FINANCING ACTIVITIES

Long-term Debt

The following table details long-term debt outstanding as of September 30, 2014 and December 31, 2013:



Type of Debt	September 30, 2014			December 31, 2013
	(in millions)
Senior Unsecured Notes	$	12,017		$	11,799
Pollution Control Bonds	1,963			1,932
Notes Payable	277			369
Securitization Bonds	2,413			2,686
Spent Nuclear Fuel Obligation (a)	265			265
Other Long-term Debt	1,155			1,360
Fair Value of Interest Rate Hedges	(7		)	(9		)
Unamortized Discount, Net	(25		)	(25		)
Total Long-term Debt Outstanding	18,058			18,377
Long-term Debt Due Within One Year	2,381			1,549
Long-term Debt	$	15,677		$	16,828

(a)

Pursuant to the Nuclear Waste Policy Act of 1982, I&M, a nuclear licensee, has an obligation to the United States Department of Energy for spent nuclear fuel disposal. The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983. Trust fund assets related to this obligation were $309 million and $309 million as of September 30, 2014 and December 31, 2013, respectively, and are included in Spent Nuclear Fuel and Decommissioning Trusts on our condensed balance sheets.

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2014 are shown in the tables below:



Company	Type of Debt	Principal Amount			Interest Rate	Due Date
Issuances:		(in millions)			(%)
APCo	Senior Unsecured Notes	$	300		4.40	2044
I&M	Pollution Control Bonds	100			1.75	2018
PSO	Other Long-term Debt	75			Variable	2016
SWEPCo	Other Long-term Debt	100			Variable	2017

Non-Registrant:
AEPTCo	Senior Unsecured Notes	30			5.42	2044
AGR	Pollution Control Bonds	39			Variable	2015
AGR	Pollution Control Bonds	79			Variable	2015
AGR	Pollution Control Bonds	60		(a)	Variable	2038
KPCo	Pollution Control Bonds	65		(a)	Variable	2036
KPCo	Senior Unsecured Notes	120			4.18	2026
TCC	Senior Unsecured Notes	50			2.61	2019
TCC	Senior Unsecured Notes	50			3.81	2026
TCC	Senior Unsecured Notes	100			4.67	2044
Transource Missouri	Other Long-term Debt	49			Variable	2018
Total Issuances		$	1,217	(b)


(a)	Pollution Control Bonds are subject to redemption earlier than the maturity date. Consequently, these bonds have been classified for maturity purposes as Long-term Debt Due Within One Year.


(b)	Amount indicated on the statement of cash flows is net of issuance costs and premium or discount and will not tie to the issuance amount.



Company	Type of Debt	Principal Amount Paid		Interest Rate	Due Date
Total Retirements and Principal Payments:		(in millions)		(%)
APCo	Other Long-term Debt	$	300	Variable	2015
APCo	Securitization Bonds	13		2.01	2024
APCo	Senior Unsecured Notes	200		4.95	2015
I&M	Notes Payable	29		Variable	2017
I&M	Notes Payable	22		Variable	2016
I&M	Notes Payable	11		2.12	2016
I&M	Notes Payable	15		Variable	2016
I&M	Notes Payable	4		4.00	2014
I&M	Other Long-term Debt	8		Variable	2015
I&M	Other Long-term Debt	1		6.00	2025
I&M	Pollution Control Bonds	100		6.25	2014
OPCo	Pollution Control Bonds	39		2.875	2014
OPCo	Pollution Control Bonds	79		3.25	2014
OPCo	Pollution Control Bonds	60		3.875	2014
OPCo	Senior Unsecured Notes	225		4.85	2014
OPCo	Securitization Bonds	35		0.958	2018
PSO	Pollution Control Bonds	34		5.25	2014
SWEPCo	Notes Payable	3		4.58	2032

Non-Registrant:
AEGCo	Senior Unsecured Notes	7		6.33	2037
AEP Subsidiaries	Notes Payable	2		8.03	2026
AEP Subsidiaries	Notes Payable	1		7.59	2026
AEP Subsidiaries	Notes Payable	5		Variable	2017
KPCo	Other Long-term Debt	120		Variable	2015
TCC	Securitization Bonds	127		5.09	2015
TCC	Securitization Bonds	72		6.25	2016
TCC	Securitization Bonds	26		0.88	2017
Total Retirements and Principal Payments		$	1,538

