11. SUSTAINABLE COST REDUCTIONS

In April 2012, we initiated a process to identify employee repositioning opportunities and efficiencies that will result in sustainable cost savings. The process will result in involuntary severances and is expected to be completed in early 2013. The severance program provides two weeks of base pay for every year of service along with other severance benefits.

We recorded charges to expense in 2012 related to the sustainable cost reductions initiative.

	Total
	(in millions)
Incurred	$	14
Settled		(12)
Remaining Balance as of September 30, 2012	$	2

These expenses relate primarily to severance benefits. They are included primarily in Other Operation on the condensed statements of income and Other Current Liabilities on the condensed balance sheets. Approximately 94% of the expense was within the Utility Operations segment. At this time, we are unable to estimate the total amount to be incurred in future periods related to this initiative or to quantify the effects on future net income, cash flows and financial condition.

Sustainable Cost Reductions

11. SUSTAINABLE COST REDUCTIONS

In April 2012, management initiated a process to identify employee repositioning opportunities and efficiencies that will result in sustainable cost savings. The process will result in involuntary severances and is expected to be completed in early 2013. The severance program provides two weeks of base pay for every year of service along with other severance benefits.

The Registrant Subsidiaries recorded charges to expense in 2012 related to the sustainable cost reductions initiative.

		Expense	Incurred for					Remaining
		Allocation from	Registrant					Balance at
	AEPSC		Subsidiaries		Settled		September 30, 2012
	(in thousands)
APCo	$	2,076	$	715	$	(2,780)	$	11
I&M		1,231		277		(1,480)		28
OPCo		3,099		756		(3,827)		28
PSO		1,121		3		(1,124)		-
SWEPCo		1,367		898		(2,241)		24

These expenses relate primarily to severance benefits. They are included primarily in Other Operation on the condensed statements of income and Other Current Liabilities on the condensed balance sheets. At this time, management is unable to estimate the total amount to be incurred in future periods related to this initiative or to quantify the effects on future net income, cash flows and financial condition.

Sustainable Cost Reductions

11. SUSTAINABLE COST REDUCTIONS

In April 2012, management initiated a process to identify employee repositioning opportunities and efficiencies that will result in sustainable cost savings. The process will result in involuntary severances and is expected to be completed in early 2013. The severance program provides two weeks of base pay for every year of service along with other severance benefits.

The Registrant Subsidiaries recorded charges to expense in 2012 related to the sustainable cost reductions initiative.

		Expense	Incurred for					Remaining
		Allocation from	Registrant					Balance at
	AEPSC		Subsidiaries		Settled		September 30, 2012
	(in thousands)
APCo	$	2,076	$	715	$	(2,780)	$	11
I&M		1,231		277		(1,480)		28
OPCo		3,099		756		(3,827)		28
PSO		1,121		3		(1,124)		-
SWEPCo		1,367		898		(2,241)		24

These expenses relate primarily to severance benefits. They are included primarily in Other Operation on the condensed statements of income and Other Current Liabilities on the condensed balance sheets. At this time, management is unable to estimate the total amount to be incurred in future periods related to this initiative or to quantify the effects on future net income, cash flows and financial condition.

Sustainable Cost Reductions

11. SUSTAINABLE COST REDUCTIONS

In April 2012, management initiated a process to identify employee repositioning opportunities and efficiencies that will result in sustainable cost savings. The process will result in involuntary severances and is expected to be completed in early 2013. The severance program provides two weeks of base pay for every year of service along with other severance benefits.

The Registrant Subsidiaries recorded charges to expense in 2012 related to the sustainable cost reductions initiative.

		Expense	Incurred for					Remaining
		Allocation from	Registrant					Balance at
	AEPSC		Subsidiaries		Settled		September 30, 2012
	(in thousands)
APCo	$	2,076	$	715	$	(2,780)	$	11
I&M		1,231		277		(1,480)		28
OPCo		3,099		756		(3,827)		28
PSO		1,121		3		(1,124)		-
SWEPCo		1,367		898		(2,241)		24

These expenses relate primarily to severance benefits. They are included primarily in Other Operation on the condensed statements of income and Other Current Liabilities on the condensed balance sheets. At this time, management is unable to estimate the total amount to be incurred in future periods related to this initiative or to quantify the effects on future net income, cash flows and financial condition.

Sustainable Cost Reductions

11. SUSTAINABLE COST REDUCTIONS

In April 2012, management initiated a process to identify employee repositioning opportunities and efficiencies that will result in sustainable cost savings. The process will result in involuntary severances and is expected to be completed in early 2013. The severance program provides two weeks of base pay for every year of service along with other severance benefits.

The Registrant Subsidiaries recorded charges to expense in 2012 related to the sustainable cost reductions initiative.

		Expense	Incurred for					Remaining
		Allocation from	Registrant					Balance at
	AEPSC		Subsidiaries		Settled		September 30, 2012
	(in thousands)
APCo	$	2,076	$	715	$	(2,780)	$	11
I&M		1,231		277		(1,480)		28
OPCo		3,099		756		(3,827)		28
PSO		1,121		3		(1,124)		-
SWEPCo		1,367		898		(2,241)		24

These expenses relate primarily to severance benefits. They are included primarily in Other Operation on the condensed statements of income and Other Current Liabilities on the condensed balance sheets. At this time, management is unable to estimate the total amount to be incurred in future periods related to this initiative or to quantify the effects on future net income, cash flows and financial condition.

Sustainable Cost Reductions

11. SUSTAINABLE COST REDUCTIONS

In April 2012, management initiated a process to identify employee repositioning opportunities and efficiencies that will result in sustainable cost savings. The process will result in involuntary severances and is expected to be completed in early 2013. The severance program provides two weeks of base pay for every year of service along with other severance benefits.

The Registrant Subsidiaries recorded charges to expense in 2012 related to the sustainable cost reductions initiative.

		Expense	Incurred for					Remaining
		Allocation from	Registrant					Balance at
	AEPSC		Subsidiaries		Settled		September 30, 2012
	(in thousands)
APCo	$	2,076	$	715	$	(2,780)	$	11
I&M		1,231		277		(1,480)		28
OPCo		3,099		756		(3,827)		28
PSO		1,121		3		(1,124)		-
SWEPCo		1,367		898		(2,241)		24

These expenses relate primarily to severance benefits. They are included primarily in Other Operation on the condensed statements of income and Other Current Liabilities on the condensed balance sheets. At this time, management is unable to estimate the total amount to be incurred in future periods related to this initiative or to quantify the effects on future net income, cash flows and financial condition.