Other Temporary Investments



	September 30, 2014				December 31, 2013
	Book Value		Fair Value		Book Value		Fair Value
	(in millions)
Long-term Debt	$	18,058	$	20,237	$	18,377	$	19,672



	September 30, 2014
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in millions)
Restricted Cash (a)	$	213	$	—	$	—	$	213
Fixed Income Securities – Mutual Funds	80		—		—		80
Equity Securities – Mutual Funds	13		12		—		25
Total Other Temporary Investments	$	306	$	12	$	—	$	318

	December 31, 2013
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in millions)
Restricted Cash (a)	$	250	$	—	$	—	$	250
Fixed Income Securities – Mutual Funds	80		—		—		80
Equity Securities – Mutual Funds	12		11		—		23
Total Other Temporary Investments	$	342	$	11	$	—	$	353


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

Debt and Equity Securities Within Other Temporary Investments



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—	$	—
Purchases of Investments	—		6		1		17
Gross Realized Gains on Investment Sales	—		—		—		—
Gross Realized Losses on Investment Sales	—		—		—		—

Securities Activity Within the Decommissioning and SNF Trusts



	September 30, 2014							December 31, 2013
	Estimated Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Estimated Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	13	$	—	$	—		$	19	$	—	$	—
Fixed Income Securities:
United States Government	609		35		(3		)	609		26		(4		)
Corporate Debt	46		4		(1		)	37		2		(1		)
State and Local Government	286		1		—			255		1		—
Subtotal Fixed Income Securities	941		40		(4		)	901		29		(5		)
Equity Securities – Domestic	1,066		545		(80		)	1,012		506		(82		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,020	$	585	$	(84	)	$	1,932	$	535	$	(87	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in millions)
Proceeds from Investment Sales	$	263	$	250	$	746	$	635
Purchases of Investments	281		264		790		676
Gross Realized Gains on Investment Sales	8		4		25		16
Gross Realized Losses on Investment Sales	1		2		10		12

Contractual Maturities, Fair Value of Debt Securities in Nuclear Trusts



	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	103
1 year – 5 years	377
5 years – 10 years	198
After 10 years	263
Total	$	941

Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)

Cash and Cash Equivalents (a)	$	22	$	1	$	—	$	171		$	194

Other Temporary Investments
Restricted Cash (a)	196		8		—		9			213
Fixed Income Securities - Mutual Funds	80		—		—		—			80
Equity Securities – Mutual Funds (b)	25		—		—		—			25
Total Other Temporary Investments	301		8		—		9			318

Risk Management Assets
Risk Management Commodity Contracts (c) (d)	13		441		155		(261		)	348
Cash Flow Hedges:
Commodity Hedges (c)	—		16		4		(11		)	9
Fair Value Hedges	—		1		—		3			4
De-designated Risk Management Contracts (e)	—		—		—		2			2
Total Risk Management Assets	13		458		159		(267		)	363

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (f)	4		—		—		9			13
Fixed Income Securities:
United States Government	—		609		—		—			609
Corporate Debt	—		46		—		—			46
State and Local Government	—		286		—		—			286
Subtotal Fixed Income Securities	—		941		—		—			941
Equity Securities – Domestic (b)	1,066		—		—		—			1,066
Total Spent Nuclear Fuel and Decommissioning Trusts	1,070		941		—		9			2,020

Total Assets	$	1,406	$	1,408	$	159	$	(78	)	$	2,895

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	26	$	355	$	30	$	(247	)	$	164
Cash Flow Hedges:
Commodity Hedges (c)	—		14		—		(11		)	3
Interest Rate/Foreign Currency Hedges	—		1		—		—			1
Fair Value Hedges	—		9		—		3			12
Total Risk Management Liabilities	$	26	$	379	$	30	$	(255	)	$	180

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)

Cash and Cash Equivalents (a)	$	16	$	1	$	—	$	101		$	118

Other Temporary Investments
Restricted Cash (a)	231		8		—		11			250
Fixed Income Securities - Mutual Funds	80		—		—		—			80
Equity Securities – Mutual Funds (b)	23		—		—		—			23
Total Other Temporary Investments	334		8		—		11			353

Risk Management Assets
Risk Management Commodity Contracts (c) (g)	22		549		142		(273		)	440
Cash Flow Hedges:
Commodity Hedges (c)	—		15		—		(8		)	7
Fair Value Hedges	—		1		—		3			4
De-designated Risk Management Contracts (e)	—		—		—		6			6
Total Risk Management Assets	22		565		142		(272		)	457

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (f)	8		—		—		11			19
Fixed Income Securities:
United States Government	—		609		—		—			609
Corporate Debt	—		37		—		—			37
State and Local Government	—		255		—		—			255
Subtotal Fixed Income Securities	—		901		—		—			901
Equity Securities – Domestic (b)	1,012		—		—		—			1,012
Total Spent Nuclear Fuel and Decommissioning Trusts	1,020		901		—		11			1,932

Total Assets	$	1,392	$	1,475	$	142	$	(149	)	$	2,860

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	30	$	475	$	22	$	(282	)	$	245
Cash Flow Hedges:
Commodity Hedges (c)	—		11		3		(8		)	6
Interest Rate/Foreign Currency Hedges	—		2		—		—			2
Fair Value Hedges	—		11		—		3			14
Total Risk Management Liabilities	$	30	$	499	$	25	$	(287	)	$	267


(a)	Amounts in ''Other'' column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 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)

The September 30, 2014 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures ($12) million in periods 2015-2017 and ($1) million in periods 2018-2019; Level 2 matures $6 million in 2014, $67 million in periods 2015-2017, $9 million in periods 2018-2019 and $4 million in periods 2020-2030; Level 3 matures $38 million in 2014, $46 million in periods 2015-2017, $16 million in periods 2018-2019 and $25 million in periods 2020-2030. Risk management commodity contracts are substantially comprised of power contracts.


(e)	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.


(f)	Amounts in ''Other'' column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.

(g)

The December 31, 2013 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $4 million in 2014, ($11) million in periods 2015-2017 and ($1) million in periods 2018-2019; Level 2 matures $25 million in 2014, $37 million in periods 2015-2017, $7 million in periods 2018-2019 and $5 million in periods 2020-2030; Level 3 matures $27 million in 2014, $60 million in periods 2015-2017, $14 million in periods 2018-2019 and $19 million in periods 2020-2030. Risk management commodity contracts are substantially comprised of power contracts.

Changes in Fair Value of Net Trading Derivatives and Other Investments



Three Months Ended September 30, 2014	Net Risk Management Assets (Liabilities)
	(in millions)
Balance as of June 30, 2014	$	132
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(9		)
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	10
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(3		)
Purchases, Issuances and Settlements (c)	(5		)
Transfers into Level 3 (d) (e)	(9		)
Transfers out of Level 3 (e) (f)	(1		)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	14
Balance as of September 30, 2014	$	129



Three Months Ended September 30, 2013	Net Risk Management Assets (Liabilities)
	(in millions)
Balance as of June 30, 2013	$	122
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(2		)
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	13
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(3		)
Purchases, Issuances and Settlements (c)	(8		)
Transfers out of Level 3 (e) (f)	(2		)
Balance as of September 30, 2013	$	120



Nine Months Ended September 30, 2014	Net Risk Management Assets (Liabilities)
	(in millions)
Balance as of December 31, 2013	$	117
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	91
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	(3		)
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	12
Purchases, Issuances and Settlements (c)	(103		)
Transfers into Level 3 (d) (e)	(9		)
Transfers out of Level 3 (e) (f)	(8		)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	32
Balance as of September 30, 2014	$	129



Nine Months Ended September 30, 2013	Net Risk Management Assets (Liabilities)
	(in millions)
Balance as of December 31, 2012	$	86
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(9		)
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	32
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(3		)
Purchases, Issuances and Settlements (c)	(7		)
Transfers into Level 3 (d) (e)	18
Transfers out of Level 3 (e) (f)	(1		)
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	4
Balance as of September 30, 2013	$	120


(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.