In December 2013, AGR assigned KPCo $200 million of Other Long-term Debt due in May 2015. In September 2014, KPCo refinanced $120 million of the original assignment as Senior Unsecured Notes (see issuances and retirements tables above). Also in September 2014, KPCo signed an agreement to refinance the remaining $80 million in December 2014 as 4.33% Senior Unsecured Notes due in 2026. Consequently and as of September 30, 2014, the remaining $80 million was excluded from current liabilities and was instead classified as Long-term Debt on the balance sheet.

In October 2014, APCo remarketed $100 million of 1.625% Pollution Control Bonds due in 2018.

In October 2014, I&M retired $5 million of Notes Payable related to DCC Fuel.

As of September 30, 2014, trustees held on our behalf, $435 million of our reacquired Pollution Control Bonds.

Dividend Restrictions

Parent Restrictions

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

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

Utility Subsidiaries’ Restrictions

Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of our utility subsidiaries to transfer funds to us in the form of dividends. Specifically, several of our public utility subsidiaries have credit agreements that contain a covenant that limits their debt to capitalization ratio to 67.5%.

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

Short-term Debt

Our outstanding short-term debt was as follows:



	September 30, 2014				December 31, 2013
Type of Debt	Outstanding Amount		Interest Rate (a)		Outstanding Amount		Interest Rate (a)
	(in millions)				(in millions)
Securitized Debt for Receivables (b)	$	750	0.22	%	$	700	0.23	%
Commercial Paper	532		0.28	%	57		0.29	%
Total Short-term Debt	$	1,282			$	757


(a)	Weighted average rate.


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

Credit Facilities

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

Securitized Accounts Receivable – AEP Credit

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

Our receivables securitization agreement provides a commitment of $750 million from bank conduits to purchase receivables. The agreement was increased in June 2014 from $700 million and expires in June 2016.

Accounts receivable information for AEP Credit is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(dollars in millions)
Effective Interest Rates on Securitization of
Accounts Receivable	0.21		%	0.23		%	0.22		%	0.23		%
Net Uncollectible Accounts Receivable
Written Off	$	16		$	12		$	32		$	26



	September 30, 2014		December 31, 2013
	(in millions)
Accounts Receivable Retained Interest and Pledged as Collateral Less Uncollectible Accounts	$	1,000	$	929
Total Principal Outstanding	750		700
Delinquent Securitized Accounts Receivable	57		45
Bad Debt Reserves Related to Securitization/Sale of Accounts Receivable	13		16
Unbilled Receivables Related to Securitization/Sale of Accounts Receivable	269		331

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

Financing Activities

FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2014 are shown in the tables below:



Company	Type of Debt	Principal Amount (a)		Interest Rate	Due Date
Issuances:		(in thousands)		(%)
APCo	Senior Unsecured Notes	$	300,000	4.40	2044
I&M	Pollution Control Bonds	100,000		1.75	2018
PSO	Other Long-term Debt	75,000		Variable	2016
SWEPCo	Other Long-term Debt	100,000		Variable	2017


(a)	Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.



Company	Type of Debt	Principal Amount Paid		Interest Rate	Due Date
Retirements and Principal Payments:		(in thousands)		(%)
APCo	Land Note	$	24	13.718	2026
APCo	Securitization Bonds	12,678		2.01	2024
APCo	Senior Unsecured Notes	200,000		4.95	2015
APCo	Other Long-term Debt	300,000		Variable	2015
I&M	Notes Payable	29,275		Variable	2017
I&M	Notes Payable	22,332		Variable	2016
I&M	Notes Payable	15,472		Variable	2016
I&M	Notes Payable	10,716		2.12	2016
I&M	Notes Payable	4,402		4.00	2014
I&M	Other Long-term Debt	7,563		Variable	2015
I&M	Other Long-term Debt	790		6.00	2025
I&M	Pollution Control Bonds	100,000		6.25	2014
OPCo	Other Long-term Debt	67		1.149	2028
OPCo	Pollution Control Bonds	39,130		2.875	2014
OPCo	Pollution Control Bonds	79,450		3.25	2014
OPCo	Pollution Control Bonds	60,000		3.875	2014
OPCo	Securitization Bonds	34,936		0.958	2018
OPCo	Senior Unsecured Notes	225,000		4.85	2014
PSO	Other Long-term Debt	310		3.00	2027
PSO	Pollution Control Bonds	33,700		5.25	2014
SWEPCo	Notes Payable	3,250		4.58	2032

