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Fair Value Measurements

9 Months Ended

Sep. 30, 2011

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

The accounting guidance for “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. When quoted market prices are not available, pricing may be completed using comparable securities, dealer values, operating data and general market conditions to determine fair value. Valuation models utilize various inputs such as commodity, interest rate and, to a lesser degree, volatility and credit that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, market corroborated inputs (i.e. inputs derived principally from, or correlated to, observable market data) and other observable inputs for the asset or liability.

For our commercial activities, exchange traded derivatives, namely futures contracts, are generally fair valued based on unadjusted quoted prices in active markets and are classified as Level 1. Level 2 inputs primarily consist of OTC broker quotes in moderately active or less active markets, as well as exchange traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1. We verify our price curves using these broker quotes and classify these fair values within Level 2 when substantially all of the fair value can be corroborated. We typically obtain multiple broker quotes, which are non-binding in nature, but are based on recent trades in the marketplace. When multiple broker quotes are obtained, we average the quoted bid and ask prices. In certain circumstances, we may discard a broker quote if it is a clear outlier. We use a historical correlation analysis between the broker quoted location and the illiquid locations. If the points are highly correlated, we include these locations within Level 2 as well. Certain OTC and bilaterally executed derivative instruments are executed in less active markets with a lower availability of pricing information. Long-dated and illiquid complex or structured transactions and FTRs can introduce the need for internally developed modeling inputs based upon extrapolations and assumptions of observable market data to estimate fair value. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3.

We utilize our trustee's external pricing service in our estimate of the fair value of the underlying investments held in the nuclear trusts. Our investment managers review and validate the prices utilized by the trustee to determine fair value. We perform our own valuation testing to verify the fair values of the securities. We receive audit reports of our trustee's operating controls and valuation processes. The trustee uses multiple pricing vendors for the assets held in the trusts.

Assets in the nuclear trusts, Cash and Cash Equivalents and Other Temporary Investments are classified using the following methods. Equities are classified as Level 1 holdings if they are actively traded on exchanges. Items classified as Level 1 are investments in money market funds, fixed income and equity mutual funds and domestic equity securities. They are valued based on observable inputs primarily unadjusted quoted prices in active markets for identical assets. Fixed income securities do not trade on an exchange and do not have an official closing price. Pricing vendors calculate bond valuations using financial models and matrices. Fixed income securities are typically classified as Level 2 holdings because their valuation inputs are based on observable market data. Observable inputs used for valuing fixed income securities are benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data and economic events. Other securities with model-derived valuation inputs that are observable are also classified as Level 2 investments. Investments with unobservable valuation inputs are classified as Level 3 investments.

Items classified as Level 2 are primarily investments in individual fixed income securities. These fixed income securities are valued using models with input data as follows:

	Type of Fixed Income Security
	United States		State and Local
Type of Input	Government	Corporate Debt	Government

Benchmark Yields	X	X	X
Broker Quotes	X	X	X
Discount Margins	X	X
Treasury Market Update	X
Base Spread	X	X	X
Corporate Actions		X
Ratings Agency Updates		X	X
Prepayment Schedule and
History			X
Yield Adjustments	X

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities. These instruments are not marked-to-market. The estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange.

The book values and fair values of Long-term Debt as of September 30, 2011 and December 31, 2010 are summarized in the following table:

	September 30, 2011				December 31, 2010
	Book Value		Fair Value		Book Value		Fair Value
	(in millions)
Long-term Debt	$	16,450	$	19,003	$	16,811	$	18,285

Fair Value Measurements of Other Temporary Investments

Other Temporary Investments include marketable securities that we intend to hold for less than one year, investments by our protected cell of EIS and funds held by trustees primarily for the repayment of debt.

The following is a summary of Other Temporary Investments:

			September 30, 2011
					Gross		Gross		Estimated
					Unrealized		Unrealized		Fair
Other Temporary Investments			Cost		Gains		Losses		Value
			(in millions)
Restricted Cash (a)			$	164	$	-	$	-	$	164
Fixed Income Securities:
	Mutual Funds			63		-		-		63
Equity Securities - Mutual Funds				11		2		-		13
Total Other Temporary Investments			$	238	$	2	$	-	$	240

			December 31, 2010
					Gross		Gross		Estimated
					Unrealized		Unrealized		Fair
Other Temporary Investments			Cost		Gains		Losses		Value
			(in millions)
Restricted Cash (a)			$	225	$	-	$	-	$	225
Fixed Income Securities:
	Mutual Funds			69		-		-		69
	Variable Rate Demand Notes			97		-		-		97
Equity Securities - Mutual Funds				18		7		-		25
Total Other Temporary Investments			$	409	$	7	$	-	$	416

(a)		Primarily represents amounts held for the repayment of debt.

The following table provides the activity for our debt and equity securities within Other Temporary Investments for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)
Proceeds from Investment Sales	$	21	$	133	$	268	$	390
Purchases of Investments		-		192		153		413
Gross Realized Gains on Investment Sales		4		-		4		16
Gross Realized Losses on Investment Sales		-		-		-		-

At September 30, 2011 and December 31, 2010, we had no Other Temporary Investments with an unrealized loss position. At September 30, 2011, fixed income securities are primarily debt based mutual funds with short and intermediate maturities. Mutual funds may be sold and do not contain maturity dates.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal

Nuclear decommissioning and spent nuclear fuel trust funds represent funds that regulatory commissions allow us to collect through rates to fund future decommissioning and spent nuclear fuel disposal liabilities. By rules or orders, the IURC, the MPSC and the FERC established investment limitations and general risk management guidelines. In general, limitations include:

Acceptable investments (rated investment grade or above when purchased).
Maximum percentage invested in a specific type of investment.
Prohibition of investment in obligations of AEP or its affiliates.
Withdrawals permitted only for payment of decommissioning costs and trust expenses.

We maintain trust records for each regulatory jurisdiction. These funds are managed by external investment managers who must comply with the guidelines and rules of the applicable regulatory authorities. The trust assets are invested to optimize the net of tax earnings of the trust giving consideration to liquidity, risk, diversification and other prudent investment objectives.

I&M records securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF at fair value. I&M classifies securities in the trust funds as available-for-sale due to their long-term purpose. Other-than-temporary impairments for investments in both debt and equity securities are considered realized losses as a result of securities being managed by an external investment management firm. The external investment management firm makes specific investment decisions regarding the equity and debt investments held in these trusts and generally intends to sell debt securities in an unrealized loss position as part of a tax optimization strategy. Impairments reduce the cost basis of the securities which will affect any future unrealized gain or realized gain or loss due to the adjusted cost of investment. I&M records unrealized gains and other-than-temporary impairments from securities in the trust funds as adjustments to the regulatory liability account for the nuclear decommissioning trust funds and to regulatory assets or liabilities for the SNF disposal trust funds in accordance with their treatment in rates. Consequently, changes in fair value of trust assets do not affect earnings or AOCI. The trust assets are recorded by jurisdiction and may not be used for another jurisdiction's liabilities. Regulatory approval is required to withdraw decommissioning funds.