(c)	Represents the settlement of risk management commodity contracts for the reporting period.


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


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


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


(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 liabilities/assets.

Significant Unobservable Inputs

September 30, 2014



						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	124	$	29	Discounted Cash Flow	Forward Market Price (a)	$	9.93		$	103.05	$	47.87
						Counterparty Credit Risk (b)	301
FTRs	35		1		Discounted Cash Flow	Forward Market Price (a)	(14.63		)	15.47		1.31
Total	$	159	$	30

Significant Unobservable Inputs

December 31, 2013



						Significant
	Fair Value				Valuation	Unobservable	Input/Range
	Assets		Liabilities		Technique	Input	Low			High
	(in millions)
Energy Contracts	$	132	$	22	Discounted Cash Flow	Forward Market Price (a)	$	11.42		$	120.72
						Counterparty Credit Risk (b)	316
FTRs	10		3		Discounted Cash Flow	Forward Market Price (a)	(5.10		)	10.44
Total	$	142	$	25


(a)	Represents market prices in dollars per MWh.


(b)	Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

September 30, 2014



Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)

Appalachian Power Co [Member]



	September 30, 2014				December 31, 2013
Company	Book Value		Fair Value		Book Value		Fair Value
	(in thousands)
APCo	$	3,980,107	$	4,642,320	$	4,194,357	$	4,587,079
I&M	1,948,931		2,166,248		2,039,016		2,174,891
OPCo	2,297,004		2,688,426		2,735,175		3,007,191
PSO	1,041,056		1,205,687		999,810		1,111,149
SWEPCo	2,140,348		2,401,635		2,043,332		2,214,730

Securities Activity Within the Decommissioning and SNF Trusts



	September 30, 2014							December 31, 2013
	Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments			Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments
	(in thousands)
Cash and Cash Equivalents	$	13,188	$	—	$	—		$	18,804	$	—	$	—
Fixed Income Securities:
United States Government	609,441		35,262		(2,941		)	608,875		26,114		(3,824		)
Corporate Debt	46,409		3,630		(1,046		)	36,782		2,450		(1,123		)
State and Local Government	285,496		1,309		(215		)	254,638		748		(370		)
Subtotal Fixed Income Securities	941,346		40,201		(4,202		)	900,295		29,312		(5,317		)
Equity Securities - Domestic	1,065,714		544,995		(79,329		)	1,012,511		505,538		(81,677		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,020,248	$	585,196	$	(83,531	)	$	1,931,610	$	534,850	$	(86,994	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
Proceeds from Investment Sales	$	263,738	$	249,314	$	746,272	$	635,256
Purchases of Investments	280,626		263,958		789,461		675,727
Gross Realized Gains on Investment Sales	7,617		4,113		24,835		16,011
Gross Realized Losses on Investment Sales	1,739		2,147		10,447		11,859

Contractual Maturities, Fair Value of Debt Securities in Nuclear Trusts



	Fair Value of Fixed Income Securities
	(in thousands)
Within 1 year	$	103,652
1 year – 5 years	376,783
5 years – 10 years	198,064
After 10 years	262,847
Total	$	941,346

Fair Value, Assets and Liabilities Measured on Recurring Basis

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	8,071	$	—	$	—	$	45		$	8,116

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	191		20,498		17,784		(10,153		)	28,320

Total Assets:	$	8,262	$	20,498	$	17,784	$	(10,108	)	$	36,436

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	186	$	17,679	$	1,772	$	(9,973	)	$	9,664

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	2,714	$	—	$	—	$	36		$	2,750

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	827		54,448		12,097		(29,616		)	37,756
Cash Flow Hedges:
Commodity Hedges (b)	—		389		—		(26		)	363
Total Risk Management Assets	827		54,837		12,097		(29,642		)	38,119

Total Assets:	$	3,541	$	54,837	$	12,097	$	(29,606	)	$	40,869

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	700	$	49,220	$	1,535	$	(32,609	)	$	18,846
Cash Flow Hedges:
Commodity Hedges (b)	—		313		—		(26		)	287
Total Risk Management Liabilities	$	700	$	49,533	$	1,535	$	(32,635	)	$	19,133

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	129	$	14,516	$	13,344	$	(7,250	)	$	20,739

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	4,470		—		—		8,718			13,188
Fixed Income Securities:
United States Government	—		609,441		—		—			609,441
Corporate Debt	—		46,409		—		—			46,409
State and Local Government	—		285,496		—		—			285,496
Subtotal Fixed Income Securities	—		941,346		—		—			941,346
Equity Securities - Domestic (e)	1,065,714		—		—		—			1,065,714
Total Spent Nuclear Fuel and Decommissioning Trusts	1,070,184		941,346		—		8,718			2,020,248

Total Assets	$	1,070,313	$	955,862	$	13,344	$	1,468		$	2,040,987

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	125	$	11,577	$	1,202	$	(7,247	)	$	5,657

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	561	$	38,667	$	8,205	$	(20,766	)	$	26,667
Cash Flow Hedges:
Commodity Hedges (b)	—		234		—		(18		)	216
Total Risk Management Assets	561		38,901		8,205		(20,784		)	26,883

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	8,082		—		—		10,722			18,804
Fixed Income Securities:
United States Government	—		608,875		—		—			608,875
Corporate Debt	—		36,782		—		—			36,782
State and Local Government	—		254,638		—		—			254,638
Subtotal Fixed Income Securities	—		900,295		—		—			900,295
Equity Securities - Domestic (e)	1,012,511		—		—		—			1,012,511
Total Spent Nuclear Fuel and Decommissioning Trusts	1,020,593		900,295		—		10,722			1,931,610

Total Assets	$	1,021,154	$	939,196	$	8,205	$	(10,062	)	$	1,958,493

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	475	$	35,061	$	1,041	$	(22,796	)	$	13,781
Cash Flow Hedges:
Commodity Hedges (b)	—		212		—		(18		)	194
Total Risk Management Liabilities	$	475	$	35,273	$	1,041	$	(22,814	)	$	13,975

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	17,734	$	—	$	—	$	22		$	17,756

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		7,889		33			7,922

Total Assets	$	17,734	$	—	$	7,889	$	55		$	25,678

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	215	$	—	$	(215	)	$	—

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	19,387	$	—	$	—	$	12		$	19,399

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		3,269		(349		)	2,920
Cash Flow Hedges:
Commodity Hedges (b)	—		162		—		—			162
Total Risk Management Assets	—		162		3,269		(349		)	3,082

Total Assets	$	19,387	$	162	$	3,269	$	(337	)	$	22,481

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	—	$	349	$	(349	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	232	$	383	$	(49	)	$	566

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	141	$	49	$	(190	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other		Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	1,078	$	—	$	5	$	1,083
Cash Flow Hedges:
Commodity Hedges (b)	—		84		—		—		84
Total Risk Management Assets	$	—	$	1,162	$	—	$	5	$	1,167

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	81	$	—	$	4	$	85

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	21,611	$	—	$	—	$	2,375		$	23,986

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		3		468		(60		)	411

Total Assets	$	21,611	$	3	$	468	$	2,315		$	24,397

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	291	$	60	$	(220	)	$	131

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	15,871	$	—	$	—	$	1,370		$	17,241

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		1,233		—		(151		)	1,082
Cash Flow Hedges:
Commodity Hedges (b)	—		97		—		—			97
Total Risk Management Assets	—		1,330		—		(151		)	1,179

Total Assets	$	15,871	$	1,330	$	—	$	1,219		$	18,420

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	154	$	—	$	(154	)	$	—


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


(b)	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.”


