPENDIX A

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any longer in existence, "Rating Agency" shall be a nationally recognized statistical rating organization or other comparable Person designated by the Company, written notice of which designation shall be given to the Indenture Trustee and the Servicer.

"<u>SAC Bond Collateral</u>" means the SAC Property and related properties and rights of the Company, including, without limitation, the Company's rights, title and interest in, to and under the Sale Agreement, certain deposit accounts and securities accounts, including the Collection Account, and the other collateral specified in the Indenture, all of which are encumbered by the Company as collateral for the SAC Bonds.

"<u>SAC Bonds</u>" means the securitized asset cost bonds authorized by the Financing Order and issued under the Indenture.

"<u>SAC Charge</u>" means any "securitized asset cost charge" (as defined in Section 56-249.8.A. of the Securitization Law), which is authorized by the Financing Order.

"<u>SAC Property</u>" means all "securitized asset cost property" created pursuant to the Financing Order and sold or otherwise conveyed to the Company under the Sale Agreement, including: (i) all rights and interests of APCo, or its successor or assignee, under the Financing Order, including the right to impose, bill, charge, collect and receive SAC Charges authorized in the Financing Order and to obtain periodic adjustments to such SAC Charges as provided in the Financing Order, and (ii) all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the rights and interests specified in the Financing Order, regardless of whether such revenues, collections, claims, rights to payment, payments, money or proceeds are imposed, billed, charged, collected or received with, or maintained together with or commingled with, other revenues, collections, rights to payment, payments, money or proceeds.

"<u>Sale Agreement</u>" means a sale agreement to be entered into pursuant to which the Seller will sell its rights and interests in the SAC Property to the Company.

"<u>Secured Parties</u>" means the Indenture Trustee, the Bondholders and any credit enhancer described in the Basic Documents.

"<u>Securitization Law</u>" means § 249.8 of Title 56 of the Va Code, as may be amended from time to time.

"<u>Seller</u>" means APCo, as "Seller" under the Sale Agreement, or any successor "Seller" to the extent permitted under the Sale Agreement.

"<u>Servicer</u>" means APCo, as "Servicer" under the Servicing Agreement, or any successor "Servicer" to the extent permitted under the Servicing Agreement.

"<u>Servicing Agreement</u>" means the servicing agreement to be entered into pursuant to which the Servicer will service the SAC Property on behalf of the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"<u>Special Member</u>" is defined in <u>Section</u> <u>1.02(b)</u> of this Agreement.

APPENDIX A

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"<u>Special Purpose Provisions</u>" is defined in <u>Section</u> <u>11.02(a)</u> of this Agreement.

"<u>Treasury Regulations</u>" means the regulations, including proposed or temporary regulations, promulgated under the Code.

"<u>Underwriters</u>" means the underwriters who purchase SAC Bonds of any tranche from the Company and sell such SAC Bonds in a public offering.

"<u>Underwriting Agreement</u>" means the Underwriting Agreement, to be entered into, by and among APCo, the representative(s) of the Underwriters named therein and the Company, as the same may be amended, supplemented or modified from time to time.

"<u>Va Code</u>" means the Code of Virginia, as amended from time to time.

APPENDIX A

## Exhibit 5.1

**Exhibit 5.1** 

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|:---|:---|
| ![LOGO](g44535g50b04.jpg)  | SIDLEY AUSTIN LLP<br> 1000 LOUISIANA STREET<br> SUITE 5900<br> HOUSTON, TX 77002<br> +1 713 495 4500<br> +1 713 495 7799 FAX<br>AMERICA • ASIA PACIFIC • EUROPE |

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May 1, 2026

Appalachian Power Company

1 Riverside Plaza

Columbus, Ohio 43215-2373

Appalachian Power Recovery Funding LLC

1051 East Cary St., Suite 1100

Richmond, Virginia 23219

Re: <u>Registration Statement on Form SF-1</u>

Ladies and Gentlemen:

We refer to the Registration Statement on Form SF-1 (Registration Nos. 333-293890 and 333-293890-01) filed on February 27, 2026 (as amended, the "<u>Registration Statement</u>") being filed by Appalachian Power Company, a Virginia corporation ("<u>Appalachian Power</u>"), and Appalachian Power Recovery Funding LLC, a Delaware limited liability company (the "<u>Issuer</u>"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"), relating to the registration of $1,375,500,000 principal amount of the Issuer's Series 2026-A Senior Secured SAC Bonds (the "<u>Bonds</u>"). The Bonds are to be issued under an Indenture (the "<u>Indenture</u>") to be entered into among the Issuer, U.S. Bank Trust Company, National Association, as indenture trustee (the "<u>Indenture Trustee</u>"), and U.S. Bank National Association, as securities intermediary (the "<u>Securities Intermediary</u>"), the form of which has been filed as an exhibit to the Registration Statement.

This opinion letter is being delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.

We have examined the Registration Statement, the Indenture and the resolutions adopted by the board of managers of the Issuer relating to the Registration Statement and the issuance of the Bonds by the Issuer. We have also examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and statements of Appalachian Power and the Issuer and other corporate documents and instruments, and have examined such questions of law, as we have considered relevant and necessary as a basis for this opinion letter. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of all persons and the conformity with the original documents of any copies thereof submitted to us for examination. As to facts relevant to the opinions expressed herein, we have relied without independent investigation or verification upon, and assumed the accuracy and completeness of, certificates, letters and oral and written statements and representations of public officials and officers and/or managers and other representatives of Appalachian Power and the Issuer.

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![LOGO](g44535g50b04.jpg)

Appalachian Power Company

Appalachian Power Recovery Funding LLC

May 1, 2026

Based on and subject to the foregoing and the other limitations and qualifications set forth herein, we are of the opinion that the Bonds will be validly issued and binding obligations of the Issuer when:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Registration Statement, as finally amended, shall have become effective under the Securities Act and the Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Indenture shall have been duly executed and delivered by the Issuer, the Indenture Trustee and the Securities Intermediary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Issuer's board of managers or a duly authorized committee thereof shall have duly adopted final resolutions authorizing the issuance and sale of the Bonds as contemplated by the Registration Statement and the Indenture; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the Bonds shall have been duly executed by authorized managers of the Issuer and authenticated by the Indenture Trustee, all in accordance with the Indenture and such resolutions and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor.

Our opinion is subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws relating to or affecting creditors' rights generally and to general equitable principles (regardless of whether considered in a proceeding in equity or at law), including concepts of commercial reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief.

This opinion letter is limited to the Limited Liability Company Act of the State of Delaware and the laws of the State of New York (excluding the securities laws of the State of New York). We express no opinion as to the laws, rules or regulations of any other jurisdiction, including, without limitation, the federal laws of the United States of America or any state securities or blue sky laws.

We hereby consent to the filing of this opinion letter as an Exhibit to the Registration Statement and to all references to our Firm included in or made a part of the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.

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|:---|
|  Very truly yours, |
|  /s/ Sidley Austin LLP |

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## Exhibit 8.1

**Exhibit 8.1** 

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|:---|:---|
| <br> ![LOGO](g44535g50b04.jpg)  | SIDLEY AUSTIN LLP<br> 787 SEVENTH AVENUE<br> NEW YORK, NY 10019<br> +1 212 839 5300<br> +1 212 839 5599 FAX |

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May 1, 2026

Appalachian Power Company

1 Riverside Plaza

Columbus, Ohio 43215-2373

Appalachian Power Recovery Funding LLC

1051 East Cary St., Suite 1100

Richmond, Virginia 23219

Re: <u>Appalachian Power Recovery Funding LLC</u>

Ladies and Gentlemen:

We have acted as special counsel to Appalachian Power Company, a Virginia corporation ("<u>Appalachian Power</u>"), as co-registrant, and Appalachian Power Recovery Funding LLC, a Delaware limited liability company (the "<u>Company</u>"), as issuing entity and co-registrant, in connection with the issuance and registration of $1,375,500,000 aggregate principal amount of the Company's Series 2026-A Senior Secured SAC Bonds (the "<u>Bonds</u>"). In connection therewith, reference is made to the Registration Statement on Form SF-1 (Registration Nos. 333-293890 and 333-293890-01) filed by Appalachian Power and the Company on February 27, 2026 (as amended, the "<u>Registration Statement</u>") with the Securities and Exchange Commission (the "<u>Commission</u>") under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"). The Bonds will be offered in such manner as described in the form of the prospectus (the "<u>Prospectus</u>") included as part of the Registration Statement. The Bonds are to be issued under an Indenture (the "<u>Indenture</u>") between the Company and U.S. Bank Trust Company, National Association, as indenture trustee, and U.S. Bank National Association, as securities intermediary, to be dated as of the issuance date of the Bonds. Capitalized terms used herein and not otherwise defined are used as defined in the Registration Statement.

In connection with this opinion letter, we have examined the Registration Statement, the Indenture, the Financing Order and the basic documents. We have also examined such certificates, documents and records and have made such examination of law as we have deemed appropriate in order to enable us to render the opinions set forth herein. We have examined and relied upon originals, or copies of originals, certified or otherwise identified to our satisfaction of such records of Appalachian Power and the Company and such agreements, certificates and oral or written statements and representations of public officials, certificates of officers or other representatives of Appalachian Power and the Company and other instruments and examined such questions of law and satisfied ourselves to such matters of fact as we deemed relevant or necessary as a basis for this opinion letter. In rendering the opinions expressed in this opinion letter, we have assumed

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![LOGO](g44535g50b04.jpg)

Appalachian Power Company

Appalachian Power Recovery Funding LLC

May 1, 2026

the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the original documents of any copies thereof submitted to us for examination. As to any facts material to the opinions expressed herein, we have, without independent verification, relied upon statements and representations of officers and other representatives of Appalachian Power and/or the Company or others. In addition, in rendering this opinion letter we have assumed the truth and accuracy of all representations and statements made to us which are qualified as to knowledge or belief, without regard to such qualification.

Based on Rev. Proc. 2005-62, 2005-2 C.B. 507, as modified by Rev. Proc. 2024-15, 2024-12 I.R.B. 717, and the assumptions and representations set forth herein and in the Prospectus and the Registration Statement, and subject to the limitations set forth herein and in the preliminary prospectus, the Prospectus and the Registration Statement, we are of the opinion that for U.S. federal income tax purposes, (1) the Company will not be treated as a taxable entity separate and apart from Appalachian Power (the Company's sole member) and (2) the Bonds will constitute indebtedness of Appalachian Power. This opinion is based on certain representations made by us and Appalachian Power, on the application of current law to the facts as established by the Indenture and other relevant documents and assumes compliance with the Indenture and such other documents as in effect on the date of issuance of the Bonds.

The opinions set forth herein are limited to the U.S. federal income tax matters specifically covered hereby, and we have not been asked to address, nor have we addressed, U.S. federal taxes other than income tax or any other tax consequences regarding the transaction referred to above or any other transaction. The opinions set forth herein are based upon the current provisions of the Internal Revenue Code of 1986, as amended, and Treasury Regulations issued or proposed thereunder, Revenue Rulings and other releases of the Internal Revenue Service and current case law, any of which can change at any time. Any such changes can apply retroactively and modify the legal conclusions on which the opinions set forth herein are based. The opinions set forth herein are given as of the date hereof and we undertake no obligations to supplement this opinion letter if any applicable law changes after such date or if we become aware of any facts that might change the opinions expressed herein after such date or for any other reason.

This opinion letter is furnished to you and is for your use in connection with the issuance of the Bonds described above. This opinion letter may not be relied upon by you for any other purpose or furnished to, assigned to, quoted to or relied upon by any other person, firm or other entity, for any purpose, without our prior written consent, except that this opinion letter may be relied upon by persons entitled to rely on it pursuant to applicable provisions of federal securities law.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to the discussion of our opinions under the section captioned "Material U.S. Federal Income Tax Consequences," and under the heading "Legal Matters" in the Prospectus included in the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

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|:---|
|  Very truly yours, |
|  /s/ Sidley Austin LLP |

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## Exhibit 8.2

**Exhibit 8.2** 

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|:---|:---|
| Troutman Pepper Locke LLP<br> Troutman Pepper Building, 1001 Haxall Point<br> Richmond, VA 23219<br>troutman.com | ![LOGO](g44535dsp37.jpg)  |

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May 1, 2026

Appalachian Power Company

1 Riverside Plaza

Columbus, OH 43215-2373

Appalachian Power Recovery Funding LLC

1051 E Cary St., Suite 1100

Richmond, VA, 23219

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| | |
|:---|:---|
| **Re:** | **Appalachian Power Recovery Funding LLC Form SF-1, Exhibit 8.2. "Opinion of Troutman Pepper Locke LLP with respect to Virginia tax matters"**  |

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Ladies and Gentlemen:

We have acted as counsel to Appalachian Power Company ("APCo") and Appalachian Power Recovery Funding LLC (the "Issuer"), APCo being a Virgina corporation and the Issuer being a Delaware limited liability company wholly owned by APCo, in connection with the preparation of the Registration Statement filed February 27, 2026 with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act") on Form SF-1 (Registration Numbers 333-293890 and 333-293890-01), with the Commission (collectively, the "Registration Statement") relating to the proposed issuance in multiple tranches of up to $1,375,500,000 of SAC bonds (the "SAC Bonds") of the Issuer to be offered in such manner as described in the form of the prospectus (the "Prospectus") included therein. At your request, this opinion is being furnished to you for filing as Exhibit 8.2 to the Registration Statement.

We are familiar with the proceedings taken and proposed to be taken by the Issuer in connection with the proposed authorization, issuance, and sale of the SAC Bonds. We have examined and relied upon originals, or copies of originals, certified or otherwise identified to our satisfaction as such records of the Issuer and such agreements, certificates of public officials, certificates of officers, managers or other representatives of the Issuer and other instruments as we deemed advisable, and examined such questions of law and satisfied ourselves to such matters of fact as we deemed relevant or necessary as a basis for this letter. In our examination, we have assumed (a) the legal capacity of all natural persons, (b) the genuineness of all documents and signatures presented to us, (c) the due authorization of all such documents and the execution and delivery thereof by, and the enforceability thereof against, all parties thereto, (d) the authenticity of all documents submitted to us as originals, and (e) the conformity to original documents of all documents submitted to us as certified or photostatic copies or by facsimile or

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| May 1, 2026<br> Page 2 | ![LOGO](g44535dsp38.jpg) |

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email, and the authenticity of the originals of such latter documents. Furthermore, we have assumed compliance with all covenants and agreements contained in the documents reviewed by us. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Issuer or others. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Registration Statement or other offering material relating to the SAC Bonds and express no opinion with respect thereto.

**OPINIONS** 

Based on the foregoing and the assumptions and representations set forth in the Prospectus and subject to the exceptions and qualifications set forth below, we are of the opinion that for Virginia state income tax purposes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. assuming that the Issuer is treated as an entity that is disregarded as separate from APCo for federal
income tax purposes, the Issuer will not be considered an entity separate and apart from APCo; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. assuming that the SAC Bonds are treated as indebtedness for federal income tax purposes, the SAC Bonds will
constitute the indebtedness of APCo.

Further, the statements set forth in the Prospectus under the section captioned "Material Virginia Income Tax Consequences," to the extent they constitute matters of Virginia state income tax law or legal conclusions with respect thereto, have been prepared or reviewed by us and provide a fair summary and are correct in all material respects.

**EXCEPTIONS AND QUALIFICATIONS** 

Our opinions expressed herein are limited to the Virginia tax matters specifically covered hereby and we have not been asked to address, nor have we addressed, any other tax consequences regarding the transaction referred to above or any other transaction. We express no opinion regarding tax consequences arising with respect to the SAC Bonds other than as expressly set forth in this opinion. In addition, our opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. This opinion is rendered as of the date hereof based on the current provisions of the Internal Revenue Code and the Treasury Regulations issued or proposed thereunder, revenue rulings, revenue procedures and other published releases of the Internal Revenue Service, the Code of Virginia and Virginia Department of Taxation Virginia Tax Regulations promulgated or proposed pursuant thereto and current case law, any of which can change at any time. Any change in existing law or authority could apply retroactively and modify the legal conclusions upon which our opinions are based.

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| May 1, 2026<br> Page 3 | ![LOGO](g44535dsp38.jpg) |

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We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the SAC Bonds. Except as otherwise provided herein, we express no opinion regarding the accuracy, completeness or sufficiency of the Indenture or other offering material or documents relating to the SAC Bonds in effect on the date of issuance of the SAC Bonds. Further, our opinions may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and by equitable principles, whether considered at law or in equity.

The opinions contained herein are given only as of the date of this opinion letter. No opinion is expressed herein as to the effect of any future acts of the parties or changes in existing law. We undertake no responsibility and disclaim any obligation to supplement this opinion or otherwise advise you or any other person of any change after the date hereof in the law (whether constitutional, statutory or judicial) or the facts presently in effect, even though such change may alter the scope or substance of the opinions herein expressed or affect the legal or factual statements or assumptions herein. We shall have no obligation to revise or reissue this opinion with respect to any transaction which occurs after the date hereof and we undertake no responsibility or obligation to consider this opinion's applicability or correctness to any person other than its addressees. This letter expresses our legal opinion as to the foregoing matters based on our professional judgment at this time; it is not, however, to be construed as a guaranty, nor is it a warranty that a court considering such matters would not rule in a manner contrary to the opinions set forth above.

We are furnishing this opinion to you solely in connection with the issuance of the SAC Bonds described above, and this opinion is not to be relied on, circulated, quoted or otherwise referred to for any other purpose. However, we hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to this Firm in the Prospectus under the sections captioned "Prospectus Summary—Virginia State Income Tax Status" and "Material Virginia Income Tax Consequences." In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission thereunder.

