Property, Plant and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant And Equipment

16. PROPERTY, PLANT AND EQUIPMENT

Depreciation, Depletion and Amortization

We provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class. The following tables provide the annual property information:

2012	Regulated												Nonregulated
					Annual												Annual
Functional	Property,				Composite								Property,				Composite
Class of	Plant and		Accumulated		Depreciation					Depreciable			Plant and		Accumulated		Depreciation					Depreciable
Property	Equipment		Depreciation		Rate Ranges					Life Ranges			Equipment		Depreciation		Rate Ranges					Life Ranges
	(in millions)									(in years)			(in millions)									(in years)
Generation	$	16,973	$	6,962		1.7	-	3.8	%	31	-	132	$	9,306	$	3,526		2.6	-	3.3	%	35	-	66
Transmission		9,846		2,720		1.2	-	2.8	%	25	-	87		-		-		NA				NA
Distribution		15,565		3,837		2.4	-	3.9	%	11	-	75		-		-		NA				NA
CWIP		1,600		(27)		NM				NM				219		1		NM				NM
Other		2,644		1,238		1.8	-	9.6	%	5	-	75		1,301		434		NM				NM
Total	$	46,628	$	14,730									$	10,826	$	3,961

2011	Regulated												Nonregulated
						Annual											Annual
Functional	Property,					Composite							Property,				Composite
Class of	Plant and			Accumulated		Depreciation				Depreciable			Plant and		Accumulated		Depreciation					Depreciable
Property	Equipment			Depreciation		Rate Ranges				Life Ranges			Equipment		Depreciation		Rate Ranges					Life Ranges
	(in millions)									(in years)			(in millions)									(in years)
Generation	$	14,804		$	6,692	1.6	-	3.8	%	9	-	132	$	10,134	$	3,904		2.6	-	3.5	%	20	-	66
Transmission		9,048			2,600	1.3	-	2.7	%	25	-	87		-		-		NA				NA
Distribution		14,783			3,828	2.4	-	4.0	%	11	-	75		-		-		NA				NA
CWIP		2,913	(a)		36	NM				NM				208		1		NM				NM
Other		2,587			1,246	1.7	-	9.3	%	5	-	55		1,193		392		NM				NM
Total	$	44,135		$	14,402								$	11,535	$	4,297

2010		Regulated								Nonregulated
		Annual								Annual
		Composite								Composite
		Depreciation					Depreciable			Depreciation					Depreciable
Functional Class of Property		Rate Ranges					Life Ranges			Rate Ranges					Life Ranges
							(in years)								(in years)
Generation			1.6	-	3.8	%	9	-	132		2.2	-	5.1	%	20	-	70
Transmission			1.4	-	3.0	%	25	-	87		NA				NA
Distribution			2.4	-	3.9	%	11	-	75		NA				NA
CWIP			NM				NM				NM				NM
Other			3.0	-	12.5	%	5	-	55		NM				NM
(a)	Includes CWIP related to SWEPCo's Arkansas jurisdictional share of the Turk Plant.
NA	Not applicable.
NM	Not meaningful.

We provide for depreciation, depletion and amortization of coal-mining assets over each asset's estimated useful life or the estimated life of each mine, whichever is shorter, using the straight-line method for mining structures and equipment. We use either the straight-line method or the units-of-production method to amortize mine development costs and deplete coal rights based on estimated recoverable tonnages. We include these costs in the cost of coal charged to fuel expense.

For rate-regulated operations, the composite depreciation rate generally includes a component for non-asset retirement obligation (non-ARO) removal costs, which is credited to Accumulated Depreciation and Amortization. Actual removal costs incurred are charged to Accumulated Depreciation and Amortization. Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability. For nonregulated operations, non-ARO removal costs are expensed as incurred.

Asset Retirement Obligations (ARO)

We record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for our legal obligations for asbestos removal and for the retirement of certain ash disposal facilities, closure and monitoring of underground carbon storage facilities at Mountaineer Plant, wind farms and certain coal mining facilities, as well as for nuclear decommissioning of our Cook Plant. We have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which we have assets. Generally, such easements are perpetual and require only the retirement and removal of our assets upon the cessation of the property's use. We do not estimate the retirement for such easements because we plan to use our facilities indefinitely. The retirement obligation would only be recognized if and when we abandon or cease the use of specific easements, which is not expected.

The following is a reconciliation of the 2012 and 2011 aggregate carrying amounts of ARO:

	Carrying
	Amount
	of ARO
	(in millions)
ARO as of December 31, 2010	$	1,398
Accretion Expense		82
Liabilities Incurred		7
Liabilities Settled		(26)
Revisions in Cash Flow Estimates		13
ARO as of December 31, 2011 (a)		1,474
Accretion Expense		85
Liabilities Incurred		17
Liabilities Settled		(24)
Revisions in Cash Flow Estimates		144
ARO as of December 31, 2012	$	1,696

(a)The current portion of our ARO, totaling $2 million, is included in Other Current Liabilities on our 2011 balance sheet.

As of December 31, 2012 and 2011, our ARO liability was $1.7 billion and $1.5 billion, respectively, and included $1.2 billion and $979 million, respectively, for nuclear decommissioning of the Cook Plant. As of December 31, 2012 and 2011, the fair value of assets that are legally restricted for purposes of settling the nuclear decommissioning liabilities totaled $1.4 billion and $1.3 billion, respectively, and are recorded in Spent Nuclear Fuel and Decommissioning Trusts on thebalance sheets.

Allowance for Funds Used During Construction (AFUDC) and Interest Capitalization

Our amounts of allowance for borrowed, including interest capitalized, and equity funds used during construction is summarized in the following table:

	Years Ended December 31,
	2012		2011		2010
	(in millions)
Allowance for Equity Funds Used During Construction	$	93	$	98	$	77
Allowance for Borrowed Funds Used During Construction		69		63		53

Jointly-owned Electric Facilities

We have electric facilities that are jointly-owned with nonaffiliated companies. Using our own financing, we are obligated to pay a share of the costs of these jointly-owned facilities in the same proportion as our ownership interest. Our proportionate share of the operating costs associated with such facilities is included on thestatements of income and the investments and accumulated depreciation are reflected on thebalance sheets under Property, Plant and Equipment as follows:

				Company’s Share as of December 31, 2012
						Construction
	Fuel	Percent of		Utility Plant		Work in		Accumulated
	Type	Ownership		in Service		Progress		Depreciation
				(in millions)
W.C. Beckjord Generating Station (Unit No. 6) (a)	Coal	12.5	%	$	-	$	-	$	-
Conesville Generating Station (Unit No. 4) (b)	Coal	43.5	%		310		26		59
J.M. Stuart Generating Station (c)	Coal	26.0	%		542		11		181
Wm. H. Zimmer Generating Station (a)	Coal	25.4	%		807		2		387
Dolet Hills Generating Station (Unit No. 1) (d)	Lignite	40.2	%		263		8		195
Flint Creek Generating Station (Unit No. 1) (e)	Coal	50.0	%		121		14		64
Pirkey Generating Station (Unit No. 1) (e)	Lignite	85.9	%		514		16		371
Oklaunion Generating Station (Unit No. 1) (f)	Coal	70.3	%		403		4		216
Turk Generating Plant (g)	Coal	73.33	%		1,613		(3)		-
Transmission	NA	(h)			69		4		50
Total				$	4,642	$	82	$	1,523

				Company’s Share as of December 31, 2011
						Construction
	Fuel	Percent of		Utility Plant		Work in		Accumulated
	Type	Ownership		in Service		Progress		Depreciation
				(in millions)
W.C. Beckjord Generating Station (Unit No. 6) (a)	Coal	12.5	%	$	19	$	-	$	8
Conesville Generating Station (Unit No. 4) (b)	Coal	43.5	%		310		12		54
J.M. Stuart Generating Station (c)	Coal	26.0	%		529		13		172
Wm. H. Zimmer Generating Station (a)	Coal	25.4	%		771		20		377
Dolet Hills Generating Station (Unit No. 1) (d)	Lignite	40.2	%		264		-		193
Flint Creek Generating Station (Unit No. 1) (e)	Coal	50.0	%		118		6		63
Pirkey Generating Station (Unit No. 1) (e)	Lignite	85.9	%		513		1		362
Oklaunion Generating Station (Unit No. 1) (f)	Coal	70.3	%		401		2		208
Turk Generating Plant (g)	Coal	73.33	%		-		1,326		-
Transmission	NA	(h)			63		6		50
Total				$	2,988	$	1,386	$	1,487

(a)Operated by Duke Energy Corporation, a nonaffiliated company. AEP's portion of this unit was impaired in the fourth quarter of 2012. See "Impairments" section of Note 6.

(b)Operated by OPCo.

(c)Operated by The Dayton Power & Light Company, a nonaffiliated company.

(d)Operated by CLECO, a nonaffiliated company.

(e)Operated by SWEPCo.

(f)Operated by PSO and also jointly-owned (54.7%) by TNC.

(g)Turk Generating Plant was placed in service in December 2012. SWEPCo jointly owns the plant with Arkansas Electric Cooperative Corporation (11.67%), East Texas Electric Cooperative(8.33%)and Oklahoma Municipal Power Authority (6.67%). Through December 2012, construction costs totaling $457million have been billed to the other owners.

(h)Varying percentages of ownership.

NANotapplicable.

Appalachian Power Co [Member]

Property, Plant And Equipment

15. PROPERTY, PLANT AND EQUIPMENT

Depreciation, Depletion and Amortization

The Registrant Subsidiaries provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class. The following tables provide annual property information for the Registrant Subsidiaries:

APCo
2012	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)						(in years)			(in thousands)					(in years)
Generation	$	5,632,665	$	1,928,562	3.0	%	40	-	121	$	-	$	-	NA	NA
Transmission		2,042,144		468,633	1.6	%	25	-	87		-		-	NA	NA
Distribution		2,991,898		641,504	3.4	%	13	-	57		-		-	NA	NA
CWIP		266,247		(19,379)	NM		NM				-		-	NA	NA
Other		340,027		164,932	6.8	%	24	-	55		33,300		12,387	NM	NM
Total	$	11,272,981	$	3,184,252						$	33,300	$	12,387
2011	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)						(in years)			(in thousands)					(in years)
Generation	$	5,194,967	$	1,783,154	2.6	%	40	-	121	$	-	$	-	NA	NA
Transmission		1,943,969		457,235	1.6	%	25	-	87		-		-	NA	NA
Distribution		2,845,405		595,122	3.2	%	11	-	52		-		-	NA	NA
CWIP		565,841		(9,918)	NM		NM				-		-	NA	NA
Other		323,630		155,688	6.6	%	24	-	55		33,696		12,735	NM	NM
Total	$	10,873,812	$	2,981,281						$	33,696	$	12,735

2010		Regulated					Nonregulated
		Annual Composite		Depreciable			Annual Composite	Depreciable
Functional Class of Property		Depreciation Rate		Life Ranges			Depreciation Rate	Life Ranges
				(in years)				(in years)
Generation		2.4	%	40	-	121	NA	NA
Transmission		1.6	%	25	-	87	NA	NA
Distribution		3.2	%	11	-	52	NA	NA
CWIP	NM			NM			NA	NA
Other		7.8	%	24	-	55	NM	NM
NA Not applicable.
NM Not meaningful.

For rate-regulated operations, the composite depreciation rate generally includes a component for nonasset retirement obligation (non-ARO) removal costs, which is credited to Accumulated Depreciation and Amortization. Actual removal costs incurred are charged to Accumulated Depreciation and Amortization. Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability. For nonregulated operations, non-ARO removal costs are expensed as incurred.

Asset Retirement Obligations (ARO)

The Registrant Subsidiaries record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for the retirement of certain ash disposal facilities, closure and monitoring of underground carbon storage facilities at Mountaineer Plant and coal mining facilities as well as asbestos removal. I&M records ARO for the decommissioning of the Cook Plant. The Registrant Subsidiaries have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which assets are owned. Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property's use. The retirement obligation is not estimable for such easements since the Registrant Subsidiaries plan to use their facilities indefinitely. The retirement obligation would only be recognized if and when the Registrant Subsidiaries abandon or cease the use of specific easements, which is not expected.

The following is a reconciliation of the 2012 and 2011 aggregate carrying amounts of ARO by Registrant Subsidiary:

	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2011		Expense		Incurred		Settled		Estimates		2012
	(in thousands)
APCo (a)(d)	$	112,767	$	7,264	$	-	$	(8,921)	$	4,058	$	115,168
I&M (a)(b)(d)		1,013,122		53,848		-		(806)		126,149		1,192,313
OPCo (a)(d)		241,828		15,113		-		(8,294)		21,293		269,940
PSO (a)(d)		19,623		1,572		84		(949)		1,669		21,999
SWEPCo (a)(c)(d)(e)		67,183		5,511		17,380		(3,831)		(8,226)		78,017
	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2010		Expense		Incurred		Settled		Estimates		2011
	(in thousands)
APCo (a)(d)	$	141,924	$	9,534	$	3	$	(3,600)	$	(35,094)	$	112,767
I&M (a)(b)(d)		963,029		51,308		-		(1,370)		155		1,013,122
OPCo (a)(d)		189,271		13,499		165		(4,872)		43,765		241,828
PSO (a)(d)		21,557		1,708		-		(414)		(3,228)		19,623
SWEPCo (a)(c)(d)(e)		59,382		4,114		7,063		(14,947)		11,571		67,183

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.2billion and $979 million as of December 31, 2012 and 2011, respectively.