The following is a summary of nuclear trust fund investments at September 30, 2011 and December 31, 2010:

		September 30, 2011						December 31, 2010
		Estimated		Gross		Other-Than-		Estimated		Gross		Other-Than-
		Fair		Unrealized		Temporary		Fair		Unrealized		Temporary
		Value		Gains		Impairments		Value		Gains		Impairments

		(in millions)
Cash and Cash Equivalents		$	14	$	-	$	-	$	20	$	-	$	-
Fixed Income Securities:
	United States Government		550		59		(1)		461		23		(1)
	Corporate Debt		53		5		(2)		59		4		(2)
	State and Local Government		320		-		(1)		341		(1)		-
	Subtotal Fixed Income Securities		923		64		(4)		861		26		(3)
Equity Securities - Domestic			576		144		(84)		634		183		(123)
Spent Nuclear Fuel and
	Decommissioning Trusts	$	1,513	$	208	$	(88)	$	1,515	$	209	$	(126)

The following table provides the securities activity within the decommissioning and SNF trusts for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in millions)
Proceeds from Investment Sales	$	361	$	495	$	826	$	1,087
Purchases of Investments		379		512		871		1,129
Gross Realized Gains on Investment Sales		18		1		30		7
Gross Realized Losses on Investment Sales		12		-		21		-

The adjusted cost of debt securities was $859 million and $835 million as of September 30, 2011 and December 31, 2010, respectively. The adjusted cost of equity securities was $432 million and $451 million as of September 30, 2011 and December 31, 2010, respectively.

The fair value of debt securities held in the nuclear trust funds, summarized by contractual maturities, at September 30, 2011 was as follows:

	Fair Value
	of Debt
	Securities
	(in millions)
Within 1 year	$	79
1 year – 5 years		269
5 years – 10 years		318
After 10 years		257
Total	$	923

Fair Value Measurements of Financial Assets and Liabilities

The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2011 and December 31, 2010. As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There have not been any significant changes in our valuation techniques.

Assets and Liabilities Measured at Fair Value on a Recurring Basis
September 30, 2011

			Level 1		Level 2		Level 3		Other		Total

Assets:			(in millions)

Cash and Cash Equivalents (a)			$	13	$	-	$	-	$	533	$	546

Other Temporary Investments
Restricted Cash (a)				123		-		-		41		164
Fixed Income Securities:
	Mutual Funds			63		-		-		-		63
Equity Securities - Mutual Funds (b)				13		-		-		-		13
Total Other Temporary Investments				199		-		-		41		240

Risk Management Assets
Risk Management Commodity Contracts (c) (f)				25		855		105		(562)		423
Cash Flow Hedges:
	Commodity Hedges (c)			11		24		-		(12)		23
De-designated Risk Management Contracts (d)				-		-		-		34		34
Total Risk Management Assets				36		879		105		(540)		480

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)				-		5		-		9		14
Fixed Income Securities:
	United States Government			-		550		-		-		550
	Corporate Debt			-		53		-		-		53
	State and Local Government			-		320		-		-		320
		Subtotal Fixed Income Securities		-		923		-		-		923
Equity Securities - Domestic (b)				576		-		-		-		576
Total Spent Nuclear Fuel and Decommissioning Trusts				576		928		-		9		1,513

Total Assets			$	824	$	1,807	$	105	$	43	$	2,779

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)			$	25	$	734	$	41	$	(592)	$	208
Cash Flow Hedges:
	Commodity Hedges (c)			1		15		-		(12)		4
	Interest Rate/Foreign Currency Hedges			-		34		-		-		34
Total Risk Management Liabilities			$	26	$	783	$	41	$	(604)	$	246

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2010

			Level 1		Level 2		Level 3		Other		Total

Assets:			(in millions)

Cash and Cash Equivalents (a)			$	170	$	-	$	-	$	124	$	294

Other Temporary Investments
Restricted Cash (a)				184		-		-		41		225
Fixed Income Securities:
	Mutual Funds			69		-		-		-		69
	Variable Rate Demand Notes			-		97		-		-		97
Equity Securities - Mutual Funds (b)				25		-		-		-		25
Total Other Temporary Investments				278		97		-		41		416

Risk Management Assets
Risk Management Commodity Contracts (c) (g)				20		1,432		112		(1,013)		551
Cash Flow Hedges:
	Commodity Hedges (c)			11		17		-		(15)		13
	Interest Rate/Foreign Currency Hedges			-		25		-		-		25
Fair Value Hedges				-		7		-		-		7
De-designated Risk Management Contracts (d)				-		-		-		46		46
Total Risk Management Assets				31		1,481		112		(982)		642

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)				-		8		-		12		20
Fixed Income Securities:
	United States Government			-		461		-		-		461
	Corporate Debt			-		59		-		-		59
	State and Local Government			-		341		-		-		341
		Subtotal Fixed Income Securities		-		861		-		-		861
Equity Securities - Domestic (b)				634		-		-		-		634
Total Spent Nuclear Fuel and Decommissioning Trusts				634		869		-		12		1,515

Total Assets			$	1,113	$	2,447	$	112	$	(805)	$	2,867

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)			$	25	$	1,325	$	27	$	(1,114)	$	263
Cash Flow Hedges:
	Commodity Hedges (c)			4		13		-		(15)		2
	Interest Rate/Foreign Currency Hedges			-		4		-		-		4
Fair Value Hedges				-		1		-		-		1
Total Risk Management Liabilities			$	29	$	1,343	$	27	$	(1,129)	$	270

(a) Amounts in ''Other'' column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in ''Other'' column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for ''Derivatives and Hedging.''

(d) Represents contracts that were originally MTM but were subsequently elected as normal under the accounting guidance for ''Derivatives and Hedging.'' At the time of the normal election, the MTM value was frozen and no longer fair valued. This MTM value will be amortized into revenues over the remaining life of the contracts.

(e) Amounts in ''Other'' column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(f) The September 30, 2011 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $0 in 2011, $6 million in periods 2012-2014 and ($6) million in periods 2015-2016; Level 2 matures $3 million in 2011, $80 million in periods 2012-2014, $22 million in periods 2015-2016 and $16 million in periods 2017-2028; Level 3 matures $5 million in 2011, $17 million in periods 2012-2014, $13 million in periods 2015-2016 and $29 million in periods 2017-2028. Risk management commodity contracts are substantially comprised of power contracts.