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


(d)	Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.


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

Changes in Fair Value of Net Trading Derivatives and Other Investments



Three Months Ended September 30, 2014	APCo			I&M			OPCo			PSO			SWEPCo
	(in thousands)
Balance as of June 30, 2014	$	18,394		$	12,923		$	9,300		$	(3	)	$	(3	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(5,629		)	(3,832		)	(3,639		)	2			2
Purchases, Issuances and Settlements (c)	(1,560		)	(1,244		)	(637		)	—			—
Transfers into Level 3 (d) (e)	(6		)	(4		)	—			—			—
Transfers out of Level 3 (e) (f)	(30		)	(20		)	—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	4,843			4,319			2,865			335			409
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334		$	408



Three Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of June 30, 2013	$	12,976		$	8,967		$	18,347		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(1,200		)	(754		)	(1,616		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			(89		)	—		—
Purchases, Issuances and Settlements (c)	(1,058		)	(757		)	(1,504		)	—		—
Transfers into Level 3 (d) (e)	13			9			18			—		—
Transfers out of Level 3 (e) (f)	(15		)	(11		)	(21		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	195			(275		)	(164		)	—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—



Nine Months Ended September 30, 2014	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2013	$	10,562		$	7,164		$	2,920		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	29,467			18,438			30,768			—		—
Purchases, Issuances and Settlements (c)	(32,213		)	(20,301		)	(33,688		)	—		—
Transfers into Level 3 (d) (e)	(3,648		)	(2,475		)	—			—		—
Transfers out of Level 3 (e) (f)	(32		)	(22		)	—			—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	11,876			9,338			7,889			334		408
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334	$	408



Nine Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2012	$	10,979		$	7,541		$	15,429		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(3,450		)	(2,386		)	(4,879		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			351			—		—
Purchases, Issuances and Settlements (c)	1,712			1,213			2,463			—		—
Transfers into Level 3 (d) (e)	961			661			1,353			—		—
Transfers out of Level 3 (e) (f)	(925		)	(637		)	(1,303		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	1,634			787			1,557			—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—


(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.


(c)	Represents the settlement of risk management commodity contracts for the reporting period.


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


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


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


(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 liabilities/assets.

Significant Unobservable Inputs

September 30, 2014

APCo



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	4,873	$	1,615	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	12,911		157		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	17,784	$	1,772

Significant Unobservable Inputs

December 31, 2013

APCo



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	9,359	$	960	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	2,738		575		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	12,097	$	1,535

Significant Unobservable Inputs

September 30, 2014

I&M



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	3,496	$	1,095	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	9,848		107		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	13,344	$	1,202

Significant Unobservable Inputs

December 31, 2013

I&M



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	6,348	$	651	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	1,857		390		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	8,205	$	1,041

Significant Unobservable Inputs

September 30, 2014

OPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

7,889

—

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

December 31, 2013

OPCo

Significant

Fair Value

Valuation

Unobservable

Forward Price Range

Assets

Liabilities

Technique

Input (a)

Low

High

(in thousands)

FTRs

3,269

349

Discounted Cash Flow

Forward Market Price

(5.10

)

10.44

Significant Unobservable Inputs

September 30, 2014

PSO

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

383

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

September 30, 2014

SWEPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

468

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38


(a)	Represents market prices in dollars per MWh.

September 30, 2014



Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)

Indiana Michigan Power Co [Member]



	September 30, 2014				December 31, 2013
Company	Book Value		Fair Value		Book Value		Fair Value
	(in thousands)
APCo	$	3,980,107	$	4,642,320	$	4,194,357	$	4,587,079
I&M	1,948,931		2,166,248		2,039,016		2,174,891
OPCo	2,297,004		2,688,426		2,735,175		3,007,191
PSO	1,041,056		1,205,687		999,810		1,111,149
SWEPCo	2,140,348		2,401,635		2,043,332		2,214,730

Securities Activity Within the Decommissioning and SNF Trusts



	September 30, 2014							December 31, 2013
	Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments			Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments
	(in thousands)
Cash and Cash Equivalents	$	13,188	$	—	$	—		$	18,804	$	—	$	—
Fixed Income Securities:
United States Government	609,441		35,262		(2,941		)	608,875		26,114		(3,824		)
Corporate Debt	46,409		3,630		(1,046		)	36,782		2,450		(1,123		)
State and Local Government	285,496		1,309		(215		)	254,638		748		(370		)
Subtotal Fixed Income Securities	941,346		40,201		(4,202		)	900,295		29,312		(5,317		)
Equity Securities - Domestic	1,065,714		544,995		(79,329		)	1,012,511		505,538		(81,677		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,020,248	$	585,196	$	(83,531	)	$	1,931,610	$	534,850	$	(86,994	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
Proceeds from Investment Sales	$	263,738	$	249,314	$	746,272	$	635,256
Purchases of Investments	280,626		263,958		789,461		675,727
Gross Realized Gains on Investment Sales	7,617		4,113		24,835		16,011
Gross Realized Losses on Investment Sales	1,739		2,147		10,447		11,859

Contractual Maturities, Fair Value of Debt Securities in Nuclear Trusts



	Fair Value of Fixed Income Securities
	(in thousands)
Within 1 year	$	103,652
1 year – 5 years	376,783
5 years – 10 years	198,064
After 10 years	262,847
Total	$	941,346

Fair Value, Assets and Liabilities Measured on Recurring Basis

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	8,071	$	—	$	—	$	45		$	8,116

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	191		20,498		17,784		(10,153		)	28,320

Total Assets:	$	8,262	$	20,498	$	17,784	$	(10,108	)	$	36,436

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	186	$	17,679	$	1,772	$	(9,973	)	$	9,664

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	2,714	$	—	$	—	$	36		$	2,750

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	827		54,448		12,097		(29,616		)	37,756
Cash Flow Hedges:
Commodity Hedges (b)	—		389		—		(26		)	363
Total Risk Management Assets	827		54,837		12,097		(29,642		)	38,119

Total Assets:	$	3,541	$	54,837	$	12,097	$	(29,606	)	$	40,869

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	700	$	49,220	$	1,535	$	(32,609	)	$	18,846
Cash Flow Hedges:
Commodity Hedges (b)	—		313		—		(26		)	287
Total Risk Management Liabilities	$	700	$	49,533	$	1,535	$	(32,635	)	$	19,133

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	129	$	14,516	$	13,344	$	(7,250	)	$	20,739

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	4,470		—		—		8,718			13,188
Fixed Income Securities:
United States Government	—		609,441		—		—			609,441
Corporate Debt	—		46,409		—		—			46,409
State and Local Government	—		285,496		—		—			285,496
Subtotal Fixed Income Securities	—		941,346		—		—			941,346
Equity Securities - Domestic (e)	1,065,714		—		—		—			1,065,714
Total Spent Nuclear Fuel and Decommissioning Trusts	1,070,184		941,346		—		8,718			2,020,248

