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Financing Activities
 3 Months Ended
Mar. 31, 2012
Financing Activities

10. FINANCING ACTIVITIES

Long-term Debt      
        
 Type of Debt March 31, 2012 December 31, 2011
   (in millions)
 Senior Unsecured Notes $ 11,862 $ 11,737
 Pollution Control Bonds   2,062   2,112
 Notes Payable   428   402
 Securitization Bonds   2,389   1,688
 Junior Subordinated Debentures   315   315
 Spent Nuclear Fuel Obligation (a)   265   265
 Other Long-term Debt    31   29
 Fair Value of Interest Rate Hedges   7   7
 Unamortized Discount, Net   (39)   (39)
 Total Long-term Debt Outstanding   17,320   16,516
 Long-term Debt Due Within One Year   1,980   1,433
 Long-term Debt  $ 15,340 $ 15,083

       (a)       Pursuant to the Nuclear Waste Policy Act of 1982, I&M, a nuclear licensee, has an obligation to the United States Department of Energy for spent nuclear fuel disposal. The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983. Trust fund assets related to this obligation were $308 million at both March 31, 2012 and December 31, 2011 and are included in Spent Nuclear Fuel and Decommissioning Trusts on our condensed balance sheets.

 

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2012 are shown in the tables below:

      Principal   Interest  
 Company Type of Debt Amount  Rate Due Date
 Issuances:  (in millions) (%)  
 PSO Notes Payable $ 2  3.00 2027
 SWEPCo Senior Unsecured Notes   275  3.55 2022
 SWEPCo Notes Payable   65  4.58 2032
             
 Non-Registrant:          
 TCC Securitization Bonds   312  2.845 2024
 TCC Securitization Bonds   308  0.88 2017
 TCC Securitization Bonds   180  1.976 2020
 Total Issuances   $ 1,142(a)    

(a)       Amount indicated on the statement of cash flows of $1,132 million is net of issuance costs and premium or discount.

      Principal   Interest  
 Company Type of Debt Amount Paid  Rate Due Date
 Retirements and   (in millions) (%)  
  Principal Payments:          
 APCo Pollution Control Bonds $ 30  6.05 2024
 APCo Pollution Control Bonds   20  5.00 2021
 I&M Notes Payable   6  Variable 2016
 I&M Notes Payable   4  2.12 2016
 I&M Notes Payable   6  Variable 2015
 OPCo Senior Unsecured Notes   150  Variable 2012
 SWEPCo Notes Payable   20  7.03 2012
             
 Non-Registrant:          
 AEP Subsidiaries Notes Payable   4  Variable 2017
 AEP Subsidiaries Notes Payable   1  7.59-8.03 2026
 TCC Securitization Bonds   63  4.98 2013
 TCC Securitization Bonds   35  5.96 2013
 Total Retirements and          
  Principal Payments   $ 339     

In April 2012, I&M retired $26 million of Notes Payable and issued $110 million of variable rate Notes Payable related to DCC Fuel.

 

In April 2012, AEGCo retired $4 million of 6.33% Senior Unsecured Notes due in 2037.

 

As of March 31, 2012, trustees held, on our behalf, $478 million of our reacquired Pollution Control Bonds.

Dividend Restrictions

 

Parent Restrictions

 

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

 

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

 

We have issued $315 million of Junior Subordinated Debentures. The debentures will mature on March 1, 2063, subject to extensions to no later than March 1, 2068, and are callable at par any time on or after March 1, 2013. We have the option to defer interest payments on the debentures for one or more periods of up to 10 consecutive years per period. During any period in which we defer interest payments, we may not declare or pay any dividends or distributions on, or redeem, repurchase or acquire our common stock. We do not anticipate any deferral of those interest payments in the foreseeable future.

 

Utility Subsidiaries' Restrictions

 

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

       

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

Short-term Debt            
               
Our outstanding short-term debt was as follows:           
               
    March 31, 2012 December 31, 2011
    Outstanding Interest Outstanding Interest
 Type of DebtAmountRate (a) AmountRate (a)
   (in millions)    (in millions)   
 Securitized Debt for Receivables (b) $ 665  0.26% $ 666  0.27%
 Commercial Paper   385  0.46%   967  0.51%
 Line of Credit – Sabine (c)   -  -%   17  1.79%
 Total Short-term Debt $ 1,050    $ 1,650   

(a)       Weighted average rate.

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

(c)       This line of credit does not reduce available liquidity under AEP's credit facilities.