(g) The December 31, 2010 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures ($2) million in 2011, $2 million in periods 2012-2014 and ($5) million in periods 2015-2018; Level 2 matures $13 million in 2011, $66 million in periods 2012-2014, $12 million in periods 2015-2016 and $16 million in periods 2017-2028; Level 3 matures $18 million in 2011, $24 million in periods 2012-2014, $16 million in periods 2015-2016 and $27 million in periods 2017-2028. Risk management commodity contracts are substantially comprised of power contracts.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives and other investments classified as Level 3 in the fair value hierarchy:

		Net Risk Management
Three Months Ended September 30, 2011		Assets (Liabilities)

		(in millions)
Balance as of June 30, 2011		$	77
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)			(16)
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)
	Relating to Assets Still Held at the Reporting Date (a)		(5)
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income			-
Purchases, Issuances and Settlements (c)			3
Transfers into Level 3 (d) (f)			5
Transfers out of Level 3 (e) (f)			(1)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)			1
Balance as of September 30, 2011		$	64

		Net Risk Management
Three Months Ended September 30, 2010		Assets (Liabilities)

		(in millions)
Balance as of June 30, 2010		$	100
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)			(4)
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)
	Relating to Assets Still Held at the Reporting Date (a)		23
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income			-
Purchases, Issuances and Settlements (c)			-
Transfers into Level 3 (d) (f)			5
Transfers out of Level 3 (e) (f)			(22)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)			9
Balance as of September 30, 2010		$	111

		Net Risk Management
Nine Months Ended September 30, 2011		Assets (Liabilities)

		(in millions)
Balance as of December 31, 2010		$	85
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)			(11)
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)
	Relating to Assets Still Held at the Reporting Date (a)		-
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income			-
Purchases, Issuances and Settlements (c)			5
Transfers into Level 3 (d) (f)			9
Transfers out of Level 3 (e) (f)			(12)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)			(12)
Balance as of September 30, 2011		$	64

		Net Risk Management
Nine Months Ended September 30, 2010		Assets (Liabilities)

		(in millions)
Balance as of December 31, 2009		$	62
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)			4
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)
	Relating to Assets Still Held at the Reporting Date (a)		60
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income			-
Purchases, Issuances and Settlements (c)			(18)
Transfers into Level 3 (d) (f)			14
Transfers out of Level 3 (e) (f)			(26)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)			15
Balance as of September 30, 2010		$	111

(a) Included in revenues on our condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on our condensed statements of income. These net gains (losses) are recorded as regulatory liabilities/assets.

Appalachian Power Co [Member]

Fair Value Measurements [Abstract]

Fair Value Measurements

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

For commercial activities, exchange traded derivatives, namely futures contracts, are generally fair valued based on unadjusted quoted prices in active markets and are classified as Level 1. Level 2 inputs primarily consist of OTC broker quotes in moderately active or less active markets, as well as exchange traded contracts where there is insufficient market liquidity to warrant inclusion in Level 1. Management verifies price curves using these broker quotes and classifies these fair values within Level 2 when substantially all of the fair value can be corroborated. Management typically obtains multiple broker quotes, which are non-binding in nature, but are based on recent trades in the marketplace. When multiple broker quotes are obtained, the quoted bid and ask prices are averaged. In certain circumstances, a broker quote may be discarded if it is a clear outlier. Management uses a historical correlation analysis between the broker quoted location and the illiquid locations. If the points are highly correlated, these locations are included within Level 2 as well. Certain OTC and bilaterally executed derivative instruments are executed in less active markets with a lower availability of pricing information. Long-dated and illiquid complex or structured transactions and FTRs can introduce the need for internally developed modeling inputs based upon extrapolations and assumptions of observable market data to estimate fair value. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3.

Fair Value Measurements of Long-term Debt

The book values and fair values of Long-term Debt for the Registrant Subsidiaries as of September 30, 2011 and December 31, 2010 are summarized in the following table:

	September 30, 2011				December 31, 2010
Company	Book Value		Fair Value		Book Value		Fair Value

	(in thousands)
APCo	$	3,726,069	$	4,362,079	$	3,561,141	$	3,878,557
CSPCo		1,439,039		1,673,882		1,438,830		1,571,219
I&M		1,985,733		2,245,484		2,004,226		2,169,520
OPCo		2,614,910		2,965,698		2,729,522		2,945,280
PSO		945,735		1,106,839		971,186		1,040,656
SWEPCo		1,728,574		1,996,103		1,769,520		1,931,516

Fair Value Measurements of Financial Assets and Liabilities

The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries' financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2011 and December 31, 2010. As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There have not been any significant changes in management's valuation techniques.

Assets and Liabilities Measured at Fair Value on a Recurring Basis
September 30, 2011
APCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	1,617	$	183,140	$	13,153	$	(146,484)	$	51,426
Cash Flow Hedges:
	Commodity Hedges (a)		-		2,426		1		(1,629)		798
De-designated Risk Management Contracts (b)			-		-		-		2,203		2,203
Total Risk Management Assets		$	1,617	$	185,566	$	13,154	$	(145,910)	$	54,427

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	964	$	165,672	$	12,339	$	(153,486)	$	25,489
Cash Flow Hedges:
	Commodity Hedges (a)		-		2,375		46		(1,629)		792
Total Risk Management Liabilities		$	964	$	168,047	$	12,385	$	(155,115)	$	26,281

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2010
APCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	1,686	$	330,605	$	13,791	$	(270,012)	$	76,070
Cash Flow Hedges:
	Commodity Hedges (a)		-		2,591		-		(2,258)		333
	Interest Rate/Foreign Currency Hedges		-		11,888		-		-		11,888
De-designated Risk Management Contracts (b)			-		-		-		3,371		3,371
Total Risk Management Assets		$	1,686	$	345,084	$	13,791	$	(268,899)	$	91,662

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	1,653	$	312,258	$	8,660	$	(284,432)	$	38,139
Cash Flow Hedges:
	Commodity Hedges (a)		-		2,985		-		(2,258)		727
Total Risk Management Liabilities		$	1,653	$	315,243	$	8,660	$	(286,690)	$	38,866

(a) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(b) Represents contracts that were originally MTM but were subsequently elected as normal under the accounting guidance for “Derivatives and Hedging.” At the time of the normal election, the MTM value was frozen and no longer fair valued. This MTM value will be amortized into revenues over the remaining life of the contracts.

(c) Amounts in “Other” column primarily represent cash deposits with third parties. Level 1 amounts primarily represent investments in money market funds.

(d) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(e) Amounts represent publicly traded equity securities and equity-based mutual funds.

