Financing Activities

12 Months Ended

Dec. 31, 2012

Financing Activities

13. FINANCING ACTIVITIES

AEP Common Stock

Listed below is a reconciliation of common stock share activity for the years ended December 31, 2012, 2011 and 2010:

		Held in
Shares of AEP Common Stock	Issued	Treasury
Balance, December 31, 2009	498,333,265	20,278,858
Issued	2,781,616	-
Treasury Stock Acquired	-	28,867
Balance, December 31, 2010	501,114,881	20,307,725
Issued	2,644,579	-
Treasury Stock Acquired	-	28,867
Balance, December 31, 2011	503,759,460	20,336,592
Issued	2,245,502	-
Balance, December 31, 2012	506,004,962	20,336,592

Preferred Stock

In December 2011, AEP subsidiaries redeemed all of their outstanding preferred stock with a par value of $60 million at a premium, resulting in a $2.8 million loss, which is included in Preferred Stock Dividend Requirements of Subsidiaries Including Capital Stock Expense on the statement of income.

Long-term Debt

The following details long-term debt outstanding as of December 31, 2012 and 2011:

		Weighted
		Average
		Interest
		Rate as of	Interest Rate Ranges as of		Outstanding as of
		December 31,	December 31,		December 31,
Type of Debt and Maturity		2012	2012	2011	2012		2011
					(in millions)
Senior Unsecured Notes (a)
	2012-2042	5.46%	0.685%-8.13%	0.955%-8.13%	$	12,712	$	11,737
Pollution Control Bonds (b)
	2012-2038 (c)	3.58%	0.11%-6.30%	0.06%-6.30%		1,958		2,112
Notes Payable (d)
	2012-2032	4.35%	1.913%-8.03%	2.029%-8.03%		427		402
Securitization Bonds (e)
	2013-2024	4.21%	0.88%-6.25%	4.98%-6.25%		2,281		1,688
Junior Subordinated Debentures (a)
	2063			8.75%		-		315
Spent Nuclear Fuel Obligation (f)						265		265
Other Long-term Debt (g)
	2015-2059	2.63%	1.72%-13.718%	3.00%-13.718%		140		29
Fair Value of Interest Rate Hedges						3		7
Unamortized Discount, Net						(29)		(39)
Total Long-term Debt Outstanding						17,757		16,516
Long-term Debt Due Within One Year						2,171		1,433
Long-term Debt					$	15,586	$	15,083

(a)In 2012, AEP issued $850 million of Senior Unsecured Notes used to retire$243 million of Senior Unsecured Notes and $315 million of Junior Subordinated Debentures.

(b)For certain series of pollution control bonds, interest rates are subject to periodic adjustment. Certain series may bepurchased on demand at periodic interest adjustment dates. Letters of credit from banks, standby bond purchase agreements and insurance policies support certain series.

(c)Certain pollution control bonds are subject to redemption earlier than the maturity date. Consequently, these bonds have been classified for maturity purposes as Long-term Debt Due Within One Year on the balance sheets.

(d)Notes payable represent outstanding promissory notes issued under term loan agreements and credit agreements with a number of banks and other financial institutions. At expiration, all notes then issued and outstanding are due and payable. Interest rates are both fixed and variable. Variable rates generally relate to specified short-term interest rates.

(e)In 2012, AEP Texas Central Transition Funding III LLC issued $800 million of Securitization Bonds (see Note 15).

(f)Spent nuclear fuel obligation consists of a liability along with accrued interest for disposal of spent nuclear fuel (see "SNF Disposal" section of Note 5).

(g)In 2012, I&M issued a $110 million three-year credit facility to be used for general corporate purposes.

Long-term debt outstanding as ofDecember 31, 2012 is payable as follows:

											After
	2013		2014		2015		2016		2017		2017		Total
	(in millions)
Principal Amount	$	2,171	$	1,169	$	1,438	$	840	$	1,655	$	10,513	$	17,786
Unamortized Discount, Net														(29)
Total Long-term Debt Outstanding													$	17,757

In January 2013 and February 2013, I&M retired $12 million and $11 million, respectively, of Notes Payable related to DCC Fuel.

In January 2013, TCC retired $105 million of its outstanding Securitization Bonds.

In February 2013, OPCo retired $250 million of 5.5% Senior Unsecured Notes due in 2013.

As of December 31, 2012, trustees held, on our behalf, $583 million of our reacquired Pollution Control Bonds.

Dividend Restrictions

Parent Restrictions

The holders of our common stock are entitled to receive the dividends declared by our Board of Directors provided funds are legally available for such dividends.Our income derives from our common stock equity in the earnings of our utility subsidiaries.

Pursuant to the leverage restrictions in our credit agreements, we must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. The payment of cash dividends indirectly results in an increase in the percentage of debt to total capitalization of the company distributing the dividend. The method for calculating outstanding debt and capitalization is contractually defined in the credit agreements. None of AEP's retained earnings were restricted for the purpose of the payment of dividends.

Utility Subsidiaries' Restrictions

Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of our utility subsidiaries to transfer funds to us in the form of dividends.Specifically, several of our public utility subsidiaries have credit agreements that contain a covenant that limits their debt to capitalization ratio to 67.5%. As of December 31, 2012, the amount of restricted net assets of AEP's subsidiaries that may not be distributed to Parent in the form of a loan, advance or dividend was approximately $6 billion.

The Federal Power Act prohibits the utility subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.”The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean the book value of the common stock.This restriction does not limit the ability of the utility subsidiaries to pay dividends out of retained earnings.

Lines of Credit and Short-term Debt

We use our commercial paper program to meet the short-term borrowing needs of our subsidiaries. The program is used to fund both a Utility Money Pool, which funds the utility subsidiaries, and a Nonutility Money Pool, which funds the majority of the nonutility subsidiaries. In addition, the program also funds, as direct borrowers, the short-term debt requirements of other subsidiaries that are not participants in either money pool for regulatory or operational reasons. As of December 31, 2012, we had credit facilities totaling $3.25billion to support our commercial paper program. The maximum amount of commercial paper outstanding during 2012 was $1.2 billion and the weighted average interest rate of commercial paper outstanding during 2012was 0.44%. Our outstanding short-term debt was as follows:

	December 31,
	2012				2011
	Outstanding		Interest		Outstanding		Interest
Type of Debt	Amount		Rate (a)		Amount		Rate (a)
	(in millions)				(in millions)
Securitized Debt for Receivables (b)	$	657	0.26	%	$	666	0.27	%
Commercial Paper		321	0.42	%		967	0.51	%
Line of Credit – Sabine (c)		3	1.82	%		17	1.79	%
Total Short-term Debt	$	981			$	1,650

(a)Weighted average rate.