In October 2014, APCo remarketed $100 million of 1.625% Pollution Control Bonds due in 2018.

In October 2014, I&M retired $5 million of Notes Payable related to DCC Fuel.

As of September 30, 2014, trustees held on behalf of I&M and OPCo, $40 million and $395 million, respectively, of their reacquired Pollution Control Bonds.

Dividend Restrictions

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

Federal Power Act

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

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

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

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M, PSO and SWEPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions of the AEP System Utility Money Pool agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of September 30, 2014 and December 31, 2013 are included in Advances to Affiliates and Advances from Affiliates, respectively, on each of the Registrant Subsidiaries’ condensed balance sheets. The Utility Money Pool participants’ money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2014 are described in the following table:



Company	Maximum Borrowings from the Utility Money Pool		Maximum Loans to the Utility Money Pool		Average Borrowings from the Utility Money Pool		Average Loans to the Utility Money Pool		Net Loans to (Borrowings from) the Utility Money Pool as of September 30, 2014			Authorized Short-term Borrowing Limit
	(in thousands)
APCo	$	44,215	$	542,186	$	14,038	$	122,105	$	70,090		$	600,000
I&M	130,128		158,857		59,863		47,695		(82,400		)	500,000
OPCo	120,264		405,350		34,841		82,518		23,745			400,000
PSO	176,950		—		93,679		—		(100,867		)	300,000
SWEPCo	153,503		49,869		82,953		22,408		(6,329		)	350,000

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



	Nine Months Ended September 30,
	2014		2013
Maximum Interest Rate	0.33	%	0.43	%
Minimum Interest Rate	0.24	%	0.28	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2014 and 2013 are summarized for all Registrant Subsidiaries in the following table:



	Average Interest Rate for Funds Borrowed from the Utility Money Pool for				Average Interest Rate for Funds Loaned to the Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
APCo	0.26	%	0.33	%	0.28	%	0.34	%
I&M	0.27	%	0.36	%	0.30	%	0.33	%
OPCo	0.27	%	0.34	%	0.29	%	0.32	%
PSO	0.27	%	0.34	%	—	%	0.32	%
SWEPCo	0.28	%	0.33	%	0.27	%	0.36	%

Credit Facilities

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

Sale of Receivables – AEP Credit

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

AEP Credit's receivables securitization agreement provides a commitment of $750 million from bank conduits to purchase receivables. The agreement was increased in June 2014 from $700 million and expires in June 2016.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2014 and December 31, 2013 was as follows:



	September 30,		December 31,
Company	2014		2013
	(in thousands)
APCo	$	134,986	$	156,599
I&M	136,897		139,257
OPCo	345,545		324,287
PSO	156,781		115,260
SWEPCo	179,687		149,337

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	2,166	$	1,575	$	6,626	$	4,590
I&M	2,011		1,762		5,836		4,744
OPCo	7,213		5,076		21,358		14,440
PSO	1,745		1,549		4,417		4,314
SWEPCo	1,890		1,649		5,035		4,413

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	354,406	$	340,438	$	1,137,564	$	1,081,615
I&M	372,422		384,316		1,132,603		1,097,563
OPCo	668,112		658,829		1,980,764		2,017,746
PSO	398,567		382,167		1,014,320		944,062
SWEPCo	466,828		450,294		1,278,325		1,171,306

Financing Activities

FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2014 are shown in the tables below:



Company	Type of Debt	Principal Amount (a)		Interest Rate	Due Date
Issuances:		(in thousands)		(%)
APCo	Senior Unsecured Notes	$	300,000	4.40	2044
I&M	Pollution Control Bonds	100,000		1.75	2018
PSO	Other Long-term Debt	75,000		Variable	2016
SWEPCo	Other Long-term Debt	100,000		Variable	2017


(a)	Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.