Credit Facilities

 

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Securitized Accounts Receivable – AEP Credit

 

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

 

Accounts receivable information for AEP Credit is as follows:

    Three Months Ended  
    March 31, 
    2012 2011 
   (dollars in millions) 
 Effective Interest Rates on Securitization of Accounts Receivable   0.26%  0.31%
 Net Uncollectible Accounts Receivable Written Off $ 8 $ 11 

    March 31, December 31,
    2012 2011
    (in millions)
 Accounts Receivable Retained Interest and Pledged as Collateral      
  Less Uncollectible Accounts $ 877 $ 902
 Total Principal Outstanding   665   666
 Delinquent Securitized Accounts Receivable   36   38
 Bad Debt Reserves Related to Securitization/Sale of Accounts Receivable   19   18
 Unbilled Receivables Related to Securitization/Sale of Accounts Receivable   323   370

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

 
Appalachian Power Co [Member]
  
Financing Activities

9. FINANCING ACTIVITIES

 

Long-term Debt

 

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2012 are shown in the tables below:

      Principal  Interest  
 Company Type of Debt Amount Paid Rate Due Date
 Retirements and   (in thousands) (%)  
  Principal Payments:         
 APCo Pollution Control Bonds $ 30,000 6.05 2024
 APCo Pollution Control Bonds   19,500 5.00 2021
 APCo Land Note   6 13.718 2026
 I&M Notes Payable   6,147 Variable 2016
 I&M Notes Payable   4,257 2.12 2016
 I&M Notes Payable   5,548 Variable 2015
 I&M Other Long-term Debt   122 6.00 2025
 OPCo Senior Unsecured Notes   150,000 Variable 2012
 SWEPCo Notes Payable   20,000 7.03 2012

Dividend Restrictions

 

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

 

Federal Power Act

 

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

 

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

 

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

 

Leverage Restrictions

 

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

Utility Money Pool – AEP System

 

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of March 31, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the three months ended March 31, 2012 are described in the following table:

               Net   
               Loans    
   Maximum Maximum Average Average (Borrowings) Authorized
   Borrowings Loans  Borrowings Loans  to/from Utility Short-term
   from Utility to Utility from Utility to Utility Money Pool as of Borrowing
 Company Money Pool Money Pool Money Pool Money Pool March 31, 2012 Limit
   (in thousands)
 APCo $ 275,241 $ 22,614 $ 176,597 $ 22,377 $ (161,634) $ 600,000
 I&M   -   193,190   -   139,106   143,962   500,000
 OPCo   30,625   290,356   30,625   175,174   89,840   600,000
 PSO   -   76,743   -   49,485   29,136   300,000
 SWEPCo   227,087   65,837   179,934   38,120   27,651   350,000

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

   Three Months Ended March 31,
   2012 2011
 Maximum Interest Rate  0.56%  0.56%
 Minimum Interest Rate  0.45%  0.06%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the three months ended March 31, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

   Average Interest Rate  Average Interest Rate
   for Funds Borrowed   for Funds Loaned
   from Utility Money Pool for   to Utility Money Pool for
   Three Months Ended March 31, Three Months Ended March 31,
 Company 2012 20112012 2011
              
 APCo  0.51%  0.38%  0.51%  0.17%
 I&M  -%  0.48%  0.51%  0.25%
 OPCo  0.47%  0.45%  0.52%  0.26%
 PSO  -%  0.47%  0.51%  0.19%
 SWEPCo  0.53%  0.36%  0.51%  0.32%

Credit Facilities

 

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

 

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

 

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of March 31, 2012 and December 31, 2011 was as follows:

    March 31, December 31,
 Company 2012 2011
    (in thousands)
 APCo $ 131,909 $ 121,605
 I&M   122,370   121,597
 OPCo   361,495   346,695
 PSO   102,258   123,172
 SWEPCo   114,510   140,440

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 2,130 $ 2,575
 I&M   1,543   1,627
 OPCo   5,916   4,035
 PSO   1,732   1,234
 SWEPCo   1,386   1,100

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 346,526 $ 366,209
 I&M   339,581   351,021
 OPCo   837,897   911,038
 PSO   272,795   268,569
 SWEPCo   321,608   314,124
Indiana Michigan Power Co [Member]
  
Financing Activities

9. FINANCING ACTIVITIES

 

Long-term Debt

 

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2012 are shown in the tables below:

      Principal  Interest  
 Company Type of Debt Amount Paid Rate Due Date
 Retirements and   (in thousands) (%)  
  Principal Payments:         
 APCo Pollution Control Bonds $ 30,000 6.05 2024
 APCo Pollution Control Bonds   19,500 5.00 2021
 APCo Land Note   6 13.718 2026
 I&M Notes Payable   6,147 Variable 2016
 I&M Notes Payable   4,257 2.12 2016
 I&M Notes Payable   5,548 Variable 2015
 I&M Other Long-term Debt   122 6.00 2025
 OPCo Senior Unsecured Notes   150,000 Variable 2012
 SWEPCo Notes Payable   20,000 7.03 2012

In April 2012, I&M retired $26 million of Notes Payable and issued $110 million of variable rate Notes Payable related to DCC Fuel.