(b)Amount of securitized debt for receivables as accounted for under the "Transfers and Servicing" accounting guidance.

(c)This line of credit does not reduce available liquidity under AEP's credit facilities.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 5.

Securitized Accounts Receivable – AEP Credit

AEP Credit has a receivables securitization agreement with bank conduits. Under the securitization agreement, AEP Credit receives financing from the bank conduits for the interest in the receivables AEP Credit acquires from affiliated utility subsidiaries. AEP Credit continues to service the receivables. These securitized transactions allow AEP Credit to repay its outstanding debt obligations, continue to purchase our operating companies' receivables and accelerate AEP Credit's cash collections.

In 2012, we renewed AEP Credit'sreceivables securitization agreement. The agreement provides a commitment of $700 millionfrom bank conduits to finance receivables from AEP Credit. A commitment of $385 millionexpires in June 2013 and the remaining commitment of $315 million expires in June 2015.

Accounts receivable information for AEP Credit is as follows:

		Years Ended December 31,
		2012			2011			2010
		(dollars in millions)
Effective Interest Rates on Securitization of
	Accounts Receivable		0.26	%		0.27	%		0.31	%
Net Uncollectible Accounts Receivable Written Off		$	29		$	37		$	22

		December 31,
		2012			2011
		(in millions)
Accounts Receivable Retained Interest and Pledged as Collateral
	Less Uncollectible Accounts	$	835	$	902
Total Principal Outstanding			657		666
Delinquent Securitized Accounts Receivable			37		38
Bad Debt Reserves Related to Securitization/Sale of Accounts Receivable			21		18
Unbilled Receivables Related to Securitization/Sale of Accounts Receivable			316		370

Customer accounts receivable retained and securitized for our operating companies are managed by AEP Credit. AEP Credit's delinquent customer accounts receivable represents accounts greater than 30 days past due.

Appalachian Power Co [Member]

Financing Activities

12. FINANCING ACTIVITIES

Preferred Stock

In December 2011, the Registrant Subsidiaries redeemed all of their outstanding preferred stock, resulting in a loss, which is included in Preferred Stock Dividend Requirements Including Capital Stock Expense on the statements of income.The par value of preferred stock redeemed and the loss recorded by the Registrant Subsidiaries was as follows:

	Par Value of		Loss on
Company	Stock Redeemed		Redemption
		(in thousands)
APCo	$	17,736	$	1,013
I&M		8,072		314
OPCo		16,613		488
PSO		4,882		254
SWEPCo		4,694		369

			Number of Shares Redeemed
			Years Ended December 31,
Company	Series		2011	2010
APCo	4.50	%	177,465	53
I&M	4.12	%	11,055	-
I&M	4.125	%	55,257	44
I&M	4.56	%	14,412	-
OPCo	4.08	%	14,495	100
OPCo	4.20	%	22,824	-
OPCo	4.40	%	31,482	-
OPCo	4.50	%	97,357	6
PSO	4.00	%	44,508	-
PSO	4.24	%	4,310	3,759
SWEPCo	4.28	%	7,386	-
SWEPCo	4.65	%	1,907	-
SWEPCo	5.00	%	37,665	8

Long-term Debt

There are certain limitations on establishing liens against the Registrant Subsidiaries' assets under their respective indentures. None of the long-term debt obligations of the Registrant Subsidiaries have been guaranteed or secured by AEP or any of its affiliates.

The following details long-term debt outstanding as of December 31, 2012 and 2011:

		Weighted
		Average
		Interest
		Rate as of			Outstanding as of
		December 31,	Interest Rate Ranges as of December 31,		December 31,
Company	Maturity	2012	2012	2011	2012		2011
Senior Unsecured Notes					(in thousands)
APCo	2012-2038	5.43%	0.685%-7.95%	3.40%-7.95%	$	3,167,559	$	3,141,843
I&M	2012-2037	6.24%	5.05%-7.00%	5.05%-7.00%		1,171,080		1,270,599
OPCo	2012-2035	5.84%	4.85%-6.60%	0.955%-6.60%		3,142,615		3,291,823
PSO	2016-2037	5.52%	4.40%-6.625%	4.40%-6.625%		896,364		896,023
SWEPCo	2015-2040	5.56%	3.55%-6.45%	4.90%-6.45%		1,822,653		1,548,437
Pollution Control Bonds (a)
APCo	2012-2038 (b)	2.01%	0.12%-5.375%	0.07%-6.05%		532,500		582,000
I&M	2012-2025 (b)	4.03%	0.11%-6.25%	0.06%-6.25%		266,531		266,494
OPCo	2012-2038 (b)	3.72%	0.13%-5.80%	0.07%-5.80%		517,825		562,325
PSO	2014-2020	5.03%	4.45%-5.25%	4.45%-5.25%		46,360		46,360
SWEPCo	2015-2018	4.28%	3.25%-4.95%	3.25%-4.95%		135,200		135,200
Notes Payable - Affiliated
OPCo	2015	5.25%	5.25%	5.25%		200,000		200,000
Notes Payable - Nonaffiliated
I&M	2013-2016	2.42%	1.913%-5.44%	2.029%-5.44%		224,376		234,590
SWEPCo	2012-2032	5.09%	4.58%-6.37%	6.37%-7.03%		88,375		45,000
Spent Nuclear Fuel Obligation (c)
I&M						265,249		265,065
Other Long-term Debt
APCo	2026	13.718%	13.718%	13.718%		2,383		2,408
I&M (d)	2015-2025	2.39%	1.72%-6.00%	6.00%		130,430		20,927
PSO	2027	3.00%	3.00%	3.00%		7,147		4,981

(a)For certain series of pollution control bonds, interest rates are subject to periodic adjustment. Certain series may be purchased on demand at periodic interest adjustment dates. Letters of credit from banks, standby bond purchaseagreements and insurance policies support certain series.

(b)Certain pollution control bonds are subject to redemption earlier than the maturity date. Consequently, these bondshave been classified for maturity purposes as Long-term Debt Due Within One Year –Nonaffiliated on the balance sheets.

(c)Spent nuclear fuel obligation consists of a liability along with accrued interest for disposal of spent nuclear fuel (see “SNF Disposal” section of Note 4).

(d)In 2012, I&M issued a $110 million three-year credit facility to be used for general corporate purposes.