Very truly yours,

/S/ TROUTMAN PEPPER LOCKE LLP

## Exhibit 23.3

**Exhibit 23.3** 

**Consent of Independent Managers** 

APPALACHIAN POWER COMPANY and APPALACHIAN POWER RECOVERY FUNDING LLC are filing a Registration Statement on Form SF-1 (the "<u>Registration Statement</u>") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"), in connection with the public offering of the securitized asset cost bonds. In connection therewith, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a manager of APPALACHIAN POWER RECOVERY FUNDING LLC in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

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|:---|:---|
| By | /s/ Sean Emerick |
| Name: | Sean Emerick |
| Title: | Independent Manager |
| By | /s/ William Bleier |
| Name: | William Bleier |
| Title: | Independent Manager |

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## Exhibit 24.1

**Exhibit 24.1** 

APPALACHIAN POWER COMPANY

POWER OF ATTORNEY

Each of the undersigned directors or officers of APPALACHIAN POWER COMPANY, a Virginia corporation, which is to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Act of 1933, as amended (the "Act"), one or more Registration Statements for the registration thereunder of up to $1,400,000,000 aggregate principal amount of securitized bonds to be issued by the Company, or one or more post-effective Registration Statements, does hereby appoint WILLIAM J. FEHRMAN, TREVOR I. MIHALIK, MATTHEW D. FRANSEN, FRANZ D. MESSNER, AND MARC B. HUNTER, his true and lawful attorneys, and each of them his true and lawful attorney, with power to act without the others, and with full power of substitution or resubstitution, to execute for him and in his name said Registration Statement(s) and any and all amendments thereto, whether said amendments add to, delete from or otherwise alter the Registration Statement(s) or the related Prospectus(es) included therein, or add or withdraw any exhibits or schedules to be filed therewith and any and all instruments necessary or incidental in connection therewith, hereby granting unto said attorneys and each of them full power and authority to do and perform in the name and on behalf of each of the undersigned, and in any and all capacities, every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as each of the undersigned might or could do in person, hereby ratifying and approving the acts of said attorneys and each of them.

IN WITNESS WHEREOF the undersigned have hereunto set their hands and seals this 16th day of December, 2025.

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| | |
|:---|:---|
| /s/ Robert B. Berntsen | /s/ Trevor I. Mihalik |
| Robert B. Berntsen | Trevor I. Mihalik |
| /s/ William J. Fehrman | /s/ Brian R. Abraham |
| William J. Fehrman | Brian R. Abraham |

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## Exhibit 24.2

**Exhibit 24.2** 

APPALACHIAN POWER RECOVERY FUNDING LLC

POWER OF ATTORNEY

Each of the undersigned directors or officers of APPALACHIAN POWER RECOVERY FUNDING LLC, a Delaware limited liability company, which is to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Act of 1933, as amended (the "Act"), one or more Registration Statements for the registration thereunder of up to $1,400,000,000 aggregate principal amount of securitized bonds to be issued by the Company, or one or more post-effective Registration Statements, does hereby appoint WILLIAM J. FEHRMAN, TREVOR I. MIHALIK, MATTHEW D. FRANSEN, FRANZ D. MESSNER, AND MARC B. HUNTER, his true and lawful attorneys, and each of them his true and lawful attorney, with power to act without the others, and with full power of substitution or resubstitution, to execute for him and in his name said Registration Statement(s) and any and all amendments thereto, whether said amendments add to, delete from or otherwise alter the Registration Statement(s) or the related Prospectus(es) included therein, or add or withdraw any exhibits or schedules to be filed therewith and any and all instruments necessary or incidental in connection therewith, hereby granting unto said attorneys and each of them full power and authority to do and perform in the name and on behalf of each of the undersigned, and in any and all capacities, every act and thing whatsoever required or necessary to be done in and about the premises, as fully and to all intents and purposes as each of the undersigned might or could do in person, hereby ratifying and approving the acts of said attorneys and each of them.

IN WITNESS WHEREOF the undersigned have hereunto set their hands and seals this 21st day of April, 2026.

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| | |
|:---|:---|
| /s/ William Bleier | /s/ Franz D. Messner |
| William Bleier | Franz D. Messner |
| /s/ Sean Emerick | /s/ Trevor I. Mihalik |
| Sean Emerick | Trevor I. Mihalik |
| /s/ Matthew D. Fransen |  |
| Matthew D. Fransen |  |

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## Exhibit 99.2

**Exhibit 99.2** 

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|:---|:---|
| ![LOGO](g44535g99b79.jpg)  | SIDLEY AUSTIN LLP<br> 787 SEVENTH AVENUE<br> NEW YORK, NY 10019<br> +1 212 839 5300<br> +1 212 839 5599 FAX<br>AMERICA • ASIA PACIFIC • EUROPE |

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***SUBJECT TO SIDLEY OPINION COMMITTEE REVIEW***

[•], 2026

To Each of the Persons Listed

on Schedule A Attached Hereto

Re: <u>Federal Constitutional Issues Related to Appalachian Power Recovery Funding LLC Series</u> <u>2026-A Senior Secured SAC Bonds</u>

Ladies and Gentlemen:

We have served as special counsel to Appalachian Power Company, a Virginia corporation ("<u>APCo</u>"), in connection with the issuance and sale on the date hereof by Appalachian Power Recovery Funding LLC, a Delaware limited liability company (the "<u>Issuer</u>"), of $1,375,500,000 aggregate principal amount of the Issuer's Series 2026-A Senior Secured SAC Bonds (the "<u>Bonds</u>"), which are more fully described in the Prospectus dated [•], 2026. The Bonds are being sold pursuant to the provisions of the Underwriting Agreement dated [•], 2026 among APCo, the Issuer and Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC, as representatives of the underwriters named in Schedule I to the Underwriting Agreement (the "<u>Underwriters</u>"). The Bonds are being issued pursuant to the provisions of the Indenture dated as of the date hereof, as supplemented by the Series Supplement dated as of the date hereof (together with the Indenture, the "<u>Indenture</u>"), among the Issuer, U.S. Bank Trust Company, National Association, as indenture trustee (the "<u>Indenture Trustee</u>"), and U.S. Bank National Association, as securities intermediary. Under the Indenture, the Indenture Trustee holds, among other things, SAC Property as described below as collateral security for the payment of the Bonds. All capitalized terms used herein and not otherwise defined shall have the meaning specified in Appendix A to the Indenture unless the context clearly indicates otherwise.

Section 56-249.8 of the Code of Virginia (the "<u>Securitization Law</u>"), among other things, (a) provides for an electric utility in the Commonwealth of Virginia (the "<u>Commonwealth</u>") to recover certain storm recovery costs, undepreciated generation utility plant balances and associated financing costs, (b) assigns certain powers and duties to the State Corporation Commission of the Commonwealth (the "<u>Commission</u>") in connection with such securitization and (c) provides for the creation of "securitized asset cost property" simultaneous with (i) the sale of such securitized asset cost property to an assignee and (ii) the pledge of such securitized asset

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Each of the Persons Listed

On Schedule A Attached Hereto

[●], 2026

cost property to secure securitized asset cost bonds. "<u>SAC Property</u>" means the "securitized asset cost property" created pursuant to, and as defined in, the Financing Order issued by the Commission on November 24, 2025, in Case No. PUR-2025-00116 (the "<u>Financing Order</u>") that was (i) sold to the Issuer as assignee of such securitized asset cost property pursuant to the provisions of the Sale Agreement dated as of the date hereof between APCo and the Issuer in consideration for the payment by the Issuer to APCo of the proceeds of the sale of the Bonds, net of certain issuance costs, and (ii) pledged to the Indenture Trustee pursuant to the terms of the Indenture to secure the Bonds. The SAC Property includes the right to impose, bill, charge, collect and receive certain "nonbypassable" "securitized asset cost charges" (each as defined in the Securitization Law) described in the Financing Order (the "<u>SAC Charges</u>"), in an amount sufficient to repay, finance or refinance the Bonds.

The SAC Charges may be periodically adjusted, in the manner authorized in the Financing Order, in order to enhance the probability that the revenues received by the Issuer from the SAC Charges are sufficient to (i) amortize the Bonds pursuant to the amortization schedule to be followed in accordance with the provisions of the Bonds and the Indenture, (ii) pay interest thereon and related fees and expenses, and (iii) maintain the required reserves for the payment of the Bonds.

The Financing Order was issued in response to an application for its issuance that was filed by APCo with the Commission pursuant to the provisions of the Securitization Law. The Financing Order became final and no longer subject to appeal on December 24, 2025.

**Questions Presented and Opinions** 

You have requested our opinion as to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) whether the Commonwealth Pledge (as defined below) creates a contractual relationship between the Commonwealth and the holders of the Bonds (the "<u>Holders</u>") that falls within the scope of the "contract clause" of the U.S. Constitution (Article I, Section 10 (the "<u>Federal Contract Clause</u>"));

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) whether the Holders could challenge successfully under the Federal Contract Clause the constitutionality of either any action by the Virginia General Assembly of the Commonwealth (the "<u>General Assembly</u>"), or any action of the Commission of a legislative character, including rescission or amendment of the Financing Order (all referred to herein as "<u>Legislative Action</u>") that in each case impairs the value of the SAC Property or the SAC Charges (other than as contemplated under the formula-based true-up mechanism authorized by the Securitization Law and the Financing Order) so as to impair (i) the terms of the Indenture or the Bonds or (ii) the rights and remedies of the Holders (or the Indenture Trustee acting on their behalf) (any impairment described in clause (i) or (ii) being referred to herein as an "<u>Impairment</u>") prior to the time that the Bonds are fully paid and discharged;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) whether preliminary injunctive relief would be available under federal law to delay implementation of Legislative Action that impairs the value of the SAC Property or otherwise cause an Impairment pending final adjudication of a claim challenging such Legislative Action in U.S. federal court and, assuming a favorable final adjudication of such claim, whether relief would be available to enjoin permanently the implementation of the challenged Legislative Action; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) whether, under the Fifth Amendment to the United States Constitution (made applicable to the Commonwealth by the Fourteenth Amendment to the United States Constitution), which provides in part "nor shall private property be taken for public use, without just compensation" (the "<u>Federal T</u><u>akings Clause</u>"), the Commonwealth could repeal or amend the Securitization Law or take any other action in contravention of the Commonwealth Pledge without paying just compensation to the Holders, as determined by a court of competent jurisdiction, if doing so (a) constituted a permanent appropriation of a substantial property interest of the Holders in the SAC Property or denied all economically productive use of the SAC Property; (b) destroyed the SAC Property other than in response to emergency conditions; or (c) substantially impaired the value of the SAC Property or the SAC Charges (other than as contemplated under the formula-based true-up mechanism authorized by the Securitization Law and the Financing Order) so as to unduly interfere with the reasonable expectations of the Holders arising from their investments in the Bonds (a "<u>Substantial Taking</u>").

As discussed in more detail in the opinion letter of Troutman Pepper Locke LLP ("<u>TPL</u>") of even date herewith, the Securitization Law authorizes the Commission "to create an irrevocable contract right," Va. Code § 56-249.8:K.1.a, and the Commission has acknowledged in the Financing Order that the Commission is bound by the Commonwealth Pledge and that "these pledges will constitute pledges of the Commonwealth and Commission to bondholders, the owners of [SAC Property], the SPE issuing [SAC Bonds], and other financing parties."<sup>1</sup> The Commonwealth Pledge further contemplates that features of the Commonwealth Pledge may be incorporated into the Bonds. Va. Code § 56-249.8:K.2.

Based on the foregoing, and supported by the conclusion in the opinion letter of TPL of even date herewith, that the Commonwealth is contractually bound by the Commonwealth Pledge as a matter of Virginia law, based upon our review of relevant judicial authority, as set forth in this letter, but subject to the qualifications, limitations and assumptions (including the assumption that any Impairment would be "substantial") set forth herein and in the TPL opinion, it is our opinion that a reviewing court of competent jurisdiction, applying the decisions and analysis used in federal courts, in a properly prepared and presented case:

<sup>1</sup> See Conclusion No. 31 in the Financing Order.

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[●], 2026

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) would conclude that the Commonwealth Pledge creates a contractual relationship between the Holders and the Commonwealth that falls within the scope of the Federal Contract Clause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) would conclude that, absent a demonstration by the Commonwealth that an Impairment is necessary to further a significant and legitimate public purpose, the Holders could successfully challenge under the Federal Contract Clause the constitutionality of any Legislative Action determined by such court to limit, alter, impair or reduce the value of the SAC Charges or SAC Property or otherwise cause an Impairment prior to the time that the Bonds are fully paid and discharged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) with respect to the questions presented above in (b), although sound and substantial arguments support the granting of preliminary injunctive relief, the decision to do so will be in the discretion of the court requested to take such action, which will be exercised on the basis of the considerations discussed in Part II below; and a federal court should conclude that permanent injunctive relief is available under federal law to prevent implementation of Legislative Action hereafter taken and determined by such court to limit, alter, impair or reduce the value of the SAC Property or otherwise cause an Impairment in violation of the Federal Contract Clause; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) would conclude under the Federal Takings Clause that the Commonwealth would be required to pay just compensation to Holders if the Commonwealth's repeal or amendment of the Securitization Law or taking of any other action in contravention of the Commonwealth Pledge constituted a Substantial Taking.

We also note, with respect to the opinion in (ii), that existing case law indicates that the Commonwealth would have to establish that any Impairment is necessary and reasonably tailored to address a significant public purpose, such as remedying or providing relief for a broad, widespread economic or social problem. The cases also indicate that the Commonwealth's justification would be subjected to a higher degree of scrutiny, and that the Commonwealth would bear a more substantial burden, if the Legislative Action impairs a contract to which the Commonwealth is a party (which we believe to be the case here), as contrasted to a contract solely between private parties.

We are not aware of any reported controlling judicial precedents that are directly on point with respect to the questions raised above. Accordingly, our analysis is necessarily a reasoned application of judicial decisions involving similar or analogous circumstances. Moreover, the application of equitable principles (including the availability of injunctive relief or the issuance of

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Each of the Persons Listed

On Schedule A Attached Hereto

[●], 2026

a stay pending appeal) is subject to the discretion of the court that is asked to apply them. We cannot predict the facts and circumstances that will be present in the future and may be relevant to the exercise of such discretion. Consequently, there can be no assurance that a court will follow our reasoning or reach the conclusions that we believe current judicial precedent supports.

This letter is limited to the federal laws of the United States of America. Our opinions are based upon our evaluation of existing judicial decisions and arguments related to the factual circumstances likely to exist at the time of a Federal Contract Clause or Federal Takings Clause challenge to Legislative Action or other Commonwealth action; such precedents and such circumstances could change materially from those discussed below in this letter. Accordingly, such opinions are intended to express our belief as to the result that should be obtainable through the proper application of existing judicial decisions in a properly prepared and presented case. It is our and your understanding that none of the foregoing opinions is intended to be a guaranty as to what a particular court would actually hold; rather each such opinion is only an expression as to the decision a court ought to reach if the issue were properly prepared and presented to it and the court followed what we believe to be the applicable legal principles under existing judicial precedent. The recipients of this letter should take these considerations into account in analyzing the risks associated with the subject transaction.

We are not aware of any reported judicial decision which we believe would provide a basis on which a court would declare the provisions of the Securitization Law to be invalid under the United States Constitution and it is our opinion that under existing case law, a reviewing court of competent jurisdiction would hold that the Securitization Law is constitutional in all material respects under the United States Constitution.

**Discussion** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***I.***  ***Protection of Commonwealth Pledge Under the Federal Contract Clause*** 

Va. Code § 56-249.8:K(1) – (2) provides:

"(1) The Commonwealth and its agencies, including the Commission, pledge and agree with bondholders, the owners of the securitized asset cost property, and other financing parties that the Commonwealth and its agencies shall not take any action listed in this subdivision. This subsection does not preclude limitation or alteration if full compensation is made by law for the full protection of the securitized asset cost charges collected pursuant to a financing order and of the bondholders and any assignee or financing party entering into a contract with the electric utility. The Commonwealth and its agencies, including the Commission, shall not:

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[●], 2026

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Alter the provisions of this section that authorize the Commission to create an irrevocable contract right or chose in action by the issuance of a financing order, to create securitized asset cost property, and to make the securitized asset cost charges imposed by a financing order irrevocable, binding, or non-bypassable charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Take or permit any action that impairs or would impair the value of securitized asset cost property or the security for the securitized asset cost bonds or revises the securitized asset costs for which recovery is authorized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In any way impair the rights and remedies of the bondholders, assignees, and other financing parties; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except for changes made pursuant to the formula-based adjustment mechanism authorized under this section, reduce, alter, or impair securitized asset cost charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the bondholders, any assignee, and any other financing parties until any and all principal, interest, premium, financing costs, and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related securitized asset cost bonds have been paid and performed in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any person that issues securitized asset cost bonds may include the language specified in subdivision 1 in the securitized asset cost bonds and related documentation."

Va. Code § 56-249.8:K(1) – (2). This language, including paragraph (2) in the block quote above, is referred to in this letter as the "Commonwealth Pledge." As authorized by the foregoing statutory provision and the Financing Order, the language of the Commonwealth Pledge has been included in the Indenture and in the Bonds. Based on our analysis of relevant judicial authority, it is our opinion, subject to all of the qualifications, limitations and assumptions (including the assumption that any Impairment would be "substantial") set forth in this letter, that, absent a demonstration by the Commonwealth that an Impairment is necessary to further a significant and legitimate public purpose, a reviewing court of competent jurisdiction would conclude that the Commonwealth Pledge provides a basis upon which the Holders (or the Indenture Trustee acting on their behalf) could challenge successfully, under the Federal Contract Clause, the constitutionality of any Legislative Action determined by such court to impair the value of the SAC Property or otherwise to cause an Impairment prior to the time that the Bonds are fully paid and discharged.

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[●], 2026

Article I, Section 10 of the United States Constitution, known as the Federal Contract Clause, prohibits any state from impairing the "[o]bligation of [c]ontracts," whether among private parties or among such state and private parties. The general purpose of the Federal Contract Clause is "to encourage trade and credit by promoting confidence in the stability of contractual obligations."<sup>2</sup> The law is well-settled that "the [Federal] Contract Clause limits the power of the States to modify their own contracts as well as to regulate those between private parties."<sup>3</sup> Although the text of the Federal Contract Clause appears to proscribe any impairment, the United States Supreme Court has made it clear that the proscription is not absolute: "Although the Contract Clause appears literally to proscribe 'any' impairment, […] 'the prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula.'"<sup>4</sup>

The United States Supreme Court has applied a three-part analysis to determine whether a particular legislative action violates the Federal Contract Clause:<sup>5</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) whether the legislative action operates as a substantial impairment of a contractual relationship;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) assuming such an impairment, whether the legislative action is justified by a significant and legitimate
public purpose; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) whether the adjustment of the rights and responsibilities of the contracting parties is reasonable and
appropriate given the public purpose behind the legislative action.

The first inquiry contains three components: "whether there is a contractual relationship, whether a change in law impairs that contractual relationship, and whether the impairment is substantial."<sup>6</sup> In addition, to succeed with a Federal Contract Clause claim involving a contract with the state itself, a party must show that the contractual relationship is not an invalid attempt by the state under the "reserved powers" doctrine to "surrender[] an essential attribute of its sovereignty."<sup>7</sup>

<sup>2</sup> <u>See</u> <u>U</u><u>.S. Tr. Co. of N.Y. v. New Jersey</u>, 431 U.S. 1, 15 (1977).

