Property, Plant and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

The disclosures in this note apply to all Registrants unless indicated otherwise.

Property, Plant and Equipment is shown functionally on the face of the balance sheets. The following tables include the total plant balances as of December 31, 2019 and 2018:

December 31, 2019	AEP			AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Regulated Property, Plant and Equipment
Generation	$	21,323.5	(a)	$	—	$	—	$	6,563.7	$	5,099.7	$	—	$	1,574.6	$	4,691.4	(a)
Transmission	24,763.4			4,466.5		8,137.9		3,584.1		1,641.8		2,686.3		948.5		2,056.5
Distribution	22,440.8			4,215.2		—		4,201.7		2,437.6		5,323.5		2,684.8		2,270.7
Other	4,369.6			803.4		268.2		542.0		590.9		754.7		337.2		520.6
CWIP	4,261.2		(a)	763.9		1,485.7		593.4		382.3		394.4		133.4		210.1		(a)
Less: Accumulated Depreciation	18,778.1			1,465.0		402.3		4,425.6		3,281.4		2,261.7		1,579.9		2,766.2
Total Regulated Property, Plant and Equipment - Net	58,380.4			8,784.0		9,489.5		11,059.3		6,870.9		6,897.2		4,098.6		6,983.1
Nonregulated Property, Plant and Equipment - Net	1,757.7			61.1		1.4		22.6		28.8		9.8		4.7		112.1
Total Property, Plant and Equipment - Net	$	60,138.1		$	8,845.1	$	9,490.9	$	11,081.9	$	6,899.7	$	6,907.0	$	4,103.3	$	7,095.2

December 31, 2018	AEP			AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Regulated Property, Plant and Equipment
Generation	$	20,989.1	(a)	$	—	$	—	$	6,509.6	$	4,887.2	$	—	$	1,577.0	$	4,672.6	(a)
Transmission	21,500.5			3,683.6		6,515.8		3,317.7		1,576.8		2,544.3		892.3		1,866.9
Distribution	21,192.8			4,043.2		—		3,989.4		2,249.7		4,942.3		2,572.8		2,178.6
Other	3,770.8			724.6		172.6		457.4		543.1		563.7		298.1		485.2
CWIP	4,352.6		(a)	836.0		1,578.3		490.2		465.3		432.1		94.0		194.7		(a)
Less: Accumulated Depreciation	17,743.1			1,431.2		271.9		4,118.9		3,139.4		2,217.7		1,472.1		2,633.5
Total Regulated Property, Plant and Equipment - Net	54,062.7			7,856.2		7,994.8		10,645.4		6,582.7		6,264.7		3,962.1		6,764.5
Nonregulated Property, Plant and Equipment - Net	1,036.4			135.6		1.4		22.9		28.5		10.2		4.6		107.3
Total Property, Plant and Equipment - Net	$	55,099.1		$	7,991.8	$	7,996.2	$	10,668.3	$	6,611.2	$	6,274.9	$	3,966.7	$	6,871.8

(a) AEP and SWEPCo’s regulated generation and regulated CWIP include amounts related to SWEPCo’s Arkansas jurisdictional share of the Turk Plant.

Depreciation, Depletion and Amortization

The Registrants provide for depreciation of Property, Plant and Equipment, excluding coal-mining properties, on a straight-line basis over the estimated useful lives of property, generally using composite rates by functional class.  The following tables provide total regulated annual composite depreciation rates and depreciable lives for the Registrants:

AEP
	2019						2018						2017
Functional Class of Property	Annual Composite Depreciation Rate Ranges			Depreciable Life Ranges			Annual Composite Depreciation Rate Ranges			Depreciable Life Ranges			Annual Composite Depreciation Rate Ranges			Depreciable Life Ranges
				(in years)						(in years)						(in years)
Generation	2.5%	-	5.5%	20	-	132	2.4%	-	4.0%	20	-	132	2.3%	-	3.7%	20	-	132
Transmission	1.8%	-	2.6%	15	-	81	1.6%	-	2.7%	15	-	81	1.6%	-	2.7%	15	-	100
Distribution	2.7%	-	3.7%	7	-	78	2.7%	-	3.6%	7	-	78	2.7%	-	3.7%	5	-	156
Other	2.6%	-	9.5%	5	-	75	2.3%	-	9.8%	5	-	75	2.3%	-	9.2%	5	-	84

AEP Texas
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Transmission	1.8%	45	-	81	1.7%	45	-	81	1.7%	45	-	81
Distribution	3.5%	7	-	70	3.6%	7	-	70	3.6%	7	-	70
Other	6.3%	5	-	50	6.0%	5	-	50	8.7%	5	-	50