Company	Type of Debt	Principal Amount Paid		Interest Rate	Due Date
Retirements and Principal Payments:		(in thousands)		(%)
APCo	Land Note	$	24	13.718	2026
APCo	Securitization Bonds	12,678		2.01	2024
APCo	Senior Unsecured Notes	200,000		4.95	2015
APCo	Other Long-term Debt	300,000		Variable	2015
I&M	Notes Payable	29,275		Variable	2017
I&M	Notes Payable	22,332		Variable	2016
I&M	Notes Payable	15,472		Variable	2016
I&M	Notes Payable	10,716		2.12	2016
I&M	Notes Payable	4,402		4.00	2014
I&M	Other Long-term Debt	7,563		Variable	2015
I&M	Other Long-term Debt	790		6.00	2025
I&M	Pollution Control Bonds	100,000		6.25	2014
OPCo	Other Long-term Debt	67		1.149	2028
OPCo	Pollution Control Bonds	39,130		2.875	2014
OPCo	Pollution Control Bonds	79,450		3.25	2014
OPCo	Pollution Control Bonds	60,000		3.875	2014
OPCo	Securitization Bonds	34,936		0.958	2018
OPCo	Senior Unsecured Notes	225,000		4.85	2014
PSO	Other Long-term Debt	310		3.00	2027
PSO	Pollution Control Bonds	33,700		5.25	2014
SWEPCo	Notes Payable	3,250		4.58	2032

In October 2014, APCo remarketed $100 million of 1.625% Pollution Control Bonds due in 2018.

In October 2014, I&M retired $5 million of Notes Payable related to DCC Fuel.

As of September 30, 2014, trustees held on behalf of I&M and OPCo, $40 million and $395 million, respectively, of their reacquired Pollution Control Bonds.

Dividend Restrictions

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

Federal Power Act

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

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

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

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M, PSO and SWEPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions of the AEP System Utility Money Pool agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of September 30, 2014 and December 31, 2013 are included in Advances to Affiliates and Advances from Affiliates, respectively, on each of the Registrant Subsidiaries’ condensed balance sheets. The Utility Money Pool participants’ money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2014 are described in the following table:



Company	Maximum Borrowings from the Utility Money Pool		Maximum Loans to the Utility Money Pool		Average Borrowings from the Utility Money Pool		Average Loans to the Utility Money Pool		Net Loans to (Borrowings from) the Utility Money Pool as of September 30, 2014			Authorized Short-term Borrowing Limit
	(in thousands)
APCo	$	44,215	$	542,186	$	14,038	$	122,105	$	70,090		$	600,000
I&M	130,128		158,857		59,863		47,695		(82,400		)	500,000
OPCo	120,264		405,350		34,841		82,518		23,745			400,000
PSO	176,950		—		93,679		—		(100,867		)	300,000
SWEPCo	153,503		49,869		82,953		22,408		(6,329		)	350,000

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



	Nine Months Ended September 30,
	2014		2013
Maximum Interest Rate	0.33	%	0.43	%
Minimum Interest Rate	0.24	%	0.28	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2014 and 2013 are summarized for all Registrant Subsidiaries in the following table:



	Average Interest Rate for Funds Borrowed from the Utility Money Pool for				Average Interest Rate for Funds Loaned to the Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
APCo	0.26	%	0.33	%	0.28	%	0.34	%
I&M	0.27	%	0.36	%	0.30	%	0.33	%
OPCo	0.27	%	0.34	%	0.29	%	0.32	%
PSO	0.27	%	0.34	%	—	%	0.32	%
SWEPCo	0.28	%	0.33	%	0.27	%	0.36	%

Credit Facilities

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

Sale of Receivables – AEP Credit

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

AEP Credit's receivables securitization agreement provides a commitment of $750 million from bank conduits to purchase receivables. The agreement was increased in June 2014 from $700 million and expires in June 2016.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2014 and December 31, 2013 was as follows:



	September 30,		December 31,
Company	2014		2013
	(in thousands)
APCo	$	134,986	$	156,599
I&M	136,897		139,257
OPCo	345,545		324,287
PSO	156,781		115,260
SWEPCo	179,687		149,337

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	2,166	$	1,575	$	6,626	$	4,590
I&M	2,011		1,762		5,836		4,744
OPCo	7,213		5,076		21,358		14,440
PSO	1,745		1,549		4,417		4,314
SWEPCo	1,890		1,649		5,035		4,413

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	354,406	$	340,438	$	1,137,564	$	1,081,615
I&M	372,422		384,316		1,132,603		1,097,563
OPCo	668,112		658,829		1,980,764		2,017,746
PSO	398,567		382,167		1,014,320		944,062
SWEPCo	466,828		450,294		1,278,325		1,171,306

Financing Activities

FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2014 are shown in the tables below:



Company	Type of Debt	Principal Amount (a)		Interest Rate	Due Date
Issuances:		(in thousands)		(%)
APCo	Senior Unsecured Notes	$	300,000	4.40	2044
I&M	Pollution Control Bonds	100,000		1.75	2018
PSO	Other Long-term Debt	75,000		Variable	2016
SWEPCo	Other Long-term Debt	100,000		Variable	2017


(a)	Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.



Company	Type of Debt	Principal Amount Paid		Interest Rate	Due Date
Retirements and Principal Payments:		(in thousands)		(%)
APCo	Land Note	$	24	13.718	2026
APCo	Securitization Bonds	12,678		2.01	2024
APCo	Senior Unsecured Notes	200,000		4.95	2015
APCo	Other Long-term Debt	300,000		Variable	2015
I&M	Notes Payable	29,275		Variable	2017
I&M	Notes Payable	22,332		Variable	2016
I&M	Notes Payable	15,472		Variable	2016
I&M	Notes Payable	10,716		2.12	2016
I&M	Notes Payable	4,402		4.00	2014
I&M	Other Long-term Debt	7,563		Variable	2015
I&M	Other Long-term Debt	790		6.00	2025
I&M	Pollution Control Bonds	100,000		6.25	2014
OPCo	Other Long-term Debt	67		1.149	2028
OPCo	Pollution Control Bonds	39,130		2.875	2014
OPCo	Pollution Control Bonds	79,450		3.25	2014
OPCo	Pollution Control Bonds	60,000		3.875	2014
OPCo	Securitization Bonds	34,936		0.958	2018
OPCo	Senior Unsecured Notes	225,000		4.85	2014
PSO	Other Long-term Debt	310		3.00	2027
PSO	Pollution Control Bonds	33,700		5.25	2014
SWEPCo	Notes Payable	3,250		4.58	2032

In October 2014, APCo remarketed $100 million of 1.625% Pollution Control Bonds due in 2018.

In October 2014, I&M retired $5 million of Notes Payable related to DCC Fuel.

As of September 30, 2014, trustees held on behalf of I&M and OPCo, $40 million and $395 million, respectively, of their reacquired Pollution Control Bonds.

Dividend Restrictions

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

Federal Power Act

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

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

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

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M, PSO and SWEPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions of the AEP System Utility Money Pool agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of September 30, 2014 and December 31, 2013 are included in Advances to Affiliates and Advances from Affiliates, respectively, on each of the Registrant Subsidiaries’ condensed balance sheets. The Utility Money Pool participants’ money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2014 are described in the following table:



Company	Maximum Borrowings from the Utility Money Pool		Maximum Loans to the Utility Money Pool		Average Borrowings from the Utility Money Pool		Average Loans to the Utility Money Pool		Net Loans to (Borrowings from) the Utility Money Pool as of September 30, 2014			Authorized Short-term Borrowing Limit
	(in thousands)
APCo	$	44,215	$	542,186	$	14,038	$	122,105	$	70,090		$	600,000
I&M	130,128		158,857		59,863		47,695		(82,400		)	500,000
OPCo	120,264		405,350		34,841		82,518		23,745			400,000
PSO	176,950		—		93,679		—		(100,867		)	300,000
SWEPCo	153,503		49,869		82,953		22,408		(6,329		)	350,000

