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Business Segments
 12 Months Ended
Dec. 31, 2020
Business Segments
9.  BUSINESS SEGMENTS

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

AEP’s Reportable Segments

AEP’s primary business is the generation, transmission and distribution of electricity.  Within its Vertically Integrated Utilities segment, AEP centrally dispatches generation assets and manages its 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.

AEP’s 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 AEP Texas and OPCo.
•OPCo purchases energy and capacity to serve standard service offer customers and provides transmission and distribution services for all connected load.

AEP Transmission Holdco

•Development, construction and operation of transmission facilities through investments in AEPTCo. These investments have FERC-approved returns on equity.
•Development, construction and operation of transmission facilities through investments in AEP’s transmission-only joint ventures. These investments have PUCT-approved or FERC-approved returns on equity.

Generation & Marketing

•Contracted renewable energy investments and management services.
•Marketing, risk management and retail activities in ERCOT, MISO, PJM and SPP.
•Competitive generation in PJM.

The remainder of AEP’s activities are presented as Corporate and Other. While not considered a reportable segment, Corporate and Other primarily includes the purchasing of receivables from certain AEP utility subsidiaries, Parent’s guarantee revenue received from affiliates, investment income, interest income and interest expense, income tax expense and other nonallocated costs.
The tables below present AEP’s reportable segment income statement information for the years ended December 31, 2020, 2019 and 2018 and reportable segment balance sheet information as of December 31, 2020 and 2019.  
Vertically Integrated UtilitiesTransmission and Distribution UtilitiesAEP Transmission HoldcoGeneration & MarketingCorporate and Other (a)Reconciling AdjustmentsConsolidated
(in millions)
2020
Revenues from:
External Customers
$8,753.2 $4,238.7 $297.4 $1,621.0 $8.2 $— $14,918.5 
Other Operating Segments
126.2 107.2 901.4 104.6 88.6 (1,328.0)— 
Total Revenues$8,879.4 $4,345.9 $1,198.8 $1,725.6 $96.8 $(1,328.0)$14,918.5 
Depreciation and Amortization
$1,600.5 $751.1 $257.6 $72.8 $0.8 $— $2,682.8 
Interest Expense565.0 289.2 133.2 24.0 196.4 (42.1)1,165.7 
Income Tax Expense (Benefit)
(7.0)29.7 130.8 (108.0)(5.0)— 40.5 
Equity Earnings of Unconsolidated Subsidiaries2.9 — 82.4 3.2 2.6 — 91.1 
Net Income (Loss)$1,064.5 $496.4 $508.5 $216.9 $(89.6)$— $2,196.7 
Gross Property Additions
$2,291.2 $2,108.1 $1,649.3 $197.0 $16.0 $(15.3)$6,246.3 
Total Property, Plant and Equipment
$49,023.3 $21,145.0 $11,827.2 $1,910.2 $407.3 $— $84,313.0 
Accumulated Depreciation and Amortization
15,586.2 3,879.3 595.7 166.1 184.1 — 20,411.4 
Total Property, Plant and Equipment – Net
$33,437.1 $17,265.7 $11,231.5 $1,744.1 $223.2 $— $63,901.6 
Total Assets$42,752.7 $19,765.9 $12,627.3 $3,585.9 $5,987.1 (b)$(3,961.7)(c)$80,757.2 
Investments in Equity Method Investees
$37.1 $2.1 $831.3 $467.0 $68.8 $— $1,406.3 
Long-term Debt Due Within One Year:
Nonaffiliated
$1,034.6 $588.8 $52.3 $— $410.4 (d)$— $2,086.1 
Long-term Debt:
Affiliated
65.0 — — — — (65.0)— 
Nonaffiliated
12,375.6 6,661.9 4,075.7 — 5,873.2 (d)— 28,986.4 
Total Long-term Debt
$13,475.2 $7,250.7 $4,128.0 $— $6,283.6 $(65.0)$31,072.5 
Vertically Integrated UtilitiesTransmission and Distribution UtilitiesAEP Transmission HoldcoGeneration & MarketingCorporate and Other (a)Reconciling AdjustmentsConsolidated
(in millions)
2019
Revenues from:
External Customers
$9,245.7 $4,319.0 $260.2 $1,721.8 $14.7 $— $15,561.4 
Other Operating Segments
121.4 163.5 813.0 135.8 81.1 (1,314.8)— 
Total Revenues$9,367.1 $4,482.5 $1,073.2 $1,857.6 $95.8 $(1,314.8)$15,561.4 
Asset Impairments and Other Related Charges
$92.9 $32.5 $— $31.0 $— $— $156.4 
Depreciation and Amortization
1,447.0 789.5 183.4 69.5 0.6 24.5 (e)2,514.5 
Interest Expense568.3 243.3 103.3 30.0 193.7 (66.1)(e)1,072.5 
Income Tax Expense (Benefit)
(97.7)(25.2)136.2 (53.8)27.6 — (12.9)
Equity Earnings (Loss) of Unconsolidated Subsidiaries3.0 — 72.8 (3.8)0.1 — 72.1 
Net Income (Loss)$985.6 $451.0 $520.1 $104.1 $(141.0)$— $1,919.8 
Gross Property Additions
$2,437.4 $2,074.3 $1,458.9 $1,005.1 $14.5 $(20.4)$6,969.8 
Total Property, Plant and Equipment
$47,323.7 $19,773.3 $10,334.0 $1,650.8 $418.4 $(354.5)(e)$79,145.7 
Accumulated Depreciation and Amortization
14,580.4 3,911.2 418.9 99.0 184.5 (186.4)(e)19,007.6 
Total Property, Plant and Equipment – Net
$32,743.3 $15,862.1 $9,915.1 $1,551.8 $233.9 $(168.1)(e)$60,138.1 
Total Assets$41,228.8 $18,757.5 $11,143.5 $3,123.8 $5,440.0 (b)$(3,801.3)(c)(e)$75,892.3 
Investments in Equity Method Investees
$41.7 $2.5 $787.5 $459.5 $65.4 $— $1,356.6 
Long-term Debt Due Within One Year:
Affiliated$20.0 $— $— $— $— $(20.0)— 
Nonaffiliated
704.7 392.2 — — 501.8 (d)— 1,598.7 
Long-term Debt:
Affiliated
39.0 — — — — (39.0)— 
Nonaffiliated
12,162.0 6,248.1 3,593.8 — 3,122.9 — 25,126.8 
Total Long-term Debt
$12,925.7 $6,640.3 $3,593.8 $— $3,624.7 (d)$(59.0)$26,725.5 
Vertically Integrated UtilitiesTransmission and Distribution UtilitiesAEP Transmission HoldcoGeneration & MarketingCorporate and Other(a)Reconciling AdjustmentsConsolidated
(in millions)
2018
Revenues from:
External Customers
$9,556.7 $4,552.3 $248.6 $1,818.1 $20.0 $— $16,195.7 
Other Operating Segments
88.8 100.8 555.5 122.2 75.1 (942.4)— 
Total Revenues$9,645.5 $4,653.1 $804.1 $1,940.3 $95.1 $(942.4)$16,195.7 
Asset Impairments and Other Related Charges
$3.4 $— $— $47.7 $19.5 $— $70.6 
Depreciation and Amortization
1,316.2 734.1 137.8 41.0 0.4 57.1 (e)2,286.6 
Interest Expense
567.8 248.1 90.7 14.9 122.6 (59.7)(e)984.4 
Income Tax Expense
5.7 42.4 95.3 (49.2)21.1 — 115.3 
Equity Earnings of Unconsolidated Subsidiaries2.7 — 68.7 0.5 1.2 — 73.1 
Net Income (Loss)
$995.5 $527.4 $373.0 $134.7 $(99.3)$— $1,931.3 
Gross Property Additions
$2,282.2 $2,162.4 $1,614.1 $289.7 $16.3 $(39.2)$6,325.5 
Total Assets
$38,874.3 $17,083.4 $9,543.7 $1,979.7 $4,036.5 (b)$(2,714.8)(c)(e)$68,802.8 

