Effects of Regulation

12 Months Ended

Dec. 31, 2013

Effects of Regulation

5. EFFECTS OF REGULATION

Regulated Generating Units to be Retired Before or During 2016

The following regulated generating units are probable of abandonment. Accordingly, CWIP and Plant in Service has been reclassified as Other Property, Plant and Equipment on the balance sheet as of December 31, 2013. The following table summarizes the plant investment and cost of removal, currently being recovered, for each generating unit as of December 31, 2013.

Plant Name and Unit	Company		Gross Investment		Accumulated Depreciation		Net Investment		Cost of Removal Regulatory Liability	Expected Retirement Date	Remaining Recovery Period
		(in millions)
Tanners Creek Plant,	I&M	$	681	$	354	$	327	$	87	2015	17 years
Units 1-4
Big Sandy Plant, Unit 2	KPCo		424		180		244		47	2015	27 years
Northeastern Station,	PSO		182		89		93		11	2016	27 years
Unit 4
Welsh Plant, Unit 2	SWEPCo		175		93		82		19	2016	27 years
Total		$	1,462	$	716	$	746	$	164

In accordance with accounting guidance for “Regulated Operations”, APCo regulated generating units expected to be retired before or during 2016 are not considered probable of abandonment.

Regulatory Assets

Regulatory assets are comprised of the following items:

			December 31,				Remaining
			2013		2012		Recovery Period
Current Regulatory Assets			(in millions)
Under-recovered Fuel Costs - earns a return			$	61	$	86	1 year
Under-recovered Fuel Costs - does not earn a return				19		2	1 year
Total Current Regulatory Assets			$	80	$	88
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending future
	proceedings to determine the recovery method and timing:
	Regulatory Assets Currently Earning a Return
		Storm Related Costs	$	22	$	23
		Ohio Economic Development Rider		14		13
		Other Regulatory Assets Not Yet Being Recovered		4		1
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs		161		172
		Ormet Special Rate Recovery Mechanism		36		5
		Indiana Under-Recovered Capacity Costs		22		-
		Expanded Net Energy Charge - Coal Inventory		21		-
		Mountaineer Carbon Capture and Storage Product Validation Facility		13		14
		Virginia Environmental Rate Adjustment Clause		2		29
		Litigation Settlement		-		11
		Other Regulatory Assets Not Yet Being Recovered		35		36
Total Regulatory Assets Not Yet Being Recovered				330		304
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Ohio Fuel Adjustment Clause		445		519	5 years
		Ohio Capacity Deferral		288		66	5 years
		Ohio Transmission Cost Recovery Rider		87		49	2 years
		Unamortized Loss on Reacquired Debt		81		82	30 years
		Texas Meter Replacement Costs		77		47	15 years
		Ohio Distribution Decoupling		31		-	2 years
		Storm Related Costs		17		36	5 years
		RTO Formation/Integration Costs		12		15	6 years
		Red Rock Generating Facility		10		10	43 years
		West Virginia Expanded Net Energy Charge		-		273
		Ohio Deferred Asset Recovery Rider		-		152
		Other Regulatory Assets Being Recovered		18		15	various
	Regulatory Assets Currently Not Earning a Return
		Income Taxes, Net		1,390		1,353	55 years
		Pension and OPEB Funded Status		1,157		1,896	11 years
		Cook Nuclear Plant Refueling Outage Levelization		58		27	3 years
		Medicare Subsidy		51		-	11 years
		Virginia Transmission Rate Adjustment Clause		47		33	2 years
		Peak Demand Reduction/Energy Efficiency		44		12	2 years
		Postemployment Benefits		40		45	5 years
		United Mine Workers of America Pension Withdrawal		27		-	12 years
		Virginia Environmental Rate Adjustment Clause		27		8	1 year
		Under-Recovery of Transmission Cost Recovery Factor		20		6	1 year
		Storm Related Costs		18		27	5 years
		Vegetation Management		14		13	1 year
		Deferred Restructuring Costs		11		15	5 years
		Litigation Settlement		10		-	12 years
		Under-Recovered Distribution Investment Rider		9		1	1 year
		Asset Retirement Obligation		8		9	33 years
		West Virginia Expanded Net Energy Charge		-		26
		Ohio Distribution Decoupling		-		16
		Deferred PJM Fees		-		14
		Unrealized Loss on Forward Commitments		-		8
		Other Regulatory Assets Being Recovered		49		29	various
Total Regulatory Assets Being Recovered				4,046		4,802
Total Noncurrent Regulatory Assets			$	4,376	$	5,106

