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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021


Year Ended December 31, 2021	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(27.8)	$	(1.2)	$	69.8	$	5.0	$	26.9	$	6.8	$	(109.6)	$	(16.7)
Deferred	182.6		40.5		54.1		14.9		(35.5)		25.2		105.6		26.2

Total Federal	154.8		39.3		123.9		19.9		(8.6)		32.0		(4.0)		9.5

State and Local:
Current	6.0		3.0		5.8		2.2		(0.6)		(3.1)		—		0.4
Deferred (a)	(45.3)		0.8		14.4		—		(1.4)		5.5		8.1		(10.5)

Total State and Local	(39.3)		3.8		20.2		2.2		(2.0)		2.4		8.1		(10.1)

Income Tax Expense (Benefit)	$	115.5	$	43.1	$	144.1	$	22.1	$	(10.6)	$	34.4	$	4.1	$	(0.6)

(a)Benefit at AEP is primarily due to an out of period adjustment related to Deferred Income Taxes and Income Tax Expense (Benefit). Management concluded the misstatement and subsequent correction was not material to prior or current period financial statements.


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)

Reconciliation of Federal Statutory Tax Rate to Reported Tax Rate


AEP	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	2,488.1		$	2,196.7		$	1,919.8
Less: Equity Earnings – Dolet Hills	(3.4)			(2.9)			(3.0)
Income Tax Expense (Benefit)	115.5			40.5			(12.9)
Pretax Income	$	2,600.2		$	2,234.3		$	1,903.9

Income Taxes on Pretax Income at Statutory Rate (21%)	$	546.0		$	469.2		$	399.8
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	25.9			26.5			20.4

Investment Tax Credit Amortization	(22.0)			(18.8)			(13.0)
Production Tax Credits	(98.8)			(83.1)			(59.6)
State and Local Income Taxes, Net	39.4			25.1			52.2
Removal Costs	(20.0)			(18.6)			(22.2)
AFUDC	(30.6)			(32.5)			(37.1)



Tax Adjustments (a)	(55.1)			—			—
Tax Reform Excess ADIT Reversal	(255.6)			(268.2)			(353.2)


CARES Act	—			(48.0)			—

Other	(13.7)			(11.1)			(0.2)
Income Tax Expense (Benefit)	$	115.5		$	40.5		$	(12.9)

Effective Income Tax Rate	4.4		%	1.8		%	(0.7)		%

(a)Represents an out of period adjustment related to Deferred Income Taxes and Income Tax Expense (Benefit). Management concluded the misstatement and subsequent correction was not material to prior or current period financial statements.


AEP Texas	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	289.8		$	241.0		$	178.3
Income Tax Expense (Benefit)	43.1			(11.2)			(53.6)
Pretax Income	$	332.9		$	229.8		$	124.7

Income Taxes on Pretax Income at Statutory Rate (21%)	$	69.9		$	48.3		$	26.2
Increase (Decrease) in Income Taxes Resulting from the Following Items:




State and Local Income Taxes, Net	2.4			(0.8)			2.3

AFUDC	(4.5)			(4.1)			(3.2)
Parent Company Loss Benefit	(3.2)			(4.5)			(3.8)



Tax Reform Excess ADIT Reversal	(21.3)			(47.9)			(73.4)




Other	(0.2)			(2.2)			(1.7)
Income Tax Expense (Benefit)	$	43.1		$	(11.2)		$	(53.6)

Effective Income Tax Rate	12.9		%	(4.9)		%	(43.0)		%


AEPTCo	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	591.7		$	423.4		$	439.7
Income Tax Expense	144.1			106.7			117.4
Pretax Income	$	735.8		$	530.1		$	557.1

Income Taxes on Pretax Income at Statutory Rate (21%)	$	154.5		$	111.3		$	117.0
Increase (Decrease) in Income Taxes Resulting from the Following Items:




State and Local Income Taxes, Net	19.8			15.1			17.4

AFUDC	(14.1)			(15.5)			(17.7)
Parent Company Loss Benefit	(18.3)			(7.0)			(4.2)







Other	2.2			2.8			4.9
Income Tax Expense	$	144.1		$	106.7		$	117.4

Effective Income Tax Rate	19.6		%	20.1		%	21.1		%


APCo	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	348.9		$	369.7		$	306.3
Income Tax Expense (Benefit)	22.1			4.3			(78.0)
Pretax Income	$	371.0		$	374.0		$	228.3