AEPTCo
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Transmission	2.0%	24	-	75	1.9%	20	-	75	1.7%	20	-	100
Other	5.8%	5	-	64	5.6%	5	-	64	6.7%	5	-	84

APCo
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Generation	3.2%	35	-	118	3.1%	35	-	112	3.1%	35	-	112
Transmission	1.8%	15	-	71	1.6%	15	-	68	1.6%	15	-	68
Distribution	3.7%	12	-	57	3.6%	10	-	57	3.7%	10	-	57
Other	7.2%	5	-	55	7.4%	5	-	55	6.5%	5	-	55

I&M
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Generation	4.0%	20	-	132	3.4%	20	-	132	2.4%	20	-	132
Transmission	1.9%	50	-	73	1.8%	50	-	73	1.7%	50	-	75
Distribution	3.4%	9	-	75	3.1%	9	-	75	2.7%	10	-	70
Other	9.4%	5	-	50	8.9%	5	-	50	8.4%	5	-	45

OPCo
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Transmission	2.3%	39	-	60	2.3%	39	-	60	2.3%	39	-	60
Distribution	3.1%	14	-	65	3.0%	14	-	65	2.8%	5	-	57
Other	4.9%	5	-	50	6.3%	5	-	50	6.2%	5	-	50

PSO
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Generation	2.9%	35	-	75	2.9%	35	-	75	2.4%	35	-	85
Transmission	2.4%	45	-	75	2.3%	45	-	75	2.2%	45	-	100
Distribution	2.9%	15	-	78	2.9%	15	-	78	2.7%	27	-	156
Other	5.6%	5	-	64	6.3%	5	-	64	7.4%	5	-	84

SWEPCo
	2019				2018				2017
Functional Class of Property	Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges			Annual Composite Depreciation Rate	Depreciable Life Ranges
		(in years)				(in years)				(in years)
Generation	2.5%	40	-	70	2.4%	40	-	70	2.3%	40	-	70
Transmission	2.4%	50	-	73	2.2%	50	-	73	2.3%	50	-	73
Distribution	2.7%	25	-	70	2.7%	25	-	70	2.7%	25	-	70
Other	7.6%	5	-	55	8.0%	5	-	55	7.2%	5	-	55

The following table includes the nonregulated annual composite depreciation rate ranges and nonregulated depreciable life ranges for AEP and AEP Texas. Depreciation rate ranges and depreciable life ranges are not meaningful for nonregulated property of AEPTCo, APCo, I&M, OPCo, PSO and SWEPCo for 2019, 2018 and 2017.

	2019							2018							2017
Functional Class of Property	Annual Composite Depreciation Rate Ranges			Depreciable Life Ranges				Annual Composite Depreciation Rate Ranges			Depreciable Life Ranges				Annual Composite Depreciation Rate Ranges			Depreciable Life Ranges
				(in years)							(in years)							(in years)
Generation	3.2%	-	21.2%	15	-	59		3.4%	-	22.3%	15	-	59		2.4%	-	5.1%	15	-	66
Transmission	2.5%			30	-	40		2.4%			40				0.2%			40
Distribution	2.3%			40				2.3%			40				2.3%			40
Other	17.6%			5	-	50	(a)	16.3%			5	-	50	(a)	12.1%			5	-	50	(a)

(a) SWEPCo’s nonregulated property, plant and equipment is depreciated using the straight-line method over a range of 3 to 20 years.

SWEPCo provides for depreciation, depletion and amortization of coal-mining assets over each asset’s estimated useful life or the estimated life of each mine, whichever is shorter, using the straight-line method for mining structures and equipment.  SWEPCo uses either the straight-line method or the units-of-production method to amortize mine development costs and deplete coal rights based on estimated recoverable tonnages.  SWEPCo includes these costs in fuel expense.

For regulated operations, the composite depreciation rate generally includes a component for non-ARO removal costs, which is credited to Accumulated Depreciation and Amortization on the balance sheets.  Actual removal costs incurred are charged to Accumulated Depreciation and Amortization.  Any excess of accrued non-ARO removal costs over actual removal costs incurred is reclassified from Accumulated Depreciation and Amortization and reflected as a regulatory liability.  For nonregulated operations, non-ARO removal costs are expensed as incurred. 

Asset Retirement Obligations (Applies to all Registrants except AEPTCo)

The Registrants record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for legal obligations for asbestos removal and for the retirement of certain ash disposal facilities, wind farms, solar farms and certain coal mining facilities.  I&M records ARO for the decommissioning of the Cook Plant.  The Registrants have identified, but not recognized, ARO liabilities related to electric transmission and distribution assets as a result of certain easements on property on which assets are owned.  Generally, such easements are perpetual and require only the retirement and removal of assets upon the cessation of the property’s use.  The retirement obligation is not estimable for such easements since the Registrants plan to use their facilities indefinitely.  The retirement obligation would only be recognized if and when the Registrants abandon or cease the use of specific easements, which is not expected.