(a)Corporate and Other primarily includes the purchasing of receivables from certain AEP utility subsidiaries. This segment also includes Parent’s guarantee revenue received from affiliates, investment income, interest income, interest expense and other nonallocated costs.
(b)Includes elimination of AEP Parent’s investments in wholly-owned subsidiary companies.
(c)Reconciling Adjustments for Total Assets primarily include elimination of intercompany advances to affiliates and intercompany accounts receivable.
(d)Amounts reflect the impact of fair value hedge accounting. See “Accounting for Fair Value Hedging Strategies” section of Note 10 for additional information.
(e)Includes eliminations due to an intercompany finance lease.


Registrant Subsidiaries’ Reportable Segments (Applies to all Registrant Subsidiaries except AEPTCo)

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business for APCo, I&M, PSO and SWEPCo, and an integrated electricity transmission and distribution business for AEP Texas and OPCo.  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.
AEPTCo’s Reportable Segments

AEPTCo Parent is the holding company of seven FERC-regulated transmission-only electric utilities. The seven State Transcos have been identified as operating segments of AEPTCo under the accounting guidance for “Segment Reporting.” The State Transcos business consists of developing, constructing and operating transmission facilities at the request of the RTOs in which they operate and in replacing and upgrading facilities, assets and components of the existing AEP transmission system as needed to maintain reliability standards and provide service to AEP’s wholesale and retail customers. The State Transcos are regulated for rate-making purposes exclusively by the FERC and earn revenues through tariff rates charged for the use of their electric transmission systems.