Income Taxes on Pretax Income at Statutory Rate (21%)	$	77.9		$	78.5		$	47.9
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	11.7			12.7			10.8



State and Local Income Taxes, Net	2.1			7.9			9.0
Removal Costs	(7.3)			(5.7)			(6.4)
AFUDC	(4.6)			(4.5)			(5.2)
Parent Company Loss Benefit	—			(6.2)			(4.1)


Tax Adjustments (a)	4.5			—			—
Tax Reform Excess ADIT Reversal	(60.5)			(72.3)			(130.4)

Federal Return to Provision	(1.6)			(7.2)			(1.0)

Other	(0.1)			1.1			1.4
Income Tax Expense (Benefit)	$	22.1		$	4.3		$	(78.0)

Effective Income Tax Rate	6.0		%	1.1		%	(34.2)		%


I&M	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	279.8		$	284.8		$	269.4
Income Tax Benefit	(10.6)			(7.5)			(10.6)
Pretax Income	$	269.2		$	277.3		$	258.8

Income Taxes on Pretax Income at Statutory Rate (21%)	$	56.5		$	58.2		$	54.3
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	3.5			1.6			4.0

Investment Tax Credit Amortization	(6.4)			(4.5)			(3.6)

State and Local Income Taxes, Net	(1.3)			1.5			(1.2)
Removal Costs	(9.7)			(10.5)			(12.8)
AFUDC	(2.7)			(2.4)			(4.1)
Parent Company Loss Benefit	(2.8)			(6.4)			(3.3)



Tax Reform Excess ADIT Reversal	(46.3)			(46.8)			(42.5)



Other	(1.4)			1.8			(1.4)
Income Tax Benefit	$	(10.6)		$	(7.5)		$	(10.6)

Effective Income Tax Rate	(3.9)		%	(2.7)		%	(4.1)		%


OPCo	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	253.6		$	271.4		$	297.1
Income Tax Expense	34.4			45.2			34.9
Pretax Income	$	288.0		$	316.6		$	332.0

Income Taxes on Pretax Income at Statutory Rate (21%)	$	60.5		$	66.5		$	69.7
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	2.2			3.7			(1.4)



State and Local Income Taxes, Net	—			(1.7)			3.4

AFUDC	(2.3)			(2.6)			(3.8)



Tax Adjustments (a)	8.9			—			—
Tax Reform Excess ADIT Reversal	(32.6)			(27.2)			(27.3)

Federal Return to Provision	(1.2)			6.5			(3.7)

Other	(1.1)			—			(2.0)
Income Tax Expense	$	34.4		$	45.2		$	34.9

Effective Income Tax Rate	11.9		%	14.3		%	10.5		%


PSO	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	141.1		$	123.0		$	137.6
Income Tax Expense	4.1			5.2			7.5
Pretax Income	$	145.2		$	128.2		$	145.1

Income Taxes on Pretax Income at Statutory Rate (21%)	$	30.5		$	26.9		$	30.5
Increase (Decrease) in Income Taxes Resulting from the Following Items:


Investment Tax Credit Amortization	(1.8)			(2.1)			(0.5)
Production Tax Credits	(6.0)			—			—
State and Local Income Taxes, Net	6.4			6.5			6.3


Parent Company Loss Benefit	—			(0.2)			(2.1)



Tax Reform Excess ADIT Reversal	(25.4)			(25.5)			(24.5)




Other	0.4			(0.4)			(2.2)
Income Tax Expense	$	4.1		$	5.2		$	7.5

Effective Income Tax Rate	2.8		%	4.1		%	5.2		%


SWEPCo	Years Ended December 31,
	2021			2020			2019
	(in millions)
Net Income	$	242.1		$	183.7		$	162.2
Less: Equity Earnings – Dolet Hills	(3.4)			(2.9)			(3.0)
Income Tax Expense (Benefit)	(0.6)			9.4			(4.7)
Pretax Income	$	238.1		$	190.2		$	154.5

Income Taxes on Pretax Income at Statutory Rate (21%)	$	50.0		$	39.9		$	32.4
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	1.8			1.9			1.9
Depletion	(2.7)			(3.4)			(3.4)