As of December 31, 2019 and 2018, I&M’s ARO liability for nuclear decommissioning of the Cook Plant was $1.73 billion and $1.66 billion, respectively.  These liabilities are reflected in Asset Retirement Obligations on I&M’s balance sheets.  As of December 31, 2019 and 2018, the fair value of I&M’s assets that are legally restricted for purposes of settling decommissioning liabilities totaled $2.65 billion and $2.16 billion, respectively.  These assets are included in Spent Nuclear Fuel and Decommissioning Trusts on I&M’s balance sheets.

The following is a reconciliation of the 2019 and 2018 aggregate carrying amounts of ARO by Registrant:

Company	ARO as of December 31, 2018		Accretion Expense		Liabilities Incurred		Liabilities Settled			Revisions in Cash Flow Estimates (a)		ARO as of December 31, 2019
	(in millions)
AEP (b)(c)(d)(e)	$	2,355.5	$	102.5	$	12.0	$	(118.1	)	$	67.0	$	2,418.9
AEP Texas (b)(e)	27.9		1.3		—		(0.2		)	0.1		29.1
APCo (b)(e)	116.1		5.9		—		(17.6		)	6.7		111.1
I&M (b)(c)(e)	1,681.3		67.4		—		(0.2		)	0.1		1,748.6
OPCo (e)	1.8		0.1		—		(0.3		)	0.2		1.8
PSO (b)(e)	46.9		3.1		—		(0.4		)	2.6		52.2
SWEPCo (b)(d)(e)	206.8		10.3		—		(11.8		)	6.9		212.2

Company	ARO as of December 31, 2017		Accretion Expense		Liabilities Incurred		Liabilities Settled			Revisions in Cash Flow Estimates (a)				ARO as of December 31, 2018
	(in millions)
AEP (b)(c)(d)(e)	$	2,005.7	$	93.7	$	0.8	$	(87.0	)	$	342.3		(f)	$	2,355.5
AEP Texas (b)(e)	26.7		1.2		—		(0.1		)	0.1				27.9
APCo (b)(e)	125.0		6.6		—		(17.3		)	1.8				116.1
I&M (b)(c)(e)	1,321.8		58.7		—		(0.2		)	301.0			(f)	1,681.3
OPCo (e)	1.7		0.1		—		—			—				1.8
PSO (b)(e)	54.0		3.2		—		(0.4		)	(9.9		)		46.9
SWEPCo (b)(d)(e)	169.2		9.1		0.2		(11.7		)	40.0				206.8

(a) Primarily related to ash ponds, landfills and mine reclamation, generally due to changes in estimated closure area, volumes and/or unit costs.

(b) Includes ARO related to ash disposal facilities.

(c) Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.73 billion and $1.66 billion as of December 31, 2019 and 2018, respectively.

(d) Includes ARO related to Sabine and DHLC.

(e) Includes ARO related to asbestos removal.

(f) Revision for Cook Plant related to a new third-party study, which impacted the ARO liability for changes of estimated cash flows and application of a new discount rate.

Allowance for Funds Used During Construction and Interest Capitalization

The Registrants’ amounts of Allowance for Equity Funds Used During Construction are summarized in the following table:

	Years Ended December 31,
Company	2019		2018		2017
	(in millions)
AEP	$	168.4	$	132.5	$	93.7
AEP Texas	15.2		20.0		6.8
AEPTCo	84.3		70.6		49.0
APCo	16.6		13.2		9.2
I&M	19.4		11.9		11.1
OPCo	18.2		9.8		6.4
PSO	2.7		0.4		0.5
SWEPCo	6.8		6.0		2.4

The Registrants’ amounts of allowance for borrowed funds used during construction, including capitalized interest, are summarized in the following table:

	Years Ended December 31,
Company	2019		2018		2017
	(in millions)
AEP	$	88.7	$	73.6	$	48.6
AEP Texas	20.0		18.4		6.8
AEPTCo	32.2		26.1		20.2
APCo	9.3		8.4		5.3
I&M	8.9		7.4		6.7
OPCo	6.7		5.8		3.8
PSO	1.9		0.9		1.1
SWEPCo	4.0		4.8		2.1

Jointly-owned Electric Facilities (Applies to AEP, AEP Texas, I&M, PSO and SWEPCo)