Regulatory Liabilities

Regulatory liabilities are comprised of the following items:

				December 31,				Remaining
				2013		2012		Refund Period
Current Regulatory Liabilities				(in millions)
Over-recovered Fuel Costs - pays a return				$	9	$	25	1 year
Over-recovered Fuel Costs - does not pay a return					110		22	1 year
Total Current Regulatory Liabilities				$	119	$	47
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Louisiana Refundable Construction Financing Costs		$	-	$	96
		Other Regulatory Liabilities Not Yet Being Paid			5		4
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			3		9
Total Regulatory Liabilities Not Yet Being Paid					8		109
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			2,589		2,511	(a)
		Louisiana Refundable Construction Financing Costs			78		-	5 years
		Advanced Metering Infrastructure Surcharge			68		83	7 years
		Deferred Investment Tax Credits			29		23	47 years
		Excess Earnings			12		12	40 years
		Other Regulatory Liabilities Being Paid			1		1	various
	Regulatory Liabilities Currently Not Paying a Return
		Excess Asset Retirement Obligations for
			Nuclear Decommissioning Liability		597		436	(b)
		Deferred Investment Tax Credits			121		136	49 years
		Spent Nuclear Fuel Liability			43		43	(b)
		Over-Recovery of Transition Charges			40		57	14 years
		Unrealized Gain on Forward Commitments			35		46	4 years
		Deferred State Income Tax Coal Credits			28		29	10 years
		Peak Demand Reduction/Energy Efficiency			18		31	1 year
		Over-Recovery of PJM Expense			14		-	2 years
		Other Regulatory Liabilities Being Paid			13		27	various
Total Regulatory Liabilities Being Paid					3,686		3,435
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	3,694	$	3,544
(a)			Relieved as removal costs are incurred.
(b)			Relieved when plant is decommissioned.

Appalachian Power Co [Member]

Effects of Regulation

4. EFFECTS OF REGULATION

Regulatory Assets

Regulatory assets and liabilities are comprised of the following items:

				APCo					I&M
								Remaining					Remaining
				December 31,				Recovery	December 31,				Recovery
Regulatory Assets:				2013		2012		Period	2013		2012		Period
				(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return				$	39,811	$	74,906	1 year	$	-	$	3,029
Under-recovered Fuel Costs - does not earn a return					-		-			3,397		1,647	1 year
Total Current Regulatory Assets				$	39,811	$	74,906		$	3,397	$	4,676
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs		$	65,206	$	94,458		$	1,836	$	-
		Expanded Net Energy Charge - Coal Inventory			20,528		-			-		-
		Mountaineer Carbon Capture and Storage
			Product Validation Facility		13,264		14,155			-		-
		Virginia Demand Response Program Costs			5,012		1,447			-		-
		Transmission Agreement Phase-In			3,313		2,992			-		-
		Virginia Environmental Rate Adjustment Clause			2,440		29,320			-		-
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility		1,287		1,287			-		1,380
		Indiana Under-Recovered Capacity Costs			-		-			21,945		-
		Indiana Deferred Cook Plant Life Cycle
			Management Project Costs		-		-			4,093		-
		Stranded Costs on Abandoned Plants			-		-			3,896		-
		Dresden Plant Operating Costs			-		8,758			-		-
		Deferred Wind Power Costs			-		5,143			-		-
		Litigation Settlement			-		-			-		11,098
		Other Regulatory Assets Not Yet Being Recovered			168		-			3,616		786
Total Regulatory Assets Not Yet Being Recovered					111,218		157,560			35,386		13,264
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Storm Related Costs			17,167		21,371	5 years		-		-
		Unamortized Loss on Reacquired Debt			11,622		12,969	29 years		21,508		15,871	19 years
		RTO Formation/Integration Costs			3,473		4,370	6 years		2,544		3,229	6 years
		Cook Plant, Unit 2 Baffle Bolts			-		-			7,248		-	25 years
		West Virginia Expanded Net Energy Charge			-		272,783			-		-
		Customer Choice Implementation Costs			-		-			-		1,493
		Other Regulatory Assets Being Recovered			665		-	various		522		-	various
	Regulatory Assets Currently Not Earning a Return
		Income Taxes, Net			531,302		525,549	26 years		250,478		222,252	30 years
		Pension and OPEB Funded Status			192,464		312,645	11 years		100,132		220,797	11 years
		Virginia Transmission Rate Adjustment Clause			47,322		32,992	2 years		-		-
		Virginia Environmental Rate Adjustment Clause			27,426		8,347	1 year		-		-
		Postemployment Benefits			19,772		22,663	5 years		9,096		8,897	5 years
		Storm Related Costs			11,100		13,712	5 years		-		-
		Deferred Restructuring Costs			8,525		10,531	5 years		2,423		3,688	2 years
		Medicare Subsidy			6,477		-	11 years		11,221		-	11 years
		Litigation Settlement			-		-			10,382		-	12 years
		Asset Retirement Obligation			6,453		8,489	4 years		696		808	7 years
		Virginia Generation Rate Adjustment Clause			6,491		3,469	2 years		-		-
		West Virginia Expanded Net Energy Charge			-		25,932			-		-
		Virginia Environmental and Reliability Costs			-		560			-		-
		Cook Nuclear Plant Refueling Outage Levelization			-		-			57,979		26,652	3 years
		Peak Demand Reduction/Energy Efficiency			-		-			4,457		2,608	1 year
		Off-system Sales Margin Sharing			-		-			4,409		-	1 year
		River Transportation Division Expenses			-		-			4,090		4,576	1 year
		Deferred PJM Fees			-		-			-		13,998
		Other Regulatory Assets Being Recovered			2,413		1,762	various		1,543		1,886	various
Total Regulatory Assets Being Recovered					892,672		1,278,144			488,728		526,755
Total Noncurrent Regulatory Assets				$	1,003,890	$	1,435,704		$	524,114	$	540,019

					APCo					I&M
									Remaining					Remaining
					December 31,				Refund	December 31,				Refund
Regulatory Liabilities:					2013		2012		Period	2013		2012		Period
					(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - does not pay a return					$	107,048	$	-	1 year	$	-	$	-
Over-recovered Fuel Costs - pays a return						-		-			1,976		-	1 year
Total Current Regulatory Liabilities					$	107,048	$	-		$	1,976	$	-
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			$	249	$	249		$	113	$	124
Total Regulatory Liabilities Not Yet Being Paid						249		249			113		124
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs				583,723		552,590	(a)		389,025		381,116	(a)
		Deferred Investment Tax Credits				1,863		2,823	47 years		-		-
	Regulatory Liabilities Currently Not Paying a Return
		Deferred State Income Tax Coal Credits				28,255		29,296	10 years		-		-
		Unrealized Gain on Forward Commitments				15,853		21,433	4 years		10,810		19,872	4 years
		Deferred Investment Tax Credits				122		382	2 years		43,200		48,130	23 years
		Peak Demand Reduction/Energy Efficiency				746		907	1 year		15,021		11,080	1 year
		Excess Asset Retirement Obligations for Nuclear
			Decommissioning Liability			-		-			597,113		435,717	(b)
		Spent Nuclear Fuel Liability				-		-			43,416		42,898	(b)
		Over-Recovery of PJM Expense				-		-			13,924		-	2 years
		Off-system Sales Margin Sharing				-		-			-		7,611
		Other Regulatory Liabilities Being Paid				414		-	various		23		1,744	various
Total Regulatory Liabilities Being Paid						630,976		607,431			1,112,532		948,168
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits				$	631,225	$	607,680		$	1,112,645	$	948,292
(a)				Relieved as removal costs are incurred.
(b)				Relieved when plant is decommissioned.