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



	Nine Months Ended September 30,
	2014		2013
Maximum Interest Rate	0.33	%	0.43	%
Minimum Interest Rate	0.24	%	0.28	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2014 and 2013 are summarized for all Registrant Subsidiaries in the following table:



	Average Interest Rate for Funds Borrowed from the Utility Money Pool for				Average Interest Rate for Funds Loaned to the Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
APCo	0.26	%	0.33	%	0.28	%	0.34	%
I&M	0.27	%	0.36	%	0.30	%	0.33	%
OPCo	0.27	%	0.34	%	0.29	%	0.32	%
PSO	0.27	%	0.34	%	—	%	0.32	%
SWEPCo	0.28	%	0.33	%	0.27	%	0.36	%

Credit Facilities

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

Sale of Receivables – AEP Credit

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

AEP Credit's receivables securitization agreement provides a commitment of $750 million from bank conduits to purchase receivables. The agreement was increased in June 2014 from $700 million and expires in June 2016.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2014 and December 31, 2013 was as follows:



	September 30,		December 31,
Company	2014		2013
	(in thousands)
APCo	$	134,986	$	156,599
I&M	136,897		139,257
OPCo	345,545		324,287
PSO	156,781		115,260
SWEPCo	179,687		149,337

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	2,166	$	1,575	$	6,626	$	4,590
I&M	2,011		1,762		5,836		4,744
OPCo	7,213		5,076		21,358		14,440
PSO	1,745		1,549		4,417		4,314
SWEPCo	1,890		1,649		5,035		4,413

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	354,406	$	340,438	$	1,137,564	$	1,081,615
I&M	372,422		384,316		1,132,603		1,097,563
OPCo	668,112		658,829		1,980,764		2,017,746
PSO	398,567		382,167		1,014,320		944,062
SWEPCo	466,828		450,294		1,278,325		1,171,306

Financing Activities

FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2014 are shown in the tables below:



Company	Type of Debt	Principal Amount (a)		Interest Rate	Due Date
Issuances:		(in thousands)		(%)
APCo	Senior Unsecured Notes	$	300,000	4.40	2044
I&M	Pollution Control Bonds	100,000		1.75	2018
PSO	Other Long-term Debt	75,000		Variable	2016
SWEPCo	Other Long-term Debt	100,000		Variable	2017


(a)	Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.



Company	Type of Debt	Principal Amount Paid		Interest Rate	Due Date
Retirements and Principal Payments:		(in thousands)		(%)
APCo	Land Note	$	24	13.718	2026
APCo	Securitization Bonds	12,678		2.01	2024
APCo	Senior Unsecured Notes	200,000		4.95	2015
APCo	Other Long-term Debt	300,000		Variable	2015
I&M	Notes Payable	29,275		Variable	2017
I&M	Notes Payable	22,332		Variable	2016
I&M	Notes Payable	15,472		Variable	2016
I&M	Notes Payable	10,716		2.12	2016
I&M	Notes Payable	4,402		4.00	2014
I&M	Other Long-term Debt	7,563		Variable	2015
I&M	Other Long-term Debt	790		6.00	2025
I&M	Pollution Control Bonds	100,000		6.25	2014
OPCo	Other Long-term Debt	67		1.149	2028
OPCo	Pollution Control Bonds	39,130		2.875	2014
OPCo	Pollution Control Bonds	79,450		3.25	2014
OPCo	Pollution Control Bonds	60,000		3.875	2014
OPCo	Securitization Bonds	34,936		0.958	2018
OPCo	Senior Unsecured Notes	225,000		4.85	2014
PSO	Other Long-term Debt	310		3.00	2027
PSO	Pollution Control Bonds	33,700		5.25	2014
SWEPCo	Notes Payable	3,250		4.58	2032

In October 2014, APCo remarketed $100 million of 1.625% Pollution Control Bonds due in 2018.

In October 2014, I&M retired $5 million of Notes Payable related to DCC Fuel.

As of September 30, 2014, trustees held on behalf of I&M and OPCo, $40 million and $395 million, respectively, of their reacquired Pollution Control Bonds.