<sup>3</sup> <u>I</u><u>d</u>. at 17.

<sup>4</sup> <u>Id.</u> at 21 (citation omitted); <u>see also</u> <u>E</u><u>nergy Reserves Grp., Inc. v. Kan. Power</u> <u>& Light Co.</u>, 459 U.S. 400, 410 (1983) ("Although the language of the Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State 'to safeguard the vital interests of its people.'") (citing <u>H</u><u>ome Bldg. & Loan</u> <u>Ass</u><u>'</u><u>n</u> <u>v. Blaisdell</u>, 290 U.S. 398, 434 (1934)). 

<sup>5</sup> <u>E</u><u>nergy Reserves</u>, 459 U.S. at 411-13. <u>See also</u>, e.g., <u>FOP Lodge No.</u> <u>89 v. Prince George</u><u>'</u><u>s</u> <u>Cty</u><u>.</u>, 608 F.3d 183, 188 (4th Cir. 2010); <u>Kaminski v. Coulter</u>, 865 F.3d 339, 344-45 (6th Cir. 2017). 

<sup>6</sup> <u>G</u><u>en. Motors Corp. v. Romein</u>, 503 U.S. 181, 186 (1992).

<sup>7</sup> <u>See</u> <u>U</u><u>.S. Trust</u>, 431 U.S. at 23.

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As described above, the opinion of TPL supports the conclusion that the Commonwealth Pledge unambiguously indicates the Commonwealth's intent to be bound with the Holders and, subject to all of the qualifications, limitations and assumptions set forth in such opinion, supports the conclusion that, for purposes of the Contract Clause of the Virginia Constitution, the Commonwealth Pledge constitutes a binding contractual relationship between the Commonwealth and the Holders.

On that premise, the following three subparts address: (i) whether such a contract that falls within the scope of the Federal Contract Clause exists between the Commonwealth and the Holders as a result of Commonwealth Pledge; (ii) if so, whether such contract violates the "reserved powers" doctrine, which would render such contract unenforceable; and (iii) the Commonwealth's burden in justifying an impairment. The determination of whether particular Legislative Action constitutes a substantial impairment of a particular contract is a fact-specific analysis, and nothing in this letter expresses any opinion as to how a court would resolve the issue of "substantial impairment" with respect to the Financing Order, the SAC Property or the Bonds vis-à -vis a particular Legislative Action. Therefore, we have assumed for purposes of this letter that any Impairment resulting from the Legislative Action being challenged under the Federal Contract Clause would be substantial.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***A.***  ***Existence of a Contractual Relationship*** 

The courts have recognized the general presumption that, "absent some clear indication that the legislature intends to bind itself contractually, …'a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise.'"<sup>8</sup> This presumption is based on the fact that the legislature's principal function "is not to make contracts, but to make laws that establish the policy of the state."<sup>9</sup> Thus, a person asserting the creation of a contract with the Commonwealth must overcome this presumption.

<sup>8</sup> <u>Nat</u><u>'</u><u>l</u> <u>R.R. Passenger Corp. v. Atchison, Topeka</u> <u>& Santa Fe Ry.</u>, 470 U.S. 451, 465-66 (1985) (quoting <u>D</u><u>odge v. Bd. of Educ.</u>, 302 U.S. 74, 79 (1937)). 

<sup>9</sup> <u>See</u> <u>id.</u> at 466 (citing <u>Ind. ex rel. Anderson v. Brand</u>, 303 U.S. 95, 104-05 (1938)).

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private parties if the statutory language contains sufficient words of contractual undertaking.<sup>11</sup> The United States Supreme Court has further stated that a contract is created "when the language and circumstances evince a legislative intent to create private rights of a contractual nature enforceable against the State."<sup>12</sup>

In <u>U</u><u>.S. Trust v. New Jersey</u>, the United States Supreme Court affirmed the trial court's finding, which was not contested on appeal, that a statutory covenant of two states for the benefit of the holders of certain bonds gave rise to a contractual obligation between such states and the bondholders.<sup>13</sup> The covenant at issue limited the ability of the Port Authority of New York and New Jersey to subsidize rail passenger transportation from revenues and reserves pledged as security for such bonds. In finding the existence of a contract between such states and bondholders, the Court stated "[t]he intent to make a contract is clear from the statutory language: 'The 2 States covenant and agree with each other and with the holders of any affected bonds. . . .'"<sup>14</sup> In that case, the statute used the words "covenant and agree with each other and with the holders of any affected bonds."<sup>15</sup> Later, in <u>National Railroad Passenger Corp. v. Atchison, Topeka</u> <u>& Santa Fe Railway Co.</u>, the Court discussed the <u>U</u><u>.S. Trust</u> covenant and noted: "[r]esort need not be had to a dictionary or case law to recognize the language of contract" in such covenant.<sup>16</sup>

Similarly, in <u>Indiana ex rel. Anderson v. B</u><u>rand</u>, the United States Supreme Court determined that the Indiana Teachers' Tenure Act created a contract between the state and specified teachers because the statutory language demonstrated a clear legislative intent to contract. The Court based its decision, in part, on the legislature's use of the word "contract" throughout the statute to describe the legal relationship between the state and such teachers.<sup>17</sup>

<sup>10</sup> <u>D</u><u>odge</u>, 302 U.S. at 78.

<sup>11</sup> <u>See</u> <u>I</u><u>nd. ex rel. Anderson</u>, 303 U.S. at 104-05 (1938) (noting "the cardinal inquiry is as to the terms of the statute supposed to create such a contract"); <u>U</u><u>.S. Trust</u>, 431 U.S. at 17-18 & n.14. 

<sup>12</sup> <u>U</u><u>.S.</u> <u>Trust</u>, 431 U.S. at 17 n.14.

<sup>13</sup> <u>I</u><u>d</u>. at 17-18.

<sup>14</sup> <u>I</u><u>d</u>. at 18. Although the issue of whether a contract existed between such states and the bondholders was never disputed on appeal, the Court reviewed the language of the covenant and the circumstances surrounding the covenant, and stated, "[w]e therefore have no doubt that the 1962 covenant has been properly characterized as a contractual obligation of the two States." <u>I</u><u>d</u>. 

<sup>15</sup> <u>Id.</u> at 18 (quoting 1962 N.J. Laws, c.8, § 6, 1962 N.Y.Laws, c. 209, § 6).

<sup>16</sup> <u>See</u> <u>Nat</u><u>'</u><u>l</u> <u>R.R.</u>, 470 U.S. at 470.

<sup>17</sup> <u>B</u><u>rand</u>, 303 U.S. at 105. However, the mere use of the word "contract" in a statute will not necessarily evince the requisite legislative intent. As the Court cautioned in <u>National Railroad</u>, the use of the word "contract" alone would not signify the existence of a contract *with the government*. <u>Nat</u><u>'</u><u>l</u> <u>R.R.</u>, 470 U.S. at 470. In <u>National Railroad</u>, the Court found that use of the word "contract" in the Rail Passenger Service Act defined only the relationship between the newly-created nongovernmental corporation (Amtrak) and the railroads, not the relationship between the United States and the railroads. The Court determined that "[l]egislation outlining the terms on which private parties may execute contracts does not on its own constitute a statutory contract." <u>I</u><u>d</u>. at 467. 

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Like the language of the covenant considered in <u>U</u><u>.S. Trust</u>, the language of the Commonwealth Pledge unambiguously indicates the General Assembly's intent to bind the Commonwealth by providing in pertinent part that the Commonwealth does "pledge and agree with bondholders, the owners of the securitized asset cost property, and other financing parties that the Commonwealth and its agencies shall not take any action listed in this subdivision." Va. Code § 56-249.8:K.1. Indeed, the most evident difference between such language and the <u>U</u><u>.S. Trust</u> statute is the use of the verb "pledge," rather than "covenant," but that difference is not, in our view, material.<sup>18</sup> Indeed, much like the terms "covenant" and "agree" quoted in <u>U.S. Trust</u>, the phrase "pledge and agree" evinces a legislative intent to create private rights of a contractual nature enforceable against the Commonwealth. The provisions, also consistent with contract language and like the statute quoted in U.S. Trust names the beneficiaries of the Commonwealth's pledge and agreement. Further, the definition of the General Assembly's term — "pledge" — is "to bind by a promise."<sup>19</sup> Unlike the statute construed in <u>National Railroad</u>, the Securitization Law expressly includes language indicating the Commonwealth's obligation with respect to securitized asset cost bond transactions. <u>See</u> Va. Code § 56-249.8:K.1 ("The <u>Commonwealth</u> and its agencies, including the Commission, pledge and agree . . . that the Commonwealth and its agencies shall not take any action listed in this subdivision … [t]he Commonwealth and its agencies, including the Commission shall not: . . . Take or permit any action that impairs or would impair the value of securitized asset cost property or the security for the securitized asset cost bonds or revises the securitized asset costs for which recovery is authorized" (emphasis added). Finally, it is important to note that the Commonwealth also authorizes an issuer of securitized asset cost bonds to include the Commonwealth Pledge in contracts with the holders of securitized asset cost bonds (such as

<sup>18</sup> It could be contended that the factual situation in the <u>U</u><u>.S. Trust</u> case is distinguishable from the factual situation surrounding the issuance of the Bonds. In <u>U</u><u>.S. Trust</u>, the bonds were issued by the Port Authority — a governmental agency — while the Bonds are being issued by a private entity, and the Securitization Law states that the Bonds "shall not be a debt or a general obligation of the Commonwealth." Va. Code § 56-249.8:I. However, the Securitization Law dictates that a utility <u>must</u> obtain a financing order before any "securitized asset cost bonds" such as the Bonds are issued. Va. Code § 56-249.8:B.2. The authority to issue such an order rests with the Commonwealth, acting through the Commission, and therefore the issuance of the Bonds is state-sanctioned in a manner closely analogous to the situation in <u>U</u><u>.S. Trust</u>. In addition, and most significantly, the Securitization Law pledges that the Commonwealth shall not "take or permit any action that impairs or would impair the value of securitized asset cost property" and it expressly states that "[t]he Commonwealth and its agencies, including the Commission, pledge and agree with bondholders, the owners of the securitized asset cost property, and other financing parties that the Commonwealth and its agencies shall not take any action listed in this subdivision." Va. Code § 56-249.8:K.1. This pledge not to permit or take action that would impair the value of securitized asset cost property is thus like the covenant in <u>U.S. Trust</u> because it is directed to the bond holders and is intended "as security against repeal" in order to enhance the marketability of the securitized asset bonds. <u>See</u> <u>U.S. Trust</u>, 431 U.S. at 18. 

<sup>19</sup> WEBSTER'S NEW WORLD DICTIONARY 573 (2d ed. 1982).

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the Bonds). <u>I</u><u>d</u>. § 56-249.8:K.2. While the Virginia Securitization Law also states that neither the Commonwealth nor its agencies shall be liable on the Bonds and that the Bonds shall not be considered a debt or general obligation of the Commonwealth or its agencies, that does not mean that no promise has been made for the purpose of impairment of contracts.

In summary, supported by the conclusion, subject to the qualifications, limitations and assumptions therein, in the opinion of TPL that, for purposes of the Contract Clause of the Virginia Constitution, the Commonwealth Pledge constitutes a binding contractual relationship between the Commonwealth and the Holders, the language of the Commonwealth Pledge supports the conclusion that the Commonwealth meant, through the Commonwealth Pledge, to create a contractual relationship between the Commonwealth and the Holders that falls within the scope of the Federal Contract Clause.<sup>20</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***B.***  ***Reserved Powers Doctrine*** 

The "reserved powers" doctrine limits the Commonwealth's ability to bind itself contractually in a manner which surrenders an essential attribute of its sovereignty.<sup>21</sup> Under this doctrine, if a contract purports to surrender a state's "reserved powers" – powers that cannot be contracted away – such contract is void.<sup>22</sup> Although the scope of the "reserved powers" doctrine has not been precisely defined by the courts, case law has established that a state cannot enter into contracts that forbid future exercises of its police powers or its power of eminent domain.<sup>23</sup> In contrast, the United States Supreme Court has stated that a state's "power to enter into effective financial contracts cannot be questioned."<sup>24</sup>

<sup>20</sup> In addition to the Commonwealth Pledge, the Commission's Financing Order contains the following language in Conclusion (30): "The Commission, on behalf of itself and the Commonwealth in accordance with the Securitization Statute, pledges and agrees with the holders of the Securitized Asset Cost Bonds, the owners of the Securitized Asset Cost Property, and other financing parties that the Commission and the Commonwealth and its agencies shall not take any action to: (i) alter the provisions of the Securitization Statute that authorize the Commission to create an irrevocable contract right or chose in action by the issuance of this Financing Order, to create securitized asset cost property in the form of the Securitized Asset Cost Property, and to make the securitized asset cost charges imposed by this Financing Order in the form of the Securitized Asset Cost Charges imposed by this Financing Order irrevocable, binding, or nonbypassable charges; (ii) take or permit any action that impairs or would impair the value of the Securitized Asset Cost Property or the security for the Securitized Asset Cost Bonds or revises the Securitized Asset Costs for which recovery is authorized; (iii) in any way impair the rights and remedies of the bondholders, assignees, and other financing parties related thereto; or (iv) except for changes made pursuant to the formula-based adjustment mechanism authorized under this Financing Order, reduce, alter, or impair Securitized Asset Cost Charges that are to be imposed, billed, charged, collected, and remitted for the benefit of such bondholders, assignees, and financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related Securitized Asset Cost Bonds have been paid and performed in full." 

<sup>21</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 23.

<sup>22</sup> <u>I</u><u>d</u>*.* <u>See generally</u> <u>United States v. Winstar Corp.</u>, 518 U.S. 839, 888-90 (1996) (plurality opinion).

<sup>23</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 23-24 & nn.20-21 (citing <u>S</u><u>tone v. Mississippi</u>, 101 U.S. 814, 817 (1880), and <u>W</u><u>. River Bridge Co. v. Dix</u>, 47 U.S. 507, 525-26 (1848)). 

<sup>24</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 24. <u>See also Cont</u><u>'</u><u>l Ill.</u> <u>Nat</u><u>'</u><u>l</u> <u>Bank</u> <u>& Tr. Co. v. Washington</u>, 696 F.2d 692, 699 (9th Cir. 1983) ("Thus, insofar as the purely financial aspects of the agreement are concerned, reservations are not to be lightly inferred."); <u>Baltimore Teachers. Union, Am.</u> <u>Fed</u><u>'</u><u>n</u> <u>of Teachers. Loc. 340, AFL-CIO v. Mayor</u> <u>& City Council of Baltimore, Md.</u>, 6 F.3d 1012, 1018-19 (4th Cir. 1993). 

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Under existing case law, the Commonwealth Pledge does not, in our view, purport to surrender any "reserved powers" of the Commonwealth. Although the Commonwealth's commitment not to "[t]ake or permit any action that impairs or would impair the value of securitized asset cost property" is broader than the commitment in <u>U</u><u>.S. Trust</u> that revenues and reserves securing bonds would not be depleted beyond a certain level,<sup>25</sup> we do not believe courts, in applying the applicable federal case law, would construe the Commonwealth Pledge as purporting to contract away, or forbid future exercises of, the Commonwealth's power of eminent domain or its police power to protect the public health and safety. Through the Securitization Law and "financing orders" (such as the Financing Order) issued in accordance therewith by the Commission in order to create "securitized asset cost property", as such term is used in the Securitization Law, the Commonwealth has authorized the Commission to issue "securitized asset cost bonds" (such as the Bonds) and has pledged not to impair the value of the "securitized asset cost property" (such as the SAC Property) securing such instruments. As discussed above, in the absence of any contrary indication under Virginia law, federal courts would find that the Securitization Law and the Commonwealth Pledge constitute a contractual obligation undertaken by the Commonwealth akin to the type of "financial contract" involved in <u>U</u><u>.S. Trust</u>, and would not be viewed as an impermissible surrender of an essential attribute of State sovereignty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***C.***  ***Commonwealth's Burden to Justify an Impairment*** 

To survive scrutiny under the Federal Contract Clause, a substantial impairment by a state of a valid state contract must be justified by "a significant and legitimate public purpose . . . such as the remedying of a broad and general social or economic problem,"<sup>26</sup> and the state action causing that impairment must be both "reasonable and necessary to serve" such a public purpose.<sup>27</sup>

<sup>25</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 25.

<sup>26</sup> <u>E</u><u>nergy Reserves</u>, 459 U.S. at 411-12.

<sup>27</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 25. <u>See also</u> <u>Cherry v. Mayor</u> <u>& Baltimore</u>, 762 F. 3d 366, 371 (4th Cir. 2014); <u>Puckett v. Lexington-Fayette Urb.</u> <u>Cnty</u><u>. Gov</u><u>'</u><u>t</u>, 833 F.3d 590, 599 (6th Cir. 2016) (articulating two-part test). 

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The contours of this test are illustrated by several decisions of the United States Supreme Court. In <u>Home Building</u> <u>& Loan</u> <u>Ass</u><u>'</u><u>n</u> <u>v. B</u><u>laisdell,</u><sup>28</sup> which the Court has described as "the leading case in the modern era of [Federal] Contract Clause interpretation,"<sup>29</sup> the Court addressed a Contract Clause challenge to a Minnesota law that, in response to economic conditions caused by the Great Depression, (i) authorized county courts to extend the period of redemption from foreclosure sales on mortgages previously made "for such additional time as the court may deem just and equitable," subject to certain limitations, and (ii) limited actions for deficiency judgments.<sup>30</sup> The Court stated that the "reserved powers" doctrine could not be construed to "permit the State to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them." On the other hand, the Court also indicated that the Federal Contract Clause could not be construed to prevent limited and temporary interpositions with respect to the enforcement of contracts if made necessary by a great public calamity such as fire, flood, or earthquake. The reservation of state power appropriate to such extraordinary conditions may be deemed to be as much a part of all contracts, as is the reservation of state power to protect the public interest in the other situations to which we have referred. And if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood or earthquake, that power cannot be said to be nonexistent when the urgent public need demanding such relief is produced by other and economic causes.<sup>31</sup>

<sup>28</sup> <u>B</u><u>laisdell</u>, 290 U.S. 398.

<sup>29</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 15.

<sup>30</sup> The mortgagor was required to continue to pay the reasonable income or rental value of the property, as determined by the court, toward payment of taxes, insurance, interest and principal. The law stated that it was to remain in effect only during the current emergency and no later than May 1, 1935; no redemption period could be extended beyond the expiration of the law. <u>B</u><u>laisdell</u>, 290 U.S. at 415-18. 

<sup>31</sup> <u>Id</u>. at 439-40 (citation omitted).