Total Assets	$	1,070,313	$	955,862	$	13,344	$	1,468		$	2,040,987

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	125	$	11,577	$	1,202	$	(7,247	)	$	5,657

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	561	$	38,667	$	8,205	$	(20,766	)	$	26,667
Cash Flow Hedges:
Commodity Hedges (b)	—		234		—		(18		)	216
Total Risk Management Assets	561		38,901		8,205		(20,784		)	26,883

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	8,082		—		—		10,722			18,804
Fixed Income Securities:
United States Government	—		608,875		—		—			608,875
Corporate Debt	—		36,782		—		—			36,782
State and Local Government	—		254,638		—		—			254,638
Subtotal Fixed Income Securities	—		900,295		—		—			900,295
Equity Securities - Domestic (e)	1,012,511		—		—		—			1,012,511
Total Spent Nuclear Fuel and Decommissioning Trusts	1,020,593		900,295		—		10,722			1,931,610

Total Assets	$	1,021,154	$	939,196	$	8,205	$	(10,062	)	$	1,958,493

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	475	$	35,061	$	1,041	$	(22,796	)	$	13,781
Cash Flow Hedges:
Commodity Hedges (b)	—		212		—		(18		)	194
Total Risk Management Liabilities	$	475	$	35,273	$	1,041	$	(22,814	)	$	13,975

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	17,734	$	—	$	—	$	22		$	17,756

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		7,889		33			7,922

Total Assets	$	17,734	$	—	$	7,889	$	55		$	25,678

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	215	$	—	$	(215	)	$	—

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	19,387	$	—	$	—	$	12		$	19,399

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		3,269		(349		)	2,920
Cash Flow Hedges:
Commodity Hedges (b)	—		162		—		—			162
Total Risk Management Assets	—		162		3,269		(349		)	3,082

Total Assets	$	19,387	$	162	$	3,269	$	(337	)	$	22,481

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	—	$	349	$	(349	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	232	$	383	$	(49	)	$	566

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	141	$	49	$	(190	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other		Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	1,078	$	—	$	5	$	1,083
Cash Flow Hedges:
Commodity Hedges (b)	—		84		—		—		84
Total Risk Management Assets	$	—	$	1,162	$	—	$	5	$	1,167

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	81	$	—	$	4	$	85

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	21,611	$	—	$	—	$	2,375		$	23,986

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		3		468		(60		)	411

Total Assets	$	21,611	$	3	$	468	$	2,315		$	24,397

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	291	$	60	$	(220	)	$	131

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	15,871	$	—	$	—	$	1,370		$	17,241

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		1,233		—		(151		)	1,082
Cash Flow Hedges:
Commodity Hedges (b)	—		97		—		—			97
Total Risk Management Assets	—		1,330		—		(151		)	1,179

Total Assets	$	15,871	$	1,330	$	—	$	1,219		$	18,420

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	154	$	—	$	(154	)	$	—


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


(b)	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.”


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


(d)	Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.


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

Changes in Fair Value of Net Trading Derivatives and Other Investments



Three Months Ended September 30, 2014	APCo			I&M			OPCo			PSO			SWEPCo
	(in thousands)
Balance as of June 30, 2014	$	18,394		$	12,923		$	9,300		$	(3	)	$	(3	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(5,629		)	(3,832		)	(3,639		)	2			2
Purchases, Issuances and Settlements (c)	(1,560		)	(1,244		)	(637		)	—			—
Transfers into Level 3 (d) (e)	(6		)	(4		)	—			—			—
Transfers out of Level 3 (e) (f)	(30		)	(20		)	—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	4,843			4,319			2,865			335			409
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334		$	408



Three Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of June 30, 2013	$	12,976		$	8,967		$	18,347		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(1,200		)	(754		)	(1,616		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			(89		)	—		—
Purchases, Issuances and Settlements (c)	(1,058		)	(757		)	(1,504		)	—		—
Transfers into Level 3 (d) (e)	13			9			18			—		—
Transfers out of Level 3 (e) (f)	(15		)	(11		)	(21		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	195			(275		)	(164		)	—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—



Nine Months Ended September 30, 2014	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2013	$	10,562		$	7,164		$	2,920		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	29,467			18,438			30,768			—		—
Purchases, Issuances and Settlements (c)	(32,213		)	(20,301		)	(33,688		)	—		—
Transfers into Level 3 (d) (e)	(3,648		)	(2,475		)	—			—		—
Transfers out of Level 3 (e) (f)	(32		)	(22		)	—			—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	11,876			9,338			7,889			334		408
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334	$	408



Nine Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2012	$	10,979		$	7,541		$	15,429		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(3,450		)	(2,386		)	(4,879		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			351			—		—
Purchases, Issuances and Settlements (c)	1,712			1,213			2,463			—		—
Transfers into Level 3 (d) (e)	961			661			1,353			—		—
Transfers out of Level 3 (e) (f)	(925		)	(637		)	(1,303		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	1,634			787			1,557			—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—


(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.


(c)	Represents the settlement of risk management commodity contracts for the reporting period.


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


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


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


(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 liabilities/assets.

Significant Unobservable Inputs

September 30, 2014

APCo



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	4,873	$	1,615	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	12,911		157		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	17,784	$	1,772

Significant Unobservable Inputs

December 31, 2013

APCo



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	9,359	$	960	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	2,738		575		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	12,097	$	1,535

Significant Unobservable Inputs

September 30, 2014

I&M



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	3,496	$	1,095	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	9,848		107		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	13,344	$	1,202

Significant Unobservable Inputs

December 31, 2013

I&M



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	6,348	$	651	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	1,857		390		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	8,205	$	1,041

Significant Unobservable Inputs

September 30, 2014

OPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

7,889

—

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

December 31, 2013

OPCo

Significant

Fair Value

Valuation

Unobservable

Forward Price Range

Assets

Liabilities

Technique

Input (a)

Low

High

(in thousands)

FTRs

3,269

349

Discounted Cash Flow

Forward Market Price

(5.10

)

10.44

Significant Unobservable Inputs

September 30, 2014

PSO

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

383

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

September 30, 2014

SWEPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

468

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38


(a)	Represents market prices in dollars per MWh.

September 30, 2014



Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)

Ohio Power Co [Member]



	September 30, 2014				December 31, 2013
Company	Book Value		Fair Value		Book Value		Fair Value
	(in thousands)
APCo	$	3,980,107	$	4,642,320	$	4,194,357	$	4,587,079
I&M	1,948,931		2,166,248		2,039,016		2,174,891
OPCo	2,297,004		2,688,426		2,735,175		3,007,191
PSO	1,041,056		1,205,687		999,810		1,111,149
SWEPCo	2,140,348		2,401,635		2,043,332		2,214,730

Securities Activity Within the Decommissioning and SNF Trusts



	September 30, 2014							December 31, 2013
	Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments			Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments
	(in thousands)
Cash and Cash Equivalents	$	13,188	$	—	$	—		$	18,804	$	—	$	—
Fixed Income Securities:
United States Government	609,441		35,262		(2,941		)	608,875		26,114		(3,824		)
Corporate Debt	46,409		3,630		(1,046		)	36,782		2,450		(1,123		)
State and Local Government	285,496		1,309		(215		)	254,638		748		(370		)
Subtotal Fixed Income Securities	941,346		40,201		(4,202		)	900,295		29,312		(5,317		)
Equity Securities - Domestic	1,065,714		544,995		(79,329		)	1,012,511		505,538		(81,677		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,020,248	$	585,196	$	(83,531	)	$	1,931,610	$	534,850	$	(86,994	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
Proceeds from Investment Sales	$	263,738	$	249,314	$	746,272	$	635,256
Purchases of Investments	280,626		263,958		789,461		675,727
Gross Realized Gains on Investment Sales	7,617		4,113		24,835		16,011
Gross Realized Losses on Investment Sales	1,739		2,147		10,447		11,859