Dividend Restrictions

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

Federal Power Act

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

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

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

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M, PSO and SWEPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions of the AEP System Utility Money Pool agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of September 30, 2014 and December 31, 2013 are included in Advances to Affiliates and Advances from Affiliates, respectively, on each of the Registrant Subsidiaries’ condensed balance sheets. The Utility Money Pool participants’ money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2014 are described in the following table:



Company	Maximum Borrowings from the Utility Money Pool		Maximum Loans to the Utility Money Pool		Average Borrowings from the Utility Money Pool		Average Loans to the Utility Money Pool		Net Loans to (Borrowings from) the Utility Money Pool as of September 30, 2014			Authorized Short-term Borrowing Limit
	(in thousands)
APCo	$	44,215	$	542,186	$	14,038	$	122,105	$	70,090		$	600,000
I&M	130,128		158,857		59,863		47,695		(82,400		)	500,000
OPCo	120,264		405,350		34,841		82,518		23,745			400,000
PSO	176,950		—		93,679		—		(100,867		)	300,000
SWEPCo	153,503		49,869		82,953		22,408		(6,329		)	350,000

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



	Nine Months Ended September 30,
	2014		2013
Maximum Interest Rate	0.33	%	0.43	%
Minimum Interest Rate	0.24	%	0.28	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2014 and 2013 are summarized for all Registrant Subsidiaries in the following table:



	Average Interest Rate for Funds Borrowed from the Utility Money Pool for				Average Interest Rate for Funds Loaned to the Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
APCo	0.26	%	0.33	%	0.28	%	0.34	%
I&M	0.27	%	0.36	%	0.30	%	0.33	%
OPCo	0.27	%	0.34	%	0.29	%	0.32	%
PSO	0.27	%	0.34	%	—	%	0.32	%
SWEPCo	0.28	%	0.33	%	0.27	%	0.36	%

Credit Facilities

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

Sale of Receivables – AEP Credit

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

AEP Credit's receivables securitization agreement provides a commitment of $750 million from bank conduits to purchase receivables. The agreement was increased in June 2014 from $700 million and expires in June 2016.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2014 and December 31, 2013 was as follows:



	September 30,		December 31,
Company	2014		2013
	(in thousands)
APCo	$	134,986	$	156,599
I&M	136,897		139,257
OPCo	345,545		324,287
PSO	156,781		115,260
SWEPCo	179,687		149,337

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	2,166	$	1,575	$	6,626	$	4,590
I&M	2,011		1,762		5,836		4,744
OPCo	7,213		5,076		21,358		14,440
PSO	1,745		1,549		4,417		4,314
SWEPCo	1,890		1,649		5,035		4,413

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	354,406	$	340,438	$	1,137,564	$	1,081,615
I&M	372,422		384,316		1,132,603		1,097,563
OPCo	668,112		658,829		1,980,764		2,017,746
PSO	398,567		382,167		1,014,320		944,062
SWEPCo	466,828		450,294		1,278,325		1,171,306

Financing Activities

FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2014 are shown in the tables below:



Company	Type of Debt	Principal Amount (a)		Interest Rate	Due Date
Issuances:		(in thousands)		(%)
APCo	Senior Unsecured Notes	$	300,000	4.40	2044
I&M	Pollution Control Bonds	100,000		1.75	2018
PSO	Other Long-term Debt	75,000		Variable	2016
SWEPCo	Other Long-term Debt	100,000		Variable	2017


(a)	Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.



