Business Segments

12 Months Ended

Dec. 31, 2013

Business Segments

9. BUSINESS SEGMENTS

Our primary business is the generation, transmission and distribution of electricity. Within our Vertically Integrated Utilities 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.

During the fourth quarter of 2013, we changed the structure of our internal organization which resulted in a change in the composition of our reportable segments. In accordance with authoritative accounting guidance for segment reporting, prior period financial information has been recast in the financial statements and footnotes to be comparable to the current year presentation of reportable segments.See the “Corporate Separation” section of Executive Overview.

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

Vertically Integrated Utilities

• Generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo.

  Transmission and Distribution Utilities

• Transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by OPCo, TCC and TNC.
• OPCo purchases energy and capacity to serve remaining generation service customers.

  Generation & Marketing

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

AEP Transmission Holdco

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

  AEP River Operations

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

The remainder of our activities is presented as Corporate and Other. While not considered a reportable segment, Corporate and Other primarily includes management and professional services to AEP provided at cost to AEP subsidiaries and the purchasing of receivables from certain AEP utility subsidiaries. This segment also 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 years ended December 31, 2013, 2012 and 2011and balance sheet information as of December 31, 2013 and 2012. These amounts include certain estimates and allocations where necessary.

				Transmission
		Vertically		and		AEP				Generation		Corporate
		Integrated		Distribution		Transmission		AEP River		and		and Other		Reconciling
		Utilities		Utilities		Holdco		Operations		Marketing		(a)		Adjustments			Consolidated
		(in millions)
Year Ended December 31, 2013
Revenues from:
	External Customers	$	9,347	$	4,279	$	27	$	544	$	1,208	$	32	$	(80)	(b)	$	15,357
	Other Operating Segments		645		199		51		19		2,457		57		(3,428)			-
Total Revenues		$	9,992	$	4,478	$	78	$	563	$	3,665	$	89	$	(3,508)		$	15,357
Asset Impairments and Other
	Related Charges	$	72	$	-	$	-	$	-	$	154	$	-	$	-		$	226
Depreciation and Amortization			941		591		10		31		236		-		(66)	(c)		1,743
Interest Income			7		2		-		-		2		69		(22)			58
Carrying Costs Income			14		16		-		-		-		-		-			30
Interest Expense			540		292		10		17		55		27		(35)	(c)		906
Income Tax Expense			398		198		29		7		112		(60)		-			684
Net Income			681		358		80		12		228		125		-			1,484
Gross Property Additions			1,822		871		843		7		185		9		(81)			3,656
				Transmission
		Vertically		and		AEP				Generation		Corporate
		Integrated		Distribution		Transmission		AEP River		and		and Other		Reconciling
		Utilities		Utilities		Holdco		Operations		Marketing		(a)		Adjustments			Consolidated
		(in millions)
Year Ended December 31, 2012
Revenues from:
	External Customers	$	8,785	$	4,659	$	7	$	647	$	882	$	25	$	(60)	(b)	$	14,945
	Other Operating Segments		633		159		17		20		2,585		58		(3,472)			-
Total Revenues		$	9,418	$	4,818	$	24	$	667	$	3,467	$	83	$	(3,532)		$	14,945
Asset Impairments and Other
	Related Charges	$	13	$	-	$	-	$	-	$	287	$	-	$	-		$	300
Depreciation and Amortization			873		561		3		29		349		-		(33)	(c)		1,782
Interest Income			5		4		-		-		1		22		(24)			8
Carrying Costs Income			28		24		1		-		-		-		-			53
Interest Expense			520		291		3		17		83		112		(38)	(c)		988
Income Tax Expense			345		201		17		7		15		19		-			604
Net Income (Loss)			803		389		43		15		100		(88)		-			1,262
Gross Property Additions			1,801		664		392		31		249		2		(20)			3,119
				Transmission
		Vertically		and		AEP				Generation		Corporate
		Integrated		Distribution		Transmission		AEP River		and		and Other		Reconciling
		Utilities		Utilities		Holdco		Operations		Marketing		(a)		Adjustments			Consolidated
		(in millions)
Year Ended December 31, 2011
Revenues from:
	External Customers	$	8,942	$	4,982	$	3	$	697	$	563	$	24	$	(95)	(b)	$	15,116
	Other Operating Segments		760		174		5		19		3,331		59		(4,348)			-
Total Revenues		$	9,702	$	5,156	$	8	$	716	$	3,894	$	83	$	(4,443)		$	15,116
Asset Impairments and Other
	Related Charges	$	49	$	-	$	-	$	-	$	90	$	-	$	-		$	139
Depreciation and Amortization			785		549		-		28		304		2		(13)	(c)		1,655
Interest Income			13		7		-		-		4		22		(19)			27
Carrying Costs Income			17		376		-		-		-		-		-			393
Interest Expense			514		293		1		17		87		56		(35)	(c)		933
Income Tax Expense			312		220		2		24		166		94		-			818
Income (Loss) Before
	Extraordinary Item	$	710	$	404	$	30	$	45	$	439	$	(52)	$	-		$	1,576
Extraordinary Item, Net of Tax			-		373		-		-		-		-		-			373
Net Income (Loss)		$	710	$	777	$	30	$	45	$	439	$	(52)	$	-		$	1,949
Gross Property Additions		$	1,733	$	544	$	263	$	18	$	156	$	219	$	(31)		$	2,902

				Transmission
		Vertically		and		AEP				Generation		Corporate		Reconciling
		Integrated		Distribution		Transmission		AEP River		and		and Other		Adjustments
		Utilities		Utilities		Holdco		Operations		Marketing		(a)		(c)			Consolidated
		(in millions)
December 31, 2013
Total Property, Plant and
	Equipment	$	37,545	$	12,143	$	1,636	$	638	$	8,277	$	315	$	(269)		$	60,285
Accumulated Depreciation and
	Amortization		12,250		3,342		10		189		3,409		173		(85)			19,288
Total Property, Plant and
	Equipment - Net	$	25,295	$	8,801	$	1,626	$	449	$	4,868	$	142	$	(184)		$	40,997
Total Assets		$	32,791	$	14,165	$	2,245	$	673	$	6,426	$	19,645	$	(19,531)	(d)	$	56,414
Investments in Equity Method
	Investees		24		-		480		54		-		11		-			569
				Transmission
		Vertically		and		AEP				Generation		Corporate		Reconciling
		Integrated		Distribution		Transmission		AEP River		and		and Other		Adjustments
		Utilities		Utilities		Holdco		Operations		Marketing		(a)		(c)			Consolidated
		(in millions)
December 31, 2012
Total Property, Plant and
	Equipment	$	36,066	$	11,461	$	748	$	636	$	8,529	$	280	$	(266)		$	57,454
Accumulated Depreciation and
	Amortization		11,733		3,232		4		161		3,465		168		(72)			18,691
Total Property, Plant and
	Equipment - Net	$	24,333	$	8,229	$	744	$	475	$	5,064	$	112	$	(194)		$	38,763
Total Assets		$	32,008	$	13,516	$	1,216	$	670	$	6,664	$	19,179	$	(18,886)	(d)	$	54,367
Investments in Equity Method
	Investees		24		-		393		43		-		5		-			465

(a)Corporate andOther includes management and professional services to AEP provided at cost to AEP subsidiaries and the purchasing of receivables from certain AEP utility subsidiaries. This segment also includes parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

(b)Reconciling Adjustments for External Customers primarily include eliminations as a result of corporate separation.

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

(d)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

8. 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

8. 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

8. 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

8. 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

8. 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.