Long-term debt outstanding as ofDecember 31, 2012 is payable as follows:

		APCo		I&M		OPCo		PSO		SWEPCo
		(in thousands)
2013		$	574,679	$	203,953	$	856,000	$	764	$	3,250
2014			100,033		353,946		403,580		34,115		3,250
2015			500,038		253,730		286,000		427		306,750
2016			65,393		4,158		350,000		150,440		3,250
2017			250,049		1,479		-		454		253,250
After 2017			2,219,692		1,244,789		1,972,245		767,307		1,478,825
Principal Amount			3,709,884		2,062,055		3,867,825		953,507		2,048,575
Unamortized Discount, Net			(7,442)		(4,389)		(7,385)		(3,636)		(2,347)
Total Long-term Debt
	Outstanding	$	3,702,442	$	2,057,666	$	3,860,440	$	949,871	$	2,046,228

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean thebook value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. As ofDecember 31, 2012, $32 million of APCo's retained earnings and none of I&M's or OPCo'sretained earningshave restrictions related to the payment of dividends to Parent.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of December 31, 2012 and 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the years ended December 31, 2012and 2011 are described in the following tables:

Year Ended December 31, 2012:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,504	$	161,363	$	22,821	$	(150,941)	$	600,000
I&M		-		362,733		-		202,439		116,977		500,000
OPCo		126,975		290,356		47,820		105,154		116,422		600,000
PSO		-		177,778		-		92,697		10,558		300,000
SWEPCo		227,087		173,778		147,338		78,994		153,829		350,000

Year Ended December 31, 2011:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2011		Limit
	(in thousands)
APCo	$	217,876	$	393,811	$	117,378	$	96,186	$	(176,240)	$	600,000
I&M		57,352		219,386		23,793		56,999		95,714		500,000
OPCo		46,761		452,187		31,365		225,728		219,458		600,000
PSO		96,034		255,611		41,971		88,805		39,876		300,000
SWEPCo		136,752		105,184		47,232		38,798		(132,473)		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Years Ended December 31,
	2012		2011		2010
Maximum Interest Rate	0.56	%	0.56	%	0.55	%
Minimum Interest Rate	0.39	%	0.06	%	0.09	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the years ended December 31, 2012, 2011 and 2010 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate						Average Interest Rate
	for Funds Borrowed						for Funds Loaned
	from Utility Money Pool for						to Utility Money Pool for
	Years Ended December 31,						Years Ended December 31,
Company	2012		2011		2010		2012		2011		2010
APCo	0.47	%	0.42	%	0.26	%	0.47	%	0.32	%	-	%
I&M	-	%	0.39	%	0.43	%	0.46	%	0.38	%	0.24	%
OPCo	0.47	%	0.45	%	-	%	0.47	%	0.35	%	0.22	%
PSO	-	%	0.41	%	0.31	%	0.46	%	0.32	%	0.17	%
SWEPCo	0.53	%	0.40	%	0.19	%	0.45	%	0.33	%	0.27	%

Interest expense related to the Utility Money Pool is included in Interest Expense on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries incurred interest expense for amounts borrowed from the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	772	$	198	$	611
I&M		-		20		17
OPCo		555		12		16
PSO		11		85		102
SWEPCo		977		174		11

Interest income related to the Utility Money Pool is included in Interest Income on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries earned interest income for amounts advanced to the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	123	$	313	$	9
I&M		963		226		219
OPCo		1,038		820		708
PSO		435		250		19
SWEPCo		320		32		438

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 4.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides a commitment of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiaryas of December 31, 2012 and 2011 was as follows:

	December 31,
Company	2012		2011
	(in thousands)
APCo	$	153,719	$	121,605
I&M		123,447		121,597
OPCo		300,675		346,695
PSO		85,530		123,172
SWEPCo		132,449		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	6,883	$	9,612	$	9,194
I&M		6,121		6,168		6,770
OPCo		20,312		18,851		20,630
PSO		7,054		6,363		5,406
SWEPCo		6,140		5,672		5,688

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,353,920	$	1,248,253	$	1,418,487
I&M		1,344,260		1,323,068		1,283,955
OPCo		2,952,723		3,461,758		3,495,609
PSO		1,157,174		1,299,190		1,196,586
SWEPCo		1,481,925		1,495,397		1,402,525

Indiana Michigan Power Co [Member]

Financing Activities

12. FINANCING ACTIVITIES

Preferred Stock

In December 2011, the Registrant Subsidiaries redeemed all of their outstanding preferred stock, resulting in a loss, which is included in Preferred Stock Dividend Requirements Including Capital Stock Expense on the statements of income.The par value of preferred stock redeemed and the loss recorded by the Registrant Subsidiaries was as follows:

	Par Value of		Loss on
Company	Stock Redeemed		Redemption
		(in thousands)
APCo	$	17,736	$	1,013
I&M		8,072		314
OPCo		16,613		488
PSO		4,882		254
SWEPCo		4,694		369

			Number of Shares Redeemed
			Years Ended December 31,
Company	Series		2011	2010
APCo	4.50	%	177,465	53
I&M	4.12	%	11,055	-
I&M	4.125	%	55,257	44
I&M	4.56	%	14,412	-
OPCo	4.08	%	14,495	100
OPCo	4.20	%	22,824	-
OPCo	4.40	%	31,482	-
OPCo	4.50	%	97,357	6
PSO	4.00	%	44,508	-
PSO	4.24	%	4,310	3,759
SWEPCo	4.28	%	7,386	-
SWEPCo	4.65	%	1,907	-
SWEPCo	5.00	%	37,665	8

Long-term Debt

There are certain limitations on establishing liens against the Registrant Subsidiaries' assets under their respective indentures. None of the long-term debt obligations of the Registrant Subsidiaries have been guaranteed or secured by AEP or any of its affiliates.

The following details long-term debt outstanding as of December 31, 2012 and 2011:

		Weighted
		Average
		Interest
		Rate as of			Outstanding as of
		December 31,	Interest Rate Ranges as of December 31,		December 31,
Company	Maturity	2012	2012	2011	2012		2011
Senior Unsecured Notes					(in thousands)
APCo	2012-2038	5.43%	0.685%-7.95%	3.40%-7.95%	$	3,167,559	$	3,141,843
I&M	2012-2037	6.24%	5.05%-7.00%	5.05%-7.00%		1,171,080		1,270,599
OPCo	2012-2035	5.84%	4.85%-6.60%	0.955%-6.60%		3,142,615		3,291,823
PSO	2016-2037	5.52%	4.40%-6.625%	4.40%-6.625%		896,364		896,023
SWEPCo	2015-2040	5.56%	3.55%-6.45%	4.90%-6.45%		1,822,653		1,548,437
Pollution Control Bonds (a)
APCo	2012-2038 (b)	2.01%	0.12%-5.375%	0.07%-6.05%		532,500		582,000
I&M	2012-2025 (b)	4.03%	0.11%-6.25%	0.06%-6.25%		266,531		266,494
OPCo	2012-2038 (b)	3.72%	0.13%-5.80%	0.07%-5.80%		517,825		562,325
PSO	2014-2020	5.03%	4.45%-5.25%	4.45%-5.25%		46,360		46,360
SWEPCo	2015-2018	4.28%	3.25%-4.95%	3.25%-4.95%		135,200		135,200
Notes Payable - Affiliated
OPCo	2015	5.25%	5.25%	5.25%		200,000		200,000
Notes Payable - Nonaffiliated
I&M	2013-2016	2.42%	1.913%-5.44%	2.029%-5.44%		224,376		234,590
SWEPCo	2012-2032	5.09%	4.58%-6.37%	6.37%-7.03%		88,375		45,000
Spent Nuclear Fuel Obligation (c)
I&M						265,249		265,065
Other Long-term Debt
APCo	2026	13.718%	13.718%	13.718%		2,383		2,408
I&M (d)	2015-2025	2.39%	1.72%-6.00%	6.00%		130,430		20,927
PSO	2027	3.00%	3.00%	3.00%		7,147		4,981

(a)For certain series of pollution control bonds, interest rates are subject to periodic adjustment. Certain series may be purchased on demand at periodic interest adjustment dates. Letters of credit from banks, standby bond purchaseagreements and insurance policies support certain series.

(b)Certain pollution control bonds are subject to redemption earlier than the maturity date. Consequently, these bondshave been classified for maturity purposes as Long-term Debt Due Within One Year –Nonaffiliated on the balance sheets.

(c)Spent nuclear fuel obligation consists of a liability along with accrued interest for disposal of spent nuclear fuel (see “SNF Disposal” section of Note 4).

(d)In 2012, I&M issued a $110 million three-year credit facility to be used for general corporate purposes.

Long-term debt outstanding as ofDecember 31, 2012 is payable as follows:

		APCo		I&M		OPCo		PSO		SWEPCo
		(in thousands)
2013		$	574,679	$	203,953	$	856,000	$	764	$	3,250
2014			100,033		353,946		403,580		34,115		3,250
2015			500,038		253,730		286,000		427		306,750
2016			65,393		4,158		350,000		150,440		3,250
2017			250,049		1,479		-		454		253,250
After 2017			2,219,692		1,244,789		1,972,245		767,307		1,478,825
Principal Amount			3,709,884		2,062,055		3,867,825		953,507		2,048,575
Unamortized Discount, Net			(7,442)		(4,389)		(7,385)		(3,636)		(2,347)
Total Long-term Debt
	Outstanding	$	3,702,442	$	2,057,666	$	3,860,440	$	949,871	$	2,046,228

In January 2013 and February 2013, I&M retired $12 million and $11 million, respectively, of Notes Payable related to DCC Fuel.

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean thebook value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. As ofDecember 31, 2012, $32 million of APCo's retained earnings and none of I&M's or OPCo'sretained earningshave restrictions related to the payment of dividends to Parent.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of December 31, 2012 and 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the years ended December 31, 2012and 2011 are described in the following tables:

Year Ended December 31, 2012:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,504	$	161,363	$	22,821	$	(150,941)	$	600,000
I&M		-		362,733		-		202,439		116,977		500,000
OPCo		126,975		290,356		47,820		105,154		116,422		600,000
PSO		-		177,778		-		92,697		10,558		300,000
SWEPCo		227,087		173,778		147,338		78,994		153,829		350,000

Year Ended December 31, 2011:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2011		Limit
	(in thousands)
APCo	$	217,876	$	393,811	$	117,378	$	96,186	$	(176,240)	$	600,000
I&M		57,352		219,386		23,793		56,999		95,714		500,000
OPCo		46,761		452,187		31,365		225,728		219,458		600,000
PSO		96,034		255,611		41,971		88,805		39,876		300,000
SWEPCo		136,752		105,184		47,232		38,798		(132,473)		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Years Ended December 31,
	2012		2011		2010
Maximum Interest Rate	0.56	%	0.56	%	0.55	%
Minimum Interest Rate	0.39	%	0.06	%	0.09	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the years ended December 31, 2012, 2011 and 2010 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate						Average Interest Rate
	for Funds Borrowed						for Funds Loaned
	from Utility Money Pool for						to Utility Money Pool for
	Years Ended December 31,						Years Ended December 31,
Company	2012		2011		2010		2012		2011		2010
APCo	0.47	%	0.42	%	0.26	%	0.47	%	0.32	%	-	%
I&M	-	%	0.39	%	0.43	%	0.46	%	0.38	%	0.24	%
OPCo	0.47	%	0.45	%	-	%	0.47	%	0.35	%	0.22	%
PSO	-	%	0.41	%	0.31	%	0.46	%	0.32	%	0.17	%
SWEPCo	0.53	%	0.40	%	0.19	%	0.45	%	0.33	%	0.27	%

Interest expense related to the Utility Money Pool is included in Interest Expense on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries incurred interest expense for amounts borrowed from the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	772	$	198	$	611
I&M		-		20		17
OPCo		555		12		16
PSO		11		85		102
SWEPCo		977		174		11

Interest income related to the Utility Money Pool is included in Interest Income on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries earned interest income for amounts advanced to the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	123	$	313	$	9
I&M		963		226		219
OPCo		1,038		820		708
PSO		435		250		19
SWEPCo		320		32		438

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 4.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides a commitment of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiaryas of December 31, 2012 and 2011 was as follows:

	December 31,
Company	2012		2011
	(in thousands)
APCo	$	153,719	$	121,605
I&M		123,447		121,597
OPCo		300,675		346,695
PSO		85,530		123,172
SWEPCo		132,449		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	6,883	$	9,612	$	9,194
I&M		6,121		6,168		6,770
OPCo		20,312		18,851		20,630
PSO		7,054		6,363		5,406
SWEPCo		6,140		5,672		5,688

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,353,920	$	1,248,253	$	1,418,487
I&M		1,344,260		1,323,068		1,283,955
OPCo		2,952,723		3,461,758		3,495,609
PSO		1,157,174		1,299,190		1,196,586
SWEPCo		1,481,925		1,495,397		1,402,525

Ohio Power Co [Member]

Financing Activities

12. FINANCING ACTIVITIES

Preferred Stock

In December 2011, the Registrant Subsidiaries redeemed all of their outstanding preferred stock, resulting in a loss, which is included in Preferred Stock Dividend Requirements Including Capital Stock Expense on the statements of income.The par value of preferred stock redeemed and the loss recorded by the Registrant Subsidiaries was as follows:

	Par Value of		Loss on
Company	Stock Redeemed		Redemption
		(in thousands)
APCo	$	17,736	$	1,013
I&M		8,072		314
OPCo		16,613		488
PSO		4,882		254
SWEPCo		4,694		369

			Number of Shares Redeemed
			Years Ended December 31,
Company	Series		2011	2010
APCo	4.50	%	177,465	53
I&M	4.12	%	11,055	-
I&M	4.125	%	55,257	44
I&M	4.56	%	14,412	-
OPCo	4.08	%	14,495	100
OPCo	4.20	%	22,824	-
OPCo	4.40	%	31,482	-
OPCo	4.50	%	97,357	6
PSO	4.00	%	44,508	-
PSO	4.24	%	4,310	3,759
SWEPCo	4.28	%	7,386	-
SWEPCo	4.65	%	1,907	-
SWEPCo	5.00	%	37,665	8

Long-term Debt

There are certain limitations on establishing liens against the Registrant Subsidiaries' assets under their respective indentures. None of the long-term debt obligations of the Registrant Subsidiaries have been guaranteed or secured by AEP or any of its affiliates.

The following details long-term debt outstanding as of December 31, 2012 and 2011:

		Weighted
		Average
		Interest
		Rate as of			Outstanding as of
		December 31,	Interest Rate Ranges as of December 31,		December 31,
Company	Maturity	2012	2012	2011	2012		2011
Senior Unsecured Notes					(in thousands)
APCo	2012-2038	5.43%	0.685%-7.95%	3.40%-7.95%	$	3,167,559	$	3,141,843
I&M	2012-2037	6.24%	5.05%-7.00%	5.05%-7.00%		1,171,080		1,270,599
OPCo	2012-2035	5.84%	4.85%-6.60%	0.955%-6.60%		3,142,615		3,291,823
PSO	2016-2037	5.52%	4.40%-6.625%	4.40%-6.625%		896,364		896,023
SWEPCo	2015-2040	5.56%	3.55%-6.45%	4.90%-6.45%		1,822,653		1,548,437
Pollution Control Bonds (a)
APCo	2012-2038 (b)	2.01%	0.12%-5.375%	0.07%-6.05%		532,500		582,000
I&M	2012-2025 (b)	4.03%	0.11%-6.25%	0.06%-6.25%		266,531		266,494
OPCo	2012-2038 (b)	3.72%	0.13%-5.80%	0.07%-5.80%		517,825		562,325
PSO	2014-2020	5.03%	4.45%-5.25%	4.45%-5.25%		46,360		46,360
SWEPCo	2015-2018	4.28%	3.25%-4.95%	3.25%-4.95%		135,200		135,200
Notes Payable - Affiliated
OPCo	2015	5.25%	5.25%	5.25%		200,000		200,000
Notes Payable - Nonaffiliated
I&M	2013-2016	2.42%	1.913%-5.44%	2.029%-5.44%		224,376		234,590
SWEPCo	2012-2032	5.09%	4.58%-6.37%	6.37%-7.03%		88,375		45,000
Spent Nuclear Fuel Obligation (c)
I&M						265,249		265,065
Other Long-term Debt
APCo	2026	13.718%	13.718%	13.718%		2,383		2,408
I&M (d)	2015-2025	2.39%	1.72%-6.00%	6.00%		130,430		20,927
PSO	2027	3.00%	3.00%	3.00%		7,147		4,981

(a)For certain series of pollution control bonds, interest rates are subject to periodic adjustment. Certain series may be purchased on demand at periodic interest adjustment dates. Letters of credit from banks, standby bond purchaseagreements and insurance policies support certain series.

(b)Certain pollution control bonds are subject to redemption earlier than the maturity date. Consequently, these bondshave been classified for maturity purposes as Long-term Debt Due Within One Year –Nonaffiliated on the balance sheets.

(c)Spent nuclear fuel obligation consists of a liability along with accrued interest for disposal of spent nuclear fuel (see “SNF Disposal” section of Note 4).

(d)In 2012, I&M issued a $110 million three-year credit facility to be used for general corporate purposes.

Long-term debt outstanding as ofDecember 31, 2012 is payable as follows:

		APCo		I&M		OPCo		PSO		SWEPCo
		(in thousands)
2013		$	574,679	$	203,953	$	856,000	$	764	$	3,250
2014			100,033		353,946		403,580		34,115		3,250
2015			500,038		253,730		286,000		427		306,750
2016			65,393		4,158		350,000		150,440		3,250
2017			250,049		1,479		-		454		253,250
After 2017			2,219,692		1,244,789		1,972,245		767,307		1,478,825
Principal Amount			3,709,884		2,062,055		3,867,825		953,507		2,048,575
Unamortized Discount, Net			(7,442)		(4,389)		(7,385)		(3,636)		(2,347)
Total Long-term Debt
	Outstanding	$	3,702,442	$	2,057,666	$	3,860,440	$	949,871	$	2,046,228

In February 2013, OPCo retired $250 million of 5.5% Senior Unsecured Notes due in 2013.

As of December 31, 2012, trustees held, on behalf of OPCo, $463 million of its reacquired Pollution Control Bonds.

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean thebook value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. As ofDecember 31, 2012, $32 million of APCo's retained earnings and none of I&M's or OPCo'sretained earningshave restrictions related to the payment of dividends to Parent.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of December 31, 2012 and 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the years ended December 31, 2012and 2011 are described in the following tables:

Year Ended December 31, 2012:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,504	$	161,363	$	22,821	$	(150,941)	$	600,000
I&M		-		362,733		-		202,439		116,977		500,000
OPCo		126,975		290,356		47,820		105,154		116,422		600,000
PSO		-		177,778		-		92,697		10,558		300,000
SWEPCo		227,087		173,778		147,338		78,994		153,829		350,000