The Registrants have electric facilities that are jointly-owned with affiliated and nonaffiliated companies.  Using its own financing, each participating company is obligated to pay its share of the costs of these jointly-owned facilities in the same proportion as its ownership interest.  Each Registrant’s proportionate share of the operating costs associated with these facilities is included in its statements of income and the investments and accumulated depreciation are reflected in its balance sheets under Property, Plant and Equipment as follows:

				Registrant’s Share as of December 31, 2019
	Fuel Type	Percent of Ownership		Utility Plant in Service		Construction Work in Progress		Accumulated Depreciation
				(in millions)
AEP
Conesville Generating Station, Unit 4 (a)(h)	Coal	83.5	%	$	—	$	—	$	—
Dolet Hills Power Station, Unit 1 (f)	Lignite	40.2	%	337.3		6.2		216.5
Flint Creek Generating Station, Unit 1 (g)	Coal	50.0	%	374.3		3.4		101.1
Pirkey Generating Station, Unit 1 (g)	Lignite	85.9	%	607.8		7.7		416.8
Oklaunion Power Station (e)	Coal	70.3	%	106.6		0.1		91.7
Turk Generating Plant (g)	Coal	73.3	%	1,593.3		1.7		225.8
Total				$	3,019.3	$	19.1	$	1,051.9
AEP Texas
Oklaunion Power Station (e)	Coal	54.7	%	$	351.7	$	—	$	291.9
I&M
Rockport Generating Plant (b)(c)(d)	Coal	50.0	%	$	1,114.2	$	105.5	$	586.2
PSO
Oklaunion Power Station (e)	Coal	15.6	%	$	106.6	$	0.1	$	91.7
SWEPCo
Dolet Hills Power Station, Unit 1 (f)	Lignite	40.2	%	$	337.3	$	6.2	$	216.5
Flint Creek Generating Station, Unit 1 (g)	Coal	50.0	%	374.3		3.4		101.1
Pirkey Generating Station, Unit 1 (g)	Lignite	85.9	%	607.8		7.7		416.8
Turk Generating Plant (g)	Coal	73.3	%	1,593.3		1.7		225.8
Total				$	2,912.7	$	19.0	$	960.2

				Registrant’s Share as of December 31, 2018
	Fuel Type	Percent of Ownership		Utility Plant in Service		Construction Work in Progress		Accumulated Depreciation
				(in millions)
AEP
Conesville Generating Station, Unit 4 (a)(h)	Coal	83.5	%	$	16.4	$	0.2	$	2.4
Dolet Hills Power Station, Unit 1 (f)	Lignite	40.2	%	336.2		5.1		209.6
Flint Creek Generating Station, Unit 1 (g)	Coal	50.0	%	375.1		1.6		88.9
Pirkey Generating Station, Unit 1 (g)	Lignite	85.9	%	591.3		16.6		418.0
Oklaunion Power Station (e)	Coal	70.3	%	106.4		—		67.8
Turk Generating Plant (g)	Coal	73.3	%	1,590.5		1.1		197.5
Total				$	3,015.9	$	24.6	$	984.2
AEP Texas
Oklaunion Power Station (e)	Coal	54.7	%	$	352.1	$	0.2	$	218.6
I&M
Rockport Generating Plant (b)(c)(d)	Coal	50.0	%	$	1,108.7	$	50.2	$	514.1
PSO
Oklaunion Power Station (e)	Coal	15.6	%	$	106.4	$	—	$	67.8
SWEPCo
Dolet Hills Power Station, Unit 1 (f)	Lignite	40.2	%	$	336.2	$	5.1	$	209.6
Flint Creek Generating Station, Unit 1 (g)	Coal	50.0	%	375.1		1.6		88.9
Pirkey Generating Station, Unit 1 (g)	Lignite	85.9	%	591.3		16.6		418.0
Turk Generating Plant (g)	Coal	73.3	%	1,590.5		1.1		197.5
Total				$	2,893.1	$	24.4	$	914.0

(a) Operated by AGR.

(b) Operated by I&M.

(c) Amounts include I&M’s 50% ownership of both Unit 1 and capital additions for Unit 2. Unit 2 is subject to an operating lease with a nonaffiliated company. See the “Rockport Lease” section of Note 13.

(d) AEGCo owns 50% of Unit 1 with I&M and 50% of capital additions for Unit 2.

(e) Operated by PSO, which owns 15.6%. Also jointly-owned (54.7%) by AEP Texas and various nonaffiliated companies.

(f) Operated by CLECO, a nonaffiliated company.

(g) Operated by SWEPCo.

(h)

Conesville Generating Station, Unit 4 was impaired as of December 31, 2019. See the “Impairments” section of Note 7.