Contractual Maturities, Fair Value of Debt Securities in Nuclear Trusts



	Fair Value of Fixed Income Securities
	(in thousands)
Within 1 year	$	103,652
1 year – 5 years	376,783
5 years – 10 years	198,064
After 10 years	262,847
Total	$	941,346

Fair Value, Assets and Liabilities Measured on Recurring Basis

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	8,071	$	—	$	—	$	45		$	8,116

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	191		20,498		17,784		(10,153		)	28,320

Total Assets:	$	8,262	$	20,498	$	17,784	$	(10,108	)	$	36,436

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	186	$	17,679	$	1,772	$	(9,973	)	$	9,664

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	2,714	$	—	$	—	$	36		$	2,750

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	827		54,448		12,097		(29,616		)	37,756
Cash Flow Hedges:
Commodity Hedges (b)	—		389		—		(26		)	363
Total Risk Management Assets	827		54,837		12,097		(29,642		)	38,119

Total Assets:	$	3,541	$	54,837	$	12,097	$	(29,606	)	$	40,869

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	700	$	49,220	$	1,535	$	(32,609	)	$	18,846
Cash Flow Hedges:
Commodity Hedges (b)	—		313		—		(26		)	287
Total Risk Management Liabilities	$	700	$	49,533	$	1,535	$	(32,635	)	$	19,133

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	129	$	14,516	$	13,344	$	(7,250	)	$	20,739

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	4,470		—		—		8,718			13,188
Fixed Income Securities:
United States Government	—		609,441		—		—			609,441
Corporate Debt	—		46,409		—		—			46,409
State and Local Government	—		285,496		—		—			285,496
Subtotal Fixed Income Securities	—		941,346		—		—			941,346
Equity Securities - Domestic (e)	1,065,714		—		—		—			1,065,714
Total Spent Nuclear Fuel and Decommissioning Trusts	1,070,184		941,346		—		8,718			2,020,248

Total Assets	$	1,070,313	$	955,862	$	13,344	$	1,468		$	2,040,987

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	125	$	11,577	$	1,202	$	(7,247	)	$	5,657

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	561	$	38,667	$	8,205	$	(20,766	)	$	26,667
Cash Flow Hedges:
Commodity Hedges (b)	—		234		—		(18		)	216
Total Risk Management Assets	561		38,901		8,205		(20,784		)	26,883

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	8,082		—		—		10,722			18,804
Fixed Income Securities:
United States Government	—		608,875		—		—			608,875
Corporate Debt	—		36,782		—		—			36,782
State and Local Government	—		254,638		—		—			254,638
Subtotal Fixed Income Securities	—		900,295		—		—			900,295
Equity Securities - Domestic (e)	1,012,511		—		—		—			1,012,511
Total Spent Nuclear Fuel and Decommissioning Trusts	1,020,593		900,295		—		10,722			1,931,610

Total Assets	$	1,021,154	$	939,196	$	8,205	$	(10,062	)	$	1,958,493

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	475	$	35,061	$	1,041	$	(22,796	)	$	13,781
Cash Flow Hedges:
Commodity Hedges (b)	—		212		—		(18		)	194
Total Risk Management Liabilities	$	475	$	35,273	$	1,041	$	(22,814	)	$	13,975

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	17,734	$	—	$	—	$	22		$	17,756

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		7,889		33			7,922

Total Assets	$	17,734	$	—	$	7,889	$	55		$	25,678

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	215	$	—	$	(215	)	$	—

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	19,387	$	—	$	—	$	12		$	19,399

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		3,269		(349		)	2,920
Cash Flow Hedges:
Commodity Hedges (b)	—		162		—		—			162
Total Risk Management Assets	—		162		3,269		(349		)	3,082

Total Assets	$	19,387	$	162	$	3,269	$	(337	)	$	22,481

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	—	$	349	$	(349	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	232	$	383	$	(49	)	$	566

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	141	$	49	$	(190	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other		Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	1,078	$	—	$	5	$	1,083
Cash Flow Hedges:
Commodity Hedges (b)	—		84		—		—		84
Total Risk Management Assets	$	—	$	1,162	$	—	$	5	$	1,167

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	81	$	—	$	4	$	85

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	21,611	$	—	$	—	$	2,375		$	23,986

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		3		468		(60		)	411

Total Assets	$	21,611	$	3	$	468	$	2,315		$	24,397

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	291	$	60	$	(220	)	$	131

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	15,871	$	—	$	—	$	1,370		$	17,241

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		1,233		—		(151		)	1,082
Cash Flow Hedges:
Commodity Hedges (b)	—		97		—		—			97
Total Risk Management Assets	—		1,330		—		(151		)	1,179

Total Assets	$	15,871	$	1,330	$	—	$	1,219		$	18,420

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	154	$	—	$	(154	)	$	—


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


(b)	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.”


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


(d)	Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.


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

Changes in Fair Value of Net Trading Derivatives and Other Investments



Three Months Ended September 30, 2014	APCo			I&M			OPCo			PSO			SWEPCo
	(in thousands)
Balance as of June 30, 2014	$	18,394		$	12,923		$	9,300		$	(3	)	$	(3	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(5,629		)	(3,832		)	(3,639		)	2			2
Purchases, Issuances and Settlements (c)	(1,560		)	(1,244		)	(637		)	—			—
Transfers into Level 3 (d) (e)	(6		)	(4		)	—			—			—
Transfers out of Level 3 (e) (f)	(30		)	(20		)	—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	4,843			4,319			2,865			335			409
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334		$	408



Three Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of June 30, 2013	$	12,976		$	8,967		$	18,347		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(1,200		)	(754		)	(1,616		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			(89		)	—		—
Purchases, Issuances and Settlements (c)	(1,058		)	(757		)	(1,504		)	—		—
Transfers into Level 3 (d) (e)	13			9			18			—		—
Transfers out of Level 3 (e) (f)	(15		)	(11		)	(21		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	195			(275		)	(164		)	—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—



Nine Months Ended September 30, 2014	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2013	$	10,562		$	7,164		$	2,920		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	29,467			18,438			30,768			—		—
Purchases, Issuances and Settlements (c)	(32,213		)	(20,301		)	(33,688		)	—		—
Transfers into Level 3 (d) (e)	(3,648		)	(2,475		)	—			—		—
Transfers out of Level 3 (e) (f)	(32		)	(22		)	—			—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	11,876			9,338			7,889			334		408
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334	$	408



Nine Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2012	$	10,979		$	7,541		$	15,429		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(3,450		)	(2,386		)	(4,879		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			351			—		—
Purchases, Issuances and Settlements (c)	1,712			1,213			2,463			—		—
Transfers into Level 3 (d) (e)	961			661			1,353			—		—
Transfers out of Level 3 (e) (f)	(925		)	(637		)	(1,303		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	1,634			787			1,557			—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—


(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.


(c)	Represents the settlement of risk management commodity contracts for the reporting period.


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


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


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


(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 liabilities/assets.

