Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Details of Income Taxes as Reported

Year Ended December 31, 2020	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(138.2)	$	5.2	$	22.2	$	21.4	$	11.3	$	(26.6)	$	(11.4)	$	(13.6)
Deferred	146.9		(15.4)		65.4		(27.1)		(20.6)		74.0		8.3		19.6
Total Federal	8.7		(10.2)		87.6		(5.7)		(9.3)		47.4		(3.1)		6.0
State and Local:
Current	(16.7)		(0.1)		2.8		9.3		1.9		(5.4)		0.1		(8.2)
Deferred	48.5		(0.9)		16.3		0.7		(0.1)		3.2		8.2		11.6
Total State and Local	31.8		(1.0)		19.1		10.0		1.8		(2.2)		8.3		3.4
Income Tax Expense (Benefit)	$	40.5	$	(11.2)	$	106.7	$	4.3	$	(7.5)	$	45.2	$	5.2	$	9.4

Year Ended December 31, 2019	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(7.4)	$	(31.8)	$	23.7	$	36.7	$	48.1	$	(10.0)	$	25.5	$	6.9
Deferred	(71.6)		(24.7)		71.7		(126.1)		(57.1)		40.6		(26.0)		(10.0)
Total Federal	(79.0)		(56.5)		95.4		(89.4)		(9.0)		30.6		(0.5)		(3.1)
State and Local:
Current	4.4		2.9		2.4		12.0		(2.4)		1.1		0.2		0.8
Deferred	61.7		—		19.6		(0.6)		0.8		3.2		7.8		(2.4)
Total State and Local	66.1		2.9		22.0		11.4		(1.6)		4.3		8.0		(1.6)
Income Tax Expense (Benefit)	$	(12.9)	$	(53.6)	$	117.4	$	(78.0)	$	(10.6)	$	34.9	$	7.5	$	(4.7)

Year Ended December 31, 2018	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(31.7)	$	37.0	$	(14.2)	$	(31.9)	$	60.9	$	55.6	$	35.6	$	18.3
Deferred	122.0		(17.9)		82.3		(24.5)		(48.8)		(36.9)		(36.7)		(1.9)
Total Federal	90.3		19.1		68.1		(56.4)		12.1		18.7		(1.1)		16.4
State and Local:
Current	30.8		1.8		(0.6)		3.7		15.8		4.6		(0.2)		2.3
Deferred	(5.8)		(0.1)		16.6		7.8		1.2		0.7		6.3		1.7
Total State and Local	25.0		1.7		16.0		11.5		17.0		5.3		6.1		4.0
Income Tax Expense (Benefit)	$	115.3	$	20.8	$	84.1	$	(44.9)	$	29.1	$	24.0	$	5.0	$	20.4

Reconciliation of Federal Statutory Tax Rate to Reported Tax Rate

AEP	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	2,196.7		$	1,919.8		$	1,931.3
Less: Equity Earnings – Dolet Hills	(2.9)			(3.0)			(2.7)
Income Tax Expense (Benefit)	40.5			(12.9)			115.3
Pretax Income	$	2,234.3		$	1,903.9		$	2,043.9
Income Taxes on Pretax Income at Statutory Rate (21%)	$	469.2		$	399.8		$	429.2
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	26.5			20.4			24.6
Investment Tax Credit Amortization	(18.8)			(13.0)			(20.4)
Production Tax Credits	(83.1)			(59.6)			(10.3)
State and Local Income Taxes, Net	25.1			52.2			19.7
Removal Costs	(18.6)			(22.2)			(18.6)
AFUDC	(32.5)			(37.1)			(29.4)
Tax Reform Adjustments	—			—			(10.9)
Tax Reform Excess ADIT Reversal	(268.2)			(353.2)			(257.2)
CARES Act	(48.0)			—			—
Other	(11.1)			(0.2)			(11.4)
Income Tax Expense (Benefit)	$	40.5		$	(12.9)		$	115.3
Effective Income Tax Rate	1.8		%	(0.7)		%	5.6		%

AEP Texas	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	241.0		$	178.3		$	211.3
Income Tax Expense (Benefit)	(11.2)			(53.6)			20.8
Pretax Income	$	229.8		$	124.7		$	232.1
Income Taxes on Pretax Income at Statutory Rate (21%)	$	48.3		$	26.2		$	48.7
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.0			1.0			0.7
Investment Tax Credit Amortization	(1.1)			(1.2)			(2.3)
State and Local Income Taxes, Net	(0.8)			2.3			1.3
AFUDC	(4.1)			(3.2)			(4.2)
Parent Company Loss Benefit	(4.5)			(3.8)			(3.0)
Tax Reform Adjustments	—			—			(11.0)
Tax Reform Excess ADIT Reversal	(47.9)			(73.4)			(11.8)
Other	(2.1)			(1.5)			2.4
Income Tax Expense (Benefit)	$	(11.2)		$	(53.6)		$	20.8
Effective Income Tax Rate	(4.9)		%	(43.0)		%	9.0		%

AEPTCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	423.4		$	439.7		$	315.9
Income Tax Expense	106.7			117.4			84.1
Pretax Income	$	530.1		$	557.1		$	400.0
Income Taxes on Pretax Income at Statutory Rate (21%)	$	111.3		$	117.0		$	84.0
Increase (Decrease) in Income Taxes Resulting from the Following Items:
State and Local Income Taxes, Net	15.1			17.4			12.6
AFUDC	(15.5)			(17.7)			(14.1)
Parent Company Loss Benefit	(7.0)			(4.2)			(0.6)
Other	2.8			4.9			2.2
Income Tax Expense	$	106.7		$	117.4		$	84.1
Effective Income Tax Rate	20.1		%	21.1		%	21.0		%

APCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	369.7		$	306.3		$	367.8
Income Tax Expense (Benefit)	4.3			(78.0)			(44.9)
Pretax Income	$	374.0		$	228.3		$	322.9
Income Taxes on Pretax Income at Statutory Rate (21%)	$	78.5		$	47.9		$	67.8
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	12.7			10.8			9.4
State and Local Income Taxes, Net	7.9			9.0			9.1
Removal Costs	(5.7)			(6.4)			(7.9)
AFUDC	(4.5)			(5.2)			(4.3)
Parent Company Loss Benefit	(6.2)			(4.1)			(3.6)
Tax Reform Excess ADIT Reversal	(72.3)			(130.4)			(108.5)
Federal Return to Provision	(7.2)			(1.0)			(6.6)
Other	1.1			1.4			(0.3)
Income Tax Expense (Benefit)	$	4.3		$	(78.0)		$	(44.9)
Effective Income Tax Rate	1.1		%	(34.2)		%	(13.9)		%

I&M	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	284.8		$	269.4		$	261.3
Income Tax Expense (Benefit)	(7.5)			(10.6)			29.1
Pretax Income	$	277.3		$	258.8		$	290.4
Income Taxes on Pretax Income at Statutory Rate (21%)	$	58.2		$	54.3		$	61.0
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.6			4.0			1.5
Investment Tax Credit Amortization	(4.5)			(3.6)			(4.7)
State and Local Income Taxes, Net	1.5			(1.2)			13.4
Removal Costs	(10.5)			(12.8)			(8.0)
AFUDC	(2.4)			(4.1)			(2.5)
Parent Company Loss Benefit	(6.4)			(3.3)			(2.3)
Tax Reform Excess ADIT Reversal	(46.8)			(42.5)			(25.8)
Federal Return to Provision	1.9			(0.3)			(4.6)
Other	(0.1)			(1.1)			1.1
Income Tax Expense (Benefit)	$	(7.5)		$	(10.6)		$	29.1
Effective Income Tax Rate	(2.7)		%	(4.1)		%	10.0		%

OPCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	271.4		$	297.1		$	325.5
Income Tax Expense	45.2			34.9			24.0
Pretax Income	$	316.6		$	332.0		$	349.5
Income Taxes on Pretax Income at Statutory Rate (21%)	$	66.5		$	69.7		$	73.4
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	3.7			(1.4)			2.4
State and Local Income Taxes, Net	(1.7)			3.4			4.2
AFUDC	(2.6)			(3.8)			(2.1)
Parent Company Loss Benefit	—			(1.8)			(6.0)
Tax Reform Excess ADIT Reversal	(27.2)			(27.3)			(51.0)
Federal Return to Provision	6.5			(3.7)			0.2
Other	—			(0.2)			2.9
Income Tax Expense	$	45.2		$	34.9		$	24.0
Effective Income Tax Rate	14.3		%	10.5		%	6.9		%

PSO	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	123.0		$	137.6		$	83.2
Income Tax Expense	5.2			7.5			5.0
Pretax Income	$	128.2		$	145.1		$	88.2
Income Taxes on Pretax Income at Statutory Rate (21%)	$	26.9		$	30.5		$	18.5
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.1			0.6			0.7
Investment Tax Credit Amortization	(2.1)			(0.5)			(1.7)
State and Local Income Taxes, Net	6.5			6.3			4.8
Parent Company Loss Benefit	(0.2)			(2.1)			(1.4)
Tax Reform Excess ADIT Reversal	(25.5)			(24.5)			(15.5)
Other	(1.5)			(2.8)			(0.4)
Income Tax Expense	$	5.2		$	7.5		$	5.0
Effective Income Tax Rate	4.1		%	5.2		%	5.7		%

SWEPCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	183.7		$	162.2		$	152.2
Less: Equity Earnings – Dolet Hills	(2.9)			(3.0)			(2.7)
Income Tax Expense (Benefit)	9.4			(4.7)			20.4
Pretax Income	$	190.2		$	154.5		$	169.9
Income Taxes on Pretax Income at Statutory Rate (21%)	$	39.9		$	32.4		$	35.7
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.9			1.9			1.9
Depletion	(3.4)			(3.4)			(3.4)
State and Local Income Taxes, Net	2.7			(1.3)			3.2
AFUDC	(1.5)			(1.4)			(1.3)
Parent Company Loss Benefit	(5.6)			(1.6)			(0.6)
Tax Reform Excess ADIT Reversal	(21.9)			(29.9)			(16.0)
Other	(2.7)			(1.4)			0.9
Income Tax Expense (Benefit)	$	9.4		$	(4.7)		$	20.4
Effective Income Tax Rate	4.9		%	(3.0)		%	12.0		%

Reconciliation of Significant Temporary Differences

AEP	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	3,259.7	$	3,246.1
Deferred Tax Liabilities	(11,500.6)		(10,834.3)
Net Deferred Tax Liabilities	$	(8,240.9)	$	(7,588.2)
Property Related Temporary Differences	$	(7,340.5)	$	(6,602.9)
Amounts Due to Customers for Future Income Taxes	1,075.8		1,173.5
Deferred State Income Taxes	(1,317.6)		(1,198.0)
Securitized Assets	(140.0)		(178.7)
Regulatory Assets	(391.6)		(371.1)
Accrued Nuclear Decommissioning	(626.4)		(557.4)
Net Operating Loss Carryforward	112.9		77.6
Tax Credit Carryforward	323.6		247.2
Operating Lease Liability	183.7		182.6
Investment in Partnership	(362.0)		(446.6)
All Other, Net	241.2		85.6
Net Deferred Tax Liabilities	$	(8,240.9)	$	(7,588.2)

AEP Texas	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	183.6	$	220.0
Deferred Tax Liabilities	(1,200.3)		(1,185.4)
Net Deferred Tax Liabilities	$	(1,016.7)	$	(965.4)
Property Related Temporary Differences	$	(1,039.6)	$	(973.5)
Amounts Due to Customers for Future Income Taxes	114.4		126.7
Deferred State Income Taxes	(29.1)		(27.5)
Securitized Transition Assets	(90.2)		(124.3)
Regulatory Assets	(47.4)		(51.2)
Operating Lease Liability	18.0		17.2
All Other, Net	57.2		67.2
Net Deferred Tax Liabilities	$	(1,016.7)	$	(965.4)

AEPTCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	166.5	$	162.9
Deferred Tax Liabilities	(1,073.4)		(980.7)
Net Deferred Tax Liabilities	$	(906.9)	$	(817.8)
Property Related Temporary Differences	$	(937.8)	$	(847.1)
Amounts Due to Customers for Future Income Taxes	118.9		119.9
Deferred State Income Taxes	(98.3)		(86.1)
Net Operating Loss Carryforward	13.2		12.3
All Other, Net	(2.9)		(16.8)
Net Deferred Tax Liabilities	$	(906.9)	$	(817.8)

APCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	500.6	$	486.2
Deferred Tax Liabilities	(2,250.5)		(2,167.0)
Net Deferred Tax Liabilities	$	(1,749.9)	$	(1,680.8)
Property Related Temporary Differences	$	(1,412.0)	$	(1,420.0)
Amounts Due to Customers for Future Income Taxes	198.3		222.8
Deferred State Income Taxes	(336.5)		(337.2)
Securitized Assets	(44.7)		(49.3)
Regulatory Assets	(114.8)		(71.0)
Operating Lease Liability	16.7		16.5
All Other, Net	(56.9)		(42.6)
Net Deferred Tax Liabilities	$	(1,749.9)	$	(1,680.8)

I&M	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	989.5	$	970.5
Deferred Tax Liabilities	(2,053.9)		(1,950.2)
Net Deferred Tax Liabilities	$	(1,064.4)	$	(979.7)
Property Related Temporary Differences	$	(409.2)	$	(430.7)
Amounts Due to Customers for Future Income Taxes	147.9		169.6
Deferred State Income Taxes	(211.1)		(194.4)
Regulatory Assets	(16.5)		(26.9)
Accrued Nuclear Decommissioning	(626.4)		(557.4)
Operating Lease Liability	46.6		61.9
All Other, Net	4.3		(1.8)
Net Deferred Tax Liabilities	$	(1,064.4)	$	(979.7)

OPCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	210.8	$	202.3
Deferred Tax Liabilities	(1,165.9)		(1,051.6)
Net Deferred Tax Liabilities	$	(955.1)	$	(849.3)
Property Related Temporary Differences	$	(1,016.0)	$	(890.8)
Amounts Due to Customers for Future Income Taxes	121.1		130.2
Deferred State Income Taxes	(40.7)		(35.5)
Regulatory Assets	(53.7)		(48.0)
Operating Lease Liability	19.4		18.3
All Other, Net	14.8		(23.5)
Net Deferred Tax Liabilities	$	(955.1)	$	(849.3)

PSO	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	239.8	$	257.4
Deferred Tax Liabilities	(928.3)		(885.7)
Net Deferred Tax Liabilities	$	(688.5)	$	(628.3)
Property Related Temporary Differences	$	(661.8)	$	(627.6)
Amounts Due to Customers for Future Income Taxes	118.5		127.2
Deferred State Income Taxes	(107.7)		(100.4)
Regulatory Assets	(39.1)		(44.6)
Net Operating Loss Carryforward	12.9		10.2
All Other, Net	(11.3)		6.9
Net Deferred Tax Liabilities	$	(688.5)	$	(628.3)

SWEPCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	338.1	$	359.6
Deferred Tax Liabilities	(1,355.7)		(1,300.5)
Net Deferred Tax Liabilities	$	(1,017.6)	$	(940.9)
Property Related Temporary Differences	$	(985.1)	$	(947.6)
Amounts Due to Customers for Future Income Taxes	162.7		169.8
Deferred State Income Taxes	(214.7)		(200.3)
Regulatory Assets	(26.2)		(30.2)
Net Operating Loss Carryforward	33.4		38.2
All Other, Net	12.3		29.2
Net Deferred Tax Liabilities	$	(1,017.6)	$	(940.9)

State Net Income Tax Operating Loss Carryforwards

		State Net Income
		Tax Operating Loss		Years of
Company	State/Municipality	Carryforward		Expiration
		(in millions)
AEP	Arkansas	$	87.2	2021	-	2028
AEP	Kentucky	163.7		2030	-	2037
AEP	Louisiana	466.8		2025	-	2040
AEP	Oklahoma	569.4		2034	-	2037
AEP	Tennessee	31.1		2028	-	2035
AEP	Virginia	29.4		2025	-	2037
AEP	West Virginia	21.9		2029	-	2037
AEP	Ohio Municipal	649.8		2021	-	2025
AEP	Indiana	145.7		2039
AEP	Colorado	95.7		NA
AEP	Pennsylvania	56.5		2030	-	2040
AEP	New Jersey	60.2		2036	-	2040
AEP	Illinois	15.6		2031
AEP	Michigan	14.9		2029
AEPTCo	Oklahoma	195.4		2034	-	2037
AEPTCo	Ohio Municipal	18.4		2023
I&M	West Virginia	2.5		2032	-	2037
PSO	Oklahoma	354.5		2034	-	2037
SWEPCo	Arkansas	86.4		2021	-	2024
SWEPCo	Louisiana	454.3		2032	-	2037

Summary of Tax Credit Carryforwards

	Total Federal		Total State
	Tax Credit		Tax Credit
Company	Carryforward		Carryforward
	(in millions)
AEP	$	323.6	$	38.4
AEP Texas	1.2		—
AEPTCo	0.1		—
APCo	1.6		—
I&M	9.7		—
OPCo	0.5		—
PSO	0.5		38.4
SWEPCo	1.3		—

Reconciliation of Beginning and Ending Unrecognized Tax Benefits

	AEP
	2020		2019		2018
	(in millions)
Balance as of January 1,	$	24.1	$	14.6	$	86.6
Increase – Tax Positions Taken During a Prior Period	0.6		8.8		0.1
Decrease – Tax Positions Taken During a Prior Period	(14.5)		(2.1)		—
Increase – Tax Positions Taken During the Current Year	3.0		2.8		—
Decrease – Tax Positions Taken During the Current Year	—		—		—
Decrease – Settlements with Taxing Authorities	—		—		(71.0)
Decrease – Lapse of the Applicable Statute of Limitations	—		—		(1.1)
Balance as of December 31,	$	13.2	$	24.1	$	14.6