Year Ended December 31, 2011:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2011		Limit
	(in thousands)
APCo	$	217,876	$	393,811	$	117,378	$	96,186	$	(176,240)	$	600,000
I&M		57,352		219,386		23,793		56,999		95,714		500,000
OPCo		46,761		452,187		31,365		225,728		219,458		600,000
PSO		96,034		255,611		41,971		88,805		39,876		300,000
SWEPCo		136,752		105,184		47,232		38,798		(132,473)		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Years Ended December 31,
	2012		2011		2010
Maximum Interest Rate	0.56	%	0.56	%	0.55	%
Minimum Interest Rate	0.39	%	0.06	%	0.09	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the years ended December 31, 2012, 2011 and 2010 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate						Average Interest Rate
	for Funds Borrowed						for Funds Loaned
	from Utility Money Pool for						to Utility Money Pool for
	Years Ended December 31,						Years Ended December 31,
Company	2012		2011		2010		2012		2011		2010
APCo	0.47	%	0.42	%	0.26	%	0.47	%	0.32	%	-	%
I&M	-	%	0.39	%	0.43	%	0.46	%	0.38	%	0.24	%
OPCo	0.47	%	0.45	%	-	%	0.47	%	0.35	%	0.22	%
PSO	-	%	0.41	%	0.31	%	0.46	%	0.32	%	0.17	%
SWEPCo	0.53	%	0.40	%	0.19	%	0.45	%	0.33	%	0.27	%

Interest expense related to the Utility Money Pool is included in Interest Expense on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries incurred interest expense for amounts borrowed from the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	772	$	198	$	611
I&M		-		20		17
OPCo		555		12		16
PSO		11		85		102
SWEPCo		977		174		11

Interest income related to the Utility Money Pool is included in Interest Income on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries earned interest income for amounts advanced to the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	123	$	313	$	9
I&M		963		226		219
OPCo		1,038		820		708
PSO		435		250		19
SWEPCo		320		32		438

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 4.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides a commitment of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiaryas of December 31, 2012 and 2011 was as follows:

	December 31,
Company	2012		2011
	(in thousands)
APCo	$	153,719	$	121,605
I&M		123,447		121,597
OPCo		300,675		346,695
PSO		85,530		123,172
SWEPCo		132,449		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	6,883	$	9,612	$	9,194
I&M		6,121		6,168		6,770
OPCo		20,312		18,851		20,630
PSO		7,054		6,363		5,406
SWEPCo		6,140		5,672		5,688

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,353,920	$	1,248,253	$	1,418,487
I&M		1,344,260		1,323,068		1,283,955
OPCo		2,952,723		3,461,758		3,495,609
PSO		1,157,174		1,299,190		1,196,586
SWEPCo		1,481,925		1,495,397		1,402,525

Public Service Co of Oklahoma [Member]

Financing Activities

12. FINANCING ACTIVITIES

Preferred Stock

In December 2011, the Registrant Subsidiaries redeemed all of their outstanding preferred stock, resulting in a loss, which is included in Preferred Stock Dividend Requirements Including Capital Stock Expense on the statements of income.The par value of preferred stock redeemed and the loss recorded by the Registrant Subsidiaries was as follows:

	Par Value of		Loss on
Company	Stock Redeemed		Redemption
		(in thousands)
APCo	$	17,736	$	1,013
I&M		8,072		314
OPCo		16,613		488
PSO		4,882		254
SWEPCo		4,694		369

			Number of Shares Redeemed
			Years Ended December 31,
Company	Series		2011	2010
APCo	4.50	%	177,465	53
I&M	4.12	%	11,055	-
I&M	4.125	%	55,257	44
I&M	4.56	%	14,412	-
OPCo	4.08	%	14,495	100
OPCo	4.20	%	22,824	-
OPCo	4.40	%	31,482	-
OPCo	4.50	%	97,357	6
PSO	4.00	%	44,508	-
PSO	4.24	%	4,310	3,759
SWEPCo	4.28	%	7,386	-
SWEPCo	4.65	%	1,907	-
SWEPCo	5.00	%	37,665	8

Long-term Debt

There are certain limitations on establishing liens against the Registrant Subsidiaries' assets under their respective indentures. None of the long-term debt obligations of the Registrant Subsidiaries have been guaranteed or secured by AEP or any of its affiliates.

The following details long-term debt outstanding as of December 31, 2012 and 2011:

		Weighted
		Average
		Interest
		Rate as of			Outstanding as of
		December 31,	Interest Rate Ranges as of December 31,		December 31,
Company	Maturity	2012	2012	2011	2012		2011
Senior Unsecured Notes					(in thousands)
APCo	2012-2038	5.43%	0.685%-7.95%	3.40%-7.95%	$	3,167,559	$	3,141,843
I&M	2012-2037	6.24%	5.05%-7.00%	5.05%-7.00%		1,171,080		1,270,599
OPCo	2012-2035	5.84%	4.85%-6.60%	0.955%-6.60%		3,142,615		3,291,823
PSO	2016-2037	5.52%	4.40%-6.625%	4.40%-6.625%		896,364		896,023
SWEPCo	2015-2040	5.56%	3.55%-6.45%	4.90%-6.45%		1,822,653		1,548,437
Pollution Control Bonds (a)
APCo	2012-2038 (b)	2.01%	0.12%-5.375%	0.07%-6.05%		532,500		582,000
I&M	2012-2025 (b)	4.03%	0.11%-6.25%	0.06%-6.25%		266,531		266,494
OPCo	2012-2038 (b)	3.72%	0.13%-5.80%	0.07%-5.80%		517,825		562,325
PSO	2014-2020	5.03%	4.45%-5.25%	4.45%-5.25%		46,360		46,360
SWEPCo	2015-2018	4.28%	3.25%-4.95%	3.25%-4.95%		135,200		135,200
Notes Payable - Affiliated
OPCo	2015	5.25%	5.25%	5.25%		200,000		200,000
Notes Payable - Nonaffiliated
I&M	2013-2016	2.42%	1.913%-5.44%	2.029%-5.44%		224,376		234,590
SWEPCo	2012-2032	5.09%	4.58%-6.37%	6.37%-7.03%		88,375		45,000
Spent Nuclear Fuel Obligation (c)
I&M						265,249		265,065
Other Long-term Debt
APCo	2026	13.718%	13.718%	13.718%		2,383		2,408
I&M (d)	2015-2025	2.39%	1.72%-6.00%	6.00%		130,430		20,927
PSO	2027	3.00%	3.00%	3.00%		7,147		4,981

(a)For certain series of pollution control bonds, interest rates are subject to periodic adjustment. Certain series may be purchased on demand at periodic interest adjustment dates. Letters of credit from banks, standby bond purchaseagreements and insurance policies support certain series.

(b)Certain pollution control bonds are subject to redemption earlier than the maturity date. Consequently, these bondshave been classified for maturity purposes as Long-term Debt Due Within One Year –Nonaffiliated on the balance sheets.

(c)Spent nuclear fuel obligation consists of a liability along with accrued interest for disposal of spent nuclear fuel (see “SNF Disposal” section of Note 4).

(d)In 2012, I&M issued a $110 million three-year credit facility to be used for general corporate purposes.