(c)IncludesARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.

(e)The current portion of SWEPCo's ARO totaling $1.5million as of December 31,2011 is included in Other Current Liabilities on SWEPCo's balance sheets.

Allowance for Funds Used During Construction (AFUDC) and Interest Capitalization

The Registrant Subsidiaries' amounts of allowance for equity funds used during construction are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,684	$	9,212	$	2,967
I&M		9,724		15,395		15,678
OPCo		3,492		5,549		5,949
PSO		2,007		1,317		804
SWEPCo		57,054		48,731		45,646

The Registrant Subsidiaries' amounts of allowance for borrowed funds used during construction, including capitalized interest, are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,347	$	6,257	$	2,251
I&M		4,717		7,838		8,500
OPCo		9,046		2,350		3,786
PSO		1,098		822		572
SWEPCo		48,499		40,904		33,668

Jointly-owned Electric Facilities

The Registrant Subsidiaries have electric facilities that are jointly-owned with affiliated and nonaffiliated companies. Using its own financing, each participating company is obligated to pay its share of the costs of any such jointly-owned facilities in the same proportion as its ownership interest. Each Registrant Subsidiary's proportionate share of the operating costs associated with such facilities is included in its statements of income and the investments and accumulated depreciation are reflected in its balance sheets under Property, Plant and Equipment as follows:

					Company’s Share as of December 31, 2012
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	563,470	$	14,188	$	108,441
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	762,737	$	55,420	$	456,436
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	995,005	$	14,093	$	213,163
W.C. Beckjord Generating Station		Coal	12.5	%		-		-		-
2	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		310,342		26,067		58,677
J.M. Stuart Generating Station (e)		Coal	26.0	%		541,719		11,151		180,687
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		807,431		1,817		387,209
Transmission		NA	(f)			69,148		4,101		50,516
Total					$	2,723,645	$	57,229	$	890,252
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	93,218	$	939	$	57,060
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	262,649	$	7,523	$	195,336
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		121,052		14,272		64,348
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		513,833		16,029		371,015
Turk Generating Plant (j)		Coal	73.33	%		1,612,618		(2,669)		59
Total					$	2,510,152	$	35,155	$	630,758

					Company’s Share as of December 31, 2011
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	554,555	$	16,987	$	93,404
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	759,033	$	19,357	$	443,857
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	988,510	$	15,344	$	188,820
W.C. Beckjord Generating Station		Coal	12.5	%		19,131		108		8,476
	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		309,771		11,633		53,980
J.M. Stuart Generating Station (e)		Coal	26.0	%		528,271		13,292		171,830
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		771,158		19,949		376,585
Transmission		NA	(f)			63,115		5,805		49,487
Total					$	2,679,956	$	66,131	$	849,178
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	92,805	$	446	$	56,539
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	264,487	$	465	$	193,565
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		118,163		6,532		62,988
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		512,557		674		361,667
Turk Generating Plant (j)		Coal	73.33	%		-		1,326,013		-
Total					$	895,207	$	1,333,684	$	618,220

(a)Operated by APCo.

(b)Operated by I&M.

(c)Operated by Duke Energy Corporation, a nonaffiliated company. AEP's portion of this unit was impaired in the fourth quarter of 2012. See "Impairments" section of Note 5.

(d)Operated by OPCo.

(e)Operated by The Dayton Power & Light Company, a nonaffiliated company.

(f)Varying percentages of ownership.

(g)Operated by PSO and also jointly-owned (54.7%) by TNC.

(h)Operated by CLECO, a nonaffiliated company.

(i)Operated by SWEPCo.

(j)Turk Generating Plant was placed in service in December 2012. SWEPCo jointly owns the plant with Arkansas Electric Cooperative Corporation (11.67%), East Texas Electric Cooperative (8.33%) and Oklahoma Municipal Power Authority (6.67%). Through December 2012, construction costs totaling $457million have been billed to the other owners.

NANotapplicable.

Indiana Michigan Power Co [Member]

Property, Plant And Equipment

15. PROPERTY, PLANT AND EQUIPMENT

Depreciation, Depletion and Amortization

The Registrant Subsidiaries provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class. The following tables provide annual property information for the Registrant Subsidiaries:

I&M
2012	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)						(in years)			(in thousands)					(in years)
Generation	$	4,062,733	$	2,130,136	1.7	%	59	-	132	$	-	$	-	NA	NA
Transmission		1,278,236		411,825	1.5	%	46	-	75		-		-	NA	NA
Distribution		1,553,358		373,342	2.5	%	14	-	70		-		-	NA	NA
CWIP		341,063		65,449	NM		NM				-		-	NA	NA
Other		573,836		141,291	9.6	%	14	-	40		151,477		110,092	NM	NM
Total	$	7,809,226	$	3,122,043						$	151,477	$	110,092
2011	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)						(in years)			(in thousands)					(in years)
Generation	$	3,932,472	$	2,078,651	1.6	%	59	-	132	$	-	$	-	NA	NA
Transmission		1,224,786		414,941	1.4	%	46	-	75		-		-	NA	NA
Distribution		1,481,608		374,137	2.4	%	14	-	70		-		-	NA	NA
CWIP		236,096		60,665	NM		NM				-		-	NA	NA
Other		559,698		143,312	7.4	%	NM				149,860		108,214	NM	NM
Total	$	7,434,660	$	3,071,706						$	149,860	$	108,214

2010		Regulated					Nonregulated
		Annual Composite		Depreciable			Annual Composite	Depreciable
Functional Class of Property		Depreciable Rate		Life Ranges			Depreciable Rate	Life Ranges
				(in years)				(in years)
Generation		1.6	%	59	-	132	NA	NA
Transmission		1.4	%	46	-	75	NA	NA
Distribution		2.5	%	14	-	70	NA	NA
CWIP	NM			NM			NA	NA
Other		11.7	%	NM			NM	NM
NA Not applicable.
NM Not meaningful.

For rate-regulated operations, the composite depreciation rate generally includes a component for nonasset retirement obligation (non-ARO) removal costs, which is credited to Accumulated Depreciation and Amortization. Actual removal costs incurred are charged to Accumulated Depreciation and Amortization. Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability. For nonregulated operations, non-ARO removal costs are expensed as incurred.

