Business Segments

3 Months Ended

Mar. 31, 2013

Business Segments

7. BUSINESS SEGMENTS

As outlined in our 2012 Annual Report, our primary business is the generation, transmission and distribution of electricity. Within our Utility Operations segment, we centrally dispatch generation assets and manage our overall utility operations on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight. Intersegment sales and transfers are generally based on underlying contractual arrangements and agreements.

Our reportable segments and their related business activities are outlined below:

Utility Operations

• Generation of electricity for sale to U.S. retail and wholesale customers.
• Transmission and distribution of electricity through assets owned and operated by our ten utility operating companies.

Transmission Operations

• Development, construction and operation of transmission facilities through investments in our wholly-owned transmission subsidiaries and transmission joint ventures. These investments have PUCT-approved or FERC-approved returns on equity.

AEP River Operations

• Commercial barging operations that transport coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers.

Generation and Marketing

• Nonregulated generation in ERCOT.
• Marketing, risk management and retail activities in ERCOT, PJM and MISO.

The remainder of our activities is presented as All Other. While not considered a reportable segment, All Other includes Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

The tables below present our reportable segment information for the three months ended March 31, 2013 and 2012 and balance sheet information as of March 31, 2013 and December 31, 2012. These amounts include certain estimates and allocations where necessary.

						Nonutility Operations
								Generation
		Utility		Transmission		AEP River		and		All Other		Reconciling
		Operations		Operations		Operations		Marketing		(a)		Adjustments		Consolidated
		(in millions)
Three Months Ended March 31, 2013
Revenues from:
	External Customers	$	3,486	$	3	$	128	$	206	$	3	$	-	$	3,826
	Other Operating Segments		31		5		5		-		2		(43)		-
Total Revenues		$	3,517	$	8	$	133	$	206	$	5	$	(43)	$	3,826
Net Income (Loss)		$	349	$	13	$	(2)	$	7	$	(3)	$	-	$	364
						Nonutility Operations
								Generation
		Utility		Transmission		AEP River		and		All Other		Reconciling
		Operations		Operations		Operations		Marketing		(a)		Adjustments		Consolidated
		(in millions)
Three Months Ended March 31, 2012
Revenues from:
	External Customers	$	3,362	$	1	$	172	$	85	$	5	$	-	$	3,625
	Other Operating Segments		23		2		7		-		2		(34)		-
Total Revenues		$	3,385	$	3	$	179	$	85	$	7	$	(34)	$	3,625
Net Income (Loss)		$	384	$	9	$	9	$	(1)	$	(11)	$	-	$	390

						Nonutility Operations
								Generation				Reconciling
		Utility		Transmission		AEP River		and		All Other		Adjustments
		Operations		Operations		Operations		Marketing		(a)		(b)			Consolidated
		(in millions)
March 31, 2013
Total Property, Plant and Equipment		$	56,152	$	921	$	638	$	625	$	8	$	(269)		$	58,075
Accumulated Depreciation and
	Amortization		18,585		5		169		254		7		(75)			18,945
Total Property, Plant and
	Equipment - Net	$	37,567	$	916	$	469	$	371	$	1	$	(194)		$	39,130
Total Assets		$	51,534	$	1,409	$	640	$	1,003	$	17,795	$	(17,831)	(c)	$	54,550
						Nonutility Operations
								Generation				Reconciling
		Utility		Transmission		AEP River		and		All Other		Adjustments
		Operations		Operations		Operations		Marketing		(a)		(b)			Consolidated
		(in millions)
December 31, 2012
Total Property, Plant and Equipment		$	55,707	$	748	$	636	$	621	$	8	$	(266)		$	57,454
Accumulated Depreciation and
	Amortization		18,344		4		161		246		7		(71)			18,691
Total Property, Plant and
	Equipment - Net	$	37,363	$	744	$	475	$	375	$	1	$	(195)		$	38,763
Total Assets		$	51,477	$	1,216	$	670	$	1,005	$	17,191	$	(17,192)	(c)	$	54,367

(a)All Other includes Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

(b)Includes eliminations due to an intercompany capital lease.

(c)Reconciling Adjustments for Total Assets primarily include the elimination of intercompany advances to affiliates and intercompany accounts receivable along with the elimination of AEP's investments in subsidiary companies.

Appalachian Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Indiana Michigan Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Ohio Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Public Service Co Of Oklahoma [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Southwestern Electric Power Co [Member]

Business Segments

7. BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business. The Registrant Subsidiaries' other activities are insignificant. The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.