Long-term debt outstanding as ofDecember 31, 2012 is payable as follows:

		APCo		I&M		OPCo		PSO		SWEPCo
		(in thousands)
2013		$	574,679	$	203,953	$	856,000	$	764	$	3,250
2014			100,033		353,946		403,580		34,115		3,250
2015			500,038		253,730		286,000		427		306,750
2016			65,393		4,158		350,000		150,440		3,250
2017			250,049		1,479		-		454		253,250
After 2017			2,219,692		1,244,789		1,972,245		767,307		1,478,825
Principal Amount			3,709,884		2,062,055		3,867,825		953,507		2,048,575
Unamortized Discount, Net			(7,442)		(4,389)		(7,385)		(3,636)		(2,347)
Total Long-term Debt
	Outstanding	$	3,702,442	$	2,057,666	$	3,860,440	$	949,871	$	2,046,228

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean thebook value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of December 31, 2012 and 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the years ended December 31, 2012and 2011 are described in the following tables:

Year Ended December 31, 2012:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,504	$	161,363	$	22,821	$	(150,941)	$	600,000
I&M		-		362,733		-		202,439		116,977		500,000
OPCo		126,975		290,356		47,820		105,154		116,422		600,000
PSO		-		177,778		-		92,697		10,558		300,000
SWEPCo		227,087		173,778		147,338		78,994		153,829		350,000

Year Ended December 31, 2011:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2011		Limit
	(in thousands)
APCo	$	217,876	$	393,811	$	117,378	$	96,186	$	(176,240)	$	600,000
I&M		57,352		219,386		23,793		56,999		95,714		500,000
OPCo		46,761		452,187		31,365		225,728		219,458		600,000
PSO		96,034		255,611		41,971		88,805		39,876		300,000
SWEPCo		136,752		105,184		47,232		38,798		(132,473)		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Years Ended December 31,
	2012		2011		2010
Maximum Interest Rate	0.56	%	0.56	%	0.55	%
Minimum Interest Rate	0.39	%	0.06	%	0.09	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the years ended December 31, 2012, 2011 and 2010 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate						Average Interest Rate
	for Funds Borrowed						for Funds Loaned
	from Utility Money Pool for						to Utility Money Pool for
	Years Ended December 31,						Years Ended December 31,
Company	2012		2011		2010		2012		2011		2010
APCo	0.47	%	0.42	%	0.26	%	0.47	%	0.32	%	-	%
I&M	-	%	0.39	%	0.43	%	0.46	%	0.38	%	0.24	%
OPCo	0.47	%	0.45	%	-	%	0.47	%	0.35	%	0.22	%
PSO	-	%	0.41	%	0.31	%	0.46	%	0.32	%	0.17	%
SWEPCo	0.53	%	0.40	%	0.19	%	0.45	%	0.33	%	0.27	%

Interest expense related to the Utility Money Pool is included in Interest Expense on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries incurred interest expense for amounts borrowed from the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	772	$	198	$	611
I&M		-		20		17
OPCo		555		12		16
PSO		11		85		102
SWEPCo		977		174		11

Interest income related to the Utility Money Pool is included in Interest Income on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries earned interest income for amounts advanced to the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	123	$	313	$	9
I&M		963		226		219
OPCo		1,038		820		708
PSO		435		250		19
SWEPCo		320		32		438

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides a commitment of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiaryas of December 31, 2012 and 2011 was as follows:

	December 31,
Company	2012		2011
	(in thousands)
APCo	$	153,719	$	121,605
I&M		123,447		121,597
OPCo		300,675		346,695
PSO		85,530		123,172
SWEPCo		132,449		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	6,883	$	9,612	$	9,194
I&M		6,121		6,168		6,770
OPCo		20,312		18,851		20,630
PSO		7,054		6,363		5,406
SWEPCo		6,140		5,672		5,688

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,353,920	$	1,248,253	$	1,418,487
I&M		1,344,260		1,323,068		1,283,955
OPCo		2,952,723		3,461,758		3,495,609
PSO		1,157,174		1,299,190		1,196,586
SWEPCo		1,481,925		1,495,397		1,402,525

Southwestern Electric Power Co [Member]

Financing Activities

12. FINANCING ACTIVITIES

Preferred Stock

In December 2011, the Registrant Subsidiaries redeemed all of their outstanding preferred stock, resulting in a loss, which is included in Preferred Stock Dividend Requirements Including Capital Stock Expense on the statements of income.The par value of preferred stock redeemed and the loss recorded by the Registrant Subsidiaries was as follows:

	Par Value of		Loss on
Company	Stock Redeemed		Redemption
		(in thousands)
APCo	$	17,736	$	1,013
I&M		8,072		314
OPCo		16,613		488
PSO		4,882		254
SWEPCo		4,694		369

			Number of Shares Redeemed
			Years Ended December 31,
Company	Series		2011	2010
APCo	4.50	%	177,465	53
I&M	4.12	%	11,055	-
I&M	4.125	%	55,257	44
I&M	4.56	%	14,412	-
OPCo	4.08	%	14,495	100
OPCo	4.20	%	22,824	-
OPCo	4.40	%	31,482	-
OPCo	4.50	%	97,357	6
PSO	4.00	%	44,508	-
PSO	4.24	%	4,310	3,759
SWEPCo	4.28	%	7,386	-
SWEPCo	4.65	%	1,907	-
SWEPCo	5.00	%	37,665	8

Long-term Debt

There are certain limitations on establishing liens against the Registrant Subsidiaries' assets under their respective indentures. None of the long-term debt obligations of the Registrant Subsidiaries have been guaranteed or secured by AEP or any of its affiliates.

The following details long-term debt outstanding as of December 31, 2012 and 2011:

		Weighted
		Average
		Interest
		Rate as of			Outstanding as of
		December 31,	Interest Rate Ranges as of December 31,		December 31,
Company	Maturity	2012	2012	2011	2012		2011
Senior Unsecured Notes					(in thousands)
APCo	2012-2038	5.43%	0.685%-7.95%	3.40%-7.95%	$	3,167,559	$	3,141,843
I&M	2012-2037	6.24%	5.05%-7.00%	5.05%-7.00%		1,171,080		1,270,599
OPCo	2012-2035	5.84%	4.85%-6.60%	0.955%-6.60%		3,142,615		3,291,823
PSO	2016-2037	5.52%	4.40%-6.625%	4.40%-6.625%		896,364		896,023
SWEPCo	2015-2040	5.56%	3.55%-6.45%	4.90%-6.45%		1,822,653		1,548,437
Pollution Control Bonds (a)
APCo	2012-2038 (b)	2.01%	0.12%-5.375%	0.07%-6.05%		532,500		582,000
I&M	2012-2025 (b)	4.03%	0.11%-6.25%	0.06%-6.25%		266,531		266,494
OPCo	2012-2038 (b)	3.72%	0.13%-5.80%	0.07%-5.80%		517,825		562,325
PSO	2014-2020	5.03%	4.45%-5.25%	4.45%-5.25%		46,360		46,360
SWEPCo	2015-2018	4.28%	3.25%-4.95%	3.25%-4.95%		135,200		135,200
Notes Payable - Affiliated
OPCo	2015	5.25%	5.25%	5.25%		200,000		200,000
Notes Payable - Nonaffiliated
I&M	2013-2016	2.42%	1.913%-5.44%	2.029%-5.44%		224,376		234,590
SWEPCo	2012-2032	5.09%	4.58%-6.37%	6.37%-7.03%		88,375		45,000
Spent Nuclear Fuel Obligation (c)
I&M						265,249		265,065
Other Long-term Debt
APCo	2026	13.718%	13.718%	13.718%		2,383		2,408
I&M (d)	2015-2025	2.39%	1.72%-6.00%	6.00%		130,430		20,927
PSO	2027	3.00%	3.00%	3.00%		7,147		4,981

(a)For certain series of pollution control bonds, interest rates are subject to periodic adjustment. Certain series may be purchased on demand at periodic interest adjustment dates. Letters of credit from banks, standby bond purchaseagreements and insurance policies support certain series.

(b)Certain pollution control bonds are subject to redemption earlier than the maturity date. Consequently, these bondshave been classified for maturity purposes as Long-term Debt Due Within One Year –Nonaffiliated on the balance sheets.

(c)Spent nuclear fuel obligation consists of a liability along with accrued interest for disposal of spent nuclear fuel (see “SNF Disposal” section of Note 4).

(d)In 2012, I&M issued a $110 million three-year credit facility to be used for general corporate purposes.

Long-term debt outstanding as ofDecember 31, 2012 is payable as follows:

		APCo		I&M		OPCo		PSO		SWEPCo
		(in thousands)
2013		$	574,679	$	203,953	$	856,000	$	764	$	3,250
2014			100,033		353,946		403,580		34,115		3,250
2015			500,038		253,730		286,000		427		306,750
2016			65,393		4,158		350,000		150,440		3,250
2017			250,049		1,479		-		454		253,250
After 2017			2,219,692		1,244,789		1,972,245		767,307		1,478,825
Principal Amount			3,709,884		2,062,055		3,867,825		953,507		2,048,575
Unamortized Discount, Net			(7,442)		(4,389)		(7,385)		(3,636)		(2,347)
Total Long-term Debt
	Outstanding	$	3,702,442	$	2,057,666	$	3,860,440	$	949,871	$	2,046,228

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean thebook value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of December 31, 2012 and 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the years ended December 31, 2012and 2011 are described in the following tables:

Year Ended December 31, 2012:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,504	$	161,363	$	22,821	$	(150,941)	$	600,000
I&M		-		362,733		-		202,439		116,977		500,000
OPCo		126,975		290,356		47,820		105,154		116,422		600,000
PSO		-		177,778		-		92,697		10,558		300,000
SWEPCo		227,087		173,778		147,338		78,994		153,829		350,000

Year Ended December 31, 2011:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		December 31, 2011		Limit
	(in thousands)
APCo	$	217,876	$	393,811	$	117,378	$	96,186	$	(176,240)	$	600,000
I&M		57,352		219,386		23,793		56,999		95,714		500,000
OPCo		46,761		452,187		31,365		225,728		219,458		600,000
PSO		96,034		255,611		41,971		88,805		39,876		300,000
SWEPCo		136,752		105,184		47,232		38,798		(132,473)		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Years Ended December 31,
	2012		2011		2010
Maximum Interest Rate	0.56	%	0.56	%	0.55	%
Minimum Interest Rate	0.39	%	0.06	%	0.09	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the years ended December 31, 2012, 2011 and 2010 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate						Average Interest Rate
	for Funds Borrowed						for Funds Loaned
	from Utility Money Pool for						to Utility Money Pool for
	Years Ended December 31,						Years Ended December 31,
Company	2012		2011		2010		2012		2011		2010
APCo	0.47	%	0.42	%	0.26	%	0.47	%	0.32	%	-	%
I&M	-	%	0.39	%	0.43	%	0.46	%	0.38	%	0.24	%
OPCo	0.47	%	0.45	%	-	%	0.47	%	0.35	%	0.22	%
PSO	-	%	0.41	%	0.31	%	0.46	%	0.32	%	0.17	%
SWEPCo	0.53	%	0.40	%	0.19	%	0.45	%	0.33	%	0.27	%

Interest expense related to the Utility Money Pool is included in Interest Expense on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries incurred interest expense for amounts borrowed from the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	772	$	198	$	611
I&M		-		20		17
OPCo		555		12		16
PSO		11		85		102
SWEPCo		977		174		11

Interest income related to the Utility Money Pool is included in Interest Income on each of the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries earned interest income for amounts advanced to the Utility Money Pool as follows:

	Years Ended December 31,
Company	2012		2011		2010
			(in thousands)
APCo	$	123	$	313	$	9
I&M		963		226		219
OPCo		1,038		820		708
PSO		435		250		19
SWEPCo		320		32		438

Short-term Debt
The Registrant Subsidiaries’ outstanding short-term debt was as follows:
			December 31,
			2012				2011
			Outstanding		Interest		Outstanding		Interest
Company		Type of Debt	Amount		Rate (a)		Amount		Rate (a)
			(in thousands)				(in thousands)
SWEPCo		Line of Credit – Sabine	$	2,603	1.82	%	$	17,016	1.79	%
(a)	Weighted average rate.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 4.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides a commitment of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiaryas of December 31, 2012 and 2011 was as follows:

	December 31,
Company	2012		2011
	(in thousands)
APCo	$	153,719	$	121,605
I&M		123,447		121,597
OPCo		300,675		346,695
PSO		85,530		123,172
SWEPCo		132,449		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	6,883	$	9,612	$	9,194
I&M		6,121		6,168		6,770
OPCo		20,312		18,851		20,630
PSO		7,054		6,363		5,406
SWEPCo		6,140		5,672		5,688

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,353,920	$	1,248,253	$	1,418,487
I&M		1,344,260		1,323,068		1,283,955
OPCo		2,952,723		3,461,758		3,495,609
PSO		1,157,174		1,299,190		1,196,586
SWEPCo		1,481,925		1,495,397		1,402,525