Indiana Michigan Power Co [Member]

Effects of Regulation

4. EFFECTS OF REGULATION

Regulated Generating Units to be Retired Before or During 2016

The following regulated generating units are probable of abandonment. Accordingly, CWIP and Plant in Service has been reclassified as Other Property, Plant and Equipment on the balance sheet as of December 31, 2013. The following table summarizes the plant investment and cost of removal, currently being recovered, for each generating unit as of December 31, 2013.

Plant Name and Unit	Company		Gross Investment		Accumulated Depreciation		Net Investment		Cost of Removal Regulatory Liability	Expected Retirement Date	Remaining Recovery Period
		(in thousands)
Tanners Creek Plant,	I&M	$	681,490	$	353,800	$	327,690	$	87,102	2015	17 years
Units 1-4
Northeastern Station,	PSO		181,652		88,836		92,816		11,142	2016	27 years
Unit 4
Welsh Plant, Unit 2	SWEPCo		174,919		92,973		81,946		19,054	2016	27 years
Total		$	1,038,061	$	535,609	$	502,452	$	117,298

Regulatory Assets

Regulatory assets and liabilities are comprised of the following items:

				APCo					I&M
								Remaining					Remaining
				December 31,				Recovery	December 31,				Recovery
Regulatory Assets:				2013		2012		Period	2013		2012		Period
				(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return				$	39,811	$	74,906	1 year	$	-	$	3,029
Under-recovered Fuel Costs - does not earn a return					-		-			3,397		1,647	1 year
Total Current Regulatory Assets				$	39,811	$	74,906		$	3,397	$	4,676
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs		$	65,206	$	94,458		$	1,836	$	-
		Expanded Net Energy Charge - Coal Inventory			20,528		-			-		-
		Mountaineer Carbon Capture and Storage
			Product Validation Facility		13,264		14,155			-		-
		Virginia Demand Response Program Costs			5,012		1,447			-		-
		Transmission Agreement Phase-In			3,313		2,992			-		-
		Virginia Environmental Rate Adjustment Clause			2,440		29,320			-		-
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility		1,287		1,287			-		1,380
		Indiana Under-Recovered Capacity Costs			-		-			21,945		-
		Indiana Deferred Cook Plant Life Cycle
			Management Project Costs		-		-			4,093		-
		Stranded Costs on Abandoned Plants			-		-			3,896		-
		Dresden Plant Operating Costs			-		8,758			-		-
		Deferred Wind Power Costs			-		5,143			-		-
		Litigation Settlement			-		-			-		11,098
		Other Regulatory Assets Not Yet Being Recovered			168		-			3,616		786
Total Regulatory Assets Not Yet Being Recovered					111,218		157,560			35,386		13,264
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Storm Related Costs			17,167		21,371	5 years		-		-
		Unamortized Loss on Reacquired Debt			11,622		12,969	29 years		21,508		15,871	19 years
		RTO Formation/Integration Costs			3,473		4,370	6 years		2,544		3,229	6 years
		Cook Plant, Unit 2 Baffle Bolts			-		-			7,248		-	25 years
		West Virginia Expanded Net Energy Charge			-		272,783			-		-
		Customer Choice Implementation Costs			-		-			-		1,493
		Other Regulatory Assets Being Recovered			665		-	various		522		-	various
	Regulatory Assets Currently Not Earning a Return
		Income Taxes, Net			531,302		525,549	26 years		250,478		222,252	30 years
		Pension and OPEB Funded Status			192,464		312,645	11 years		100,132		220,797	11 years
		Virginia Transmission Rate Adjustment Clause			47,322		32,992	2 years		-		-
		Virginia Environmental Rate Adjustment Clause			27,426		8,347	1 year		-		-
		Postemployment Benefits			19,772		22,663	5 years		9,096		8,897	5 years
		Storm Related Costs			11,100		13,712	5 years		-		-
		Deferred Restructuring Costs			8,525		10,531	5 years		2,423		3,688	2 years
		Medicare Subsidy			6,477		-	11 years		11,221		-	11 years
		Litigation Settlement			-		-			10,382		-	12 years
		Asset Retirement Obligation			6,453		8,489	4 years		696		808	7 years
		Virginia Generation Rate Adjustment Clause			6,491		3,469	2 years		-		-
		West Virginia Expanded Net Energy Charge			-		25,932			-		-
		Virginia Environmental and Reliability Costs			-		560			-		-
		Cook Nuclear Plant Refueling Outage Levelization			-		-			57,979		26,652	3 years
		Peak Demand Reduction/Energy Efficiency			-		-			4,457		2,608	1 year
		Off-system Sales Margin Sharing			-		-			4,409		-	1 year
		River Transportation Division Expenses			-		-			4,090		4,576	1 year
		Deferred PJM Fees			-		-			-		13,998
		Other Regulatory Assets Being Recovered			2,413		1,762	various		1,543		1,886	various
Total Regulatory Assets Being Recovered					892,672		1,278,144			488,728		526,755
Total Noncurrent Regulatory Assets				$	1,003,890	$	1,435,704		$	524,114	$	540,019