(f) Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2011		$	5,321	$	3,077	$	3,150	$	3,682	$	-	$	-
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(4,553)		(2,805)		(2,904)		(3,333)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		(406)		-		(533)		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(7)		(6)		(7)		(7)		-		-
Purchases, Issuances and Settlements (c)			358		278		297		321		-		-
Transfers into Level 3 (d) (f)			-		-		-		-		-		-
Transfers out of Level 3 (e) (f)			(259)		(150)		(154)		(180)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(91)		488		112		615		-		-
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Three Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2010		$	10,874	$	6,153	$	6,209	$	7,069	$	(2)	$	(2)
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(1,680)		(845)		(850)		(981)		2		2
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		5,941		-		9,258		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			195		118		133		157		2		3
Transfers into Level 3 (d) (f)			380		215		217		247		-		-
Transfers out of Level 3 (e) (f)			(890)		(503)		(508)		(579)		(1)		(2)
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		7,686		(1,532)		4,757		(3,514)		1		1
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

Nine Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2010		$	5,131	$	2,975	$	3,108	$	3,608	$	1	$	2
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(2,373)		(1,367)		(1,401)		(1,640)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		908		-		1,039		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(45)		(28)		(29)		(33)		-		-
Purchases, Issuances and Settlements (c)			2,835		1,620		1,656		1,947		-		-
Transfers into Level 3 (d) (f)			1,299		744		764		894		-		-
Transfers out of Level 3 (e) (f)			(3,057)		(1,762)		(1,834)		(2,146)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(3,021)		(2,614)		(1,770)		(3,104)		(1)		(2)
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Nine Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2009		$	9,428	$	4,776	$	4,816	$	5,569	$	2	$	3
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		1,269		713		721		825		1		3
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		10,670		-		14,651		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			(5,463)		(3,059)		(3,100)		(3,565)		(1)		(2)
Transfers into Level 3 (d) (f)			986		530		528		615		-		-
Transfers out of Level 3 (e) (f)			(2,088)		(1,195)		(1,199)		(1,376)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		12,433		(2,888)		8,192		(5,062)		-		(2)
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

(a) Included in revenues on the condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on the condensed statements of income. These net gains (losses) are recorded as regulatory assets/liabilities.

Columbus Southern Power Co [Member]

Fair Value Measurements [Abstract]

Fair Value Measurements

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

Fair Value Measurements of Long-term Debt

The book values and fair values of Long-term Debt for the Registrant Subsidiaries as of September 30, 2011 and December 31, 2010 are summarized in the following table

	September 30, 2011				December 31, 2010
Company	Book Value		Fair Value		Book Value		Fair Value

	(in thousands)
APCo	$	3,726,069	$	4,362,079	$	3,561,141	$	3,878,557
CSPCo		1,439,039		1,673,882		1,438,830		1,571,219
I&M		1,985,733		2,245,484		2,004,226		2,169,520
OPCo		2,614,910		2,965,698		2,729,522		2,945,280
PSO		945,735		1,106,839		971,186		1,040,656
SWEPCo		1,728,574		1,996,103		1,769,520		1,931,516

Fair Value Measurements of Financial Assets and Liabilities

Assets and Liabilities Measured at Fair Value on a Recurring Basis
September 30, 2011
CSPCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	1,001	$	111,138	$	8,142	$	(88,793)	$	31,488
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,488		-		(1,008)		480
De-designated Risk Management Contracts (b)			-		-		-		1,364		1,364
Total Risk Management Assets		$	1,001	$	112,626	$	8,142	$	(88,437)	$	33,332

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	597	$	100,537	$	7,638	$	(93,061)	$	15,711
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,397		28		(1,008)		417
Total Risk Management Liabilities		$	597	$	101,934	$	7,666	$	(94,069)	$	16,128

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
	December 31, 2010
CSPCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	972	$	185,699	$	7,950	$	(150,930)	$	43,691
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,531		-		(1,302)		229
De-designated Risk Management Contracts (b)			-		-		-		1,943		1,943
Total Risk Management Assets		$	972	$	187,230	$	7,950	$	(150,289)	$	45,863

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	953	$	175,078	$	4,975	$	(159,235)	$	21,771
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,721		-		(1,302)		419
Total Risk Management Liabilities		$	953	$	176,799	$	4,975	$	(160,537)	$	22,190

(c) Amounts in “Other” column primarily represent cash deposits with third parties. Level 1 amounts primarily represent investments in money market funds.

(d) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(e) Amounts represent publicly traded equity securities and equity-based mutual funds.

(f) Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2011		$	5,321	$	3,077	$	3,150	$	3,682	$	-	$	-
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(4,553)		(2,805)		(2,904)		(3,333)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		(406)		-		(533)		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(7)		(6)		(7)		(7)		-		-
Purchases, Issuances and Settlements (c)			358		278		297		321		-		-
Transfers into Level 3 (d) (f)			-		-		-		-		-		-
Transfers out of Level 3 (e) (f)			(259)		(150)		(154)		(180)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(91)		488		112		615		-		-
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Three Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2010		$	10,874	$	6,153	$	6,209	$	7,069	$	(2)	$	(2)
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(1,680)		(845)		(850)		(981)		2		2
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		5,941		-		9,258		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			195		118		133		157		2		3
Transfers into Level 3 (d) (f)			380		215		217		247		-		-
Transfers out of Level 3 (e) (f)			(890)		(503)		(508)		(579)		(1)		(2)
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		7,686		(1,532)		4,757		(3,514)		1		1
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

Nine Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2010		$	5,131	$	2,975	$	3,108	$	3,608	$	1	$	2
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(2,373)		(1,367)		(1,401)		(1,640)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		908		-		1,039		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(45)		(28)		(29)		(33)		-		-
Purchases, Issuances and Settlements (c)			2,835		1,620		1,656		1,947		-		-
Transfers into Level 3 (d) (f)			1,299		744		764		894		-		-
Transfers out of Level 3 (e) (f)			(3,057)		(1,762)		(1,834)		(2,146)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(3,021)		(2,614)		(1,770)		(3,104)		(1)		(2)
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Nine Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2009		$	9,428	$	4,776	$	4,816	$	5,569	$	2	$	3
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		1,269		713		721		825		1		3
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		10,670		-		14,651		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			(5,463)		(3,059)		(3,100)		(3,565)		(1)		(2)
Transfers into Level 3 (d) (f)			986		530		528		615		-		-
Transfers out of Level 3 (e) (f)			(2,088)		(1,195)		(1,199)		(1,376)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		12,433		(2,888)		8,192		(5,062)		-		(2)
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

(a) Included in revenues on the condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on the condensed statements of income. These net gains (losses) are recorded as regulatory assets/liabilities

Indiana Michigan Power Co [Member]

Fair Value Measurements [Abstract]

Fair Value Measurements

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

AEP utilizes its trustee's external pricing service in its estimate of the fair value of the underlying investments held in the nuclear trusts. AEP's investment managers review and validate the prices utilized by the trustee to determine fair value. AEP's investment managers perform their own valuation testing to verify the fair values of the securities. AEP receives audit reports of the trustee's operating controls and valuation processes. The trustee uses multiple pricing vendors for the assets held in the trusts.