<sup>32</sup> <u>I</u><u>d</u>. at 444-47.

<sup>33</sup> <u>See</u> <u>T</u><u>reigle</u> <u>v. Acme Homestead</u> <u>Ass</u><u>'</u><u>n</u>, 297 U.S. 189 (1936); <u>W</u><u>.B.</u> <u>Worthen Co. v. Kavanaugh</u>, 295 U.S. 56 (1935); <u>W</u><u>.B. Worthen Co. v. Thomas</u>, 292 U.S. 426 (1934). 

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The deference to be given by a court to a legislature's determination of the need for a particular impairment depends on whether the contract is purely private or the state is a contracting party. Although courts ordinarily defer to legislative judgment as to the necessity and reasonableness of a particular action,<sup>34</sup> the Supreme Court has noted that such deference "is not appropriate" when a state is a contracting party.<sup>35</sup> In that circumstance, a "stricter standard" of justification should apply.<sup>36</sup> Indeed, in <u>E</u><u>nergy Reserves Group v. Kansas Power</u> <u>& Light Co.</u> the Court noted that "[i]n almost every case, the Court has held a governmental unit to its contractual obligations when it enters financial or other markets."<sup>37</sup>

The leading case addressing impairment of contracts to which the state is a party is <u>U</u><u>.S. Trust</u>. As noted above, there the state had covenanted that revenues and reserves securing certain bonds would not be depleted below a certain level.<sup>38</sup> The state thereafter repealed that promise in order to finance new mass transit projects, claiming that the repeal was justified by the need to promote, and encourage additional use of, mass transportation in response to energy shortages and environmental concerns.<sup>39</sup> The Court ruled that the state's action was nevertheless invalid under the Contract Clause because repeal of the covenant was "neither necessary to achievement of the plan nor reasonable in light of the circumstances."<sup>40</sup> The Court stated that a modification less drastic than total repeal would have permitted the states to achieve their plan to improve commuter rail service, and, in fact, the states could have achieved that goal without modifying the covenant at all.<sup>41</sup> For example, the states "could discourage automobile use through taxes on gasoline or parking . . . and use the revenues to subsidize mass transit projects."<sup>42</sup>

<sup>34</sup> <u>K</u><u>eystone Bituminous Coal</u> <u>Ass</u><u>'</u><u>n</u> <u>v. DeBenedictis</u>, 480 U.S. 470 (1987) (upholding against Federal Contract Clause challenge a law authorizing revocation of a coal mine operator's mining permit as a reasonable and necessary response to the "devastating effects" of subsidence caused by underground mining). 

<sup>35</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 25-26.

<sup>36</sup> <u>E</u><u>nergy Reserves</u>, 459 U.S. at 400, 412-13 n.14. <u>See also</u> <u>A</u><u>llied Structural Steel Co. v. Spannaus</u>, 438 U.S. 234, 244 n.15 (1978) ("impairments of a State's own contracts would face more stringent examination under the Contract Clause"). 

<sup>37</sup> 459 U.S. at 412 n.14.

<sup>38</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 25.

<sup>39</sup> <u>I</u><u>d</u>. at 28-29. The Court noted that when the bills to repeal the covenant were pending "a national energy crisis was developing." <u>I</u><u>d</u>. at 13-14.

<sup>40</sup> <u>I</u><u>d</u>. at 29.

<sup>41</sup> <u>I</u><u>d</u>. at 30.

<sup>42</sup> <u>I</u><u>d</u>. at 30 n.29.

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The Court in <u>U</u><u>.S. Trust</u> contrasted the legislation under consideration with the statute challenged in <u>City of E</u><u>l Paso v. Simmons</u>,<sup>43</sup> which limited to five years the reinstatement rights of defaulting purchasers of land from the state. For many years prior to the enactment of this statute, defaulting purchasers had been allowed to reinstate their claims upon written request and payment of delinquent interest, unless the rights of third parties had intervened. In <u>U</u><u>.S. Trust</u>, the Court stated that this older (19th century) statute "had effects that were unforeseen and unintended by the legislature when originally adopted," *i.e.*, "speculators were placed in a position to obtain windfall benefits," and therefore adoption of a statute of limitations was reasonable to restrict parties to gains reasonably expected from the contract when the original statute was adopted.<sup>44</sup> In contrast, the need for mass transportation was not a new development and the likelihood that publicly owned commuter railroads would produce substantial deficits was well known when the covenant was adopted.<sup>45</sup> Although, the Court noted, public perception of the importance of mass transit undoubtedly grew between 1962, when the covenant was adopted, and 1974, when it was repealed, "these concerns were not unknown in 1962, and the subsequent changes were of degree and not of kind . . . and [did not] cause the covenant to have a substantially different impact in 1974 than when it was adopted in 1962."<sup>46</sup>

The Court in <u>U</u><u>.S. Trust</u> also distinguished its earlier decision in <u>F</u><u>aitoute</u> <u>Iron</u> <u>& Steel Co. v. City of Asbury Park</u>,<sup>47</sup> which, according to the Court, was the "only time in this century that alteration of a municipal bond contract has been sustained."<sup>48</sup> <u>F</u><u>aitoute</u> involved a state municipal reorganization act under which bankrupt local governments could be placed in receivership by a state agency. Pursuant to that act, the holders of certain municipal revenue bonds received new securities bearing lower interest rates and later maturities. According to the Court in <u>U</u><u>.S. Trust</u>, the earlier decision rejected the dissenting bondholders' Federal Contract Clause claims on the theory that the "old bonds represented only theoretical rights; as a practical matter the city could not raise its taxes enough to pay off its creditors under the old contract terms," and thus the plan "enabled the city to meet its financial obligations more effectively."<sup>49</sup> The <u>U</u><u>.S. Trust</u> Court further quoted <u>F</u><u>aitoute</u> to the effect that the obligation in that case was "discharged, not impaired" by the plan.<sup>50</sup>

<sup>43</sup> <u>City of E</u><u>l Paso v. Simmons</u>, 379 U.S. 497 (1965).

<sup>44</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 31.

<sup>45</sup> <u>I</u><u>d</u>. at 31-32.

<sup>46</sup> <u>I</u><u>d</u>. at 32.

<sup>47</sup> <u>F</u><u>aitoute</u> <u>Iron</u> <u>& Steel Co. v. City of Asbury Park</u>, 316 U.S. 502 (1942).

<sup>48</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 27.

<sup>49</sup> <u>I</u><u>d</u>. at 28.

<sup>50</sup> <u>I</u><u>d</u>.

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Thus, the relevant case law demonstrates that a state bears a substantial burden when attempting to justify an impairment of a contract to which it is a party. As noted by the Supreme Court, "[i]n almost every case, the Court has held a governmental unit to its contractual obligations when it enters financial or other markets."<sup>51</sup> A mere recitation that the impairment is in the public interest is thus insufficient. Instead, a state action that impairs contracts to which it is a party must further a significant, legitimate and broad public purpose, not the interests of a narrow group; that public purpose must be served by a reasonable, necessary and carefully tailored measure, as "a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well."<sup>52</sup>

Subject to the qualifications, limitations and assumptions set forth in this letter, and supported by the conclusion, subject to the qualifications, limitations and assumptions therein, in the opinion of TPL that the Commonwealth Pledge unambiguously indicates the Commonwealth's intent to be bound with the Holders and that, for purposes of the Contract Clause of the Virginia Constitution, the Commonwealth Pledge constitutes a binding contractual relationship between the Commonwealth and the Holders, it is our opinion that a reviewing court of competent jurisdiction, in a properly prepared and presented case applying federal precedent, would conclude that the Commonwealth Pledge constitutes a binding contractual relationship between the Holders and the Commonwealth that falls within the scope of the Federal Contract Clause, and that, absent a demonstration by the Commonwealth that an Impairment is necessary to further a significant and legitimate public purpose, the Holders could successfully challenge under the Federal Contract Clause the constitutionality of any Legislative Action determined by such court to limit, alter, reduce or otherwise impair the value of the SAC Charges or SAC Property or otherwise cause an Impairment prior to the time that the Bonds are fully paid and discharged.

<sup>51</sup> <u>E</u><u>nergy Reserves</u>, 459 U.S. at 412 n.14 (citing <u>U</u><u>.S. Trust</u>, 431 U.S. at 25-28; <u>Kavanaugh</u>, 295 U.S. 56 (1935); and <u>M</u><u>urray v. Charleston</u>, 96 U.S. 432 (1878)). In <u>Kavanaugh</u>, the United States Supreme Court reversed a decision of the Arkansas Supreme Court upholding the validity of legislative enactments which, in the words of the former, take "from the mortgage [securing bonds issued by municipal improvement districts pursuant to state law] the quality of an acceptable investment for a rational investor" by making it much more difficult and time consuming to foreclose upon the collateral posted as security for the mortgage. 295 U.S. at 60. Such enactments were accompanied by a legislative "declaration of an emergency, which was stated to endanger the peace, health, and safety of a multitude of citizens." 295 U.S. at 59. In <u>M</u><u>urray</u>, the United States Supreme Court reversed a judgment of the Supreme Court of South Carolina upholding an ordinance of the City of Charleston which permitted the City to withhold, as a tax, a portion of the interest that was otherwise payable with respect to bonds issued by the City. This "tax" was held to violate the Federal Contract Clause: "no municipality of a State can, by its own ordinances, under the guise of taxation, relieve itself from performing to the letter all that it has expressly promised to its creditors." 96 U.S. at 448. 

<sup>52</sup> <u>U</u><u>.S. Trust</u>, 431 U.S. at 31. <u>See also</u> <u>Catawba Indian Tribe of S.C. v. City of Rock Hill</u>, 501 F.3d 368, 371 (4th Cir. 2007). In <u>United Auto., Aerospace,</u> <u>Agr</u><u>. Implement Workers of Am. Int</u><u>'</u><u>l Union v. Fortu</u><u>ñ</u><u>o</u>, 633 F.3d 37, 43-44 (1st Cir. 2011), the First Circuit held that the plaintiff bears the burden of proving that the state actions causing a substantial impairment are not reasonable or necessary. The First Circuit acknowledged that its position is in "some tension with the Supreme Court's instruction" in <u>U.S. Trust</u>, and that "many courts have concluded that this burden rests with the state." <u>Id.</u> at 43. <u>See also</u> <u>Sullivan v. Nassau County Interim Finance Authority</u>, 959 F.3d 54, 66 (2d Cir. 2020) (noting issue but declining to address it). 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***II.***  ***Availability of Injunctive Relief in a Federal Court*** 

In a challenge to Legislative Action alleged to cause an Impairment, the remedies the plaintiff would be expected to seek would include an order enjoining Commonwealth officials from enforcing the provisions of such Legislative Action.<sup>53</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***A.***  ***Preliminary Injunctive Relief*** 

Under federal law, a federal court would assess the following matters in determining whether (in its discretion) to grant preliminary injunctive relief: (a) whether the party seeking an injunction is likely to succeed on the merits; (b) whether the party is likely to suffer irreparable harm in the absence of preliminary relief; (c) whether the balance of equities tips in favor of the party seeking the injunction; and (d) whether an injunction is in the public interest.<sup>54</sup> Each factor must be independently "satisfied as articulated."<sup>55</sup> Given the limited purpose of a preliminary injunction, a party seeking a preliminary injunction "is not required to prove his case in full" under the same procedures and evidentiary requirements that would apply at a trial on the merits.<sup>56</sup>

*Success on the Merits*. For purposes of our opinion regarding the availability of injunctive relief, we have assumed that a reviewing court of competent jurisdiction will find a strong likelihood of success on the merits, *i.e.* that the Legislative Action is likely an Impairment. As explained above, applying applicable federal precedent, in the absence of any contrary precedent under Virginia law, the Securitization Law and Commonwealth Pledge would be viewed as constituting a contractual relationship between the Holders and the Commonwealth that falls within the scope of the Federal Contract Clause. Thus, we examine only the three remaining portions of the test.

<sup>53</sup> If plaintiffs also seek money damages in federal court, the Commonwealth defendants could claim immunity. The Eleventh Amendment bars federal courts from granting money damages against the Commonwealth unless the Commonwealth waives that immunity. <u>Gibbons v. Gibbs</u>, 99 F.4th 211, 214 (4th Cir. 2024); <u>Hutto v. S.C. Ret. Sys.</u>, 773 F.3d 536, 543-49 (4th Cir. 2014) ("State officials sued in their official capacities for retrospective money damages have the same sovereign immunity accorded to the State. . . . Therefore, as did the district court, we hold that the plaintiffs' claim against the state officials for the return of their contributions is barred by the Eleventh Amendment."); <u>see also id.</u> ("Unlike subject-matter jurisdiction, which cannot be waived, a State can always waive its immunity and consent to be sued in federal court[.]"). 

<sup>54</sup> <u>Winter v. Nat. Res. Def. Council, Inc.</u>, 555 U.S. 7, 20 (2008). <u>See also</u> <u>Am. Fed'n of Teachers v. Bessent</u>, 152 F.4th 162, 168-69 (4th Cir. 2025) ("While the court in Winter considered two factors, some requests for preliminary injunctions can be quickly resolved on just the first Winter factor alone. Such a truncated analysis is sufficient when a plaintiff must prevail on several independent issues, each potentially dispositive of the case, to prevail overall. To win under such circumstances, a plaintiff must show that they will likely prevail on the combination of all of the issues; the defendant, on the other hand, need only show they will likely prevail on one of them."). 

<sup>55</sup> <u>Pashby v. Delia</u>, 709 F.3d 307, 321 (4th Cir. 2013) (citing <u>The Real Truth About Obama</u>, 575 F.3d at 347), <u>vacated on other grounds</u>, 130 S. Ct. 2371 (2010), <u>aff'd</u>, <u>The Real Truth About Obama, Inc. v. F.E.C.</u>, 607 F.3d 355 (4th Cir. 2010). 

<sup>56</sup> <u>AttorneyFirst, LLC v. Ascension Entm't, Inc.</u>, 144 F. App'x 283, 288 (4th Cir. 2005).

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*Irreparable Harm*. In considering irreparable harm, courts evaluate whether (1) there is a sufficient causal connection between the alleged injury and the conduct sought to be enjoined;<sup>57</sup> (2) irreparable injury is likely in the absence of an injunction;<sup>58</sup> (3) the threat of harm to plaintiff is immediate;<sup>59</sup> and (4) litigation can offer monetary compensation instead.<sup>60</sup>

*<u>Causation</u>*. Holders would have to prove that enforcement of the Legislative Action would cause detriment to them, such as loss of expected payments or loss of bond value. Given that a fundamental premise of an Impairment is Legislative Action to the detriment of Holders, Holders should be able to show causation.

*<u>Likelihood</u>.* Holders would have to prove that harm is likely absent an injunction. Likely harm is a premise that makes the Legislative Action an Impairment in the first place. Thus, we assume Holders could prove likely harm absent an injunction.

*<u>Immediacy</u>*. If scheduled payments are disrupted by Legislative Action before a trial on the merits, immediate harm could be proven. If, however, a trial on the merits is possible before such harm will occur, the harm is not immediate enough to support a preliminary injunction.<sup>61</sup> In addition, depressed bond values may be experienced before trial. The fact that diminished credit quality due to the Legislative Action leads to diminished Bond value also should be provable.

<sup>57</sup> <u>Perfect 10, Inc. v. Google, Inc.</u>, 653 F.3d 976, 982 (9th Cir. 2011); <u>see</u> <u>Garcia v. Google, Inc.</u>, 786 F.3d 733, 745 (9th Cir. 2015); <u>Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Operating Co.</u>, 22 F.3d 546, 551-552 (4th Cir. 1994) (irreparable harm found when the injury is directly caused by the challenged conduct). 

<sup>58</sup> <u>Winter</u>, 555 U.S. at 22.

<sup>59</sup> <u>See</u> <u>Real Time Med. Sys., Inc. v. PointClickCare Tech., Inc.</u>, 131 F.4th 205, 239-41 (4th Cir. 2025); <u>Air Evac EMS, Inc. v. McVey</u>, 37 F.4th 89, 102-03 (4th Cir. 2022).

<sup>60</sup> <u>Sampson v. Murray</u>, 415 U.S. 61, 90 (1974); <u>see also, e.g.</u>, <u>Mt. Valley Pipeline, LLC v. 6.56 Acres of Land, Owned by Sandra Townes Powell</u>, 915 F.3d 197, 218 (4th Cir. 2019) ("It is true that when anticipated economic losses will be recoverable at the end of litigation, then those losses generally will not qualify as irreparable for purposes of preliminary relief."). 

<sup>61</sup> <u>See</u> <u>Roland Mach. Co. v. Dresser Indus., Inc.</u>, 749 F.2d 380, 386 (7th Cir. 1984) (only if plaintiff will suffer irreparable harm in period before final judgment following trial can preliminary injunction issue); <u>but see</u> <u>Fed. Leasing, Inc. v. Underwriters at Lloyd's</u>, 650 F.2d 495, 500 (4th Cir. 1981) (holding that plaintiffs were entitled to preliminary injunctive relief where the economic losses threatened the very existence of the business) (citing <u>Semmes Motors, Inc., v. Ford Motor Co.</u>, 429 F.2d 1197, 1205 (2d Cir. 1970); <u>Amazon.com, Inc. v. WDC Holdings LLC</u>, No. 20-1743, 2021 WL 3878403, at \*8-9 (4th Cir. 2021) (holding that defendant's assets were likely to become unavailable before judgment due to the likelihood of insolvency and plaintiffs were entitled to preliminary injunctive relief). 

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*<u>Alternative remedies</u>.* Unless the Commonwealth waives immunity, the Eleventh Amendment bars federal courts from granting money damages against the Commonwealth.<sup>62</sup> Absent a Commonwealth waiver of immunity, money damages would be unavailable to redress the harm to Holders from the Legislative Action, supporting the inadequacy of relief available in a federal court.<sup>63</sup>

*Balance of Equities*. Before issuing a preliminary injunction, a court identifies the harm that a preliminary injunction might cause the defendant and weighs it against plaintiff's threatened injury,<sup>64</sup> and may consider the equities of nonparties.<sup>65</sup> Here, a court will likely consider the balance of harm in the next stage of the analysis instead because assessing the harm to the opposing party and weighing the public interest merge when the government is the opposing party.<sup>66</sup>

<sup>62</sup> <u>Lee-Thomas v. Prince George's Cty. Pub. Sch.</u>, 666 F.3d 244, 249 (4th Cir. 2012); <u>Frew ex rel. Frew v. Hawkins</u>, 540 U.S. 431, 437 (2004) (federal courts may not award retrospective relief, for instance, money damages or its equivalent, if state invokes its immunity). 