Production Tax Credits	(7.2)			—			—
State and Local Income Taxes, Net	(8.0)			2.7			(1.3)


Parent Company Loss Benefit	—			(5.6)			(1.6)



Tax Reform Excess ADIT Reversal	(31.1)			(21.9)			(29.9)




Other	(3.4)			(4.2)			(2.8)
Income Tax Expense (Benefit)	$	(0.6)		$	9.4		$	(4.7)

Effective Income Tax Rate	(0.3)		%	4.9		%	(3.0)		%

Reconciliation of Significant Temporary Differences


AEP	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	3,277.0	$	3,259.7
Deferred Tax Liabilities	(11,479.5)		(11,500.6)
Net Deferred Tax Liabilities	$	(8,202.5)	$	(8,240.9)

Property Related Temporary Differences	$	(7,020.3)	$	(7,340.5)
Amounts Due to Customers for Future Income Taxes	1,033.0		1,075.8
Deferred State Income Taxes	(1,116.7)		(1,317.6)

Securitized Assets	(128.8)		(140.0)

Regulatory Assets	(645.4)		(391.6)
Accrued Nuclear Decommissioning	(743.2)		(626.4)
Net Operating Loss Carryforward	285.7		112.9
Tax Credit Carryforward	439.8		323.6
Operating Lease Liability	114.2		183.7
Investment in Partnership	(392.1)		(362.0)





All Other, Net	(28.7)		241.2
Net Deferred Tax Liabilities	$	(8,202.5)	$	(8,240.9)


AEP Texas	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	173.8	$	183.6
Deferred Tax Liabilities	(1,262.7)		(1,200.3)
Net Deferred Tax Liabilities	$	(1,088.9)	$	(1,016.7)

Property Related Temporary Differences	$	(1,060.2)	$	(1,039.6)
Amounts Due to Customers for Future Income Taxes	110.0		114.4
Deferred State Income Taxes	(32.2)		(29.1)


Securitized Transition Assets	(84.4)		(90.2)
Regulatory Assets	(45.1)		(47.4)



Operating Lease Liability	15.8		18.0






All Other, Net	7.2		57.2
Net Deferred Tax Liabilities	$	(1,088.9)	$	(1,016.7)


AEPTCo	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	158.8	$	166.5
Deferred Tax Liabilities	(1,121.7)		(1,073.4)
Net Deferred Tax Liabilities	$	(962.9)	$	(906.9)

Property Related Temporary Differences	$	(997.0)	$	(937.8)
Amounts Due to Customers for Future Income Taxes	118.2		118.9
Deferred State Income Taxes	(94.5)		(98.3)





Net Operating Loss Carryforward	8.1		13.2








All Other, Net	2.3		(2.9)
Net Deferred Tax Liabilities	$	(962.9)	$	(906.9)


APCo	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	495.1	$	500.6
Deferred Tax Liabilities	(2,299.8)		(2,250.5)
Net Deferred Tax Liabilities	$	(1,804.7)	$	(1,749.9)

Property Related Temporary Differences	$	(1,476.5)	$	(1,412.0)
Amounts Due to Customers for Future Income Taxes	182.1		198.3
Deferred State Income Taxes	(288.8)		(336.5)

Securitized Assets	(39.3)		(44.7)

Regulatory Assets	(177.0)		(114.8)



Operating Lease Liability	14.2		16.7






All Other, Net	(19.4)		(56.9)
Net Deferred Tax Liabilities	$	(1,804.7)	$	(1,749.9)


I&M	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	1,072.2	$	989.5
Deferred Tax Liabilities	(2,172.4)		(2,053.9)
Net Deferred Tax Liabilities	$	(1,100.2)	$	(1,064.4)

Property Related Temporary Differences	$	(286.2)	$	(409.2)
Amounts Due to Customers for Future Income Taxes	135.5		147.9
Deferred State Income Taxes	(222.0)		(211.1)



Regulatory Assets	(23.6)		(16.5)
Accrued Nuclear Decommissioning	(743.2)		(626.4)


Operating Lease Liability	13.5		46.6






All Other, Net	25.8		4.3
Net Deferred Tax Liabilities	$	(1,100.2)	$	(1,064.4)


OPCo	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	204.4	$	210.8
Deferred Tax Liabilities	(1,205.3)		(1,165.9)
Net Deferred Tax Liabilities	$	(1,000.9)	$	(955.1)