					APCo					I&M
									Remaining					Remaining
					December 31,				Refund	December 31,				Refund
Regulatory Liabilities:					2013		2012		Period	2013		2012		Period
					(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - does not pay a return					$	107,048	$	-	1 year	$	-	$	-
Over-recovered Fuel Costs - pays a return						-		-			1,976		-	1 year
Total Current Regulatory Liabilities					$	107,048	$	-		$	1,976	$	-
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			$	249	$	249		$	113	$	124
Total Regulatory Liabilities Not Yet Being Paid						249		249			113		124
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs				583,723		552,590	(a)		389,025		381,116	(a)
		Deferred Investment Tax Credits				1,863		2,823	47 years		-		-
	Regulatory Liabilities Currently Not Paying a Return
		Deferred State Income Tax Coal Credits				28,255		29,296	10 years		-		-
		Unrealized Gain on Forward Commitments				15,853		21,433	4 years		10,810		19,872	4 years
		Deferred Investment Tax Credits				122		382	2 years		43,200		48,130	23 years
		Peak Demand Reduction/Energy Efficiency				746		907	1 year		15,021		11,080	1 year
		Excess Asset Retirement Obligations for Nuclear
			Decommissioning Liability			-		-			597,113		435,717	(b)
		Spent Nuclear Fuel Liability				-		-			43,416		42,898	(b)
		Over-Recovery of PJM Expense				-		-			13,924		-	2 years
		Off-system Sales Margin Sharing				-		-			-		7,611
		Other Regulatory Liabilities Being Paid				414		-	various		23		1,744	various
Total Regulatory Liabilities Being Paid						630,976		607,431			1,112,532		948,168
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits				$	631,225	$	607,680		$	1,112,645	$	948,292
(a)				Relieved as removal costs are incurred.
(b)				Relieved when plant is decommissioned.

Ohio Power Co [Member]

Effects of Regulation

4. EFFECTS OF REGULATION

Regulatory Assets

Regulatory assets and liabilities are comprised of the following items:

			OPCo
							Remaining
			December 31,				Recovery
Regulatory Assets:			2013		2012		Period
			(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - does not earn a return			$	15,829	$	-	1 year
Total Current Regulatory Assets			$	15,829	$	-
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending future proceedings to
	determine the recovery method and timing:
	Regulatory Assets Currently Earning a Return
		Ohio Economic Development Rider	$	13,854	$	13,213
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs		57,589		61,828
		Ormet Special Rate Recovery Mechanism		35,631		5,453
		Other Regulatory Assets Not Yet Being Recovered		-		30
Total Regulatory Assets Not Yet Being Recovered				107,074		80,524
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Ohio Fuel Adjustment Clause		444,959		518,595	5 years
		Ohio Capacity Deferral		288,060		65,818	5 years
		Ohio Transmission Cost Recovery Rider		86,621		49,391	2 years
		Ohio Distribution Decoupling		31,329		-	2 years
		Unamortized Loss on Reacquired Debt		13,033		13,215	25 years
		RTO Formation/Integration Costs		5,232		6,594	6 years
		Economic Development Rider		791		5,488	1 year
		Ohio Deferred Asset Recovery Rider		-		152,039
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status		188,722		309,685	11 years
		Income Taxes, Net		150,183		190,685	29 years
		Peak Demand Reduction/Energy Efficiency		18,529		-	2 years
		Medicare Subsidy		11,354		-	11 years
		Under-Recovered Distribution Investment Rider		8,677		1,304	1 year
		Under-Recovered gridSMART® Costs		8,396		-	2 years
		Enhanced Service Reliability Plan		6,836		557	2 years
		Postemployment Benefits		6,198		7,658	5 years
		Partnership with Ohio Contribution		1,410		2,405	2 years
		Ohio Distribution Decoupling		-		16,198
		Other Regulatory Assets Being Recovered		1,293		810	various
Total Regulatory Assets Being Recovered				1,271,623		1,340,442
Total Noncurrent Regulatory Assets			$	1,378,697	$	1,420,966