<sup>63</sup> <u>See</u> <u>Hutto</u>, 773 F.3d at 547-49 ("state officials sued in their official capacities for retrospective money damages have the same sovereign immunity accorded to the State"); Commonwealth v. Biden, 57 F.4th 545, 556 (6th Cir. 2023) (explaining that governmental sovereign immunity "typically makes monetary losses … irreparable"); <u>Chamber of Com. of U.S. v. Edmondson</u>, 594 F.3d 742, 756, 770–71 (10th Cir. 2010) (associations' members were likely to suffer irreparable harm from compliance costs related to state law that might total more than $1,000 per business per year because such costs were unrecoverable as damages due to sovereign immunity); <u>Entergy Nuclear Vt. Yankee, LLC v. Shumlin</u>, 733 F.3d 393, 423 (2d Cir. 2013) (injunction supported in part because money damages unavailable to movant because of state immunity under Eleventh Amendment); <u>KPMG LLP v. United States</u>, 139 Fed.Cl. 533, 537 (Fed. Cl. 2018) ("[a]s a general principle, where plaintiff has no ability to recoup lost profits against the United States, the harm to the plaintiff is irreparable"); <u>E. Bay Sanctuary Covenant v. Biden</u>, 993 F.3d 640, 677 (9th Cir. 2021) (where parties cannot typically recover monetary damages flowing from their injury economic harm can be considered irreparable); <u>Odebrecht Const., Inc. v. Secretary, Florida Dept. of Transp.</u> 715 F3d 1268, 1289 (11th Cir. 2013); <u>Entergy, Arkansas, Inc. v. Nebraska</u>, 210 F3d 887, 899–900 (8th Cir. 2000) (chances for a preliminary injunction may be "heightened" where relief in the form of money damages is barred by the government's sovereign immunity); <u>but see</u> <u>Black United Fund of N.J., Inc. v. Kean</u>, 763 F.2d 156, 161 (3d Cir. 1985) ("[t]hat the Eleventh Amendment may pose an obstacle to recovery of damages in the federal court does not transform money loss into irreparable injury for equitable purposes"). 

<sup>64</sup> <u>Scotts Co. v. United Indus. Corp.</u>, 315 F.3d 264, 284 (4th Cir. 2002); <u>see</u> <u>Winter</u>, 555 U.S. at 24; <u>Earth Island Inst. v. Carlton</u>, 626 F.3d 462, 475 (9th Cir. 2010) (assignment of weight to particular harms is matter for district courts to decide). 

<sup>65</sup> <u>Horwitz v. Southwest Forest Indus., Inc.</u>, 604 F. Supp. 1130, 1136 (D Nev. 1985); <u>see</u> <u>Publications Int'l, Ltd. v. Meredith Corp.</u>, 88 F.3d 473, 478 (7th Cir. 1996).

<sup>66</sup> Assessing the harm to the opposing party and weighing the public interest "merge when the Government is the opposing party." <u>Nken v. Holder</u>, 556 U.S. 418, 435 (2009); <u>Am. Fed'n of State, Cty. and Mun. Emp. AL-CIO v. Social Security</u>, 2025 WL 1249608, at \*63 (4th Cir. 2025); <u>Daunt v. Benson</u>, 956 F.3d 396, 422 (6th Cir. 2020); <u>Drakes Bay Oyster Co. v. Jewell</u>, 747 F.3d 1073, 1092 (9th Cir. 2014); <u>Minard Run Oil Co. v. United States Forest Serv.</u>, 670 F.3d 236, 256 (3rd Cir. 2011). 

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*Public Interest*. In exercising their discretion, courts of equity "pay particular regard for the public consequences in employing the extraordinary remedy of injunction."<sup>67</sup> And, "[a]ny time a State is enjoined by a court from effectuating statutes enacted by representatives of its people, it suffers a form of irreparable injury."<sup>68</sup> However, some courts have determined there is no "blanket presumption in favor of the government in all preliminary injunction cases."<sup>69</sup> The government does not have an interest in enforcing unconstitutional laws.<sup>70</sup> And financial concerns are not a paramount public interest.<sup>71</sup>

The function of preliminary injunctive relief is to preserve the latest uncontested status quo prior to the action which is the subject of the legal challenge.<sup>72</sup> The latest uncontested status quo with respect to the Bonds prior to the challenged Legislative Action would appear to be the continued effectiveness of the Financing Order and the validity of the SAC Property and SAC Charges.

As discussed above, the likely primary harm to Holders would come from delinquent Bond payments or diminished Bond value. If the legislation merely targets the Commonwealth Pledge, without pursuing some larger public policy goal, a court would more likely view the Commonwealth as merely seeking to advance its own pecuniary interests (coinciding, likely, with actions prohibited by constitutional restrictions against impairment of contracts) and would likely see little public interest advanced. But if the Legislative Action is part of a larger public policy aim, and the modification or elimination of the Commonwealth Pledge is an important and integrated part of the statutory scheme, the court may weigh the public interest advanced by that Legislative Action to disfavor issuing the injunction.

<sup>67</sup> <u>Winter</u>, 555 U.S. at 24; <u>Salazar v. Buono</u>, 559 U.S. 700, 714 (2010); <u>see also</u> <u>Int'l Refugee Assistance Project v. Trump</u>, 857 F.3d 554, 602 (4th Cir. 2017) ("Even if Plaintiffs are likely to suffer irreparable harm in the absence of a preliminary injunction, we still must determine that the balance of the equities tips in their favor, 'paying particular regard for the public consequences in employing the extraordinary remedy of injunction.'") (internal citation omitted). 

<sup>68</sup> <u>Maryland v. King</u>, 567 U.S. 1301, 1303 (2012) (Roberts, Circuit Justice) (internal quotes omitted<u>); Pierce v. N.C. State Bd. of Elec.</u>, 97 F.4th 194, 225 (4th Cir. 2024); <u>Planned Parenthood of Greater Tex. Surgical Health Servs. v. Abbott</u>, 734 F.3d 406, 419 (5th Cir. 2013). 

<sup>69</sup> <u>Rodriguez v. Robbins</u>, 715 F.3d 1127, 1145–46 (9th Cir. 2013).

<sup>70</sup> <u>See, e.g.</u>, <u>Am. Fed'n of State, Cty. and Mun. Emp.</u>, 2025 WL 1249608, at \*62 ("There is generally no public interest in the perpetuation of unlawful agency action"), citing <u>Louisiana v. Biden</u>, 55 F.4th 1017, 1035 (5th Cir. 2022); <u>Giovani Carandola, Ltd. v. Bason</u>, 303 F.3d 507, 520-21 (4th Cir. 2002). 

<sup>71</sup> See <u>Pashby v. Delia</u>, 709 F.3d 307, 331 (4th Cir. 2013) (rejecting state's proffered financial concerns as relevant public interest).

<sup>72</sup> <u>Univ. of Tex. v. Camenisch</u>, 451 U.S. 390, 395 (1981) ("The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held."); <u>United States v. South Carolina</u>, 720 F.3d 518, 524 (4th Cir. 2013). 

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We cannot offer more than the framework above for assessing this element of the test of issuance of an injunction because much will depend on the particulars of the Legislative Action. But we strain to conceive of legislation that seeks broad public policy aims that cannot be achieved without modifying or eliminating the Commonwealth Pledge favoring Holders. Thus, we assume here that the public interest will not prevent a court from issuing an injunction.

Based on the foregoing, the Holders likely could satisfy these standards for temporary injunctive relief, and a temporary injunction to prevent an unconstitutional Impairment should be an available remedy.<sup>73</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***B.***  ***Availability of Permanent Injunctive Relief in Federal Court*** 

The requirements for a permanent injunction are essentially the same as for a preliminary injunction, except that the moving party must demonstrate actual success on the merits (prevailing at trial).<sup>74</sup> On that basis, we hold the same views regarding a permanent injunction as those we expressed above for a preliminary injunction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***III.***  ***Protections Afforded by Takings Clauses*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***A.***  ***Federal Takings Clause Protections*** 

The Takings Clause of the Fifth Amendment of the United States Constitution—"nor shall private property be taken for public use, without just compensation"—is made applicable to state action via the Fourteenth Amendment.<sup>75</sup> The Federal Takings Clause covers both tangible and intangible property.<sup>76</sup> Rights under contracts can be property for purposes of the

<sup>73</sup> <u>See</u> <u>Centro Tepeyac v. Montgomery Cty.</u>, 722 F.3d 184, 191 (4th Cir. 2013) ("That precedent counsels that 'a state is in no way harmed by issuance of a preliminary injunction which prevents the state from enforcing restrictions likely to be found unconstitutional. If anything, the system is improved by such an injunction.' It also teaches that 'upholding constitutional rights surely serves the public interest.'") (internal citations omitted). 

<sup>74</sup> <u>Mowery v. Nat'l Geospatial-Intelligence Agcy.</u>, 42 F.4th 428, 441 (4th Cir. 2022) ("Injunctions are not magic beans that may be handed out without any analysis of the underlying claims or a showing that such relief is warranted. Instead, courts grant injunctions, if at all, only after reviewing the factual basis and merits (or likelihood of success on the merits) of a claim."); <u>New York Civil Liberties Union v. New York City Transit Auth.</u>, 684 F.3d 286, 294 (2nd Cir. 2012); <u>Perfect 10</u>, 653 F.3d at 979–80. 

<sup>75</sup> <u>Webb's Fabulous Pharmacies, Inc. v. Beckwith</u>, 449 U.S. 155, 160 (1980).

<sup>76</sup> <u>Ruckelshaus v. Monsanto Co.</u>, 467 U.S. 986, 1003-04 (1984).

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Federal Takings Clause,<sup>77</sup> but legislation that "disregards or destroys" contract rights does not always constitute a taking.<sup>78</sup> Where intangible property is at issue, state law will determine whether a property right exists. If a court determines that an intangible asset is property, a court will next look to whether the owner of the property interest had a "reasonable investment-backed expectation" that the property right would be protected.<sup>79</sup>

The United States Supreme Court has suggested that the Federal Takings Clause may be implicated by a diverse range of government actions, including when the government (a) permanently appropriates or denies all economically productive use of property;<sup>80</sup> (b) destroys property other than in response to emergency conditions;<sup>81</sup> or (c) reduces, alters or impairs the value of property so as to unduly interfere with reasonable investment-backed expectations.<sup>82</sup> In determining what is an undue interference, a court would consider the nature of the governmental action and weigh the public purpose served thereby against the degree to which it interferes with legitimate property interests and distinct investment-backed expectations of bondholders.

<sup>77</sup> <u>Lynch v. United States</u>, 292 U.S. 571, 577 (1934).

<sup>78</sup> <u>Connolly v. Pension Benefit Guar. Corp.</u>, 475 U.S. 211, 224 (1986).

<sup>79</sup> 2 Ronald D. Rotunda & John E. Nowak, TREATISE ON CONSTITUTIONAL LAW: SUBSTANCE AND PROCEDURE § 15.12(a)(iii), at 971 (5th ed. 2012).

<sup>80</sup> <u>C</u><u>onnolly</u>, 475 U.S. at 225 (noting that in that case the government did not "permanently appropriate" any of the employer's assets for its own use); <u>P</u><u>alazzolo v. Rhode Island</u>, 533 U.S. 606, 617 (2001) ("regulation which 'denies all economically beneficial or productive use of 'land' will require compensation under the Takings Clause") (citing <u>L</u><u>ucas v. S.C. Coastal Council</u>, 505 U.S. 1003, 1015 (1992), which notes that for personal property, however, some regulations that limit use of personal property may not be compensable takings given the state's "traditionally high degree of [economic] control over commercial dealings," <u>id.</u> at 1027-28); <u>United States v. Sec. Indus. Bank</u>, 459 U.S. 70, 77 (1982) ("The total destruction by the government of all compensable value of these liens, which constitute compensable property, has every possible element of a Fifth Amendment 'taking' and is not a mere 'consequential incidence' of a valid regulatory measure.") (quoting <u>Armstrong v. United States</u>, 364 U.S. 40, 48 (1960)). 

<sup>81</sup> The emergency exception to the just compensation requirement of the Federal Takings Clause appears in several Supreme Court decisions. <u>S</u><u>ee generally</u> 2 Rotunda & Nowak, <u>supra</u>, § 15.12(C), at 1013-1015. Several of these decisions involve the government's activities during military hostilities. <u>See, e.g., United States v. Caltex (Phil.), Inc.</u>, 344 U.S. 149 (1952) (no compensable taking when Army destroys property to prevent enemy forces from obtaining it); <u>United States v. Cent. Eureka Mining Co.</u>, 357 U.S. 155 (1958) (no compensable taking when government forces gold mines to cease operations to conserve resources for war effort); <u>N</u><u>at</u><u>'</u><u>l</u> <u>Bd. of Young Men</u><u>'</u><u>s Christian</u> <u>Ass</u><u>'</u><u>ns</u> <u>v. United States</u>, 395 U.S. 85 (1969) (no compensable taking where private property destroyed when U.S. troops take shelter there). <u>Compare</u> <u>U</u><u>nited States v. Pewee Coal Co.</u>, 341 U.S. 114 (1951) (plurality opinion) (compensable taking when occupation is physical rather than regulatory, emergency notwithstanding). The emergency exception is not limited to wartime activities, however. <u>See, e.g., M</u><u>iller v. Schoene</u>, 276 U.S. 272 (1928) (no compensable taking where trees destroyed to prevent disease from spreading to other trees); <u>D</u><u>ames</u> <u>& Moore v. Regan</u>, 453 U.S. 654 (1981) (no compensable taking resulting from executive order nullifying attachments on Iranian assets and permitting those assets to be transferred out of the country). The emergency exception is not limited to the physical destruction of property by the government, <u>see</u> <u>C</u><u>ent. Eureka Mining</u>, 357 U.S. at 168, but the Supreme Court has suggested it does not apply to physical occupation of property, <u>see P</u><u>ewee</u>, 341 U.S. at 116-17 (plurality opinion), or permanent appropriation, <u>see</u> <u>L</u><u>ingle v. Chevron U.S.A., Inc.</u>, 544 U.S. 528, 538 (2005), both of which constitute a per se taking. Moreover, we believe that a permanent appropriation of property by the government would be generally inconsistent with the concept of an "emergency." <u>See C</u><u>ent. Eureka Mining</u>, 357 U.S. at 168 (describing wartime restrictions as "temporary in character"). 

<sup>82</sup> <u>C</u><u>onnolly</u>, 475 U.S. at 224-25 (noting that one point of Federal Takings Clause analysis is "the extent to which the regulation has interfered with distinct investment-backed expectations") (quoting <u>P</u><u>enn Cent. Transp. Co. v. New York</u>, 438 U.S. 104, 124 (1978)); <u>C</u><u>ent. Eureka Mining</u>, 357 U.S. 155 (no compensable taking when government forces gold mines to cease operations to conserve resources for war effort). 

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The Supreme Court has identified two categories where regulatory action constitutes a per se taking—when the government by regulation "has physically taken property for itself or someone else,"<sup>83</sup> or deprived the owner of all economically beneficial use of the property.<sup>84</sup> Outside of these two narrow categories, challenges to regulations that interfere with protected property interests are governed by the three-part test set forth in <u>P</u><u>enn Central Transportation Co. v. City of New York</u>.<sup>85</sup> Under that test, a regulation constitutes a taking if it denies a property owner "economically viable use" of that property, which is determined by three factors: (i) the character of the governmental action; (ii) the economic impact of the regulation on the claimant; and (iii) the extent to which the regulation has interfered with distinct investment-backed expectations.<sup>86</sup>

The first factor requires the court to examine "the purpose and importance of the public interest underlying a regulatory imposition."<sup>87</sup>

The second factor incorporates the principle enunciated by Justice Holmes: "Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law."<sup>88</sup> "Not every destruction or injury to property by governmental action has been held to be a 'taking' in the constitutional sense."<sup>89</sup> Diminution in property value alone, thus, does not constitute a taking; there must be serious economic harm.

<sup>83</sup> <u>Cedar Point Nursery v. Hassid</u>, 141 S. Ct. 2063, 2072 (2021).

<sup>84</sup> <u>Lingle v. Chevron U.S.A., Inc.</u>, 544 U.S. 528, 538 (2005); <u>Lucas</u>, 505 U.S. at 1019.

<sup>85</sup> <u>Penn Central</u>, 438 U.S. 104, 124 (1978).

<sup>86</sup> Id.

<sup>87</sup> <u>Maritrans Inc. v. United States</u>, 342 F.3d 1344, 1356 (Fed. Cir. 2003); <u>see also</u> <u>Keystone Bituminous Coal Ass'n v. DeBenedictis</u>, 480 U.S. 470 (1987); <u>see also</u> <u>Blackburn v. Dare Cty.</u>, 58 F.4th 807, 813-14 (4th Cir. 2023). 

<sup>88</sup> <u>Penn. Coal Co. v. Mahon</u>, 260 U.S. 393, 413 (1922).

<sup>89</sup> <u>Armstrong v. United States</u>, 364 U.S. 40, 48 (1960).

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Under the third factor, the burden of showing interference with reasonable investment-backed expectations is a heavy one.<sup>90</sup> Thus, a reasonable investment-backed expectation "must be more than a 'unilateral expectation or an abstract need.'"<sup>91</sup> Further, "legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations."<sup>92</sup> "[T]he fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking. . . . This is not to say that contractual rights are never property rights or that the Government may always take them for its own benefit without compensation."<sup>93</sup> In order to sustain a claim under the Federal Takings Clause, the private party must show that it had a "reasonable expectation" at the time the contract was entered that it "would proceed without possible hindrance" arising from changes in government policy.<sup>94</sup>

We are not aware of any case law that addresses the applicability of the Federal Takings Clause in the context of exercise by a state of its police power to abrogate or impair contracts otherwise binding on the Commonwealth or in the context of an amendment or repeal of the Securitization Law. The outcome of any claim that interference by the Commonwealth with the value of the SAC Property without compensation is unconstitutional, would likely depend on factors such as the Commonwealth interest furthered by that interference, per the first factor, and the extent of financial loss to Holders caused by that interference, per the second factor, as well as the extent to which courts would consider that Holders had a reasonable expectation that changes in government policy and regulation would not interfere with their investment, per the third factor.