 

Dividend Restrictions

 

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

 

Federal Power Act

 

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

 

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

 

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

 

Leverage Restrictions

 

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

Utility Money Pool – AEP System

 

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of March 31, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the three months ended March 31, 2012 are described in the following table:

               Net   
               Loans    
   Maximum Maximum Average Average (Borrowings) Authorized
   Borrowings Loans  Borrowings Loans  to/from Utility Short-term
   from Utility to Utility from Utility to Utility Money Pool as of Borrowing
 Company Money Pool Money Pool Money Pool Money Pool March 31, 2012 Limit
   (in thousands)
 APCo $ 275,241 $ 22,614 $ 176,597 $ 22,377 $ (161,634) $ 600,000
 I&M   -   193,190   -   139,106   143,962   500,000
 OPCo   30,625   290,356   30,625   175,174   89,840   600,000
 PSO   -   76,743   -   49,485   29,136   300,000
 SWEPCo   227,087   65,837   179,934   38,120   27,651   350,000

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

   Three Months Ended March 31,
   2012 2011
 Maximum Interest Rate  0.56%  0.56%
 Minimum Interest Rate  0.45%  0.06%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the three months ended March 31, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

   Average Interest Rate  Average Interest Rate
   for Funds Borrowed   for Funds Loaned
   from Utility Money Pool for   to Utility Money Pool for
   Three Months Ended March 31, Three Months Ended March 31,
 Company 2012 20112012 2011
              
 APCo  0.51%  0.38%  0.51%  0.17%
 I&M  -%  0.48%  0.51%  0.25%
 OPCo  0.47%  0.45%  0.52%  0.26%
 PSO  -%  0.47%  0.51%  0.19%
 SWEPCo  0.53%  0.36%  0.51%  0.32%

Credit Facilities

 

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

 

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables.

The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' income statements. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

 

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of March 31, 2012 and December 31, 2011 was as follows:

    March 31, December 31,
 Company 2012 2011
    (in thousands)
 APCo $ 131,909 $ 121,605
 I&M   122,370   121,597
 OPCo   361,495   346,695
 PSO   102,258   123,172
 SWEPCo   114,510   140,440

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 2,130 $ 2,575
 I&M   1,543   1,627
 OPCo   5,916   4,035
 PSO   1,732   1,234
 SWEPCo   1,386   1,100

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 346,526 $ 366,209
 I&M   339,581   351,021
 OPCo   837,897   911,038
 PSO   272,795   268,569
 SWEPCo   321,608   314,124
Ohio Power Co [Member]
  
Financing Activities

9. FINANCING ACTIVITIES

 

Long-term Debt

 

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2012 are shown in the tables below:

      Principal  Interest  
 Company Type of Debt Amount Paid Rate Due Date
 Retirements and   (in thousands) (%)  
  Principal Payments:         
 APCo Pollution Control Bonds $ 30,000 6.05 2024
 APCo Pollution Control Bonds   19,500 5.00 2021
 APCo Land Note   6 13.718 2026
 I&M Notes Payable   6,147 Variable 2016
 I&M Notes Payable   4,257 2.12 2016
 I&M Notes Payable   5,548 Variable 2015
 I&M Other Long-term Debt   122 6.00 2025
 OPCo Senior Unsecured Notes   150,000 Variable 2012
 SWEPCo Notes Payable   20,000 7.03 2012

As of March 31, 2012, trustees held, on behalf of OPCo, $418 million of its reacquired Pollution Control Bonds.