Assets in the nuclear trusts and Other Cash Deposits are classified using the following methods. Equities are classified as Level 1 holdings if they are actively traded on exchanges. Items classified as Level 1 are investments in money market funds, fixed income and equity mutual funds and domestic equities. They are valued based on observable inputs primarily unadjusted quoted prices in active markets for identical assets. Fixed income securities do not trade on an exchange and do not have an official closing price. Pricing vendors calculate bond valuations using financial models and matrices. Fixed income securities are typically classified as Level 2 holdings because their valuation inputs are based on observable market data. Observable inputs used for valuing fixed income securities are benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data and economic events. Other securities with model-derived valuation inputs that are observable are also classified as Level 2 investments. Investments with unobservable valuation inputs are classified as Level 3 investments.

Items classified as Level 2 are primarily investments in individual fixed income securities. These fixed income securities are valued using models with input data as follows:

		Type of Fixed Income Security
		United States		State and Local
Type of Input		Government	Corporate Debt	Government

Benchmark Yields		X	X	X
Broker Quotes		X	X	X
Discount Margins		X	X
Treasury Market Update		X
Base Spread		X	X	X
Corporate Actions			X
Ratings Agency Updates			X	X
Prepayment Schedule and
	History			X
Yield Adjustments		X

Fair Value Measurements of Long-term Debt

The book values and fair values of Long-term Debt for the Registrant Subsidiaries as of September 30, 2011 and December 31, 2010 are summarized in the following table:

	September 30, 2011				December 31, 2010
Company	Book Value		Fair Value		Book Value		Fair Value

	(in thousands)
APCo	$	3,726,069	$	4,362,079	$	3,561,141	$	3,878,557
CSPCo		1,439,039		1,673,882		1,438,830		1,571,219
I&M		1,985,733		2,245,484		2,004,226		2,169,520
OPCo		2,614,910		2,965,698		2,729,522		2,945,280
PSO		945,735		1,106,839		971,186		1,040,656
SWEPCo		1,728,574		1,996,103		1,769,520		1,931,516

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal

Nuclear decommissioning and spent nuclear fuel trust funds represent funds that regulatory commissions allow I&M to collect through rates to fund future decommissioning and spent nuclear fuel disposal liabilities. By rules or orders, the IURC, the MPSC and the FERC established investment limitations and general risk management guidelines. In general, limitations include:

Acceptable investments (rated investment grade or above when purchased).
Maximum percentage invested in a specific type of investment.
Prohibition of investment in obligations of AEP or its affiliates.
Withdrawals permitted only for payment of decommissioning costs and trust expenses.

I&M maintains trust records for each regulatory jurisdiction. These funds are managed by external investment managers who must comply with the guidelines and rules of the applicable regulatory authorities. The trust assets are invested to optimize the net of tax earnings of the trust giving consideration to liquidity, risk, diversification and other prudent investment objectives.

I&M records securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF at fair value. I&M classifies securities in the trust funds as available-for-sale due to their long-term purpose. Other-than-temporary impairments for investments in both debt and equity securities are considered realized losses as a result of securities being managed by an external investment management firm. The external investment management firm makes specific investment decisions regarding the equity and debt investments held in these trusts and generally intends to sell debt securities in an unrealized loss position as part of a tax optimization strategy. Impairments reduce the cost basis of the securities which will affect any future unrealized gain or realized gain or loss due to the adjusted cost of investment. I&M records unrealized gains and other-than-temporary impairments from securities in these trust funds as adjustments to the regulatory liability account for the nuclear decommissioning trust funds and to regulatory assets or liabilities for the SNF disposal trust funds in accordance with their treatment in rates. Consequently, changes in fair value of trust assets do not affect earnings or AOCI. The trust assets are recorded by jurisdiction and may not be used for another jurisdiction's liabilities. Regulatory approval is required to withdraw decommissioning funds.

The following is a summary of nuclear trust fund investments at September 30, 2011 and December 31, 2010:

		September 30, 2011						December 31, 2010
		Estimated		Gross		Other-Than-		Estimated		Gross		Other-Than-
		Fair		Unrealized		Temporary		Fair		Unrealized		Temporary
		Value		Gains		Impairments		Value		Gains		Impairments

		(in thousands)
Cash and Cash Equivalents		$	13,906	$	-	$	-	$	20,039	$	-	$	-
Fixed Income Securities:
	United States Government		549,523		59,452		(506)		461,084		22,582		(1,489)
	Corporate Debt		53,714		4,673		(1,567)		59,463		3,716		(1,905)
	State and Local Government		319,906		461		(1,350)		340,786		(975)		(340)
	Subtotal Fixed Income Securities		923,143		64,586		(3,423)		861,333		25,323		(3,734)
Equity Securities - Domestic			575,655		144,264		(84,344)		633,855		183,447		(122,889)
Spent Nuclear Fuel and
	Decommissioning Trusts	$	1,512,704	$	208,850	$	(87,767)	$	1,515,227	$	208,770	$	(126,623)

The following table provides the securities activity within the decommissioning and SNF trusts for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(in thousands)
Proceeds from Investment Sales	$	361,001	$	495,221	$	825,689	$	1,087,484
Purchases of Investments		378,607		511,688		870,769		1,128,747
Gross Realized Gains on Investment Sales		17,256		1,168		29,661		7,518
Gross Realized Losses on Investment Sales		11,313		33		20,603		450

The fair value of debt securities held in the nuclear trust funds, summarized by contractual maturities, at September 30, 2011 was as follows:

	Fair Value
	of Debt
	Securities

	(in thousands)
Within 1 year	$	78,797
1 year – 5 years		268,611
5 years – 10 years		318,475
After 10 years		257,260
Total	$	923,143

Fair Value Measurements of Financial Assets and Liabilities

Assets and Liabilities Measured at Fair Value on a Recurring Basis
September 30, 2011
I&M
			Level 1		Level 2		Level 3		Other		Total

Assets:			(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)			$	1,037	$	121,993	$	8,436	$	(89,827)	$	41,639
Cash Flow Hedges:
	Commodity Hedges (a)			-		1,545		-		(1,044)		501
De-designated Risk Management Contracts (b)				-		-		-		1,413		1,413
Total Risk Management Assets				1,037		123,538		8,436		(89,458)		43,553

