Business Segments

12 Months Ended

Dec. 31, 2012

Business Segments

8. BUSINESS SEGMENTS

Our primary business is the generation, transmission and distribution of electricity. Within our Utility Operations segment, we centrally dispatch generation assets and manage our overall utility operations on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight. Intersegment sales and transfers are generally based on underlying contractual arrangements and agreements.

Our reportable segments and their related business activities are outlined below:

Utility Operations

• Generation of electricity for sale to U.S. retail and wholesale customers.
• Transmission and distribution of electricity through assets owned and operated by our ten utility operating companies.

Transmission Operations

• Development, construction and operation of transmission facilities through investments in our wholly-owned transmission subsidiaries and transmission joint ventures. These investments have PUCT-approved or FERC-approved returns on equity.

AEP River Operations

• Commercial barging operations that transport coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers.

Generation and Marketing

• Nonregulated generation in ERCOT.
• Marketing, risk management and retail activities in ERCOT, PJM and MISO.

The remainder of our activities is presented as All Other. While not considered a reportable segment, All Other includes:

• Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.
• Tax and interest expense adjustments related to our UK operations, which were sold in 2004 and 2002.
• Forward natural gas contracts that were not sold with our natural gas pipeline and storage operations in 2004 and 2005. These contracts were financial derivatives which settled and expired in the fourth quarter of 2011.
• Revenue sharing related to the Plaquemine Cogeneration Facility,which ended in the fourth quarter of 2011.

The tables below present our reportable segment information for the years ended December 31, 2012, 2011 and 2010and balance sheet information as of December 31, 2012 and 2011. These amounts include certain estimates and allocations where necessary.

							Nonutility Operations
									Generation
			Utility		Transmission		AEP River		and		All Other		Reconciling
			Operations		Operations		Operations		Marketing		(a)		Adjustments			Consolidated
			(in millions)
Year Ended December 31, 2012
Revenues from:
		External Customers	$	13,670	$	7	$	647	$	599	$	22	$	-		$	14,945
		Other Operating Segments		108		17		20		1		8		(154)			-
Total Revenues			$	13,778	$	24	$	667	$	600	$	30	$	(154)		$	14,945
Asset Impairments and Other
		Related Charges	$	300	$	-	$	-	$	-	$	-	$	-		$	300
Depreciation and Amortization				1,734		3		29		28		-		(12)	(b)		1,782
Interest Income				7		-		-		-		20		(19)			8
Carrying Costs Income				53		-		-		-		-		-			53
Interest Expense				882		3		17		19		102		(35)	(b)		988
Income Tax Expense				560		17		7		3		17		-			604
Net Income (Loss)				1,299		43		15		7		(102)		-			1,262
Gross Property Additions				2,625		392		31		71		-		-			3,119
							Nonutility Operations
									Generation
			Utility		Transmission		AEP River		and		All Other		Reconciling
			Operations		Operations		Operations		Marketing		(a)		Adjustments			Consolidated
			(in millions)
Year Ended December 31, 2011
Revenues from:
		External Customers	$	14,088	$	3	$	696	$	305	$	24	$	-		$	15,116
		Other Operating Segments		112		5		20		1		8		(146)			-
Total Revenues			$	14,200	$	8	$	716	$	306	$	32	$	(146)		$	15,116
Asset Impairments and Other
		Related Charges	$	139	$	-	$	-	$	-	$	-	$	-		$	139
Depreciation and Amortization				1,613		-		28		25		2		(13)	(b)		1,655
Interest Income				29		-		-		(1)		17		(18)			27
Carrying Costs Income				393		-		-		-		-		-			393
Interest Expense				886		1		18		18		43		(33)	(b)		933
Income Tax Expense (Credit)				722		2		24		(18)		88		-			818
Income (Loss) Before Extraordinary
	Item		$	1,549	$	30	$	45	$	14	$	(62)	$	-		$	1,576
Extraordinary Item, Net of Tax				373		-		-		-		-		-			373
Net Income (Loss)			$	1,922	$	30	$	45	$	14	$	(62)	$	-		$	1,949
Gross Property Additions			$	2,405	$	263	$	18	$	2	$	214	$	-		$	2,902
							Nonutility Operations
									Generation
			Utility		Transmission		AEP River		and		All Other		Reconciling
			Operations		Operations		Operations		Marketing		(a)		Adjustments			Consolidated
			(in millions)
Year Ended December 31, 2010
Revenues from:
		External Customers	$	13,687	$	-	$	566	$	173	$	1	$	-		$	14,427
		Other Operating Segments		105		1		22		-		14		(142)			-
Total Revenues			$	13,792	$	1	$	588	$	173	$	15	$	(142)		$	14,427
Asset Impairments and Other
		Related Charges	$	-	$	-	$	-	$	-	$	-	$	-		$	-
Depreciation and Amortization				1,598		-		24		30		2		(13)	(b)		1,641
Interest Income				8		-		-		2		31		(20)			21
Carrying Costs Income				70		-		-		-		-		-			70
Interest Expense				942		-		14		20		58		(35)	(b)		999
Income Tax Expense (Credit)				651		(1)		19		(20)		(6)		-			643
Net Income (Loss)				1,192		9		37		25		(45)		-			1,218
Gross Property Additions				2,440		35		23		1		1		-			2,500

							Nonutility Operations
									Generation				Reconciling
			Utility		Transmission		AEP River		and		All Other		Adjustments
			Operations		Operations		Operations		Marketing		(a)		(b)			Consolidated
			(in millions)
December 31, 2012
Total Property, Plant and Equipment			$	55,707	$	748	$	636	$	621	$	8	$	(266)		$	57,454
Accumulated Depreciation and
	Amortization			18,344		4		161		246		7		(71)			18,691
Total Property, Plant and
	Equipment - Net		$	37,363	$	744	$	475	$	375	$	1	$	(195)		$	38,763
Total Assets			$	51,477	$	1,216	$	670	$	1,005	$	17,191	$	(17,192)	(c)	$	54,367
Investments in Equity Method Investees				24		393		43		-		5		-			465
							Nonutility Operations
									Generation				Reconciling
			Utility		Transmission		AEP River		and		All Other		Adjustments
			Operations		Operations		Operations		Marketing		(a)		(b)			Consolidated
			(in millions)
December 31, 2011
Total Property, Plant and Equipment			$	54,396	$	323	$	608	$	590	$	11	$	(258)		$	55,670
Accumulated Depreciation and
		Amortization		18,393		-		136		219		10		(59)			18,699
Total Property, Plant and
	Equipment - Net		$	36,003	$	323	$	472	$	371	$	1	$	(199)		$	36,971
Total Assets			$	50,093	$	594	$	659	$	868	$	16,751	$	(16,742)	(c)	$	52,223
Investments in Equity Method Investees				24		256		17		-		2		-			299

(a)All Other includes:

• Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.
• Tax and interest expense adjustments related to our UK operations, which were sold in 2004 and 2002.
• Forward natural gas contracts that were not sold with our natural gas pipeline and storage operations in 2004 and 2005. These contracts were financial derivatives which settled and expired in the fourth quarter of 2011.
• Revenue sharing related to the Plaquemine Cogeneration Facility, which ended in the fourth quarter of 2011.

(b)Includes eliminations due to an intercompany capital lease.

(c)Reconciling Adjustments for Total Assets primarily include the elimination of intercompany advances to affiliates and intercompany accounts receivable along with the elimination of AEP's investments in subsidiary companies.

Appalachian Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Indiana Michigan Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Ohio Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Public Service Co of Oklahoma [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Southwestern Electric Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.