Company	Type of Debt	Principal Amount Paid		Interest Rate	Due Date
Retirements and Principal Payments:		(in thousands)		(%)
APCo	Land Note	$	24	13.718	2026
APCo	Securitization Bonds	12,678		2.01	2024
APCo	Senior Unsecured Notes	200,000		4.95	2015
APCo	Other Long-term Debt	300,000		Variable	2015
I&M	Notes Payable	29,275		Variable	2017
I&M	Notes Payable	22,332		Variable	2016
I&M	Notes Payable	15,472		Variable	2016
I&M	Notes Payable	10,716		2.12	2016
I&M	Notes Payable	4,402		4.00	2014
I&M	Other Long-term Debt	7,563		Variable	2015
I&M	Other Long-term Debt	790		6.00	2025
I&M	Pollution Control Bonds	100,000		6.25	2014
OPCo	Other Long-term Debt	67		1.149	2028
OPCo	Pollution Control Bonds	39,130		2.875	2014
OPCo	Pollution Control Bonds	79,450		3.25	2014
OPCo	Pollution Control Bonds	60,000		3.875	2014
OPCo	Securitization Bonds	34,936		0.958	2018
OPCo	Senior Unsecured Notes	225,000		4.85	2014
PSO	Other Long-term Debt	310		3.00	2027
PSO	Pollution Control Bonds	33,700		5.25	2014
SWEPCo	Notes Payable	3,250		4.58	2032

In October 2014, APCo remarketed $100 million of 1.625% Pollution Control Bonds due in 2018.

In October 2014, I&M retired $5 million of Notes Payable related to DCC Fuel.

As of September 30, 2014, trustees held on behalf of I&M and OPCo, $40 million and $395 million, respectively, of their reacquired Pollution Control Bonds.

Dividend Restrictions

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

Federal Power Act

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

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

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

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M, PSO and SWEPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of AEP’s subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions of the AEP System Utility Money Pool agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of September 30, 2014 and December 31, 2013 are included in Advances to Affiliates and Advances from Affiliates, respectively, on each of the Registrant Subsidiaries’ condensed balance sheets. The Utility Money Pool participants’ money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2014 are described in the following table:



Company	Maximum Borrowings from the Utility Money Pool		Maximum Loans to the Utility Money Pool		Average Borrowings from the Utility Money Pool		Average Loans to the Utility Money Pool		Net Loans to (Borrowings from) the Utility Money Pool as of September 30, 2014			Authorized Short-term Borrowing Limit
	(in thousands)
APCo	$	44,215	$	542,186	$	14,038	$	122,105	$	70,090		$	600,000
I&M	130,128		158,857		59,863		47,695		(82,400		)	500,000
OPCo	120,264		405,350		34,841		82,518		23,745			400,000
PSO	176,950		—		93,679		—		(100,867		)	300,000
SWEPCo	153,503		49,869		82,953		22,408		(6,329		)	350,000

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



	Nine Months Ended September 30,
	2014		2013
Maximum Interest Rate	0.33	%	0.43	%
Minimum Interest Rate	0.24	%	0.28	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2014 and 2013 are summarized for all Registrant Subsidiaries in the following table:



	Average Interest Rate for Funds Borrowed from the Utility Money Pool for				Average Interest Rate for Funds Loaned to the Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
APCo	0.26	%	0.33	%	0.28	%	0.34	%
I&M	0.27	%	0.36	%	0.30	%	0.33	%
OPCo	0.27	%	0.34	%	0.29	%	0.32	%
PSO	0.27	%	0.34	%	—	%	0.32	%
SWEPCo	0.28	%	0.33	%	0.27	%	0.36	%

Credit Facilities

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

Sale of Receivables – AEP Credit

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

AEP Credit's receivables securitization agreement provides a commitment of $750 million from bank conduits to purchase receivables. The agreement was increased in June 2014 from $700 million and expires in June 2016.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2014 and December 31, 2013 was as follows:



	September 30,		December 31,
Company	2014		2013
	(in thousands)
APCo	$	134,986	$	156,599
I&M	136,897		139,257
OPCo	345,545		324,287
PSO	156,781		115,260
SWEPCo	179,687		149,337

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	2,166	$	1,575	$	6,626	$	4,590
I&M	2,011		1,762		5,836		4,744
OPCo	7,213		5,076		21,358		14,440
PSO	1,745		1,549		4,417		4,314
SWEPCo	1,890		1,649		5,035		4,413

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2014		2013		2014		2013
	(in thousands)
APCo	$	354,406	$	340,438	$	1,137,564	$	1,081,615
I&M	372,422		384,316		1,132,603		1,097,563
OPCo	668,112		658,829		1,980,764		2,017,746
PSO	398,567		382,167		1,014,320		944,062
SWEPCo	466,828		450,294		1,278,325		1,171,306