				OPCo
								Remaining
				December 31,				Refund
				2013		2012		Period
Regulatory Liabilities:				(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - does not pay a return				$	-	$	14,848
Total Current Regulatory Liabilities				$	-	$	14,848
Noncurrent Regulatory Liabilities and Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		IGCC Preconstruction Costs		$	4,782	$	4,411
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			216		216
Total Regulatory Liabilities Not Yet Being Paid					4,998		4,627
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			421,061		416,461	(a)
		Deferred Investment Tax Credits			165		322	8 years
	Regulatory Liabilities Currently Not Paying a Return
		Deferred Asset Phase-In Rider			4,334		-	7 years
		Unrealized Gain on Forward Commitments			2,920		-	1 year
		Low Income Customers/Economic Recovery			1,724		2,243	2 years
		Deferred Investment Tax Credits			224		11,321	7 years
		Over-Recovery of Costs Related to gridSMART®			73		3,501	2 years
		Peak Demand Reduction/Energy Efficiency			-		12,596
Total Regulatory Liabilities Being Paid					430,501		446,444
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	435,499	$	451,071
(a)			Relieved as removal costs are incurred.

Public Service Co of Oklahoma [Member]

Effects of Regulation

4. EFFECTS OF REGULATION

Regulated Generating Units to be Retired Before or During 2016

The following regulated generating units are probable of abandonment. Accordingly, CWIP and Plant in Service has been reclassified as Other Property, Plant and Equipment on the balance sheet as of December 31, 2013. The following table summarizes the plant investment and cost of removal, currently being recovered, for each generating unit as of December 31, 2013.

Plant Name and Unit	Company		Gross Investment		Accumulated Depreciation		Net Investment		Cost of Removal Regulatory Liability	Expected Retirement Date	Remaining Recovery Period
		(in thousands)
Tanners Creek Plant,	I&M	$	681,490	$	353,800	$	327,690	$	87,102	2015	17 years
Units 1-4
Northeastern Station,	PSO		181,652		88,836		92,816		11,142	2016	27 years
Unit 4
Welsh Plant, Unit 2	SWEPCo		174,919		92,973		81,946		19,054	2016	27 years
Total		$	1,038,061	$	535,609	$	502,452	$	117,298

Regulatory Assets

Regulatory assets and liabilities are comprised of the following items:

					PSO					SWEPCo
									Remaining					Remaining
					December 31,				Recovery	December 31,				Recovery
					2013		2012		Period	2013		2012		Period
Regulatory Assets:					(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return					$	3,298	$	-	1 year	$	17,949	$	8,527	1 year
Total Current Regulatory Assets					$	3,298	$	-		$	17,949	$	8,527
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs			$	18,743	$	-		$	-	$	-
		Rate Case Expense				-		-			7,934		4,517
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility			-		-			1,143		2,295
		Other Regulatory Assets Not Yet Being Recovered				845		423			1,951		2,188
Total Regulatory Assets Not Yet Being Recovered						19,588		423			11,028		9,000
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Red Rock Generating Facility				9,728		9,954	43 years		-		-
		Unamortized Loss on Reacquired Debt				9,455		10,923	19 years		8,165		9,379	30 years
		Storm Related Costs				-		14,172			-		337
		Acquisition of Valley Electric Membership
			Corporation (VEMCO)			-		-			4,100		6,443	2 years
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status				77,171		133,404	11 years		89,672		143,226	11 years
		Peak Demand Reduction/Energy Efficiency				11,333		6,248	1 year		2,584		1,467	1 year
		Vegetation Management				13,963		13,388	1 year		-		-
		Base Load Purchase Power Contract				6,400		-	1 year		-		-
		Medicare Subsidy				5,389		-	11 years		5,866		-	11 years
		Deferral of Major Generation Overhauls				2,933		4,533	4 years		-		-
		Income Taxes, Net				88		3,785	34 years		247,827		230,220	31 years
		Unrealized Loss on Forward Commitments				2		5,347	1 year		3		427	1 year
		Other Regulatory Assets Being Recovered				640		151	various		660		2,779	various
Total Regulatory Assets Being Recovered						137,102		201,905			358,877		394,278
Total Noncurrent Regulatory Assets (a)					$	156,690	$	202,328		$	369,905	$	403,278
(a)				Additionally, as of December 31, 2013, SWEPCo has recorded approximately $42 million in Customer Accounts Receivable on the balance sheet to reflect revenues, retroactive to January 2013, resulting from the PUCT decision in the Texas Base Rate Case. These amounts will be collected from customers through a rider currently being billed to customers.

				PSO					SWEPCo
								Remaining					Remaining
				December 31,				Refund	December 31,				Refund
				2013		2012		Period	2013		2012		Period
Regulatory Liabilities:				(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - pays a return				$	-	$	7,945		$	7,275	$	16,761	1 year
Total Current Regulatory Liabilities				$	-	$	7,945		$	7,275	$	16,761
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Louisiana Refundable Construction Financing Costs		$	-	$	-		$	-	$	96,094
	Regulatory Liabilities Currently Not Paying a Return
		Over-recovery of Costs Related to gridSMART®			2,635		3,964			-		-
		Storm Related Costs			-		3,207			-		-
		Other Regulatory Liabilities Not Yet Being Paid			248		1,613			-		-
Total Regulatory Liabilities Not Yet Being Paid					2,883		8,784			-		96,094
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			276,418		280,446	(a)		372,381		362,838	(a)
		Louisiana Refundable Construction Financing Costs			-		-			77,664		-	5 years
		Excess Earnings			-		-			2,903		2,975	40 years
		Other Regulatory Liabilities Being Paid			-		-			1,286		838	various
	Regulatory Liabilities Currently Not Paying a Return
		Deferred Investment Tax Credits			46,753		42,345	51 years		11,207		12,769	17 years
		Vegetation Management			-		-			4,002		130	1 year
		Peak Demand Reduction/Energy Efficiency			-		2,915			901		-	1 year
		Base Load Purchase Power Contract			-		8,484			-		-
		Other Regulatory Liabilities Being Paid			1,619		1,843	various		1,784		827	various
Total Regulatory Liabilities Being Paid					324,790		336,033			472,128		380,377
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	327,673	$	344,817		$	472,128	$	476,471
(a)			Relieved as removal costs are incurred.

Southwestern Electric Power Co [Member]

Effects of Regulation

4. EFFECTS OF REGULATION

Regulated Generating Units to be Retired Before or During 2016

The following regulated generating units are probable of abandonment. Accordingly, CWIP and Plant in Service has been reclassified as Other Property, Plant and Equipment on the balance sheet as of December 31, 2013. The following table summarizes the plant investment and cost of removal, currently being recovered, for each generating unit as of December 31, 2013.

Plant Name and Unit	Company		Gross Investment		Accumulated Depreciation		Net Investment		Cost of Removal Regulatory Liability	Expected Retirement Date	Remaining Recovery Period
		(in thousands)
Tanners Creek Plant,	I&M	$	681,490	$	353,800	$	327,690	$	87,102	2015	17 years
Units 1-4
Northeastern Station,	PSO		181,652		88,836		92,816		11,142	2016	27 years
Unit 4
Welsh Plant, Unit 2	SWEPCo		174,919		92,973		81,946		19,054	2016	27 years
Total		$	1,038,061	$	535,609	$	502,452	$	117,298