Property Related Temporary Differences	$	(1,042.0)	$	(1,016.0)
Amounts Due to Customers for Future Income Taxes	117.7		121.1
Deferred State Income Taxes	(58.8)		(40.7)



Regulatory Assets	(39.8)		(53.7)



Operating Lease Liability	17.2		19.4






All Other, Net	4.8		14.8
Net Deferred Tax Liabilities	$	(1,000.9)	$	(955.1)


PSO	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	170.0	$	239.8
Deferred Tax Liabilities	(952.3)		(928.3)
Net Deferred Tax Liabilities	$	(782.3)	$	(688.5)

Property Related Temporary Differences	$	(708.6)	$	(661.8)
Amounts Due to Customers for Future Income Taxes	111.5		118.5
Deferred State Income Taxes	(83.2)		(107.7)



Regulatory Assets	(228.0)		(39.1)

Net Operating Loss Carryforward	111.4		12.9








All Other, Net	14.6		(11.3)
Net Deferred Tax Liabilities	$	(782.3)	$	(688.5)


SWEPCo	December 31,
	2021		2020
	(in millions)
Deferred Tax Assets	$	336.4	$	338.1
Deferred Tax Liabilities	(1,424.0)		(1,355.7)
Net Deferred Tax Liabilities	$	(1,087.6)	$	(1,017.6)

Property Related Temporary Differences	$	(989.6)	$	(985.1)
Amounts Due to Customers for Future Income Taxes	154.8		162.7
Deferred State Income Taxes	(234.9)		(214.7)



Regulatory Assets	(101.4)		(26.2)

Net Operating Loss Carryforward	67.4		33.4








All Other, Net	16.1		12.3
Net Deferred Tax Liabilities	$	(1,087.6)	$	(1,017.6)

State Net Income Tax Operating Loss Carryforwards


		State Net Income
		Tax Operating Loss		Years of
Company	State/Municipality	Carryforward		Expiration
		(in millions)
AEP	Arkansas	$	161.8	2022	-	2031
AEP	Colorado	82.8		2041
AEP	Illinois	55.2		2031	-	2041
AEP	Indiana	304.4		2039	-	2041
AEP	Kentucky	230.4		2030	-	2037
AEP	Louisiana	566.7		NA
AEP	Michigan	65.2		2029	-	2031
AEP	New Jersey	36.5		2036	-	2041
AEP	New Mexico	32.6		2037	-	2039
AEP	Ohio Municipal	1,027.9		2022	-	2026
AEP	Oklahoma	1,357.1		2034	-	2037
AEP	Pennsylvania	82.7		2030	-	2041
AEP	Tennessee	53.0		2030	-	2036
AEP	Virginia	20.9		2030	-	2037
AEP	West Virginia	99.5		2029	-	2037
AEPTCo	Oklahoma	107.8		2034	-	2037

APCo	West Virginia	62.9		NA

OPCo	Ohio Municipal	76.0		2022	-	2026
PSO	Oklahoma	1,229.8		2034	-	2037
SWEPCo	Arkansas	160.7		2022	-	2031
SWEPCo	Louisiana	554.7		NA

Summary of Tax Credit Carryforwards



	Total Federal		Total State
	Tax Credit		Tax Credit
Company	Carryforward		Carryforward
	(in millions)
AEP	$	439.8	$	38.8
AEP Texas	0.3		—
AEPTCo	0.1		—
APCo	1.3		—
I&M	16.9		—
OPCo	0.4		—
PSO	6.3		38.8
SWEPCo	7.9		—

Reconciliation of Beginning and Ending Unrecognized Tax Benefits


	AEP
	2021		2020		2019
	(in millions)
Balance as of January 1,	$	13.2	$	24.1	$	14.6
Increase – Tax Positions Taken During a Prior Period	1.2		0.6		8.8
Decrease – Tax Positions Taken During a Prior Period	(3.2)		(14.5)		(2.1)
Increase – Tax Positions Taken During the Current Year	3.1		3.0		2.8
Decrease – Tax Positions Taken During the Current Year	—		—		—

Decrease – Settlements with Taxing Authorities	—		—		—
Decrease – Lapse of the Applicable Statute of Limitations	—		—		—
Balance as of December 31,	$	14.3	$	13.2	$	24.1