Property, Plant and Equipment

6 Months Ended

Jun. 30, 2020

PROPERTY, PLANT AND EQUIPMENT

The disclosure in this note applies to AEP, AEP Texas, APCo, PSO and SWEPCo.

Asset Retirement Obligations

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. The Registrants recorded the following revisions to ARO estimates during the first six months of 2020:

•In March 2020, SWEPCo recorded a revision to increase estimated ARO liabilities by $21 million primarily due to the revision in the useful life of DHLC. See Note 4 - Rate Matters for additional details.

•In June 2020, AEP Texas and PSO recorded a revision to decrease estimated ARO liabilities by $17 million and $5 million, respectively, due to the expected retirement of the Oklaunion Power Station in October 2020. See Note 4 - Rate Matters for additional details.

•In June 2020, AGR derecognized $106 million of Conesville Plant related ARO liabilities as a result of the Environmental Liability and Property Transfer and Asset Purchase Agreement executed with a non-affiliated third-party. See Note 6 - Acquisitions and Dispositions for additional details.

•In June 2020, APCo recorded a revision to increase estimated Glen Lyn Station ash disposal ARO liabilities by $199 million due to the enactment of House Bill 443. This bill requires APCo to close the ash disposal units at the retired Glen Lyn Station by removal of all coal combustion material. The legislation provides for regulatory recovery of these costs. See Note 5 - Commitments, Guarantees and Contingencies for additional details.

The following is a reconciliation of the aggregate carrying amounts of ARO for AEP, AEP Texas, APCo, PSO and SWEPCo:


Company	ARO as of December 31, 2019		Accretion Expense		Liabilities Incurred		Liabilities Settled		Revisions in Cash Flow Estimates		ARO as of June 30, 2020
	(in millions)
AEP (a)(b)(c)(d)	$	2,418.9	$	50.8	$	0.2	$	(129.9)	$	204.3	$	2,544.3
AEP Texas (a)(d)	29.1		0.6		—		—		(16.8)		12.9
APCo (a)(d)	111.1		2.8		—		(2.7)		199.8		311.0
PSO (a)(d)	52.2		1.5		—		—		(4.8)		48.9
SWEPCo (a)(c)(d)	212.2		5.4		—		(2.1)		24.0		239.5

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.76 billion and $1.73 billion as of June 30, 2020 and December 31, 2019, respectively.

(c)Includes ARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.