Asset Retirement Obligations (ARO)

The Registrant Subsidiaries record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for the retirement of certain ash disposal facilities, closure and monitoring of underground carbon storage facilities at Mountaineer Plant and coal mining facilities as well as asbestos removal. I&M records ARO for the decommissioning of the Cook Plant. The Registrant Subsidiaries have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which assets are owned. Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property's use. The retirement obligation is not estimable for such easements since the Registrant Subsidiaries plan to use their facilities indefinitely. The retirement obligation would only be recognized if and when the Registrant Subsidiaries abandon or cease the use of specific easements, which is not expected.

As of December 31, 2012 and 2011, I&M's ARO liability for nuclear decommissioning of the Cook Plant was $1.2 billion and $979 million, respectively. These liabilities are reflected in Asset Retirement Obligations on I&M's balance sheets. As of December 31, 2012 and 2011, the fair value of I&M's assets that are legally restricted for purposes of settling decommissioning liabilities totaled $1.4 billion and $1.3 billion, respectively. These assets are included in Spent Nuclear Fuel and Decommissioning Trusts on I&M's balance sheets.

The following is a reconciliation of the 2012 and 2011 aggregate carrying amounts of ARO by Registrant Subsidiary:

	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2011		Expense		Incurred		Settled		Estimates		2012
	(in thousands)
APCo (a)(d)	$	112,767	$	7,264	$	-	$	(8,921)	$	4,058	$	115,168
I&M (a)(b)(d)		1,013,122		53,848		-		(806)		126,149		1,192,313
OPCo (a)(d)		241,828		15,113		-		(8,294)		21,293		269,940
PSO (a)(d)		19,623		1,572		84		(949)		1,669		21,999
SWEPCo (a)(c)(d)(e)		67,183		5,511		17,380		(3,831)		(8,226)		78,017
	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2010		Expense		Incurred		Settled		Estimates		2011
	(in thousands)
APCo (a)(d)	$	141,924	$	9,534	$	3	$	(3,600)	$	(35,094)	$	112,767
I&M (a)(b)(d)		963,029		51,308		-		(1,370)		155		1,013,122
OPCo (a)(d)		189,271		13,499		165		(4,872)		43,765		241,828
PSO (a)(d)		21,557		1,708		-		(414)		(3,228)		19,623
SWEPCo (a)(c)(d)(e)		59,382		4,114		7,063		(14,947)		11,571		67,183

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.2billion and $979 million as of December 31, 2012 and 2011, respectively.

(c)IncludesARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.

(e)The current portion of SWEPCo's ARO totaling $1.5million as of December 31,2011 is included in Other Current Liabilities on SWEPCo's balance sheets.

Allowance for Funds Used During Construction (AFUDC) and Interest Capitalization

The Registrant Subsidiaries' amounts of allowance for equity funds used during construction are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,684	$	9,212	$	2,967
I&M		9,724		15,395		15,678
OPCo		3,492		5,549		5,949
PSO		2,007		1,317		804
SWEPCo		57,054		48,731		45,646

The Registrant Subsidiaries' amounts of allowance for borrowed funds used during construction, including capitalized interest, are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,347	$	6,257	$	2,251
I&M		4,717		7,838		8,500
OPCo		9,046		2,350		3,786
PSO		1,098		822		572
SWEPCo		48,499		40,904		33,668

Jointly-owned Electric Facilities

The Registrant Subsidiaries have electric facilities that are jointly-owned with affiliated and nonaffiliated companies. Using its own financing, each participating company is obligated to pay its share of the costs of any such jointly-owned facilities in the same proportion as its ownership interest. Each Registrant Subsidiary's proportionate share of the operating costs associated with such facilities is included in its statements of income and the investments and accumulated depreciation are reflected in its balance sheets under Property, Plant and Equipment as follows:

					Company’s Share as of December 31, 2012
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	563,470	$	14,188	$	108,441
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	762,737	$	55,420	$	456,436
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	995,005	$	14,093	$	213,163
W.C. Beckjord Generating Station		Coal	12.5	%		-		-		-
2	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		310,342		26,067		58,677
J.M. Stuart Generating Station (e)		Coal	26.0	%		541,719		11,151		180,687
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		807,431		1,817		387,209
Transmission		NA	(f)			69,148		4,101		50,516
Total					$	2,723,645	$	57,229	$	890,252
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	93,218	$	939	$	57,060
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	262,649	$	7,523	$	195,336
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		121,052		14,272		64,348
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		513,833		16,029		371,015
Turk Generating Plant (j)		Coal	73.33	%		1,612,618		(2,669)		59
Total					$	2,510,152	$	35,155	$	630,758

					Company’s Share as of December 31, 2011
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	554,555	$	16,987	$	93,404
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	759,033	$	19,357	$	443,857
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	988,510	$	15,344	$	188,820
W.C. Beckjord Generating Station		Coal	12.5	%		19,131		108		8,476
	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		309,771		11,633		53,980
J.M. Stuart Generating Station (e)		Coal	26.0	%		528,271		13,292		171,830
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		771,158		19,949		376,585
Transmission		NA	(f)			63,115		5,805		49,487
Total					$	2,679,956	$	66,131	$	849,178
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	92,805	$	446	$	56,539
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	264,487	$	465	$	193,565
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		118,163		6,532		62,988
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		512,557		674		361,667
Turk Generating Plant (j)		Coal	73.33	%		-		1,326,013		-
Total					$	895,207	$	1,333,684	$	618,220

(a)Operated by APCo.

(b)Operated by I&M.

(c)Operated by Duke Energy Corporation, a nonaffiliated company. AEP's portion of this unit was impaired in the fourth quarter of 2012. See "Impairments" section of Note 5.

(d)Operated by OPCo.

(e)Operated by The Dayton Power & Light Company, a nonaffiliated company.

(f)Varying percentages of ownership.

(g)Operated by PSO and also jointly-owned (54.7%) by TNC.

(h)Operated by CLECO, a nonaffiliated company.

(i)Operated by SWEPCo.

(j)Turk Generating Plant was placed in service in December 2012. SWEPCo jointly owns the plant with Arkansas Electric Cooperative Corporation (11.67%), East Texas Electric Cooperative (8.33%) and Oklahoma Municipal Power Authority (6.67%). Through December 2012, construction costs totaling $457million have been billed to the other owners.

NANotapplicable.