With respect to the third factor, we note that the Securitization Law expressly provides for the creation of securitized asset cost property in connection with the issuance of the Bonds, and further provides that any related financing order shall remain in effect and the securitized asset cost property under such financing order shall continue to exist until the securitized asset cost bonds issued pursuant to such financing order have been paid in full or defeased and all Commission-approved financing costs of such securitized asset cost bonds have been recovered in full. Moreover, through the Commonwealth Pledge, the Commonwealth promised to "not take" a series of actions that would impair the value of the SAC Property, make certain reductions in the SAC Charges, or impair the rights and remedies of the Holders. <u>See</u> <u>supra</u> (quoting Va. Code § 56-249.8:K). Given the foregoing, and, as discussed above, in the absence of any contrary precedent under Virginia law that courts applying Federal Contracts Clause analysis would conclude that the Commonwealth Pledge constitutes a contractual relationship between the Holders and the Commonwealth, we believe it would be hard to dispute that Holders have reasonable investment expectations with respect to their investments in the Bonds.

<sup>90</sup> <u>DeBenedictis</u>, 480 U.S. at 493.

<sup>91</sup> <u>Monsanto</u>, 467 U.S. at 1005-06 (quoting <u>Webb's Fabulous Pharmacies</u>, 449 U.S. at 161).

<sup>92</sup> <u>Usery v. Turner Elkhorn Mining Co.</u>, 428 U.S. 1, 16 (1976).

<sup>93</sup> <u>Connolly</u>, 475 U.S. at 224.

<sup>94</sup> <u>Chang v. United States</u>, 859 F.2d 893, 897 (Fed. Cir. 1988).

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Based on our analysis of judicial authority discussed above, it is our opinion that, as set forth above, subject to all of the qualifications, limitations and assumptions set forth in this letter, including that the Securitization Law and the Commonwealth Pledge created a contractual obligation of the Commonwealth under state law, under the Federal Takings Clause, a reviewing court of competent jurisdiction would hold that the Commonwealth is required to pay just compensation to Holders if the Commonwealth's repeal or amendment of the Securitization Law or taking of any other action by the Commonwealth in contravention of the Commonwealth Pledge constituted a Substantial Taking. As noted earlier, in determining what is an undue interference, a court would consider the nature of the governmental action and weigh the public purpose served thereby against the degree to which it interferes with the legitimate property interests and distinct investment-backed expectations of the Holders. There can be no assurance, however, that any such award of just compensation would be sufficient to pay the full amount of principal of and interest on the Bonds.<sup>95</sup>

\* \* \* \* \*

This opinion letter may not be relied on in any manner or for any purpose by any person other than the addressees listed on <u>S</u><u>chedule</u> <u>A</u> hereto nor may this opinion letter be relied on by you for any purpose other than for the transactions described herein without our prior written consent. This opinion letter may not be quoted, published, communicated or otherwise made available in whole or in part to any person (including, without limitation, any person who acquires

<sup>95</sup> A takings claim is generally not ripe until the government has made a final decision as to how a regulation will be applied to the property at issue. <u>Pakdel v. City and County of San Francisco</u>, 141 S. Ct. 2226, 2228, 2230 (2021). Although federal courts used to find a taking claim not ripe unless the owner had also sought and been denied compensation through whatever mechanisms state law provides, <u>Williamson Cty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City</u>, 473 U.S. 172, 186 (1985), the Supreme Court overruled that precedent in <u>Knick v. Twp. of Scott</u>, 139 S. Ct. 2162 (2019). There, the Court held that if a state or local government takes property without compensation, a property owner "*can* bring a federal suit" under 42 U.S.C. § 1983 (emphasis added), "without first bringing any sort of state lawsuit[.]" 139 S. Ct. at 2172–73 (quoting David A. Dana & Thomas W. Merrill, PROPERTY: TAKINGS 262 (2002)). The Court added, however, that if the state has an adequate procedure for obtaining compensation for the taking, there typically will be "no basis to enjoin the government's action effecting a taking," so equitable relief will be "generally unavailable" in federal court in takings cases. 139 S. Ct. at 2172–73. We express no opinion as to whether the Commonwealth provides any administrative or judicial procedures for seeking just compensation for a taking of the type of contract rights the Holders possess, or whether such procedures are "adequate." To the extent that there is a taking and state procedures for seeking just compensation are inadequate, Holders (or the Indenture Trustee on their behalf) or the Commission could seek to enjoin enforcement of the Commonwealth action by suing individual officers under <u>Ex Parte Young</u>, 209 U.S. 123, 155–56 (1908) and 42 U.S.C. § 1983. 

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On Schedule A Attached Hereto

[●], 2026

a Bond or any interest therein from an Underwriter) other than the addressees listed on <u>S</u><u>chedule</u> <u>A</u> hereto without our specific prior written consent, except that (x) each of the Underwriters may furnish copies of this letter (i) to any of its accountants or attorneys, (ii) in order to comply with any subpoena, order, regulation, ruling or request of any judicial, administrative, governmental, supervisory or legislative body or committee or any self-regulatory body (including any securities or commodities exchange or the Financial Industry Regulatory Authority, Inc.), (iii) to any other person for the purpose of substantiating an Underwriter's due diligence defense and (iv) as otherwise required by law; provided, that none of the foregoing persons is entitled to rely hereon unless an addressee hereof, (y) a copy of this opinion letter may be posted by or at the direction of APCo or the Issuer to an internet website required under Rule 17g-5 promulgated under the Securities Exchange Act of 1934, as amended, and maintained in connection with the ratings on the Bonds solely for the purpose of compliance with such rule or undertakings pursuant thereto made by APCo or the Issuer. Such permission to post a copy of this letter to such website shall not be construed to entitle any person, including any credit rating agency, who is not an addressee hereof to rely on this opinion letter.

We hereby consent to the filing of this letter as an exhibit to the registration statement filed on Form SF-1 (Registration Nos. 333-293890 and 333-293890-01) filed by APCo and the Issuer on February 27, 2026 (as amended, the "<u>Registration Statement</u>"), and to all references to our firm included in or made a part of the Registration Statement. In giving the foregoing consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the related rules and regulations of the Securities and Exchange Commission.

This opinion letter is being given as of the date hereof, and we assume no obligation to update or supplement this opinion letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the matters discussed herein, including any changes in applicable law which may hereafter occur.

Very truly yours,

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SCHEDULE A

U.S. Bank Trust Company, National Association

as Indenture Trustee

190 S. LaSalle Street, 7th Floor

Chicago, Illinois 60603

U.S. Bank National Association

as Securities Intermediary

190 S. LaSalle Street

Chicago, Illinois 60603

Moody's Investors Service, Inc.

7 World Trade Center at

250 Greenwich Street, 24th Floor

New York, New York 10007

Standard & Poor's Ratings Group, Inc.

Structured Credit Surveillance

55 Water Street, 40th Floor

New York, New York 10041

Appalachian Power Company

1 Riverside Plaza

Columbus, Ohio 43215

Appalachian Power Recovery Funding LLC

1051 East Cary St., Suite 1100

Richmond, Virginia 23219

Goldman Sachs & Co. LLC

200 West Street, 7th Floor

New York, New York 10282

J.P. Morgan Securities LLC

270 Park Avenue, 4th Floor

New York, New York 10017

RBC Capital Markets, LLC

200 Vesey Street, 8th Floor

New York, New York 10281

## Exhibit 99.3

**Exhibit 99.3** 

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|:---|:---|
| Troutman Pepper Locke LLP<br> Troutman Pepper Building, 1001 Haxall Point<br> Richmond, VA 23219<br>troutman.com | ![LOGO](g44535g99e93.jpg) |

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_____ ___, 2026

To Each of the Persons Listed

on Schedule A Attached Hereto

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|:---|:---|
| **Re:** | **Virginia State Constitutional Issues Related to Appalachian Power Recovery**  |

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**Funding LLC Series 2026-A Senior Secured SAC Bonds**

Ladies and Gentlemen:

We have been engaged as special counsel in the Commonwealth of Virginia (the "<u>Commonwealth</u>") by Appalachian Power Company ("<u>APCo</u>") and Appalachian Power Recovery Funding LLC, a special purpose Delaware limited liability company (the "<u>Issuer</u>"), in connection with the issuance and sale on the date hereof by the Issuer of $1,375,500,000 aggregate principal amount of the Issuer's Series 2026-A Senior Secured SAC Bonds (the "<u>Bonds</u>"), which are more fully described in the Prospectus dated [●], 2026. The Bonds are being sold pursuant to the provisions of the Underwriting Agreement dated [●], 2026, among APCo, the Issuer, and Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets, as representatives of the underwriters named in Schedule I to the Underwriting Agreement (the "<u>Underwriters</u>"). The Bonds are being issued pursuant to the provisions of the Indenture (the "<u>Original Indenture</u>") dated as of the date hereof, as supplemented by the Series Supplement dated as of the date hereof (together with the Original Indenture, the "<u>Indenture</u>"), among the Issuer, U.S. Bank Trust Company, National Association, as indenture trustee (the "<u>Indenture Trustee</u>"), and U.S. Bank National Association as securities intermediary. Under the Indenture, the Indenture Trustee holds, among other things, Securitized Asset Cost Property as described below as collateral security for the payment of the Bonds. All capitalized terms used herein and not otherwise defined shall have the meaning specified in Appendix A to the Indenture unless the context clearly indicates otherwise.

**<u>Overview</u>**

Pursuant to the financing order issued by the State Corporation Commission of Virginia (the "<u>Commission</u>") on November 24, 2025, in Case No. PUR-2025-00116 (the "<u>Financing Order</u>"), "<u>Securitized Asset Property</u>" constitutes (i) all rights and interests of APCo, or its successor or assignee, under the Financing Order, including the right to impose, bill, charge, collect, and receive "<u>Securitized Asset Cost Charges</u>," as defined under Va. Code § 56-249.8 A., authorized in the Financing Order and to obtain periodic adjustment to such Securitized Asset Cost Charges as provide in the Financing Order; and (ii) all revenues, collections, claims, rights to payments, payments, money or proceeds arising from the rights and interests specified in the

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Financing Order, regardless of whether such revenues, collections, claims, rights to payment, payments, money or proceeds are imposed, billed, charged, collected or received with, or maintained together with or commingled with, other revenues, collections, rights to payment, payments, money or proceeds.

The period for seeking rehearing or reconsideration of the Financing Order expired on December 15, 2025, and the period for filing a notice of appeal of the Financing Order expired on December 24, 2025. Accordingly, the Financing Order became final and non-appealable on December 24, 2025.

"<u>Securitization Law</u>" is defined for purposes of this Opinion as the provisions of Va. Code § 56-249.8. Under the Securitization Law, APCo may seek authorization to issue "<u>Securitized Asset Cost Bonds</u>," as that term is defined in Va. Code § 56-249.8 A, that are secured by Securitized Asset Cost Property, including a dedicated "<u>Securitized Asset Cost Charge</u>", as that term is defined in Va. Code § 56-249.8 A, that is separate and distinct from APCo's base rates.

The Securitization Law provides, in relevant part, that subsequent to the transfer of Securitized Asset Cost Property to an assignee or the issuance of securitized asset cost bonds authorized thereby, whichever is earlier, the Financing Order shall be irrevocable and, except for changes made pursuant to the formula-based mechanism authorized in this section, the Commission shall not amend, modify, or terminate the Financing Order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust securitized asset cost charges approved in the Financing Order.<sup>1</sup>

Pursuant to Va. Code § 56-249.8 K(1)-(2), the Securitization Law further provides that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Commonwealth and its agencies, including the Commission, pledge and agree with bondholders, the owners of the securitized asset cost property, and other financing parties that the Commonwealth and its agencies shall not take any action listed in this subdivision. This subsection does not preclude limitation or alteration if full compensation is made by law for the full protection of the securitized asset cost charges collected pursuant to a financing order and of the bondholders and any assignee or financing party entering into a contract with the electric utility. The Commonwealth and its agencies, including the Commission, shall not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Alter the provisions of this section that authorize the Commission to create an irrevocable contract right or chose in action by the issuance of a financing order, to create securitized asset cost property, and to make the securitized asset cost charges imposed by a financing order irrevocable, binding, or non-bypassable charges;

<sup>1</sup> Va. Code § 56-249.8 B(2)(e).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Take or permit any action that impairs or would impair the value of securitized asset cost property or the security for the securitized asset cost bonds or revises the securitized asset costs for which recovery is authorized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. In any way impair the rights and remedies of the bondholders, assignees, and other financing parties; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Except for changes made pursuant to the formula-based adjustment mechanism authorized under this section, reduce, alter, or impair securitized asset cost charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the bondholders, any assignee, and any other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related securitized asset cost bonds have been paid and performed in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any person that issues securitized asset cost bonds may include the language specified in subdivision 1 in the securitized asset cost bonds and related documentation.

The language immediately above, including paragraph (1) in the block quote above, is referred to in this Opinion as the "<u>Commonwealth Pledge</u>." As authorized by the foregoing statutory provision and the Financing Order, the language of the Commonwealth Pledge has been included in the Indenture and in the Bonds. The term "<u>Prohibited Actions</u>" refers to the actions listed in Va. Code § 56-249.8 K(1)(a)-(d).

Excepted from the Commonwealth Pledge are an alteration or limitation arising in connection with a Prohibited Action "if full compensation is made by law for the full protection of the securitized asset cost charges collected pursuant" to the Financing Order and full protection of "the bondholders and any assignee or financing party entering into a contract" with APCo.<sup>2</sup>

**<u>Opinions Requested</u>**

You have requested our opinion as to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Whether the Securitization Law was duly enacted by the Virginia General Assembly of the Commonwealth
("General Assembly") in accordance with all applicable Virginia laws and is in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Whether the Commonwealth Pledge unambiguously indicates the Commonwealth's intent to be bound with the
Holders and supports the conclusion that, for purposes of the Contract Clause of the Virginia Constitution, the Commonwealth Pledge constitutes a binding contractual relationship between the Commonwealth of Virginia and the Holders.

<sup>2</sup> Va. Code § 56-249.8 K(1).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Whether a Virginia state court would conclude that the Commonwealth Pledge (i) creates a binding
contractual obligation of the Commonwealth for purposes of the Contract Clause of the Virginia Constitution and (ii) provides a basis upon which the Holders could challenge successfully under the Contract Clause of the Virginia Constitution any
action by the General Assembly or any action by the Commission of a legislative character, including the rescission or amendment of the Financing Order, if that action violates the Commonwealth Pledge in a manner that substantially impairs or would
substantially impair the value of the Securitized Asset Property, or substantially reduces, alters or impairs the value of the Securitized Asset Cost Charges, prior to the time that the Securitized Asset Cost Bonds are paid and performed in full,
unless the action is a proper exercise of the Commonwealth's police power and the adjustment of the rights and responsibilities are based upon reasonable conditions and of a character appropriate to the public purpose justifying the action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Whether, assuming applicable Virginia courts would apply a Takings Clause analysis under the Takings Clause
of the Virginia Constitution, such courts of competent jurisdiction would hold that the Commonwealth would be required to pay just compensation to Holders if the General Assembly or the Commonwealth repealed or amended the Securitization Law or took
any other action contravening the Commonwealth Pledge and doing so constituted a permanent appropriation of a substantial property interest of the Holders in the Securitized Asset Cost Property and deprived the Holders of their reasonable
expectations arising from their investments in the SAC Bonds.

**<u>[Documents Reviewed]<sup>3</sup></u>**

In rendering the opinions set forth below, we examined and relied on originals or copies, certified or otherwise identified to our satisfaction, of the following (dated as of the date hereof unless otherwise indicated):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the Sale Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. the Intercreditor Agreement

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. the Registration Statement on Amendment 1 to Form SF-1 of the
Issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. the Securitization Law and related public records referenced therein;

<sup>3</sup> NTD: Need to confirm list of documents reviewed when available.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. the Financing Order;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. the Servicing Agreement by and between the Issuer and APCo dated as of the date hereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. such other documents, certificates, records and papers as we have deemed necessary or appropriate to render
the opinions below.

The documents described above in items 1 through 7 are referred to herein as the "Opinion Documents."

**<u>Assumptions</u>**

For purposes of the opinions expressed below, we assumed the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the authenticity of all documents submitted to us as originals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the conformity to the originals of all documents submitted to us as copies and the authenticity of the
originals thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. the legal capacity of natural persons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. the genuineness of all signatures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. the good standing, due authorization, requisite entity authority of, and the execution and delivery of all
documents by, all parties in each of their respective capacities thereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. the validity, binding effect and enforceability of all documents, including the enforceability of the
Opinion Documents as to the Opinion Parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. except to the extent expressly set forth in our opinions herein as to the Opinion Parties with respect to
the consummation of the transactions under the Opinion Documents, that the consummation of the transactions under the Opinion Documents by each party thereto as to its respective obligations under such documents do not violate the law of any
jurisdiction where such obligations are to be incurred or performed or the law of any other applicable jurisdiction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. [in accordance with our separate legal opinion of even date herewith as to the Financing Order, the
Financing Order was duly authorized and issued by the Commission in accordance with applicable Virginia statutes, rules and regulations; the Financing Order and the process by which it was issued comply with applicable Virginia statutes, rules, and
regulations; and that the Financing Order is in full force and effect and is final and non-appealable;] <sup>4</sup>

<sup>4</sup> NTD: confirm once this opinion is issued.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. that all information contained in the necessary filings is materially accurate and up to date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. that the Issuer and all parties to the Opinion Documents are operating, and will continue to operate, in
accordance with all applicable federal, state, and local laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. that, since the original date of execution or issuance therefor, no Opinion Document has been amended,
restated, modified, supplemented, terminated, appealed, or otherwise changed and that no rights pursuant thereto have been released, waived, or modified either expressly or by any action or inaction of the parties thereto; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. that any legislation enacted by the General Assembly, or supplemental order adopted by the Commission,
impairing the value of the Bonds would constitute a "substantial" modification of the provisions of the Securitization Law or the Financing Order that provide support for the Bonds (and is done without providing full compensation for the
Bondholders). The determination of whether particular governmental action of a legislative character constitutes a substantial impairment of a particular contract is a fact-specific analysis, and nothing in this Opinion expresses any opinion as to
how a court would resolve the issue of "substantial impairment" with respect to the Bonds in relation to any particular action.