Significant Unobservable Inputs

September 30, 2014

APCo



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	4,873	$	1,615	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	12,911		157		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	17,784	$	1,772

Significant Unobservable Inputs

December 31, 2013

APCo



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	9,359	$	960	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	2,738		575		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	12,097	$	1,535

Significant Unobservable Inputs

September 30, 2014

I&M



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	3,496	$	1,095	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	9,848		107		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	13,344	$	1,202

Significant Unobservable Inputs

December 31, 2013

I&M



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	6,348	$	651	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	1,857		390		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	8,205	$	1,041

Significant Unobservable Inputs

September 30, 2014

OPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

7,889

—

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

December 31, 2013

OPCo

Significant

Fair Value

Valuation

Unobservable

Forward Price Range

Assets

Liabilities

Technique

Input (a)

Low

High

(in thousands)

FTRs

3,269

349

Discounted Cash Flow

Forward Market Price

(5.10

)

10.44

Significant Unobservable Inputs

September 30, 2014

PSO

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

383

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

September 30, 2014

SWEPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

468

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38


(a)	Represents market prices in dollars per MWh.

September 30, 2014



Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)

Public Service Co Of Oklahoma [Member]



	September 30, 2014				December 31, 2013
Company	Book Value		Fair Value		Book Value		Fair Value
	(in thousands)
APCo	$	3,980,107	$	4,642,320	$	4,194,357	$	4,587,079
I&M	1,948,931		2,166,248		2,039,016		2,174,891
OPCo	2,297,004		2,688,426		2,735,175		3,007,191
PSO	1,041,056		1,205,687		999,810		1,111,149
SWEPCo	2,140,348		2,401,635		2,043,332		2,214,730

Securities Activity Within the Decommissioning and SNF Trusts



	September 30, 2014							December 31, 2013
	Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments			Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments
	(in thousands)
Cash and Cash Equivalents	$	13,188	$	—	$	—		$	18,804	$	—	$	—
Fixed Income Securities:
United States Government	609,441		35,262		(2,941		)	608,875		26,114		(3,824		)
Corporate Debt	46,409		3,630		(1,046		)	36,782		2,450		(1,123		)
State and Local Government	285,496		1,309		(215		)	254,638		748		(370		)
Subtotal Fixed Income Securities	941,346		40,201		(4,202		)	900,295		29,312		(5,317		)
Equity Securities - Domestic	1,065,714		544,995		(79,329		)	1,012,511		505,538		(81,677		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,020,248	$	585,196	$	(83,531	)	$	1,931,610	$	534,850	$	(86,994	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
Proceeds from Investment Sales	$	263,738	$	249,314	$	746,272	$	635,256
Purchases of Investments	280,626		263,958		789,461		675,727
Gross Realized Gains on Investment Sales	7,617		4,113		24,835		16,011
Gross Realized Losses on Investment Sales	1,739		2,147		10,447		11,859

Contractual Maturities, Fair Value of Debt Securities in Nuclear Trusts



	Fair Value of Fixed Income Securities
	(in thousands)
Within 1 year	$	103,652
1 year – 5 years	376,783
5 years – 10 years	198,064
After 10 years	262,847
Total	$	941,346

Fair Value, Assets and Liabilities Measured on Recurring Basis

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	8,071	$	—	$	—	$	45		$	8,116

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	191		20,498		17,784		(10,153		)	28,320

Total Assets:	$	8,262	$	20,498	$	17,784	$	(10,108	)	$	36,436

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	186	$	17,679	$	1,772	$	(9,973	)	$	9,664

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	2,714	$	—	$	—	$	36		$	2,750

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	827		54,448		12,097		(29,616		)	37,756
Cash Flow Hedges:
Commodity Hedges (b)	—		389		—		(26		)	363
Total Risk Management Assets	827		54,837		12,097		(29,642		)	38,119

Total Assets:	$	3,541	$	54,837	$	12,097	$	(29,606	)	$	40,869

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	700	$	49,220	$	1,535	$	(32,609	)	$	18,846
Cash Flow Hedges:
Commodity Hedges (b)	—		313		—		(26		)	287
Total Risk Management Liabilities	$	700	$	49,533	$	1,535	$	(32,635	)	$	19,133

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	129	$	14,516	$	13,344	$	(7,250	)	$	20,739

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	4,470		—		—		8,718			13,188
Fixed Income Securities:
United States Government	—		609,441		—		—			609,441
Corporate Debt	—		46,409		—		—			46,409
State and Local Government	—		285,496		—		—			285,496
Subtotal Fixed Income Securities	—		941,346		—		—			941,346
Equity Securities - Domestic (e)	1,065,714		—		—		—			1,065,714
Total Spent Nuclear Fuel and Decommissioning Trusts	1,070,184		941,346		—		8,718			2,020,248

Total Assets	$	1,070,313	$	955,862	$	13,344	$	1,468		$	2,040,987

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	125	$	11,577	$	1,202	$	(7,247	)	$	5,657

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	561	$	38,667	$	8,205	$	(20,766	)	$	26,667
Cash Flow Hedges:
Commodity Hedges (b)	—		234		—		(18		)	216
Total Risk Management Assets	561		38,901		8,205		(20,784		)	26,883

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	8,082		—		—		10,722			18,804
Fixed Income Securities:
United States Government	—		608,875		—		—			608,875
Corporate Debt	—		36,782		—		—			36,782
State and Local Government	—		254,638		—		—			254,638
Subtotal Fixed Income Securities	—		900,295		—		—			900,295
Equity Securities - Domestic (e)	1,012,511		—		—		—			1,012,511
Total Spent Nuclear Fuel and Decommissioning Trusts	1,020,593		900,295		—		10,722			1,931,610

Total Assets	$	1,021,154	$	939,196	$	8,205	$	(10,062	)	$	1,958,493

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	475	$	35,061	$	1,041	$	(22,796	)	$	13,781
Cash Flow Hedges:
Commodity Hedges (b)	—		212		—		(18		)	194
Total Risk Management Liabilities	$	475	$	35,273	$	1,041	$	(22,814	)	$	13,975

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	17,734	$	—	$	—	$	22		$	17,756

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		7,889		33			7,922

Total Assets	$	17,734	$	—	$	7,889	$	55		$	25,678

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	215	$	—	$	(215	)	$	—

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	19,387	$	—	$	—	$	12		$	19,399

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		3,269		(349		)	2,920
Cash Flow Hedges:
Commodity Hedges (b)	—		162		—		—			162
Total Risk Management Assets	—		162		3,269		(349		)	3,082

Total Assets	$	19,387	$	162	$	3,269	$	(337	)	$	22,481

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	—	$	349	$	(349	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	232	$	383	$	(49	)	$	566

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	141	$	49	$	(190	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other		Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	1,078	$	—	$	5	$	1,083
Cash Flow Hedges:
Commodity Hedges (b)	—		84		—		—		84
Total Risk Management Assets	$	—	$	1,162	$	—	$	5	$	1,167

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	81	$	—	$	4	$	85

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	21,611	$	—	$	—	$	2,375		$	23,986

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		3		468		(60		)	411

Total Assets	$	21,611	$	3	$	468	$	2,315		$	24,397

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	291	$	60	$	(220	)	$	131

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	15,871	$	—	$	—	$	1,370		$	17,241

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		1,233		—		(151		)	1,082
Cash Flow Hedges:
Commodity Hedges (b)	—		97		—		—			97
Total Risk Management Assets	—		1,330		—		(151		)	1,179

Total Assets	$	15,871	$	1,330	$	—	$	1,219		$	18,420

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	154	$	—	$	(154	)	$	—


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


(b)	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.”