Ohio Power Co [Member]

Property, Plant And Equipment

15. PROPERTY, PLANT AND EQUIPMENT

Depreciation, Depletion and Amortization

The Registrant Subsidiaries provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class. The following tables provide annual property information for the Registrant Subsidiaries:

OPCo
2012	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation		Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate		Life Ranges
	(in thousands)						(in years)			(in thousands)						(in years)
Generation	$	-	$	-	NA		NA			$	8,673,296	$	3,200,427	3.0	%	35	-	66
Transmission		2,013,737		809,199	2.3	%	39	-	60		-		-	NA		NA
Distribution		3,722,745		1,011,324	2.7	%	12	-	60		-		-	NA		NA
CWIP		147,408		(21,198)	NM		NM				207,089		1,350	NM		NM
Other		427,412		224,153	7.3	%	25	-	50		143,742		17,550	NM		NM
Total	$	6,311,302	$	2,023,478						$	9,024,127	$	3,219,327
2011	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation		Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate		Life Ranges
	(in thousands)						(in years)			(in thousands)						(in years)
Generation	$	-	$	-	NA		NA			$	9,502,614	$	3,596,589	3.2	%	35	-	66
Transmission		1,948,329		763,664	2.3	%	27	-	70		-		-	NA		NA
Distribution		3,545,574		1,146,202	3.7	%	12	-	56		-		-	NA		NA
CWIP		183,096		(3,371)	NM		NM				171,369		1,152	NM		NM
Other		407,044		222,368	8.7	%	NM				139,598		15,957	NM		NM
Total	$	6,084,043	$	2,128,863						$	9,813,581	$	3,613,698

2010		Regulated					Nonregulated
		Annual Composite					Annual Composite
		Depreciation		Depreciable			Depreciation		Depreciable
Functional Class of Property		Rate		Life Ranges			Rate		Life Ranges
				(in years)					(in years)
Generation	NA			NA			3.3	%	35	-	70
Transmission		2.3	%	27	-	70	NA		NA
Distribution		3.7	%	12	-	56	NA		NA
CWIP	NM			NM			NM		NM
Other		9.2	%	NM			NM		NM
NA Not applicable.
NM Not meaningful.

For rate-regulated operations, the composite depreciation rate generally includes a component for nonasset retirement obligation (non-ARO) removal costs, which is credited to Accumulated Depreciation and Amortization. Actual removal costs incurred are charged to Accumulated Depreciation and Amortization. Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability. For nonregulated operations, non-ARO removal costs are expensed as incurred.

Asset Retirement Obligations (ARO)

The Registrant Subsidiaries record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for the retirement of certain ash disposal facilities, closure and monitoring of underground carbon storage facilities at Mountaineer Plant and coal mining facilities as well as asbestos removal. I&M records ARO for the decommissioning of the Cook Plant. The Registrant Subsidiaries have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which assets are owned. Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property's use. The retirement obligation is not estimable for such easements since the Registrant Subsidiaries plan to use their facilities indefinitely. The retirement obligation would only be recognized if and when the Registrant Subsidiaries abandon or cease the use of specific easements, which is not expected.

The following is a reconciliation of the 2012 and 2011 aggregate carrying amounts of ARO by Registrant Subsidiary:

	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2011		Expense		Incurred		Settled		Estimates		2012
	(in thousands)
APCo (a)(d)	$	112,767	$	7,264	$	-	$	(8,921)	$	4,058	$	115,168
I&M (a)(b)(d)		1,013,122		53,848		-		(806)		126,149		1,192,313
OPCo (a)(d)		241,828		15,113		-		(8,294)		21,293		269,940
PSO (a)(d)		19,623		1,572		84		(949)		1,669		21,999
SWEPCo (a)(c)(d)(e)		67,183		5,511		17,380		(3,831)		(8,226)		78,017
	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2010		Expense		Incurred		Settled		Estimates		2011
	(in thousands)
APCo (a)(d)	$	141,924	$	9,534	$	3	$	(3,600)	$	(35,094)	$	112,767
I&M (a)(b)(d)		963,029		51,308		-		(1,370)		155		1,013,122
OPCo (a)(d)		189,271		13,499		165		(4,872)		43,765		241,828
PSO (a)(d)		21,557		1,708		-		(414)		(3,228)		19,623
SWEPCo (a)(c)(d)(e)		59,382		4,114		7,063		(14,947)		11,571		67,183

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.2billion and $979 million as of December 31, 2012 and 2011, respectively.

(c)IncludesARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.

(e)The current portion of SWEPCo's ARO totaling $1.5million as of December 31,2011 is included in Other Current Liabilities on SWEPCo's balance sheets.

Allowance for Funds Used During Construction (AFUDC) and Interest Capitalization

The Registrant Subsidiaries' amounts of allowance for equity funds used during construction are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,684	$	9,212	$	2,967
I&M		9,724		15,395		15,678
OPCo		3,492		5,549		5,949
PSO		2,007		1,317		804
SWEPCo		57,054		48,731		45,646

The Registrant Subsidiaries' amounts of allowance for borrowed funds used during construction, including capitalized interest, are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,347	$	6,257	$	2,251
I&M		4,717		7,838		8,500
OPCo		9,046		2,350		3,786
PSO		1,098		822		572
SWEPCo		48,499		40,904		33,668

Jointly-owned Electric Facilities

The Registrant Subsidiaries have electric facilities that are jointly-owned with affiliated and nonaffiliated companies. Using its own financing, each participating company is obligated to pay its share of the costs of any such jointly-owned facilities in the same proportion as its ownership interest. Each Registrant Subsidiary's proportionate share of the operating costs associated with such facilities is included in its statements of income and the investments and accumulated depreciation are reflected in its balance sheets under Property, Plant and Equipment as follows:

					Company’s Share as of December 31, 2012
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	563,470	$	14,188	$	108,441
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	762,737	$	55,420	$	456,436
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	995,005	$	14,093	$	213,163
W.C. Beckjord Generating Station		Coal	12.5	%		-		-		-
2	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		310,342		26,067		58,677
J.M. Stuart Generating Station (e)		Coal	26.0	%		541,719		11,151		180,687
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		807,431		1,817		387,209
Transmission		NA	(f)			69,148		4,101		50,516
Total					$	2,723,645	$	57,229	$	890,252
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	93,218	$	939	$	57,060
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	262,649	$	7,523	$	195,336
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		121,052		14,272		64,348
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		513,833		16,029		371,015
Turk Generating Plant (j)		Coal	73.33	%		1,612,618		(2,669)		59
Total					$	2,510,152	$	35,155	$	630,758

					Company’s Share as of December 31, 2011
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	554,555	$	16,987	$	93,404
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	759,033	$	19,357	$	443,857
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	988,510	$	15,344	$	188,820
W.C. Beckjord Generating Station		Coal	12.5	%		19,131		108		8,476
	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		309,771		11,633		53,980
J.M. Stuart Generating Station (e)		Coal	26.0	%		528,271		13,292		171,830
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		771,158		19,949		376,585
Transmission		NA	(f)			63,115		5,805		49,487
Total					$	2,679,956	$	66,131	$	849,178
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	92,805	$	446	$	56,539
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	264,487	$	465	$	193,565
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		118,163		6,532		62,988
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		512,557		674		361,667
Turk Generating Plant (j)		Coal	73.33	%		-		1,326,013		-
Total					$	895,207	$	1,333,684	$	618,220

(a)Operated by APCo.