**<u>Limitations and Qualifications</u>**

Our opinions expressed below are subject to the following limitations and qualifications:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. our opinions are limited solely to the opinions requested herein and are based on the Virginia Constitution
and relevant laws of the Commonwealth of Virginia and the published rules, regulations and decisions promulgated thereunder by the Commission and the courts of the Commonwealth of Virginia, in each case in effect as of the date of this opinion
letter (collectively, the " <u>Virginia Laws</u> ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. we express no opinion as to any other laws, rules, regulations or decisions of any other jurisdiction,
including any other laws, rules, regulations or decisions of the Commonwealth of Virginia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. various issues relating to federal, state and local laws are addressed in other opinion letters provided to
you by Troutman Pepper Locke LLP, and Sidley Austin LLP, and we express no opinion with respect to those matters herein;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. except as set forth in our legal opinion of even date herewith as to the Financing Order, we did not
independently review the manner in which any Commission applications or notices were processed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. the opinions expressed herein are limited to the matters stated herein, and no opinion is implied or may be
inferred beyond the matters expressly stated herein; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. the opinions expressed herein do not constitute a prediction or guaranty of the outcome of any particular
litigation, and there can be no assurance that an action will not be brought in federal or state court challenging the provisions of the Securitization Law or the Financing Order relating to the Bonds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. the opinions expressed herein should not be construed to imply assurance that a repeal of or amendment to
the Securitization Law or the Financing Order will not be sought or enacted or adopted, or that any other action by the Commonwealth (including the Virginia legislature or the Commission) will not occur, any of which might constitute a violation of
the Commonwealth Pledge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. judicial analysis of issues relating to the opinions expressed herein has typically proceeded on a case-by-case basis and courts' determinations, in most instances, are usually strongly influenced by the facts and circumstances of the particular case. We are not aware
of any reported controlling judicial precedents directly on point with respect to the opinions expressed herein. Our analysis is necessarily a reasoned application of judicial decisions involving similar or analogous circumstances. We cannot predict
the facts and circumstances which will be present in the future and may be relevant to the exercise of such discretion, and the opinions expressed herein are not guarantees or warranties and should not be construed as such.

**<u>Discussion</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Enactment of the Securitization Law.</u> 

This section of this Opinion addresses whether the Securitization Law, as contained in Senate Bill ("<u>SB</u>") 1076 and House Bill ("<u>HB</u>") 2621 proposed during the General Assembly's 2025 legislative session, was duly enacted by the General Assembly and approved by the Governor of the Commonwealth ("Governor") in accordance with all applicable Virginia laws and is in full force and effect.

SB 1076 was prefiled on January 7, 2025, and referred to the Senate Committee on Commerce and Labor, where it was then reported favorably on February 3, 2025. On February 4, 2025, SB 1076 was introduced on the Senate floor with a substitute, where its first reading was dispensed, read a second time, and had its third reading dispensed. SB 1076 passed the Senate on February 4, 2025, and was read the first time on February 7, 2025. It was referred to the House Committee on Labor and Commerce on February 7, 2025. SB 1076 was reported from

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the House Committee on Labor and Commerce on February 13, 2025, with a substitute. SB 1076 was read in the House the second and third times on February 17, 2025, and February 18, 2025, respectively, and ultimately passed the House with the committee substitute on February 18, 2025. On February 19, 2025, the Senate rejected the House substitute. On February 20, 2025, the House requested a conference committee to which the Senate agreed. On February 22, 2025, the conference committee agreed on a substitute, to which the House and Senate unanimously agreed that same day. SB 1076 was enrolled on March 7, 2025, signed by the Speaker of the House that same day, and signed by the President of the Senate on March 10, 2025. SB 1076 was sent to the Governor on March 11, 2025, and ultimately approved by the Governor on March 24, 2025. SB 1076 was enacted as Chapter 597 of the 2025 Virginia Acts of Assembly.

HB 2621 was presented on January 13, 2025, and referred to the House Committee on Labor and Commerce that same day. HB 2621 was then referred to House Committee on Labor and Commerce Subcommittee #3 on January 24, 2025, where it was then recommended to be reported with a substitute on January 28, 2025. On January 30, 2025, the House Committee on Labor and Commerce reported HB 2621 with a substitute. It was read a first and second time in the House on February 2, 2025, and February 3, 2025, respectively. The House Committee on Labor and Commerce substitute was rejected on February 3, 2025, and a floor substitute that was further amended printed that same day. The House read for the third time and passed HB 2621 with the floor substitute as amended on February 4, 2025. On February 5, 2025, HB 2621 was introduced on the Senate floor, where its first reading was dispensed and referred to the Senate Committee on Commerce and Labor. HB 2621 was then reported from the Senate Committee on Commerce and Labor on February 17, 2025, with a substitute. The Senate then dispensed of the second reading on February 18, 2025, and read it a third time on February 19, 2025, with the reading of the substitute waived. HB 2621 passed the Senate with the Senate Committee on Commerce and Labor substitute on February 19, 2025, and was returned to House on February 20, 2025, where the House rejected it. On February 20, 2025, the Senate requested a conference committee to which the House agreed. On February 22, 2025, the conference committee agreed on a substitute, to which the House and Senate unanimously agreed that same day. HB 2621 was enrolled on March 7, 2025, signed by the Speaker of the House that same day, and signed by the President of the Senate on March 10, 2025. HB 2621 was sent to the Governor on March 11, 2025, and ultimately approved by the Governor on March 24, 2025. HB 2621 was enacted as Chapter 497 of the 2025 Virginia Acts of Assembly.

The constitutionality of acts of the General Assembly has been challenged for several reasons under Virginia law, including, but not limited to, issues relating to due process, equal protection, and separation of powers. If anyone were to challenge the enactment of the Securitization Law, we believe the most likely challenges would relate to the legislation's subject and title or whether the legislation constitutes "special" legislation.

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The Virginia Constitution states, in relevant part, that "[n]o law shall embrace more than one object, which shall be expressed in its title."<sup>5</sup> The purposes of this constitutional provision "is to prevent the members of the legislature and people from being misled by the title to a law[,]and to "prevent the use of deceptive titles as a cover to vicious legislation and the practice of bringing together for corrupt purposes subjects diverse and dissimilar in their nature and having no necessary connection with each other, and for the prevention of fraud in legislation by means of provisions in bills of which the title gives no intimation."<sup>6</sup> Acts of the General Assembly "are presumed to be constitutional both as to title and text."<sup>7</sup> Further, "[t]he title of the act in question plainly shows with what it is dealing and should be held to be sufficient where it fairly identifies and is in furtherance of the object expressed therein."<sup>8</sup> This provision of the Virginia Constitution "is to be liberally construed so as to uphold the law if practicable. All that is required is that the subjects embraced in the statute but not specified in the title are congruous and have natural connection with or are germane to the subject in the title."<sup>9</sup>

SB 1076 (as enacted by Chapter 597 of the 2025 Virginia Acts of Assembly) and HB 2621 (as enacted by Chapter 497 of the 2025 Virginia Acts of Assembly) are both titled: "*An Act to amend and reenact § 56-585.8 of the Code of Virginia and to amend the Code of Virginia by adding a section numbered 56-249.8 and by adding in Chapter 23 of Title 56 a section numbered 56-596.5, relating to Phase I Utilities; securitized asset costs; biennial rate reviews; rate increases in certain months prohibited.*" Here, the subject of SB 1076 and HB 2621 primarily is the Securitization Law, but both address other provisions relating to APCo's biennial rate reviews and rate increases, more generally. The titles of SB 1076 and HB 2621 both reference the Securitization Law specifically in the title (via reference to the new Va. Code § 56-249.8), as well as "securitized asset costs[,]" "biennial rate reviews[,]" and "rate increases in certain months prohibited." Accordingly, if challenged on this basis, we believe a Virginia court would find that the titles of SB 1076 and HB 2621 adequately describe the subject of the legislation.

The Virginia Constitution further mandates, in relevant part, that "the General Assembly shall enact general laws[,]" and "[n]o private corporation, association, or individual shall be specially exempted from the operation of any general law, nor shall a general law's operation be suspended for the benefit of any private corporation, association, or individual."<sup>10</sup> A law is

<sup>5</sup> Va. Const. Art. IV, § 12.

<sup>6</sup> *Kingan, Inc. v. Richmond*, 198 Va. 820, 822 (1957) (citing *Commonwealth v. Brown*, 91 Va. 762, 771, 774 (1895)).

<sup>7</sup> *Id.* (citing *Good v. Commonwealth*, 155 Va. 996, 1000 (1930).

<sup>8</sup> *Id*.

<sup>9</sup> *Id*.

<sup>10</sup> Va. Const. Art. IV, § 15.

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"general" in this context "'though it may immediately affect a small number of persons, places or things, provided, under named conditions and circumstances, it operates alike on all who measure up to its requirements.'"<sup>11</sup> A law is "special" in this context "when it contains an inherent limitation that arbitrarily separates some persons, places, or things from those on which, without such separation, it would also operate."<sup>12</sup> Litigants "challenging a statute as an illegitimate special law shoulder a "'heavy burden'…one calculated to safeguard the maxim that all 'legislative acts are 'presumed to be constitutional[.]'"<sup>13</sup> Virginia courts "are required to resolve any reasonable doubt regarding the constitutionality of a statute in favor of its validity."<sup>14</sup> "To doubt is to affirm."<sup>15</sup>

"The essence of prohibited special legislation is the existence of an arbitrary separation of persons, places, or things of the same general class, with the result that some of them will, and some will not, be affected by the law…[n]onetheless, constitutional prohibitions against special laws do not proscribe classification."<sup>16</sup> The classification must, however, "'be natural and reasonable, and appropriate to the occasion.'"<sup>17</sup> Indeed, "legislation pertains to specific classifications of persons, places, or property. Such an enactment is nonetheless 'general,' provided the classification is reasonable, not arbitrary, and applies to all persons who are similarly situated as well as to all parts of the State where like conditions exist."<sup>18</sup> The "'necessity for and the reasonableness of classification are primarily questions for the legislature. If any state of facts can be reasonably conceived, that would sustain it, that state of facts at the time the law was enacted must be assumed.'"<sup>19</sup>

The Securitization Law applies to "electric utilities," which are defined as a "Phase I Utility" as that term is defined in Va. Code § 56-585.1 A(1). Under that provisions a "Phase I Utility" is "an investor-owned incumbent electric utility that was, as of July 1, 1999, not bound by a rate case settlement adopted by the Commission that extended in its application beyond January 1, 2002[.]" Here, the Securitization Act applies equally to the entire class – Phase I Utilities – and that

<sup>11</sup> *W.S. Carnes, Inc. v. Bd. Of Supervisors*, 252 Va. 377, 385 (1996) (quoting *Bray v. Cnty. Bd.*, 195 Va. 31, 36 (1953)).

<sup>12</sup> *Id.* (citing *Bray*, 195 Va. at 36-37).

<sup>13</sup> *Laurels of Bon Air, LLC v. Med. Facilities of Am. LIV Ltd. P'ship*, 51 Va. App. 583, 597 (2008) (quoting *Holly Hill Farm Corp. v. Rowe*, 241 Va. 425, 432 (1991); *In re Phillips*, 265 Va. 81, 85 (2003). 

<sup>14</sup> *Phillips*, 265 Va. 81 at 86-87; *see also, e.g., Holly Hill Farm Corp.*, 241 Va. at 430.

<sup>15</sup> *Peery v. Bd. of Funeral Dirs.*, 203 Va. 161, 165 (1961).

<sup>16</sup> *Holly Hill Farm Corp.*, 241 Va. at 430.

<sup>17</sup> *Id.* (citation omitted).

<sup>18</sup> *Id.* at 430-31.

<sup>19</sup> *Id.* at 431 (citations omitted).

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classification is reasonable and not arbitrary. For example, the Securitization Law allows a Phase I Utility to securitize storm recovery costs incurred on or after January 1, 2024, that are associated with major storms, extraordinary weather events, or natural disasters affecting the Phase I Utility's Virginia ratepayers. APCo's Virginia service territory experienced an unusual number of extreme weather events in 2024 and 2025, necessitating significant restoration efforts. In absence of the Securitization Law, APCo would seek recovery of storm recovery costs through its base rates over a much shorter period than allowed by the Securitization Law, significantly increasing base rates.

For the foregoing reasons, it is our opinion that the Securitization Law, as embodied in SB 1076 and HB 2621, was enacted in accordance with the applicable provisions of the Virginia Constitution. Finally, based on our review, we are unaware of any pending appeal or litigation challenging the validity of the Securitization Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>The Virginia Contract Clause.</u> 

The Virginia Constitution mandates "that the General Assembly shall not pass any law impairing the obligation of contracts[.]"<sup>20</sup> "The Virginia [Contract Clause] has been interpreted by [the Supreme Court of Virginia] in a manner similar to the treatment of the federal clause by the United States Supreme Court."<sup>21</sup> Va. Code § 1-239 similarly provides that, generally, new legislation should not be interpreted to impair existing contract rights. The Virginia Contract Clause (and by extension, Section 1-239), however are:

not "the Draconian provision that its words might seem to imply." The proscription against enacting statutes that impair the obligation of contracts does not prevent the State from exercising power that is vested in it for the common good, even though contracts previously formed may be affected thereby. "This power, which in its various ramifications is known as the police power, is an exercise of the sovereign right of the Government to protect the lives, health, morals, comfort and general welfare of the people, and is paramount to any rights under contracts between individuals."<sup>22</sup>

Thus, "a contract…must be considered as containing an implied condition that it is subject to the exercise of the State's regulatory police power. Such sovereign power of the government to protect the general welfare of the people of the State is paramount to any rights which may be acquired by individuals by virtue of any contracts between them."<sup>23</sup>

<sup>20</sup> Va. Const. Art. 1, § 11.

<sup>21</sup> *Working Waterman's Ass'n v. Seafood Harvesters, Inc.*, 227 Va. 101, 109 (1984).

<sup>22</sup> *Id*. at 109-10, (quoting *Allied Structural Steel Co. v. Spannaus*, 438 U.S. 234, 240-41 (1978) (other citations omitted)).

<sup>23</sup> *Haughton v. Lankford*, 189 Va. 183, 190-91 (1949).

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Virginia courts employ a three-step analysis when balancing "the interplay between Virginia's constitutional obligation not to adopt legislation which impairs the obligation of contracts and the exercise of its police power."<sup>24</sup> First, the court must examine the contractual rights affected by the statute; second, the court considers whether application of the statute operates as a "substantial impairment" to those contractual rights; and third, the court analyzes whether the statute is a proper exercise of the Commonwealth's police power, as well as its nature and purpose.<sup>25</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>The Existence Under the Virginia Contract Clause of Binding Contract Between the Commonwealth and the Holders.</u> 

We are not aware of any Virginia cases that analyze the Securitization Law (or anything closely analogous thereto) relative to the Virginia Contract Clause. As discussed above, the Commonwealth Pledge provides (in relevant part) that:

The Commonwealth and its agencies, including the Commission, pledge and agree with bondholders, the owners of the securitized asset cost property, and other financing parties that the Commonwealth and its agencies shall not take any action listed in this subdivision…[t]he Commonwealth and its agencies, including the Commission, shall not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Alter the provisions of this section that authorize the Commission to create an irrevocable contract right or chose in action by the issuance of a financing order, to create securitized asset cost property, and to make the securitized asset cost charges imposed by a financing order irrevocable, binding, or non-bypassable charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Take or permit any action that impairs or would impair the value of securitized asset cost property or the security for the securitized asset cost bonds or revises the securitized asset costs for which recovery is authorized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. In any way impair the rights and remedies of the bondholders, assignees, and other financing parties; or

<sup>24</sup> *Heublein, Inc. v. Dept. of Alcoholic Beverage Control*, 237 Va. 192, 196 (1989) (following *Waterman's*, 227 Va. at 111-12, 314 S.E.2d at 165).

<sup>25</sup> *Id*.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Except for changes made pursuant to the formula-based adjustment mechanism authorized under this section, reduce, alter, or impair securitized asset cost charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the bondholders, any assignee, and any other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related securitized asset cost bonds have been paid and performed in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any person that issues securitized asset cost bonds may include the language specified in subdivision 1 in the securitized asset cost bonds and related documentation.<sup>26</sup>

Accordingly, based on the plain language above, including the reference to the Commission's authority to create an irrevocable contract right through issuance of the Financing Order, we believe that a Virginia court would find that the Commonwealth Pledge unambiguously indicates the Commonwealth's intent to be bound with the Holders and creates a binding contractual relationship between the Commonwealth and the Holders with respect to application of the Virginia Contract Clause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Substantial Impairment.</u> 

For purposes of determining whether a substantial impairment of a contractual obligation exists under the Virginia Contract Clause, "'[t]he obligation of a contract consists in its binding force on the party who makes it.'"<sup>27</sup> Changes in the laws that make a contract legally enforceable may trigger Contract Clause scrutiny if they impair the obligation of pre-existing contracts.<sup>28</sup> Accordingly, we believe a Virginia court likely would consider a repeal of the Commonwealth Pledge or Financing Order, or any alteration or modification to the Commonwealth Pledge or Financing Order that changes legal enforceability thereof, to constitute an impairment under the Virginia Contract Clause.

If a Virginia court determines that an impairment exists, it must determine if such impairment is substantial.<sup>29</sup> Where an impairment exists, "the severity of the impairment measures the height of the hurdle the state legislation must clear."<sup>30</sup> Additionally, in determining the extent of the impairment, Virginia courts must "'consider whether the industry the complaining

<sup>26</sup> Va. Code § 56-249.8 K(1)-(2).

<sup>27</sup> *Gen. Motors Corp. v Romein*, 503 U.S. 181, 189 (1992) (citation omitted).

<sup>28</sup> *Id*.

<sup>29</sup> *Heublein*, 237 Va. at 196.

<sup>30</sup> *Waterman's*, 227 Va. at 111.

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party has entered has been regulated in the past.'"<sup>31</sup> The Virginia Contract Clause, however, does impose some limit on the State's power 'to abridge existing contractual relationships, even in the exercise of its otherwise legitimate police power,'" particularly when the State itself is a party to an impacted contract.<sup>32</sup>

In *Waterman's*, clam harvesters leased clam planting grounds from the Commonwealth, and used hydraulic dredges to harvest the clams pursuant to experimental permits. The General Assembly subsequently passed legislation prohibiting the use of hydraulic dredges due to concerns about their environmental impacts.<sup>33</sup> The clam harvesters argued that the statute was unconstitutional as applied to them. The Supreme Court of Virginia disagreed, finding in relevant part that the statute did not impact the clam harvester's exclusive right to "use and occupy" the grounds and take clams from the beds or change any of the other rights or duties established under the leases – rather, it merely prohibited the harvesting of clams by one method (hydraulic dredge).<sup>34</sup> Thus, the statute was a "police power restriction on the mode by which the plaintiffs may exercise their right, but it does not affect substantially the right to harvest the shellfish or the exclusiveness of the right."<sup>35</sup>

In *Heublein*, by contrast, the Supreme Court of Virginia considered a statute intended to apply to certain agreements involving the heavily-regulated alcoholic beverage industry that were entered before the legislation became effective. The statute removed any discretionary right an alcohol supplier had to terminate a contract with a wholesaler in the six-month period before the statute became effective.<sup>36</sup> The Supreme Court of Virginia found that the statute was a "'severe alteration of contractual obligations.'"<sup>37</sup>

Accordingly, we are of the opinion that Virginia court would consider a repeal of the Commonwealth Pledge or Financing Order, or any alteration or modification to the Commonwealth Pledge or Financing Order that changes legal enforceability thereof or substantially impairs or would substantially impair the value of the Securitized Asset Property, or substantially reduces, alters, or impairs the value of the Securitized Asset Cost Charges, to be a substantial impairment under the Virginia Contract Clause.

