Business Segments

3 Months Ended

Mar. 31, 2014

Business Segments

7. BUSINESS SEGMENTS

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

During the fourth quarter of 2013, we changed the structure of our internal organization which resulted in a change in the composition of our reportable segments. In accordance with authoritative accounting guidance for segment reporting, prior period financial information has been recast in the financial statements and footnotes to be comparable to the current year presentation of reportable segments.

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

Vertically Integrated Utilities

• Generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo.

  Transmission and Distribution Utilities

• Transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by OPCo, TCC and TNC.
• OPCo purchases energy to serve standard service offer customers, and provides capacity for all connected load.

  AEP Transmission Holdco

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

  Generation & Marketing

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

AEP River Operations

• Commercial barging operation that transports liquids, coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers.

The remainder of our activities is presented as Corporate and Other. While not considered a reportable segment, Corporate and Other primarily includes management and professional services to AEP provided at cost to AEP subsidiaries and the purchasing of receivables from certain AEP utility subsidiaries. This segment also includes Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

The tables below present our reportable segment information for the three months ended March 31, 2014 and 2013 and balance sheet information as of March 31, 2014 and December 31, 2013. These amounts include certain estimates and allocations where necessary.

					Transmission
		Vertically			and		AEP		Generation					Corporate
		Integrated			Distribution		Transmission		&			AEP River		and Other		Reconciling
		Utilities			Utilities		Holdco		Marketing			Operations		(a)		Adjustments			Consolidated
		(in millions)
Three Months Ended March 31, 2014
Revenues from:
	External Customers	$	2,549	(b)	$	1,161	$	12	$	821	(b)	$	146	$	10	$	(51)	(c)	$	4,648
	Other Operating Segments		37	(b)		54		16		430	(b)		19		16		(572)			-
Total Revenues		$	2,586		$	1,215	$	28	$	1,251		$	165	$	26	$	(623)		$	4,648
Net Income (Loss)		$	279		$	97	$	24	$	163		$	3	$	(5)	$	-		$	561
					Transmission
		Vertically			and		AEP		Generation					Corporate
		Integrated			Distribution		Transmission		&			AEP River		and Other		Reconciling
		Utilities			Utilities		Holdco		Marketing			Operations		(a)		Adjustments			Consolidated
		(in millions)
Three Months Ended March 31, 2013
Revenues from:
	External Customers	$	2,356		$	1,090	$	3	$	258		$	128	$	5	$	(14)	(c)	$	3,826
	Other Operating Segments		159			44		5		662			5		13		(888)			-
Total Revenues		$	2,515		$	1,134	$	8	$	920		$	133	$	18	$	(902)		$	3,826
Net Income (Loss)		$	181		$	87	$	12	$	85		$	(2)	$	1	$	-		$	364

				Transmission
		Vertically		and		AEP		Generation				Corporate		Reconciling
		Integrated		Distribution		Transmission		&		AEP River		and Other		Adjustments
		Utilities		Utilities		Holdco		Marketing		Operations		(a)		(d)			Consolidated
		(in millions)
March 31, 2014
Total Property, Plant and Equipment		$	37,923	$	12,339	$	1,842	$	8,302	$	639	$	321	$	(272)		$	61,094
Accumulated Depreciation and
	Amortization		12,424		3,382		13		3,460		197		176		(88)			19,564
Total Property, Plant and
	Equipment - Net	$	25,499	$	8,957	$	1,829	$	4,842	$	442	$	145	$	(184)		$	41,530
Total Assets		$	32,997	$	13,899	$	2,460	$	6,354	$	659	$	20,275	$	(19,606)	(e)	$	57,038
				Transmission
		Vertically		and		AEP		Generation				Corporate		Reconciling
		Integrated		Distribution		Transmission		&		AEP River		and Other		Adjustments
		Utilities		Utilities		Holdco		Marketing		Operations		(a)		(d)			Consolidated
		(in millions)
December 31, 2013
Total Property, Plant and Equipment		$	37,545	$	12,143	$	1,636	$	8,277	$	638	$	315	$	(269)		$	60,285
Accumulated Depreciation and
	Amortization		12,250		3,342		10		3,409		189		173		(85)			19,288
Total Property, Plant and
	Equipment - Net	$	25,295	$	8,801	$	1,626	$	4,868	$	449	$	142	$	(184)		$	40,997
Total Assets		$	32,791	$	14,165	$	2,245	$	6,426	$	673	$	19,645	$	(19,531)	(e)	$	56,414

(a)Corporate and Otherprimarily includes management and professional services to AEP provided at cost to AEP subsidiaries and the purchasing of receivables from certain AEP utility subsidiaries. This segment also includes Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

(b)Includes the impact of the corporate separation of OPCo's generation assets and liabilities that took effect December 31, 2013, as well as the impact of the termination of the Interconnection Agreement effective January 1, 2014.

(c)Reconciling Adjustments for External Customers primarily include eliminations as a result of corporate separation.

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

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

Appalachian Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

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

Indiana Michigan Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

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

Ohio Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

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

Public Service Co Of Oklahoma [Member]

Business Segments

7. BUSINESS SEGMENTS

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

Southwestern Electric Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

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