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)				-		4,548		-		9,358		13,906
Fixed Income Securities:
	United States Government			-		549,523		-		-		549,523
	Corporate Debt			-		53,714		-		-		53,714
	State and Local Government			-		319,906		-		-		319,906
		Subtotal Fixed Income Securities		-		923,143		-		-		923,143
Equity Securities - Domestic (e)				575,655		-		-		-		575,655
Total Spent Nuclear Fuel and Decommissioning Trusts				575,655		927,691		-		9,358		1,512,704

Total Assets			$	576,692	$	1,051,229	$	8,436	$	(80,100)	$	1,556,257

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)			$	618	$	101,843	$	7,913	$	(94,264)	$	16,110
Cash Flow Hedges:
	Commodity Hedges (a)			-		1,464		29		(1,044)		449
	Interest Rate/Foreign Currency Hedges			-		7,329		-		-		7,329
Total Risk Management Liabilities			$	618	$	110,636	$	7,942	$	(95,308)	$	23,888

		Assets and Liabilities Measured at Fair Value on a Recurring Basis
		December 31, 2010
I&M
			Level 1		Level 2		Level 3		Other		Total

Assets:			(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)			$	1,014	$	209,031	$	8,295	$	(161,531)	$	56,809
Cash Flow Hedges:
	Commodity Hedges (a)			-		1,533		-		(1,358)		175
De-designated Risk Management Contracts (b)				-		-		-		2,027		2,027
Total Risk Management Assets				1,014		210,564		8,295		(160,862)		59,011

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)				-		7,898		-		12,141		20,039
Fixed Income Securities:
	United States Government			-		461,084		-		-		461,084
	Corporate Debt			-		59,463		-		-		59,463
	State and Local Government			-		340,786		-		-		340,786
		Subtotal Fixed Income Securities		-		861,333		-		-		861,333
Equity Securities - Domestic (e)				633,855		-		-		-		633,855
Total Spent Nuclear Fuel and Decommissioning Trusts				633,855		869,231		-		12,141		1,515,227

Total Assets			$	634,869	$	1,079,795	$	8,295	$	(148,721)	$	1,574,238

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)			$	994	$	186,898	$	5,187	$	(170,201)	$	22,878
Cash Flow Hedges:
	Commodity Hedges (a)			-		1,795		-		(1,358)		437
Total Risk Management Liabilities			$	994	$	188,693	$	5,187	$	(171,559)	$	23,315

(c) Amounts in “Other” column primarily represent cash deposits with third parties. Level 1 amounts primarily represent investments in money market funds.

(d) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(e) Amounts represent publicly traded equity securities and equity-based mutual funds.

(f) Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2011		$	5,321	$	3,077	$	3,150	$	3,682	$	-	$	-
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(4,553)		(2,805)		(2,904)		(3,333)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		(406)		-		(533)		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(7)		(6)		(7)		(7)		-		-
Purchases, Issuances and Settlements (c)			358		278		297		321		-		-
Transfers into Level 3 (d) (f)			-		-		-		-		-		-
Transfers out of Level 3 (e) (f)			(259)		(150)		(154)		(180)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(91)		488		112		615		-		-
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Three Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2010		$	10,874	$	6,153	$	6,209	$	7,069	$	(2)	$	(2)
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(1,680)		(845)		(850)		(981)		2		2
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		5,941		-		9,258		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			195		118		133		157		2		3
Transfers into Level 3 (d) (f)			380		215		217		247		-		-
Transfers out of Level 3 (e) (f)			(890)		(503)		(508)		(579)		(1)		(2)
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		7,686		(1,532)		4,757		(3,514)		1		1
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

Nine Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2010		$	5,131	$	2,975	$	3,108	$	3,608	$	1	$	2
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(2,373)		(1,367)		(1,401)		(1,640)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		908		-		1,039		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(45)		(28)		(29)		(33)		-		-
Purchases, Issuances and Settlements (c)			2,835		1,620		1,656		1,947		-		-
Transfers into Level 3 (d) (f)			1,299		744		764		894		-		-
Transfers out of Level 3 (e) (f)			(3,057)		(1,762)		(1,834)		(2,146)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(3,021)		(2,614)		(1,770)		(3,104)		(1)		(2)
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Nine Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2009		$	9,428	$	4,776	$	4,816	$	5,569	$	2	$	3
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		1,269		713		721		825		1		3
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		10,670		-		14,651		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			(5,463)		(3,059)		(3,100)		(3,565)		(1)		(2)
Transfers into Level 3 (d) (f)			986		530		528		615		-		-
Transfers out of Level 3 (e) (f)			(2,088)		(1,195)		(1,199)		(1,376)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		12,433		(2,888)		8,192		(5,062)		-		(2)
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

(a) Included in revenues on the condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on the condensed statements of income. These net gains (losses) are recorded as regulatory assets/liabilities.

Ohio Power Co [Member]

Fair Value Measurements [Abstract]

Fair Value Measurements

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

Fair Value Measurements of Long-term Debt

The book values and fair values of Long-term Debt for the Registrant Subsidiaries as of September 30, 2011 and December 31, 2010 are summarized in the following table:

	September 30, 2011				December 31, 2010
Company	Book Value		Fair Value		Book Value		Fair Value

	(in thousands)
APCo	$	3,726,069	$	4,362,079	$	3,561,141	$	3,878,557
CSPCo		1,439,039		1,673,882		1,438,830		1,571,219
I&M		1,985,733		2,245,484		2,004,226		2,169,520
OPCo		2,614,910		2,965,698		2,729,522		2,945,280
PSO		945,735		1,106,839		971,186		1,040,656
SWEPCo		1,728,574		1,996,103		1,769,520		1,931,516

Fair Value Measurements of Financial Assets and Liabilities

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
	September 30, 2011
OPCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Other Cash Deposits (c)		$	26	$	-	$	-	$	22	$	48

Risk Management Assets
Risk Management Commodity Contracts (a) (f)			1,188		147,519		9,668		(119,731)		38,644
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,784		-		(1,197)		587
De-designated Risk Management Contracts (b)			-		-		-		1,619		1,619
Total Risk Management Assets			1,188		149,303		9,668		(119,309)		40,850

Total Assets		$	1,214	$	149,303	$	9,668	$	(119,287)	$	40,898

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	708	$	134,637	$	9,070	$	(124,878)	$	19,537
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,747		33		(1,197)		583
Total Risk Management Liabilities		$	708	$	136,384	$	9,103	$	(126,075)	$	20,120

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
	December 31, 2010
OPCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Other Cash Deposits (c)		$	26	$	-	$	-	$	-	$	26

Risk Management Assets
Risk Management Commodity Contracts (a) (f)			1,186		314,560		9,709		(269,216)		56,239
Cash Flow Hedges:
	Commodity Hedges (a)		-		1,764		-		(1,590)		174
De-designated Risk Management Contracts (b)			-		-		-		2,372		2,372
Total Risk Management Assets			1,186		316,324		9,709		(268,434)		58,785

Total Assets		$	1,212	$	316,324	$	9,709	$	(268,434)	$	58,811

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	1,163	$	302,299	$	6,101	$	(279,505)	$	30,058
Cash Flow Hedges:
	Commodity Hedges (a)		-		2,101		-		(1,590)		511
Total Risk Management Liabilities		$	1,163	$	304,400	$	6,101	$	(281,095)	$	30,569

(c) Amounts in “Other” column primarily represent cash deposits with third parties. Level 1 amounts primarily represent investments in money market funds.