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


(d)	Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.


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

Changes in Fair Value of Net Trading Derivatives and Other Investments



Three Months Ended September 30, 2014	APCo			I&M			OPCo			PSO			SWEPCo
	(in thousands)
Balance as of June 30, 2014	$	18,394		$	12,923		$	9,300		$	(3	)	$	(3	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(5,629		)	(3,832		)	(3,639		)	2			2
Purchases, Issuances and Settlements (c)	(1,560		)	(1,244		)	(637		)	—			—
Transfers into Level 3 (d) (e)	(6		)	(4		)	—			—			—
Transfers out of Level 3 (e) (f)	(30		)	(20		)	—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	4,843			4,319			2,865			335			409
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334		$	408



Three Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of June 30, 2013	$	12,976		$	8,967		$	18,347		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(1,200		)	(754		)	(1,616		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			(89		)	—		—
Purchases, Issuances and Settlements (c)	(1,058		)	(757		)	(1,504		)	—		—
Transfers into Level 3 (d) (e)	13			9			18			—		—
Transfers out of Level 3 (e) (f)	(15		)	(11		)	(21		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	195			(275		)	(164		)	—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—



Nine Months Ended September 30, 2014	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2013	$	10,562		$	7,164		$	2,920		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	29,467			18,438			30,768			—		—
Purchases, Issuances and Settlements (c)	(32,213		)	(20,301		)	(33,688		)	—		—
Transfers into Level 3 (d) (e)	(3,648		)	(2,475		)	—			—		—
Transfers out of Level 3 (e) (f)	(32		)	(22		)	—			—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	11,876			9,338			7,889			334		408
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334	$	408



Nine Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2012	$	10,979		$	7,541		$	15,429		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(3,450		)	(2,386		)	(4,879		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			351			—		—
Purchases, Issuances and Settlements (c)	1,712			1,213			2,463			—		—
Transfers into Level 3 (d) (e)	961			661			1,353			—		—
Transfers out of Level 3 (e) (f)	(925		)	(637		)	(1,303		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	1,634			787			1,557			—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—


(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.


(c)	Represents the settlement of risk management commodity contracts for the reporting period.


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


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


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


(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 liabilities/assets.

Significant Unobservable Inputs

September 30, 2014

APCo



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	4,873	$	1,615	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	12,911		157		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	17,784	$	1,772

Significant Unobservable Inputs

December 31, 2013

APCo



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	9,359	$	960	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	2,738		575		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	12,097	$	1,535

Significant Unobservable Inputs

September 30, 2014

I&M



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	3,496	$	1,095	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	9,848		107		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	13,344	$	1,202

Significant Unobservable Inputs

December 31, 2013

I&M



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	6,348	$	651	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	1,857		390		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	8,205	$	1,041

Significant Unobservable Inputs

September 30, 2014

OPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

7,889

—

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

December 31, 2013

OPCo

Significant

Fair Value

Valuation

Unobservable

Forward Price Range

Assets

Liabilities

Technique

Input (a)

Low

High

(in thousands)

FTRs

3,269

349

Discounted Cash Flow

Forward Market Price

(5.10

)

10.44

Significant Unobservable Inputs

September 30, 2014

PSO

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

383

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

September 30, 2014

SWEPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

468

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38


(a)	Represents market prices in dollars per MWh.

September 30, 2014



Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)

Southwestern Electric Power Co [Member]



	September 30, 2014				December 31, 2013
Company	Book Value		Fair Value		Book Value		Fair Value
	(in thousands)
APCo	$	3,980,107	$	4,642,320	$	4,194,357	$	4,587,079
I&M	1,948,931		2,166,248		2,039,016		2,174,891
OPCo	2,297,004		2,688,426		2,735,175		3,007,191
PSO	1,041,056		1,205,687		999,810		1,111,149
SWEPCo	2,140,348		2,401,635		2,043,332		2,214,730

Securities Activity Within the Decommissioning and SNF Trusts



	September 30, 2014							December 31, 2013
	Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments			Estimated Fair Value		Gross Unrealized Gains		Other-Than-Temporary Impairments
	(in thousands)
Cash and Cash Equivalents	$	13,188	$	—	$	—		$	18,804	$	—	$	—
Fixed Income Securities:
United States Government	609,441		35,262		(2,941		)	608,875		26,114		(3,824		)
Corporate Debt	46,409		3,630		(1,046		)	36,782		2,450		(1,123		)
State and Local Government	285,496		1,309		(215		)	254,638		748		(370		)
Subtotal Fixed Income Securities	941,346		40,201		(4,202		)	900,295		29,312		(5,317		)
Equity Securities - Domestic	1,065,714		544,995		(79,329		)	1,012,511		505,538		(81,677		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,020,248	$	585,196	$	(83,531	)	$	1,931,610	$	534,850	$	(86,994	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
Proceeds from Investment Sales	$	263,738	$	249,314	$	746,272	$	635,256
Purchases of Investments	280,626		263,958		789,461		675,727
Gross Realized Gains on Investment Sales	7,617		4,113		24,835		16,011
Gross Realized Losses on Investment Sales	1,739		2,147		10,447		11,859

Contractual Maturities, Fair Value of Debt Securities in Nuclear Trusts



	Fair Value of Fixed Income Securities
	(in thousands)
Within 1 year	$	103,652
1 year – 5 years	376,783
5 years – 10 years	198,064
After 10 years	262,847
Total	$	941,346

Fair Value, Assets and Liabilities Measured on Recurring Basis

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	8,071	$	—	$	—	$	45		$	8,116

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	191		20,498		17,784		(10,153		)	28,320

Total Assets:	$	8,262	$	20,498	$	17,784	$	(10,108	)	$	36,436

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	186	$	17,679	$	1,772	$	(9,973	)	$	9,664

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	2,714	$	—	$	—	$	36		$	2,750

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	827		54,448		12,097		(29,616		)	37,756
Cash Flow Hedges:
Commodity Hedges (b)	—		389		—		(26		)	363
Total Risk Management Assets	827		54,837		12,097		(29,642		)	38,119

Total Assets:	$	3,541	$	54,837	$	12,097	$	(29,606	)	$	40,869

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	700	$	49,220	$	1,535	$	(32,609	)	$	18,846
Cash Flow Hedges:
Commodity Hedges (b)	—		313		—		(26		)	287
Total Risk Management Liabilities	$	700	$	49,533	$	1,535	$	(32,635	)	$	19,133

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	129	$	14,516	$	13,344	$	(7,250	)	$	20,739

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	4,470		—		—		8,718			13,188
Fixed Income Securities:
United States Government	—		609,441		—		—			609,441
Corporate Debt	—		46,409		—		—			46,409
State and Local Government	—		285,496		—		—			285,496
Subtotal Fixed Income Securities	—		941,346		—		—			941,346
Equity Securities - Domestic (e)	1,065,714		—		—		—			1,065,714
Total Spent Nuclear Fuel and Decommissioning Trusts	1,070,184		941,346		—		8,718			2,020,248

Total Assets	$	1,070,313	$	955,862	$	13,344	$	1,468		$	2,040,987

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	125	$	11,577	$	1,202	$	(7,247	)	$	5,657

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	561	$	38,667	$	8,205	$	(20,766	)	$	26,667
Cash Flow Hedges:
Commodity Hedges (b)	—		234		—		(18		)	216
Total Risk Management Assets	561		38,901		8,205		(20,784		)	26,883

Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (d)	8,082		—		—		10,722			18,804
Fixed Income Securities:
United States Government	—		608,875		—		—			608,875
Corporate Debt	—		36,782		—		—			36,782
State and Local Government	—		254,638		—		—			254,638
Subtotal Fixed Income Securities	—		900,295		—		—			900,295
Equity Securities - Domestic (e)	1,012,511		—		—		—			1,012,511
Total Spent Nuclear Fuel and Decommissioning Trusts	1,020,593		900,295		—		10,722			1,931,610

Total Assets	$	1,021,154	$	939,196	$	8,205	$	(10,062	)	$	1,958,493

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	475	$	35,061	$	1,041	$	(22,796	)	$	13,781
Cash Flow Hedges:
Commodity Hedges (b)	—		212		—		(18		)	194
Total Risk Management Liabilities	$	475	$	35,273	$	1,041	$	(22,814	)	$	13,975

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	17,734	$	—	$	—	$	22		$	17,756

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		7,889		33			7,922

Total Assets	$	17,734	$	—	$	7,889	$	55		$	25,678

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	215	$	—	$	(215	)	$	—

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Restricted Cash for Securitized Funding (a)	$	19,387	$	—	$	—	$	12		$	19,399

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		—		3,269		(349		)	2,920
Cash Flow Hedges:
Commodity Hedges (b)	—		162		—		—			162
Total Risk Management Assets	—		162		3,269		(349		)	3,082

Total Assets	$	19,387	$	162	$	3,269	$	(337	)	$	22,481

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	—	$	349	$	(349	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	232	$	383	$	(49	)	$	566

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	141	$	49	$	(190	)	$	—

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other		Total
Assets:	(in thousands)

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	$	—	$	1,078	$	—	$	5	$	1,083
Cash Flow Hedges:
Commodity Hedges (b)	—		84		—		—		84
Total Risk Management Assets	$	—	$	1,162	$	—	$	5	$	1,167

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	81	$	—	$	4	$	85

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

September 30, 2014



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	21,611	$	—	$	—	$	2,375		$	23,986

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		3		468		(60		)	411

Total Assets	$	21,611	$	3	$	468	$	2,315		$	24,397

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	291	$	60	$	(220	)	$	131

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2013



	Level 1		Level 2		Level 3		Other			Total
Assets:	(in thousands)

Cash and Cash Equivalents (a)	$	15,871	$	—	$	—	$	1,370		$	17,241

Risk Management Assets
Risk Management Commodity Contracts (b) (c)	—		1,233		—		(151		)	1,082
Cash Flow Hedges:
Commodity Hedges (b)	—		97		—		—			97
Total Risk Management Assets	—		1,330		—		(151		)	1,179

Total Assets	$	15,871	$	1,330	$	—	$	1,219		$	18,420

Liabilities:

Risk Management Liabilities
Risk Management Commodity Contracts (b) (c)	$	—	$	154	$	—	$	(154	)	$	—


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


(b)	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.”


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


(d)	Amounts in “Other” column primarily represent accrued interest receivables from financial institutions. Level 1 amounts primarily represent investments in money market funds.


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

Changes in Fair Value of Net Trading Derivatives and Other Investments



Three Months Ended September 30, 2014	APCo			I&M			OPCo			PSO			SWEPCo
	(in thousands)
Balance as of June 30, 2014	$	18,394		$	12,923		$	9,300		$	(3	)	$	(3	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(5,629		)	(3,832		)	(3,639		)	2			2
Purchases, Issuances and Settlements (c)	(1,560		)	(1,244		)	(637		)	—			—
Transfers into Level 3 (d) (e)	(6		)	(4		)	—			—			—
Transfers out of Level 3 (e) (f)	(30		)	(20		)	—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	4,843			4,319			2,865			335			409
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334		$	408



Three Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of June 30, 2013	$	12,976		$	8,967		$	18,347		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(1,200		)	(754		)	(1,616		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			(89		)	—		—
Purchases, Issuances and Settlements (c)	(1,058		)	(757		)	(1,504		)	—		—
Transfers into Level 3 (d) (e)	13			9			18			—		—
Transfers out of Level 3 (e) (f)	(15		)	(11		)	(21		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	195			(275		)	(164		)	—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—



Nine Months Ended September 30, 2014	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2013	$	10,562		$	7,164		$	2,920		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	29,467			18,438			30,768			—		—
Purchases, Issuances and Settlements (c)	(32,213		)	(20,301		)	(33,688		)	—		—
Transfers into Level 3 (d) (e)	(3,648		)	(2,475		)	—			—		—
Transfers out of Level 3 (e) (f)	(32		)	(22		)	—			—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	11,876			9,338			7,889			334		408
Balance as of September 30, 2014	$	16,012		$	12,142		$	7,889		$	334	$	408



Nine Months Ended September 30, 2013	APCo			I&M			OPCo			PSO		SWEPCo
	(in thousands)
Balance as of December 31, 2012	$	10,979		$	7,541		$	15,429		$	—	$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)	(3,450		)	(2,386		)	(4,879		)	—		—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a)	—			—			351			—		—
Purchases, Issuances and Settlements (c)	1,712			1,213			2,463			—		—
Transfers into Level 3 (d) (e)	961			661			1,353			—		—
Transfers out of Level 3 (e) (f)	(925		)	(637		)	(1,303		)	—		—
Changes in Fair Value Allocated to Regulated Jurisdictions (g)	1,634			787			1,557			—		—
Balance as of September 30, 2013	$	10,911		$	7,179		$	14,971		$	—	$	—


(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.


(c)	Represents the settlement of risk management commodity contracts for the reporting period.


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


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


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


(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 liabilities/assets.

Significant Unobservable Inputs

September 30, 2014

APCo



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	4,873	$	1,615	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	12,911		157		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	17,784	$	1,772

Significant Unobservable Inputs

December 31, 2013

APCo



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	9,359	$	960	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	2,738		575		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	12,097	$	1,535

Significant Unobservable Inputs

September 30, 2014

I&M



						Significant	Forward Price Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in thousands)
Energy Contracts	$	3,496	$	1,095	Discounted Cash Flow	Forward Market Price	$	12.55		$	80.70	$	41.68
FTRs	9,848		107		Discounted Cash Flow	Forward Market Price	(14.63		)	15.47		1.38
Total	$	13,344	$	1,202

Significant Unobservable Inputs

December 31, 2013

I&M



						Significant
	Fair Value				Valuation	Unobservable	Forward Price Range
	Assets		Liabilities		Technique	Input (a)	Low			High
	(in thousands)
Energy Contracts	$	6,348	$	651	Discounted Cash Flow	Forward Market Price	$	13.04		$	80.50
FTRs	1,857		390		Discounted Cash Flow	Forward Market Price	(5.10		)	10.44
Total	$	8,205	$	1,041

Significant Unobservable Inputs

September 30, 2014

OPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

7,889

—

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

December 31, 2013

OPCo

Significant

Fair Value

Valuation

Unobservable

Forward Price Range

Assets

Liabilities

Technique

Input (a)

Low

High

(in thousands)

FTRs

3,269

349

Discounted Cash Flow

Forward Market Price

(5.10

)

10.44

Significant Unobservable Inputs

September 30, 2014

PSO

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

383

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38

Significant Unobservable Inputs

September 30, 2014

SWEPCo

Significant

Forward Price Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in thousands)

FTRs

468

Discounted Cash Flow

Forward Market Price

(14.63

)

15.47

1.38


(a)	Represents market prices in dollars per MWh.