Dividend Restrictions

 

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

 

Federal Power Act

 

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

 

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

 

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

 

Leverage Restrictions

 

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

Utility Money Pool – AEP System

 

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of March 31, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the three months ended March 31, 2012 are described in the following table:

               Net   
               Loans    
   Maximum Maximum Average Average (Borrowings) Authorized
   Borrowings Loans  Borrowings Loans  to/from Utility Short-term
   from Utility to Utility from Utility to Utility Money Pool as of Borrowing
 Company Money Pool Money Pool Money Pool Money Pool March 31, 2012 Limit
   (in thousands)
 APCo $ 275,241 $ 22,614 $ 176,597 $ 22,377 $ (161,634) $ 600,000
 I&M   -   193,190   -   139,106   143,962   500,000
 OPCo   30,625   290,356   30,625   175,174   89,840   600,000
 PSO   -   76,743   -   49,485   29,136   300,000
 SWEPCo   227,087   65,837   179,934   38,120   27,651   350,000

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

   Three Months Ended March 31,
   2012 2011
 Maximum Interest Rate  0.56%  0.56%
 Minimum Interest Rate  0.45%  0.06%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the three months ended March 31, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

   Average Interest Rate  Average Interest Rate
   for Funds Borrowed   for Funds Loaned
   from Utility Money Pool for   to Utility Money Pool for
   Three Months Ended March 31, Three Months Ended March 31,
 Company 2012 20112012 2011
              
 APCo  0.51%  0.38%  0.51%  0.17%
 I&M  -%  0.48%  0.51%  0.25%
 OPCo  0.47%  0.45%  0.52%  0.26%
 PSO  -%  0.47%  0.51%  0.19%
 SWEPCo  0.53%  0.36%  0.51%  0.32%

Credit Facilities

 

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

 

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables.

The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' income statements. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

 

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of March 31, 2012 and December 31, 2011 was as follows:

    March 31, December 31,
 Company 2012 2011
    (in thousands)
 APCo $ 131,909 $ 121,605
 I&M   122,370   121,597
 OPCo   361,495   346,695
 PSO   102,258   123,172
 SWEPCo   114,510   140,440

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 2,130 $ 2,575
 I&M   1,543   1,627
 OPCo   5,916   4,035
 PSO   1,732   1,234
 SWEPCo   1,386   1,100

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 346,526 $ 366,209
 I&M   339,581   351,021
 OPCo   837,897   911,038
 PSO   272,795   268,569
 SWEPCo   321,608   314,124
Public Service Co Of Oklahoma [Member]
  
Financing Activities

9. FINANCING ACTIVITIES

 

Long-term Debt

 

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2012 are shown in the tables below:

     Principal  Interest  
 Company Type of Debt Amount Rate Due Date
 Issuances:   (in thousands) (%)  
 PSO Notes Payable $ 1,944 3.00 2027
 SWEPCo Senior Unsecured Notes   275,000 3.55 2022
 SWEPCo Notes Payable   65,000 4.58 2032

Dividend Restrictions

 

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

 

Federal Power Act

 

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

 

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

 

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

 

Leverage Restrictions

 

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

Utility Money Pool – AEP System

 

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of March 31, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the three months ended March 31, 2012 are described in the following table:

               Net   
               Loans    
   Maximum Maximum Average Average (Borrowings) Authorized
   Borrowings Loans  Borrowings Loans  to/from Utility Short-term
   from Utility to Utility from Utility to Utility Money Pool as of Borrowing
 Company Money Pool Money Pool Money Pool Money Pool March 31, 2012 Limit
   (in thousands)
 APCo $ 275,241 $ 22,614 $ 176,597 $ 22,377 $ (161,634) $ 600,000
 I&M   -   193,190   -   139,106   143,962   500,000
 OPCo   30,625   290,356   30,625   175,174   89,840   600,000
 PSO   -   76,743   -   49,485   29,136   300,000
 SWEPCo   227,087   65,837   179,934   38,120   27,651   350,000

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

   Three Months Ended March 31,
   2012 2011
 Maximum Interest Rate  0.56%  0.56%
 Minimum Interest Rate  0.45%  0.06%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the three months ended March 31, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

   Average Interest Rate  Average Interest Rate
   for Funds Borrowed   for Funds Loaned
   from Utility Money Pool for   to Utility Money Pool for
   Three Months Ended March 31, Three Months Ended March 31,
 Company 2012 20112012 2011
              
 APCo  0.51%  0.38%  0.51%  0.17%
 I&M  -%  0.48%  0.51%  0.25%
 OPCo  0.47%  0.45%  0.52%  0.26%
 PSO  -%  0.47%  0.51%  0.19%
 SWEPCo  0.53%  0.36%  0.51%  0.32%

Sale of Receivables – AEP Credit

 

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables.