(d) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(e) Amounts represent publicly traded equity securities and equity-based mutual funds.

(f) Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2011		$	5,321	$	3,077	$	3,150	$	3,682	$	-	$	-
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(4,553)		(2,805)		(2,904)		(3,333)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		(406)		-		(533)		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(7)		(6)		(7)		(7)		-		-
Purchases, Issuances and Settlements (c)			358		278		297		321		-		-
Transfers into Level 3 (d) (f)			-		-		-		-		-		-
Transfers out of Level 3 (e) (f)			(259)		(150)		(154)		(180)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(91)		488		112		615		-		-
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Three Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2010		$	10,874	$	6,153	$	6,209	$	7,069	$	(2)	$	(2)
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(1,680)		(845)		(850)		(981)		2		2
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		5,941		-		9,258		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			195		118		133		157		2		3
Transfers into Level 3 (d) (f)			380		215		217		247		-		-
Transfers out of Level 3 (e) (f)			(890)		(503)		(508)		(579)		(1)		(2)
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		7,686		(1,532)		4,757		(3,514)		1		1
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

Nine Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2010		$	5,131	$	2,975	$	3,108	$	3,608	$	1	$	2
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(2,373)		(1,367)		(1,401)		(1,640)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		908		-		1,039		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(45)		(28)		(29)		(33)		-		-
Purchases, Issuances and Settlements (c)			2,835		1,620		1,656		1,947		-		-
Transfers into Level 3 (d) (f)			1,299		744		764		894		-		-
Transfers out of Level 3 (e) (f)			(3,057)		(1,762)		(1,834)		(2,146)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(3,021)		(2,614)		(1,770)		(3,104)		(1)		(2)
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Nine Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2009		$	9,428	$	4,776	$	4,816	$	5,569	$	2	$	3
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		1,269		713		721		825		1		3
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		10,670		-		14,651		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			(5,463)		(3,059)		(3,100)		(3,565)		(1)		(2)
Transfers into Level 3 (d) (f)			986		530		528		615		-		-
Transfers out of Level 3 (e) (f)			(2,088)		(1,195)		(1,199)		(1,376)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		12,433		(2,888)		8,192		(5,062)		-		(2)
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

(a) Included in revenues on the condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on the condensed statements of income. These net gains (losses) are recorded as regulatory assets/liabilities.

Public Service Co Of Oklahoma [Member]

Fair Value Measurements [Abstract]

Fair Value Measurements

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

Fair Value Measurements of Long-term Debt

The book values and fair values of Long-term Debt for the Registrant Subsidiaries as of September 30, 2011 and December 31, 2010 are summarized in the following table:

	September 30, 2011				December 31, 2010
Company	Book Value		Fair Value		Book Value		Fair Value

	(in thousands)
APCo	$	3,726,069	$	4,362,079	$	3,561,141	$	3,878,557
CSPCo		1,439,039		1,673,882		1,438,830		1,571,219
I&M		1,985,733		2,245,484		2,004,226		2,169,520
OPCo		2,614,910		2,965,698		2,729,522		2,945,280
PSO		945,735		1,106,839		971,186		1,040,656
SWEPCo		1,728,574		1,996,103		1,769,520		1,931,516

Fair Value Measurements of Financial Assets and Liabilities

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
	September 30, 2011
PSO
		Level 1		Level 2		Level 3		Other		Total
Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	37	$	11,776	$	-	$	(9,326)	$	2,487
Cash Flow Hedges:
	Commodity Hedges		-		41		-		-		41
Total Risk Management Assets		$	37	$	11,817	$	-	$	(9,326)	$	2,528

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	11	$	10,105	$	-	$	(9,521)	$	595
Cash Flow Hedges:
	Commodity Hedges		-		231		-		-		231
Total Risk Management Liabilities		$	11	$	10,336	$	-	$	(9,521)	$	826

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
	December 31, 2010
PSO
		Level 1		Level 2		Level 3		Other		Total
Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	-	$	21,119	$	1	$	(20,335)	$	785
Cash Flow Hedges:
	Commodity Hedges		-		134		-		-		134
	Interest Rate/Foreign Currency Hedges		-		13,558		-		-		13,558
Total Risk Management Assets		$	-	$	34,811	$	1	$	(20,335)	$	14,477

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	-	$	21,498	$	-	$	(20,379)	$	1,119

(c) Amounts in “Other” column primarily represent cash deposits with third parties. Level 1 amounts primarily represent investments in money market funds.

(d) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(e) Amounts represent publicly traded equity securities and equity-based mutual funds.

(f) Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2011		$	5,321	$	3,077	$	3,150	$	3,682	$	-	$	-
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(4,553)		(2,805)		(2,904)		(3,333)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		(406)		-		(533)		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(7)		(6)		(7)		(7)		-		-
Purchases, Issuances and Settlements (c)			358		278		297		321		-		-
Transfers into Level 3 (d) (f)			-		-		-		-		-		-
Transfers out of Level 3 (e) (f)			(259)		(150)		(154)		(180)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(91)		488		112		615		-		-
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Three Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2010		$	10,874	$	6,153	$	6,209	$	7,069	$	(2)	$	(2)
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(1,680)		(845)		(850)		(981)		2		2
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		5,941		-		9,258		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			195		118		133		157		2		3
Transfers into Level 3 (d) (f)			380		215		217		247		-		-
Transfers out of Level 3 (e) (f)			(890)		(503)		(508)		(579)		(1)		(2)
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		7,686		(1,532)		4,757		(3,514)		1		1
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

Nine Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2010		$	5,131	$	2,975	$	3,108	$	3,608	$	1	$	2
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(2,373)		(1,367)		(1,401)		(1,640)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		908		-		1,039		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(45)		(28)		(29)		(33)		-		-
Purchases, Issuances and Settlements (c)			2,835		1,620		1,656		1,947		-		-
Transfers into Level 3 (d) (f)			1,299		744		764		894		-		-
Transfers out of Level 3 (e) (f)			(3,057)		(1,762)		(1,834)		(2,146)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(3,021)		(2,614)		(1,770)		(3,104)		(1)		(2)
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Nine Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2009		$	9,428	$	4,776	$	4,816	$	5,569	$	2	$	3
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		1,269		713		721		825		1		3
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		10,670		-		14,651		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			(5,463)		(3,059)		(3,100)		(3,565)		(1)		(2)
Transfers into Level 3 (d) (f)			986		530		528		615		-		-
Transfers out of Level 3 (e) (f)			(2,088)		(1,195)		(1,199)		(1,376)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		12,433		(2,888)		8,192		(5,062)		-		(2)
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

(a) Included in revenues on the condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on the condensed statements of income. These net gains (losses) are recorded as regulatory assets/liabilities.