(b)Operated by I&M.

(c)Operated by Duke Energy Corporation, a nonaffiliated company. AEP's portion of this unit was impaired in the fourth quarter of 2012. See "Impairments" section of Note 5.

(d)Operated by OPCo.

(e)Operated by The Dayton Power & Light Company, a nonaffiliated company.

(f)Varying percentages of ownership.

(g)Operated by PSO and also jointly-owned (54.7%) by TNC.

(h)Operated by CLECO, a nonaffiliated company.

(i)Operated by SWEPCo.

(j)Turk Generating Plant was placed in service in December 2012. SWEPCo jointly owns the plant with Arkansas Electric Cooperative Corporation (11.67%), East Texas Electric Cooperative (8.33%) and Oklahoma Municipal Power Authority (6.67%). Through December 2012, construction costs totaling $457million have been billed to the other owners.

NANotapplicable.

Public Service Co of Oklahoma [Member]

Property, Plant And Equipment

15. PROPERTY, PLANT AND EQUIPMENT

Depreciation, Depletion and Amortization

The Registrant Subsidiaries provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class. The following tables provide annual property information for the Registrant Subsidiaries:

PSO
2012	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)						(in years)			(in thousands)					(in years)
Generation	$	1,346,530	$	654,989	1.7	%	35	-	70	$	-	$	-	NA	NA
Transmission		706,917		176,187	1.9	%	40	-	75		-		-	NA	NA
Distribution		1,859,557		345,207	2.4	%	30	-	65		-		-	NA	NA
CWIP		95,170		(9,281)	NM		NM				-		-	NA	NA
Other		205,373		111,837	6.6	%	5	-	40		5,176		2	NM	NM
Total	$	4,213,547	$	1,278,939						$	5,176	$	2
2011	Regulated									Nonregulated
					Annual									Annual
Functional	Property,				Composite					Property,				Composite
Class of	Plant and		Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment		Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)						(in years)			(in thousands)					(in years)
Generation	$	1,317,948	$	652,526	1.8	%	9	-	70	$	-	$	-	NA	NA
Transmission		692,644		167,827	1.9	%	40	-	75		-		-	NA	NA
Distribution		1,762,110		329,041	2.4	%	30	-	65		-		-	NA	NA
CWIP		70,371		(5,413)	NM		NM				-		-	NA	NA
Other		209,467		122,838	8.3	%	5	-	35		5,159		(3)	NM	NM
Total	$	4,052,540	$	1,266,819						$	5,159	$	(3)

2010	Regulated					Nonregulated
	Annual Composite					Annual Composite
	Depreciation		Depreciable			Depreciation	Depreciable
Functional Class of Property	Rate		Life Ranges			Rate	Life Ranges
			(in years)				(in years)
Generation	1.8	%	9	-	70	NA	NA
Transmission	1.9	%	40	-	75	NA	NA
Distribution	2.4	%	27	-	65	NA	NA
CWIP	NM		NM			NA	NA
Other	8.3	%	5	-	35	NM	NM
NA Not applicable.
NM Not meaningful.

For rate-regulated operations, the composite depreciation rate generally includes a component for nonasset retirement obligation (non-ARO) removal costs, which is credited to Accumulated Depreciation and Amortization. Actual removal costs incurred are charged to Accumulated Depreciation and Amortization. Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability. For nonregulated operations, non-ARO removal costs are expensed as incurred.

Asset Retirement Obligations (ARO)

The Registrant Subsidiaries record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for the retirement of certain ash disposal facilities, closure and monitoring of underground carbon storage facilities at Mountaineer Plant and coal mining facilities as well as asbestos removal. I&M records ARO for the decommissioning of the Cook Plant. The Registrant Subsidiaries have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which assets are owned. Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property's use. The retirement obligation is not estimable for such easements since the Registrant Subsidiaries plan to use their facilities indefinitely. The retirement obligation would only be recognized if and when the Registrant Subsidiaries abandon or cease the use of specific easements, which is not expected.

The following is a reconciliation of the 2012 and 2011 aggregate carrying amounts of ARO by Registrant Subsidiary:

	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2011		Expense		Incurred		Settled		Estimates		2012
	(in thousands)
APCo (a)(d)	$	112,767	$	7,264	$	-	$	(8,921)	$	4,058	$	115,168
I&M (a)(b)(d)		1,013,122		53,848		-		(806)		126,149		1,192,313
OPCo (a)(d)		241,828		15,113		-		(8,294)		21,293		269,940
PSO (a)(d)		19,623		1,572		84		(949)		1,669		21,999
SWEPCo (a)(c)(d)(e)		67,183		5,511		17,380		(3,831)		(8,226)		78,017
	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2010		Expense		Incurred		Settled		Estimates		2011
	(in thousands)
APCo (a)(d)	$	141,924	$	9,534	$	3	$	(3,600)	$	(35,094)	$	112,767
I&M (a)(b)(d)		963,029		51,308		-		(1,370)		155		1,013,122
OPCo (a)(d)		189,271		13,499		165		(4,872)		43,765		241,828
PSO (a)(d)		21,557		1,708		-		(414)		(3,228)		19,623
SWEPCo (a)(c)(d)(e)		59,382		4,114		7,063		(14,947)		11,571		67,183

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.2billion and $979 million as of December 31, 2012 and 2011, respectively.

(c)IncludesARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.

(e)The current portion of SWEPCo's ARO totaling $1.5million as of December 31,2011 is included in Other Current Liabilities on SWEPCo's balance sheets.