The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' income statements. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

 

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of March 31, 2012 and December 31, 2011 was as follows:

    March 31, December 31,
 Company 2012 2011
    (in thousands)
 APCo $ 131,909 $ 121,605
 I&M   122,370   121,597
 OPCo   361,495   346,695
 PSO   102,258   123,172
 SWEPCo   114,510   140,440

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 2,130 $ 2,575
 I&M   1,543   1,627
 OPCo   5,916   4,035
 PSO   1,732   1,234
 SWEPCo   1,386   1,100

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 346,526 $ 366,209
 I&M   339,581   351,021
 OPCo   837,897   911,038
 PSO   272,795   268,569
 SWEPCo   321,608   314,124
Southwestern Electric Power Co [Member]
  
Financing Activities

9. FINANCING ACTIVITIES

 

Long-term Debt

 

Long-term debt and other securities issued, retired and principal payments made during the first three months of 2012 are shown in the tables below:

     Principal  Interest  
 Company Type of Debt Amount Rate Due Date
 Issuances:   (in thousands) (%)  
 PSO Notes Payable $ 1,944 3.00 2027
 SWEPCo Senior Unsecured Notes   275,000 3.55 2022
 SWEPCo Notes Payable   65,000 4.58 2032

      Principal  Interest  
 Company Type of Debt Amount Paid Rate Due Date
 Retirements and   (in thousands) (%)  
  Principal Payments:         
 APCo Pollution Control Bonds $ 30,000 6.05 2024
 APCo Pollution Control Bonds   19,500 5.00 2021
 APCo Land Note   6 13.718 2026
 I&M Notes Payable   6,147 Variable 2016
 I&M Notes Payable   4,257 2.12 2016
 I&M Notes Payable   5,548 Variable 2015
 I&M Other Long-term Debt   122 6.00 2025
 OPCo Senior Unsecured Notes   150,000 Variable 2012
 SWEPCo Notes Payable   20,000 7.03 2012

Dividend Restrictions

 

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

 

Federal Power Act

 

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

 

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

 

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

 

Leverage Restrictions

 

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

Utility Money Pool – AEP System

 

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of March 31, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the three months ended March 31, 2012 are described in the following table:

               Net   
               Loans    
   Maximum Maximum Average Average (Borrowings) Authorized
   Borrowings Loans  Borrowings Loans  to/from Utility Short-term
   from Utility to Utility from Utility to Utility Money Pool as of Borrowing
 Company Money Pool Money Pool Money Pool Money Pool March 31, 2012 Limit
   (in thousands)
 APCo $ 275,241 $ 22,614 $ 176,597 $ 22,377 $ (161,634) $ 600,000
 I&M   -   193,190   -   139,106   143,962   500,000
 OPCo   30,625   290,356   30,625   175,174   89,840   600,000
 PSO   -   76,743   -   49,485   29,136   300,000
 SWEPCo   227,087   65,837   179,934   38,120   27,651   350,000

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

   Three Months Ended March 31,
   2012 2011
 Maximum Interest Rate  0.56%  0.56%
 Minimum Interest Rate  0.45%  0.06%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the three months ended March 31, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

   Average Interest Rate  Average Interest Rate
   for Funds Borrowed   for Funds Loaned
   from Utility Money Pool for   to Utility Money Pool for
   Three Months Ended March 31, Three Months Ended March 31,
 Company 2012 20112012 2011
              
 APCo  0.51%  0.38%  0.51%  0.17%
 I&M  -%  0.48%  0.51%  0.25%
 OPCo  0.47%  0.45%  0.52%  0.26%
 PSO  -%  0.47%  0.51%  0.19%
 SWEPCo  0.53%  0.36%  0.51%  0.32%

Short-term Debt            
                 
The Registrant Subsidiaries’ outstanding short-term debt was as follows:
                 
      March 31, 2012 December 31, 2011
      Outstanding Interest Outstanding Interest
 Company Type of DebtAmountRate (a) AmountRate (a)
      (in thousands)    (in thousands)   
 SWEPCo Line of Credit – Sabine $ -  -% $ 17,016  1.79%
                 
 (a)Weighted average rate.

Credit Facilities

 

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

 

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables.

The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' income statements. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

 

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of March 31, 2012 and December 31, 2011 was as follows:

    March 31, December 31,
 Company 2012 2011
    (in thousands)
 APCo $ 131,909 $ 121,605
 I&M   122,370   121,597
 OPCo   361,495   346,695
 PSO   102,258   123,172
 SWEPCo   114,510   140,440

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 2,130 $ 2,575
 I&M   1,543   1,627
 OPCo   5,916   4,035
 PSO   1,732   1,234
 SWEPCo   1,386   1,100

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

    Three Months Ended March 31,
 Company 2012 2011
    (in thousands)
 APCo $ 346,526 $ 366,209
 I&M   339,581   351,021
 OPCo   837,897   911,038
 PSO   272,795   268,569
 SWEPCo   321,608   314,124