Southwestern Electric Power Co [Member]

Fair Value Measurements [Abstract]

Fair Value Measurements

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy and Valuation Techniques

Fair Value Measurements of Long-term Debt

The book values and fair values of Long-term Debt for the Registrant Subsidiaries as of September 30, 2011 and December 31, 2010 are summarized in the following table:

	September 30, 2011				December 31, 2010
Company	Book Value		Fair Value		Book Value		Fair Value

	(in thousands)
APCo	$	3,726,069	$	4,362,079	$	3,561,141	$	3,878,557
CSPCo		1,439,039		1,673,882		1,438,830		1,571,219
I&M		1,985,733		2,245,484		2,004,226		2,169,520
OPCo		2,614,910		2,965,698		2,729,522		2,945,280
PSO		945,735		1,106,839		971,186		1,040,656
SWEPCo		1,728,574		1,996,103		1,769,520		1,931,516

Fair Value Measurements of Financial Assets and Liabilities

Assets and Liabilities Measured at Fair Value on a Recurring Basis
September 30, 2011
SWEPCo
		Level 1		Level 2		Level 3		Other		Total
Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	47	$	7,816	$	-	$	(7,143)	$	720
Cash Flow Hedges:
	Commodity Hedges		-		38		-		-		38
	Interest Rate/Foreign Currency Hedges		-		5		-		-		5
Total Risk Management Assets		$	47	$	7,859	$	-	$	(7,143)	$	763

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	14	$	7,760	$	-	$	(7,317)	$	457
Cash Flow Hedges:
	Commodity Hedges		-		211		-		-		211
	Interest Rate/Foreign Currency Hedges		-		16,187		-		-		16,187
Total Risk Management Liabilities		$	14	$	24,158	$	-	$	(7,317)	$	16,855

	Assets and Liabilities Measured at Fair Value on a Recurring Basis
	December 31, 2010
SWEPCo
		Level 1		Level 2		Level 3		Other		Total

Assets:		(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (a) (f)		$	-	$	36,632	$	2	$	(35,115)	$	1,519
Cash Flow Hedges:
	Commodity Hedges		-		123		-		-		123
	Interest Rate/Foreign Currency Hedges		-		5		-		-		5
Total Risk Management Assets		$	-	$	36,760	$	2	$	(35,115)	$	1,647

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (a) (f)		$	-	$	39,592	$	-	$	(35,187)	$	4,405

(c) Amounts in “Other” column primarily represent cash deposits with third parties. Level 1 amounts primarily represent investments in money market funds.

(d) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 2 amounts primarily represent investments in money market funds.

(e) Amounts represent publicly traded equity securities and equity-based mutual funds.

(f) Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Three Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2011		$	5,321	$	3,077	$	3,150	$	3,682	$	-	$	-
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(4,553)		(2,805)		(2,904)		(3,333)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		(406)		-		(533)		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(7)		(6)		(7)		(7)		-		-
Purchases, Issuances and Settlements (c)			358		278		297		321		-		-
Transfers into Level 3 (d) (f)			-		-		-		-		-		-
Transfers out of Level 3 (e) (f)			(259)		(150)		(154)		(180)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(91)		488		112		615		-		-
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Three Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of June 30, 2010		$	10,874	$	6,153	$	6,209	$	7,069	$	(2)	$	(2)
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(1,680)		(845)		(850)		(981)		2		2
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		5,941		-		9,258		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			195		118		133		157		2		3
Transfers into Level 3 (d) (f)			380		215		217		247		-		-
Transfers out of Level 3 (e) (f)			(890)		(503)		(508)		(579)		(1)		(2)
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		7,686		(1,532)		4,757		(3,514)		1		1
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

Nine Months Ended September 30, 2011		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2010		$	5,131	$	2,975	$	3,108	$	3,608	$	1	$	2
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		(2,373)		(1,367)		(1,401)		(1,640)		-		-
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		908		-		1,039		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		(45)		(28)		(29)		(33)		-		-
Purchases, Issuances and Settlements (c)			2,835		1,620		1,656		1,947		-		-
Transfers into Level 3 (d) (f)			1,299		744		764		894		-		-
Transfers out of Level 3 (e) (f)			(3,057)		(1,762)		(1,834)		(2,146)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		(3,021)		(2,614)		(1,770)		(3,104)		(1)		(2)
Balance as of September 30, 2011		$	769	$	476	$	494	$	565	$	-	$	-

Nine Months Ended September 30, 2010		APCo		CSPCo		I&M		OPCo		PSO		SWEPCo

		(in thousands)
Balance as of December 31, 2009		$	9,428	$	4,776	$	4,816	$	5,569	$	2	$	3
Realized Gain (Loss) Included in Net Income
	(or Changes in Net Assets) (a) (b)		1,269		713		721		825		1		3
Unrealized Gain (Loss) Included in Net
	Income (or Changes in Net Assets) Relating
	to Assets Still Held at the Reporting Date (a)		-		10,670		-		14,651		-		-
Realized and Unrealized Gains (Losses)
	Included in Other Comprehensive Income		-		-		-		-		-		-
Purchases, Issuances and Settlements (c)			(5,463)		(3,059)		(3,100)		(3,565)		(1)		(2)
Transfers into Level 3 (d) (f)			986		530		528		615		-		-
Transfers out of Level 3 (e) (f)			(2,088)		(1,195)		(1,199)		(1,376)		-		-
Changes in Fair Value Allocated to Regulated
	Jurisdictions (g)		12,433		(2,888)		8,192		(5,062)		-		(2)
Balance as of September 30, 2010		$	16,565	$	9,547	$	9,958	$	11,657	$	2	$	2

(a) Included in revenues on the condensed statements of income.

(b) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Represents existing assets or liabilities that were previously categorized as Level 3.

(f) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(g) Relates to the net gains (losses) of those contracts that are not reflected on the condensed statements of income. These net gains (losses) are recorded as regulatory assets/liabilities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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