Allowance for Funds Used During Construction (AFUDC) and Interest Capitalization

The Registrant Subsidiaries' amounts of allowance for equity funds used during construction are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,684	$	9,212	$	2,967
I&M		9,724		15,395		15,678
OPCo		3,492		5,549		5,949
PSO		2,007		1,317		804
SWEPCo		57,054		48,731		45,646

The Registrant Subsidiaries' amounts of allowance for borrowed funds used during construction, including capitalized interest, are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,347	$	6,257	$	2,251
I&M		4,717		7,838		8,500
OPCo		9,046		2,350		3,786
PSO		1,098		822		572
SWEPCo		48,499		40,904		33,668

Jointly-owned Electric Facilities

The Registrant Subsidiaries have electric facilities that are jointly-owned with affiliated and nonaffiliated companies. Using its own financing, each participating company is obligated to pay its share of the costs of any such jointly-owned facilities in the same proportion as its ownership interest. Each Registrant Subsidiary's proportionate share of the operating costs associated with such facilities is included in its statements of income and the investments and accumulated depreciation are reflected in its balance sheets under Property, Plant and Equipment as follows:

					Company’s Share as of December 31, 2012
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	563,470	$	14,188	$	108,441
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	762,737	$	55,420	$	456,436
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	995,005	$	14,093	$	213,163
W.C. Beckjord Generating Station		Coal	12.5	%		-		-		-
2	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		310,342		26,067		58,677
J.M. Stuart Generating Station (e)		Coal	26.0	%		541,719		11,151		180,687
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		807,431		1,817		387,209
Transmission		NA	(f)			69,148		4,101		50,516
Total					$	2,723,645	$	57,229	$	890,252
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	93,218	$	939	$	57,060
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	262,649	$	7,523	$	195,336
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		121,052		14,272		64,348
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		513,833		16,029		371,015
Turk Generating Plant (j)		Coal	73.33	%		1,612,618		(2,669)		59
Total					$	2,510,152	$	35,155	$	630,758

					Company’s Share as of December 31, 2011
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	554,555	$	16,987	$	93,404
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	759,033	$	19,357	$	443,857
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	988,510	$	15,344	$	188,820
W.C. Beckjord Generating Station		Coal	12.5	%		19,131		108		8,476
	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		309,771		11,633		53,980
J.M. Stuart Generating Station (e)		Coal	26.0	%		528,271		13,292		171,830
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		771,158		19,949		376,585
Transmission		NA	(f)			63,115		5,805		49,487
Total					$	2,679,956	$	66,131	$	849,178
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	92,805	$	446	$	56,539
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	264,487	$	465	$	193,565
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		118,163		6,532		62,988
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		512,557		674		361,667
Turk Generating Plant (j)		Coal	73.33	%		-		1,326,013		-
Total					$	895,207	$	1,333,684	$	618,220

(a)Operated by APCo.

(b)Operated by I&M.

(c)Operated by Duke Energy Corporation, a nonaffiliated company. AEP's portion of this unit was impaired in the fourth quarter of 2012. See "Impairments" section of Note 5.

(d)Operated by OPCo.

(e)Operated by The Dayton Power & Light Company, a nonaffiliated company.

(f)Varying percentages of ownership.

(g)Operated by PSO and also jointly-owned (54.7%) by TNC.

(h)Operated by CLECO, a nonaffiliated company.

(i)Operated by SWEPCo.

(j)Turk Generating Plant was placed in service in December 2012. SWEPCo jointly owns the plant with Arkansas Electric Cooperative Corporation (11.67%), East Texas Electric Cooperative (8.33%) and Oklahoma Municipal Power Authority (6.67%). Through December 2012, construction costs totaling $457million have been billed to the other owners.

NANotapplicable.

Southwestern Electric Power Co [Member]

Property, Plant And Equipment

15. PROPERTY, PLANT AND EQUIPMENT

Depreciation, Depletion and Amortization

The Registrant Subsidiaries provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class. The following tables provide annual property information for the Registrant Subsidiaries:

SWEPCo
2012	Regulated										Nonregulated
						Annual									Annual
Functional	Property,					Composite					Property,				Composite
Class of	Plant and			Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment			Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)							(in years)			(in thousands)					(in years)
Generation	$	3,888,230		$	1,092,566	2.2	%	35	-	65	$	-	$	-	NA	NA
Transmission		1,115,795			301,159	2.3	%	50	-	70		-		-	NA	NA
Distribution		1,758,988			556,904	2.6	%	25	-	65		-		-	NA	NA
CWIP		99,783	(a)		(8,294)	NM		NM				-		-	NA	NA
Other		397,643			225,254	6.6	%	7	-	47		290,611		116,669	NM	NM
Total	$	7,260,439		$	2,167,589						$	290,611	$	116,669
2011	Regulated										Nonregulated
						Annual									Annual
Functional	Property,					Composite					Property,				Composite
Class of	Plant and			Accumulated		Depreciation		Depreciable			Plant and		Accumulated		Depreciation	Depreciable
Property	Equipment			Depreciation		Rate		Life Ranges			Equipment		Depreciation		Rate	Life Ranges
	(in thousands)							(in years)			(in thousands)					(in years)
Generation	$	2,326,102		$	1,060,825	2.1	%	35	-	68	$	-	$	-	NA	NA
Transmission		988,534			285,785	2.3	%	50	-	70		-		-	NA	NA
Distribution		1,675,764			535,565	2.6	%	25	-	65		-		-	NA	NA
CWIP		1,419,216	(a)		(3,527)	NM		NM				24,353		-	NM	NM
Other		400,492			229,695	6.9	%	7	-	47		236,527		103,569	NM	NM
Total	$	6,810,108		$	2,108,343						$	260,880	$	103,569

2010		Regulated					Nonregulated
	Annual Composite					Annual Composite
	Depreciation		Depreciable			Depreciation		Depreciable
Functional Class of Property	Rate		Life Ranges			Rate		Life Ranges
			(in years)					(in years)
Generation	1.9	%	35	-	68	NA		NA
Transmission	2.4	%	50	-	70	NA		NA
Distribution	2.7	%	25	-	65	NA		NA
CWIP	NM		NM			NM		NM
Other	7.7	%	7	-	47	NM		NM
(a) Includes CWIP related to SWEPCo's Arkansas jurisdictional share of the Turk Plant.
NA Not applicable.
NM Not meaningful.

SWEPCo provides for depreciation, depletion and amortization of coal-mining assets over each asset's estimated useful life or the estimated life of each mine, whichever is shorter, using the straight-line method for mining structures and equipment. SWEPCo uses either the straight-line method or the units-of-production method to amortize mine development costs and deplete coal rights based on estimated recoverable tonnages. SWEPCo includes these costs in fuel expense.

For rate-regulated operations, the composite depreciation rate generally includes a component for nonasset retirement obligation (non-ARO) removal costs, which is credited to Accumulated Depreciation and Amortization. Actual removal costs incurred are charged to Accumulated Depreciation and Amortization. Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability. For nonregulated operations, non-ARO removal costs are expensed as incurred.

Asset Retirement Obligations (ARO)

The Registrant Subsidiaries record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for the retirement of certain ash disposal facilities, closure and monitoring of underground carbon storage facilities at Mountaineer Plant and coal mining facilities as well as asbestos removal. I&M records ARO for the decommissioning of the Cook Plant. The Registrant Subsidiaries have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which assets are owned. Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property's use. The retirement obligation is not estimable for such easements since the Registrant Subsidiaries plan to use their facilities indefinitely. The retirement obligation would only be recognized if and when the Registrant Subsidiaries abandon or cease the use of specific easements, which is not expected.