AEPTCo’s Chief Operating Decision Maker makes operating decisions, allocates resources to and assesses performance-based on these operating segments. The seven State Transcos operating segments all have similar economic characteristics and meet all of the criteria under the accounting guidance for “Segment Reporting” to be aggregated into one operating segment. As a result, AEPTCo has one reportable segment. The remainder of AEPTCo’s activity is presented in AEPTCo Parent. While not considered a reportable segment, AEPTCo Parent represents the activity of the holding company which primarily relates to debt financing activity and general corporate activities.

The tables below present AEPTCo’s reportable segment income statement information for the years ended December 31, 2020, 2019 and 2018 and reportable segment balance sheet information as of December 31, 2020 and 2019.
State TranscosAEPTCo ParentReconciling AdjustmentsAEPTCo
Consolidated
2020(in millions)
Revenues from:
External Customers
$248.8 $— $— $248.8 
Sales to AEP Affiliates
896.3 — — 896.3 
Other Revenues
0.6 — — 0.6 
Total Revenues$1,145.7 $— $— $1,145.7 
Depreciation and Amortization
$249.0 $— $— $249.0 
Interest Income
0.9 149.6 (148.1)(a)2.4 
Allowance for Equity Funds Used During Construction 74.0 — — 74.0 
Interest Expense 127.8 148.1 (148.1)(a)127.8 
Income Tax Expense 106.5 0.2 — 106.7 
Net Income $422.3 $1.1 (b)$— $423.4 
Gross Property Additions$1,621.9 $— $— $1,621.9 
Total Transmission Property$11,345.6 $— $— $11,345.6 
Accumulated Depreciation and Amortization 572.8 — — 572.8 
Total Transmission Property - Net$10,772.8 $— $— $10,772.8 
Notes Receivable - Affiliated$— $3,948.5 $(3,948.5)(c)$— 
Total Assets$11,185.1 $4,084.0 (d)$(4,023.1)(e)$11,246.0 
Total Long-Term Debt$3,990.0 $3,948.5 $(3,990.0)(c)$3,948.5 
State Transcos AEPTCo ParentReconciling AdjustmentsAEPTCo
Consolidated
2019(in millions)
Revenues from:
External Customers
$214.6 $— $— $214.6 
Sales to AEP Affiliates
806.7 — — 806.7 
Other Revenues
0.1 — — 0.1 
Total Revenues$1,021.4 $— $— $1,021.4 
Depreciation and Amortization
$176.0 $— $— $176.0 
Interest Income
1.3 123.8 (122.1)(a)3.0 
Allowance for Equity Funds Used During Construction 84.3 — — 84.3 
Interest Expense 97.4 122.1 (122.1)(a)97.4 
Income Tax Expense 117.1 0.3 — 117.4 
Net Income $438.6 $1.1 (b)$— $439.7 
Gross Property Additions$1,419.5 $— $— $1,419.5 
Total Transmission Property$9,893.2 $— $— $9,893.2 
Accumulated Depreciation and Amortization 402.3 — — 402.3 
Total Transmission Property - Net$9,490.9 $— $— $9,490.9 
Notes Receivable - Affiliated$— $3,427.3 $(3,427.3)(c)$— 
Total Assets$9,865.0 $3,519.1 (d)$(3,493.3)(e)$9,890.8 
Total Long-Term Debt$3,465.0 $3,427.3 $(3,465.0)(c)$3,427.3 
State TranscosAEPTCo ParentReconciling AdjustmentsAEPTCo
Consolidated
2018(in millions)
Revenues from:
External Customers
$177.0 $— $— $177.0 
Sales to AEP Affiliates
598.9 — — 598.9 
Other
0.2 — — 0.2 
Total Revenues$776.1 $— $— $776.1 
Depreciation and Amortization
$133.9 $— $— $133.9 
Interest Income
1.3 104.6 (103.4)(a)2.5 
Allowance for Equity Funds Used During Construction 70.6 — — 70.6 
Interest Expense83.2 103.4 (103.4)(a)83.2 
Income Tax Expense 83.9 0.2 — 84.1 
Net Income$314.9 $1.0 (b)$— $315.9 
Gross Property Additions$1,570.8 $— $— $1,570.8 
Total Assets$8,406.8 $2,857.1 (d)$(2,869.8)(e)$8,394.1 

(a)    Elimination of intercompany interest income/interest expense on affiliated debt arrangement.
(b)    Includes elimination of AEPTCo Parent’s equity earnings in the State Transcos.
(c)    Elimination of intercompany debt.
(d)    Includes elimination of AEPTCo Parent’s investments in the State Transcos.
(e)    Primarily relates to elimination of Notes Receivable from the State Transcos.