Regulatory Assets

Regulatory assets and liabilities are comprised of the following items:

					PSO					SWEPCo
									Remaining					Remaining
					December 31,				Recovery	December 31,				Recovery
					2013		2012		Period	2013		2012		Period
Regulatory Assets:					(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return					$	3,298	$	-	1 year	$	17,949	$	8,527	1 year
Total Current Regulatory Assets					$	3,298	$	-		$	17,949	$	8,527
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs			$	18,743	$	-		$	-	$	-
		Rate Case Expense				-		-			7,934		4,517
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility			-		-			1,143		2,295
		Other Regulatory Assets Not Yet Being Recovered				845		423			1,951		2,188
Total Regulatory Assets Not Yet Being Recovered						19,588		423			11,028		9,000
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Red Rock Generating Facility				9,728		9,954	43 years		-		-
		Unamortized Loss on Reacquired Debt				9,455		10,923	19 years		8,165		9,379	30 years
		Storm Related Costs				-		14,172			-		337
		Acquisition of Valley Electric Membership
			Corporation (VEMCO)			-		-			4,100		6,443	2 years
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status				77,171		133,404	11 years		89,672		143,226	11 years
		Peak Demand Reduction/Energy Efficiency				11,333		6,248	1 year		2,584		1,467	1 year
		Vegetation Management				13,963		13,388	1 year		-		-
		Base Load Purchase Power Contract				6,400		-	1 year		-		-
		Medicare Subsidy				5,389		-	11 years		5,866		-	11 years
		Deferral of Major Generation Overhauls				2,933		4,533	4 years		-		-
		Income Taxes, Net				88		3,785	34 years		247,827		230,220	31 years
		Unrealized Loss on Forward Commitments				2		5,347	1 year		3		427	1 year
		Other Regulatory Assets Being Recovered				640		151	various		660		2,779	various
Total Regulatory Assets Being Recovered						137,102		201,905			358,877		394,278
Total Noncurrent Regulatory Assets (a)					$	156,690	$	202,328		$	369,905	$	403,278
(a)				Additionally, as of December 31, 2013, SWEPCo has recorded approximately $42 million in Customer Accounts Receivable on the balance sheet to reflect revenues, retroactive to January 2013, resulting from the PUCT decision in the Texas Base Rate Case. These amounts will be collected from customers through a rider currently being billed to customers.

				PSO					SWEPCo
								Remaining					Remaining
				December 31,				Refund	December 31,				Refund
				2013		2012		Period	2013		2012		Period
Regulatory Liabilities:				(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - pays a return				$	-	$	7,945		$	7,275	$	16,761	1 year
Total Current Regulatory Liabilities				$	-	$	7,945		$	7,275	$	16,761
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Louisiana Refundable Construction Financing Costs		$	-	$	-		$	-	$	96,094
	Regulatory Liabilities Currently Not Paying a Return
		Over-recovery of Costs Related to gridSMART®			2,635		3,964			-		-
		Storm Related Costs			-		3,207			-		-
		Other Regulatory Liabilities Not Yet Being Paid			248		1,613			-		-
Total Regulatory Liabilities Not Yet Being Paid					2,883		8,784			-		96,094
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			276,418		280,446	(a)		372,381		362,838	(a)
		Louisiana Refundable Construction Financing Costs			-		-			77,664		-	5 years
		Excess Earnings			-		-			2,903		2,975	40 years
		Other Regulatory Liabilities Being Paid			-		-			1,286		838	various
	Regulatory Liabilities Currently Not Paying a Return
		Deferred Investment Tax Credits			46,753		42,345	51 years		11,207		12,769	17 years
		Vegetation Management			-		-			4,002		130	1 year
		Peak Demand Reduction/Energy Efficiency			-		2,915			901		-	1 year
		Base Load Purchase Power Contract			-		8,484			-		-
		Other Regulatory Liabilities Being Paid			1,619		1,843	various		1,784		827	various
Total Regulatory Liabilities Being Paid					324,790		336,033			472,128		380,377
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	327,673	$	344,817		$	472,128	$	476,471
(a)			Relieved as removal costs are incurred.