The following is a reconciliation of the 2012 and 2011 aggregate carrying amounts of ARO by Registrant Subsidiary:

	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2011		Expense		Incurred		Settled		Estimates		2012
	(in thousands)
APCo (a)(d)	$	112,767	$	7,264	$	-	$	(8,921)	$	4,058	$	115,168
I&M (a)(b)(d)		1,013,122		53,848		-		(806)		126,149		1,192,313
OPCo (a)(d)		241,828		15,113		-		(8,294)		21,293		269,940
PSO (a)(d)		19,623		1,572		84		(949)		1,669		21,999
SWEPCo (a)(c)(d)(e)		67,183		5,511		17,380		(3,831)		(8,226)		78,017
	ARO as of								Revisions in		ARO as of
	December 31,		Accretion		Liabilities		Liabilities		Cash Flow		December 31,
Company	2010		Expense		Incurred		Settled		Estimates		2011
	(in thousands)
APCo (a)(d)	$	141,924	$	9,534	$	3	$	(3,600)	$	(35,094)	$	112,767
I&M (a)(b)(d)		963,029		51,308		-		(1,370)		155		1,013,122
OPCo (a)(d)		189,271		13,499		165		(4,872)		43,765		241,828
PSO (a)(d)		21,557		1,708		-		(414)		(3,228)		19,623
SWEPCo (a)(c)(d)(e)		59,382		4,114		7,063		(14,947)		11,571		67,183

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.2billion and $979 million as of December 31, 2012 and 2011, respectively.

(c)IncludesARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.

(e)The current portion of SWEPCo's ARO totaling $1.5million as of December 31,2011 is included in Other Current Liabilities on SWEPCo's balance sheets.

Allowance for Funds Used During Construction (AFUDC) and Interest Capitalization

The Registrant Subsidiaries' amounts of allowance for equity funds used during construction are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,684	$	9,212	$	2,967
I&M		9,724		15,395		15,678
OPCo		3,492		5,549		5,949
PSO		2,007		1,317		804
SWEPCo		57,054		48,731		45,646

The Registrant Subsidiaries' amounts of allowance for borrowed funds used during construction, including capitalized interest, are summarized in the following table:

	Years Ended December 31,
Company	2012		2011		2010
	(in thousands)
APCo	$	1,347	$	6,257	$	2,251
I&M		4,717		7,838		8,500
OPCo		9,046		2,350		3,786
PSO		1,098		822		572
SWEPCo		48,499		40,904		33,668

Jointly-owned Electric Facilities

The Registrant Subsidiaries have electric facilities that are jointly-owned with affiliated and nonaffiliated companies. Using its own financing, each participating company is obligated to pay its share of the costs of any such jointly-owned facilities in the same proportion as its ownership interest. Each Registrant Subsidiary's proportionate share of the operating costs associated with such facilities is included in its statements of income and the investments and accumulated depreciation are reflected in its balance sheets under Property, Plant and Equipment as follows:

					Company’s Share as of December 31, 2012
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	563,470	$	14,188	$	108,441
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	762,737	$	55,420	$	456,436
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	995,005	$	14,093	$	213,163
W.C. Beckjord Generating Station		Coal	12.5	%		-		-		-
2	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		310,342		26,067		58,677
J.M. Stuart Generating Station (e)		Coal	26.0	%		541,719		11,151		180,687
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		807,431		1,817		387,209
Transmission		NA	(f)			69,148		4,101		50,516
Total					$	2,723,645	$	57,229	$	890,252
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	93,218	$	939	$	57,060
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	262,649	$	7,523	$	195,336
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		121,052		14,272		64,348
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		513,833		16,029		371,015
Turk Generating Plant (j)		Coal	73.33	%		1,612,618		(2,669)		59
Total					$	2,510,152	$	35,155	$	630,758

					Company’s Share as of December 31, 2011
							Construction
		Fuel	Percent of		Utility Plant		Work in		Accumulated
Company		Type	Ownership		in Service		Progress		Depreciation
					(in thousands)
APCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	33.33	%	$	554,555	$	16,987	$	93,404
I&M
Rockport Generating Plant (Unit No. 1) (b)		Coal	50.0	%	$	759,033	$	19,357	$	443,857
OPCo
John E. Amos Generating Station (Unit No. 3) (a)		Coal	66.67	%	$	988,510	$	15,344	$	188,820
W.C. Beckjord Generating Station		Coal	12.5	%		19,131		108		8,476
	(Unit No. 6) (c)
Conesville Generating Station (Unit No. 4) (d)		Coal	43.5	%		309,771		11,633		53,980
J.M. Stuart Generating Station (e)		Coal	26.0	%		528,271		13,292		171,830
Wm. H. Zimmer Generating Station (c)		Coal	25.4	%		771,158		19,949		376,585
Transmission		NA	(f)			63,115		5,805		49,487
Total					$	2,679,956	$	66,131	$	849,178
PSO
Oklaunion Generating Station (Unit No. 1) (g)		Coal	15.6	%	$	92,805	$	446	$	56,539
SWEPCo
Dolet Hills Generating Station (Unit No. 1) (h)		Lignite	40.2	%	$	264,487	$	465	$	193,565
Flint Creek Generating Station (Unit No. 1) (i)		Coal	50.0	%		118,163		6,532		62,988
Pirkey Generating Station (Unit No. 1) (i)		Lignite	85.9	%		512,557		674		361,667
Turk Generating Plant (j)		Coal	73.33	%		-		1,326,013		-
Total					$	895,207	$	1,333,684	$	618,220

(a)Operated by APCo.

(b)Operated by I&M.

(c)Operated by Duke Energy Corporation, a nonaffiliated company. AEP's portion of this unit was impaired in the fourth quarter of 2012. See "Impairments" section of Note 5.

(d)Operated by OPCo.

(e)Operated by The Dayton Power & Light Company, a nonaffiliated company.

(f)Varying percentages of ownership.

(g)Operated by PSO and also jointly-owned (54.7%) by TNC.

(h)Operated by CLECO, a nonaffiliated company.

(i)Operated by SWEPCo.

(j)Turk Generating Plant was placed in service in December 2012. SWEPCo jointly owns the plant with Arkansas Electric Cooperative Corporation (11.67%), East Texas Electric Cooperative (8.33%) and Oklahoma Municipal Power Authority (6.67%). Through December 2012, construction costs totaling $457million have been billed to the other owners.

NANotapplicable.