<sup>31</sup> *Va. Elec. & Power Co. v. State Corp. Comm'n*, 300 Va. 153, 175 (2021) (Kelsey, J. dissenting) (quoting *Allied Structural Steel Co. v. Spannaus*, 438 U.S. 234, 242 (1978)).

<sup>32</sup> *Waterman's*, 227 Va. at 110 (quoting *Allied Structural Steel Co.*, 438 U.S. at 242.

<sup>33</sup> *Id.* at 106.

<sup>34</sup> *Id.* at 112.

<sup>35</sup> *Id*.

<sup>36</sup> *Heublein*, 237 Va. at 197.

<sup>37</sup> *Id*.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Justification for Substantial Impairment.</u> 

Both the Supreme Court of Virginia and the United States Supreme Court agree that "'[m]inimal alteration of contractual obligations may end the inquiry[.] Severe impairment, on the other hand, will push the inquiry to a careful examination of the nature and purpose of the state legislation.'"<sup>38</sup> Generally, contracts "must be considered as containing an implied condition that [they are] subject to the exercise of the State's regulatory police power. Such sovereign power of the government to protect the general welfare of the people of the State is paramount to any rights which may be acquired by individuals by virtue of any contracts between them."<sup>39</sup> The Supreme Court of Virginia further noted that the Virginia Contract Clause "does impose some limit on the State's power 'to abridge existing contractual relationships, even in the exercise of its otherwise legitimate police power,'" particularly when the State itself is a party to an impacted contract.<sup>40</sup>

In Virginia, the police power includes the power "'to promote the health, peace, morals, education[,] and good order of the people, and to legislate so as to increase the industries of the State, develop its resources, and add to its wealth and prosperity[.]'"<sup>41</sup> The police power further includes the ability to regulate and control public service corporations and related rates.<sup>42</sup> While legislation impacting the Securitization Law or Commission action impacting the Financing Order could fall under the Commonwealth's broad regulatory police power, that is not the end of the analysis. A Virginia court must further consider whether the "'adjustment of 'the rights and responsibilities of contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the public purpose justifying [the legislation's] adoption.'"<sup>43</sup> "Unless the State itself is a contracting party…'courts properly defer to legislative judgments as to the necessity and

<sup>38</sup> *Waterman's*, 227 Va. at 111-12, (quoting *Allied Structural Steel Co.*, 438 U.S. at 245).

<sup>39</sup> *Haughton v. Lankford*, 189 Va. 183, 190 (1949).

<sup>40</sup> *Waterman's*, 227 Va. at 110 (quoting *Allied Structural Steel Co.*, 438 U.S. at 242).

<sup>41</sup> *Elizabeth River Crossings OpCo, LLC v. Meeks*, 286 Va. 286, 321 (2013) (citations omitted).

<sup>42</sup> *Commonwealth ex rel. Page Milling Co. v. Shenandoah River Light & Power Corp.*, 135 Va. 47, 63 (1923); *see also, e.g., Pacific Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n*, 461 U.S. 1, 205-06 (1983) (finding that the regulation of need and pricing for electric generation generally is reserved to the states under their police power); *Ark. Elec. Coop. v. Ark. Pub. Serv. Comm'n*, 461 U.S. 375, 377 (1983) ("[T]he regulation of utilities is one of the most important of the functions traditionally associated with the police power of the States."); *Union Dry Goods Co. v. Ga. Pub. Serv. Corp.*, 248 U.S. 372, 374-75 (1919) (holding distribution and sale of electricity to the public is subject to state regulation). 

<sup>43</sup> *Energy Rsrvs. Grp. v. Kan. Power & Light Co.*, 459 U.S. 400, 412 (1983) (citation omitted).

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reasonableness of a particular measure.'"<sup>44</sup> But "[w]hen a State itself enters into a contract, it cannot simply walk away from its financial obligations…[w]hen the State is a party to the contract, 'complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State's self-interest is at stake.'"<sup>45</sup>

Accordingly, a Virginia court is more likely to find permissible an exercise of the Commonwealth's police power that is a "generally applicable rule of conduct designed to advance 'a broad societal interest,'" in contrast to a rule "limited in effect to contractual obligations or remedies."<sup>46</sup> Indeed, in *Heublein*, involving the heavily-regulated alcoholic beverage industry, the Supreme Court of Virginia found that the statute at issue there (eliminating alcohol suppliers' discretionary right to terminate a contract with a wholesaler) was "simply an effort to protect a small group of wholesalers from possible economic loss," and therefore violated the Virginia Contract Clause.<sup>47</sup>

C. <u>The Virginia Takings Clause.</u> 

The Virginia Constitution provides that "[n]o private property shall be damaged or taken for public use without just compensation to the owner thereof. No private property shall be

<sup>44</sup> *Id.* at 412-13 (citation omitted). *See also, e.g., Keystone Bituminous Coal Ass'n v. DeBenedictis*, 480 U.S. 470, 505 (1987) (same).

<sup>45</sup> *Id.* at 412, n. 14.

<sup>46</sup> *Exxon Corp. v. Eagerton*, 462 U.S. 176, 191 (1993) (citations omitted) (favorably distinguishing such "generally applicable" legislation from legislation specifically intended to repeal or modify existing contracts).

<sup>47</sup> *Heublein*, 237 Va. at 197.

<sup>48</sup> *Exxon Corp.*, 462 U.S. at 191 (citations omitted).

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damaged or taken for public use without just compensation to the owner thereof."<sup>49</sup> The Virginia Takings Clause applies to the imposition of rates by a regulatory body on private property that is offered as a public good.<sup>50</sup> Accordingly, APCo could bring a constitutional challenge to any action of the General Assembly or any action of the Commission of a legislative nature that substantially impairs APCo's ability to recover the Securitized Asset Cost Charges.

Virginia law "recognizes inverse condemnation as a viable theory of recovery for de facto violations of Article I, Section 11" of the Viriginia Constitution.<sup>51</sup> Property "'taken or damaged for public use'" bestows "'on the owner a right to 'sue upon an implied contract that he will be paid therefor such amount as would have been awarded if the property had been condemned under the eminent domain statute.'"<sup>52</sup> For purposes of the Virginia Constitution, property is "damaged" where "the corpus of the owner's property itself, or some appurtenant right or easement connected therewith, or by the law annexed thereto, is directly…affected, and is also specially affected (that is, in a manner not common to the property owner and to the public at large).'"<sup>53</sup> The prohibition against taking or damaging "private property…except for public use" without just compensation applies to both real and personal property, regardless of whether the personal property "has been transformed into real property under fixture law[.]"<sup>54</sup> The Supreme Court of Virginia has not defined "personal property" in the inverse condemnation context, but at least one Virginia circuit court relied on the Black's Law Dictionary definition for "personal property," which is "'[g]enerally, all property other than real estate; as goods, chattels, money, notes, bonds, stocks and choses in action generally, including intangible property.'"<sup>55</sup>

Although the Securitization Law states that "[a]ll securitized asset cost property that is specified in a financing order shall constitute an existing, present intangible property right or interest therein[,]"<sup>56</sup> we are not aware of any Virginia case law that addresses the applicability of an inverse condemnation claim within the context of the Securitization Law, or anything closely related thereto.

<sup>49</sup> Va. Const. Art. I, § 11.

<sup>50</sup> *See, e.g.*, *Toll Rd. Invs. P'ship II L.P. v. State Corp.* Comm'n, 304 Va. 352, 368-70 (2025); *Roanoke Waterworks Co. v. Commonwealth*, 140 Va. 144, 170 (1924); *Petersburg Gas Co. v. City of Petersburg*, 132 Va. 82, 89 (1922). 

<sup>51</sup> *ACGS Marine Ins. Co. v. Arlington Cty.*, 293 Va. 469, 478 (2017).

<sup>52</sup> *Id.* at 477-78 (emphasis omitted) (quoting *Burns v. Bd. of Supvrs.*, 218 Va. 625, 627 (1977)).

<sup>53</sup> *Livingston v. Va. Dept. of Trans.*, 284 Va. 140, 155-56 (2012) (citation omitted).

<sup>54</sup> *ACGS Marine Ins. Co.*, 293 Va. at 496.

<sup>55</sup> *PM Lube, LLC v. Cty. of Loudoun*, 100 Va. Cir. 395, 401 at n.3 (2018).

<sup>56</sup> Va. Code § 56-249.8 E(1)(a).

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Relatedly, the Supreme Court of Virginia previously held that where valid exercises of the Commonwealth's police power result in "substantial diminution of property values, an owner has no right to compensation therefor" because "[a]ll citizens hold property subject to the proper exercise of the police power for the common good."<sup>57</sup> As discussed above, there are credible arguments that a repeal or significant modification of the Commonwealth Pledge or Financing Order which substantially impairs the Securitized Asset Property would not be a valid use of the Commonwealth's police power.

Because there is an absence of judicial precedent directly on point, it is uncertain whether a hypothetical inverse condemnation claim would succeed with respect to an alleged "taking" under the Securitization Act. Assuming applicable Virginia courts would apply a Takings Clause analysis under the Takings Clause of the Virginia Constitution, we believe that courts of competent jurisdiction would hold that the Commonwealth would be required to pay just compensation to Holders if the General Assembly or the Commonwealth repealed or amended the Securitization Law or took any other action contravening the Commonwealth Pledge. If such a claim succeeds, however, there can be no assurance that any award of just compensation would be sufficient to pay the full amount of the principal and interest on the Bonds.

For the foregoing reasons, we believe the Virginia Contract Clause would provide a clearer basis for challenging an impairment of the Securitized Asset Property.

**<u>Opinions</u>**

Based on the foregoing and in reliance thereon, and subject to the limitations, assumptions, exceptions, qualifications and other matters identified herein, we are of the opinion that as of the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Securitization Law was duly enacted by the Virginia legislature in accordance with all applicable
Virginia laws, is in full force and effect, and we are unaware of any pending appeal or litigation challenging the validity of the Securitization Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Commonwealth Pledge unambiguously indicates the Commonwealth's intent to be bound with the Holders
and supports the conclusion that, for purposes of the Contract Clause of the Virginia Constitution, the Commonwealth Pledge constitutes a binding contractual relationship between the Commonwealth of Virginia and the Holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. A Virginia state court would conclude that the Commonwealth Pledge (i) creates a binding contractual
obligation of the Commonwealth for purposes of the Contract Clause of the

<sup>57</sup> *Comm ex. rel. State Water Control Bd. v. Cnty. Utilities Corp.*, 223 Va. 534, 542 (1982) (citations omitted).

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Virginia Constitution and (ii) provides a basis upon which the Holders could challenge successfully under the Contract Clause of the Virginia Constitution any action by the General Assembly or any action by the Commission of a legislative character, including the rescission or amendment of the Financing Order, that violates the Commonwealth Pledge in a manner that substantially impairs or would substantially impair the value of the Securitized Asset Property, or substantially reduces, alters or impairs the value of the Securitized Asset Cost Charges, prior to the time that the Securitized Asset Cost Bonds are paid and performed in full, unless the action is a proper exercise of the Commonwealth's police power and the adjustment of the rights and responsibilities are based upon reasonable conditions and of a character appropriate to the public purpose justifying the action. <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Although there is an absence of judicial precedent directly on point, and assuming applicable Virginia
courts would apply a Takings Clause analysis under the Takings Clause of the Virginia Constitution, such courts of competent jurisdiction would hold that the Commonwealth would be required to pay just compensation to Holders if the General Assembly
or the Commonwealth repealed or amended the Securitization Law or took any other action contravening the Commonwealth Pledge and doing so constituted a permanent appropriation of a substantial property interest of the Holders in the Securitized
Asset Cost Property and deprived the Holders of their reasonable expectations arising from their investments in the SAC Bonds. There is no assurance, however, that any such award of compensation would be sufficient to pay the full amount of
principal and interest on the Bonds.

**<u>Matters of Reliance</u>**

The opinions expressed herein are rendered as of the date hereof. This opinion letter is furnished only to the addressees listed on <u>Schedule A</u> hereto and is solely for your exclusive use in connection with the Opinion Documents, and may not be relied upon by any other individual, entity or firm, including any governmental agency (each, a "<u>Person</u>"). Without our prior written consent, the opinions expressed herein may not be published, quoted or referenced to, or filed with, any Person in connection with any matter or in any manner whatsoever.

This Opinion may not be quoted, published, communicated or otherwise made available in whole or in part to any Person (including, without limitation, any Person who acquires a Bond or any interest therein from an Underwriter) other than the addressees listed on <u>Schedule</u> <u>A</u> hereto without our specific prior written consent, except that: (x) each of the Underwriters may furnish copies of this Opinion (i) to any of its accountants or attorneys, (ii) in order to comply with any subpoena, order, regulation, ruling or request of any judicial, administrative, governmental, supervisory or legislative body or committee or any self-regulatory body, (iii) to any other person for the purpose of substantiating an Underwriter's due diligence defense and (iv) as otherwise required by law; provided, that none of the foregoing Persons is entitled to rely hereon unless an addressee hereof, (y) a copy of this Opinion may be posted by

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or at the direction of APCo or the Issuer to an internet website required under Rule 17g-5 promulgated under the Securities Exchange Act of 1934, as amended, and maintained in connection with the ratings on the Bonds solely for the purpose of compliance with such rule or undertakings pursuant thereto made by APCo or the Issuer. Such permission to post a copy of this letter to such website shall not be construed to entitle any Person, including any credit rating agency, who is not an addressee hereof to rely on this Opinion.

Notwithstanding the foregoing, at your request, we hereby consent to reliance hereon by any future permitted assignee of the addressees, on the condition and understanding that: (i) we have no responsibility or obligation to consider the applicability of this opinion letter to any Person other than the addressees listed on <u>Schedule A</u> hereto; (ii) in no event shall any future assignee have any greater rights with respect hereto than the original addressee of this opinion letter on the date hereof or its assignor; (iii) in furtherance and not in limitation of the foregoing, our consent to such reliance shall in no event constitute a reissuance of the opinions expressed herein or otherwise extend any statute of limitations period applicable hereto on the date hereof; and (iv) any such reliance also must be actual and reasonable under the circumstances existing at the time of the related assignment, including any circumstances relating to changes in law, facts or any other developments known to or reasonably knowable by such future assignee at such time. We expressly disclaim any obligation to advise you of any changes in law, rules or regulations; any judicial or regulatory interpretation thereof; or any facts that may hereafter occur or be brought to our attention that would alter the opinions expressed herein.

Very truly yours

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|:---|:---|
| Troutman Pepper Locke LLP<br> Troutman Pepper Building, 1001 Haxall Point<br> Richmond, VA 23219<br>troutman.com | ![LOGO](g44535g99e93.jpg) |

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**<u>Schedule A</u>**

U.S. Bank Trust Company, National Association, as Indenture Trustee

190 South LaSalle Street, 7th Floor

Chicago, Illinois 60603

U.S. Bank National Association, as Securities Intermediary

190 South LaSalle Street

Chicago, Illinois 60603

Moody's Investors Service, Inc.

7 World Trade Center at

250 Greenwich Street, 24th Floor

New York, New York 10007

Standard & Poor's Ratings Group, Inc.

Structured Credit Surveillance

55 Water Street, 40th Floor

New York, New York 10041

The following, for itself and as Representative of the

Underwriters of the Bonds:

Goldman Sachs & Co. LLC

200 West Street, 7th Floor

New York, New York 10282

J.P. Morgan Securities LLC

270 Park Avenue – 4th Floor

New York, New York 10017

RBC Capital Markets, LLC

Brookfield Place

200 Vesey Street, 8th Floor

New York, New York 10281

Appalachian Power Company

1 Riverside Plaza

Columbus, Ohio 43215

Appalachian Power Recovery Funding LLC

1051 East Cary St., Suite 1100

Richmond, Virginia 23219

## Ex-Filing

**EXHIBIT 107** 

**Calculation of Filing Fee Table** 

**Form SF-1**

(Form Type)

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| | |
|:---|:---|
| **Appalachian Power Company** | **Appalachian Power Recovery Funding LLC** |
| (Exact Name of Registrant, Sponsor and Depositor as Specified<br>in its Charter) | (Exact Name of Registrant and Issuing Entity as Specified<br>in its Charter) |

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<u>Table 1: Newly Registered Securities</u> 

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Security**<br> **Type** | **Security**<br> **Class**<br> **Title** | **Fee**<br> **Calculation or<br>Carry Forward**<br> **Rule** | **Amount**<br> **Registered** | **Proposed**<br> **Maximum**<br> **Offering**<br> **Price Per**<br> **Unit** | **Maximum**<br> **Aggregate**<br> **Offering**<br> **Price<sup>(1)</sup>** | **Fee**<br> **Rate** | **Amount of**<br> **Registration**<br> **Fee<sup>(1)</sup>** |
| &nbsp;&nbsp;&nbsp; Fees to Be Paid  | Asset-Backed <br>Securities | Series 2026-A Senior<br> Secured SAC Bonds  | Rule 457(o) | $1374500000 | 100% | $1374500000 | 0.00013810 | $189818.45 |
| &nbsp;&nbsp;&nbsp; Fees to Be Paid  | Asset-Backed<br>Securities | Series 2026-A Senior Secured SAC Bonds | Rule 457(o) | 1000000 | 100% | $1000000 | 0.00013810 | $138.10 |
|  | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** |  | $1375500000 |  | $189956.55 |
|  | **Total Fees Previously Paid<sup>(2)</sup>** | **Total Fees Previously Paid<sup>(2)</sup>** | **Total Fees Previously Paid<sup>(2)</sup>** | **Total Fees Previously Paid<sup>(2)</sup>** |  |  |  | $138.10 |
|  | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  |  | $0.00 |
|  | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  |  | $189818.45 |

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(1) Estimated solely for the purpose of calculating the registration fee.

(2) $138.10 was previously paid in connection with the initial filing of this Registration Statement on
February 27, 2026, where $1,000,000 aggregate principal amount of Series 2026-A Senior Secured SAC Bonds were registered.