10. FINANCING ACTIVITIES

Long-term Debt

	Type of Debt	September 30, 2012		December 31, 2011
		(in millions)
	Senior Unsecured Notes	$	11,883	$	11,737
	Pollution Control Bonds		1,958		2,112
	Notes Payable		469		402
	Securitization Bonds		2,316		1,688
	Junior Subordinated Debentures		315		315
	Spent Nuclear Fuel Obligation (a)		265		265
	Other Long-term Debt		51		29
	Fair Value of Interest Rate Hedges		6		7
	Unamortized Discount, Net		(36)		(39)
	Total Long-term Debt Outstanding		17,227		16,516
	Long-term Debt Due Within One Year		2,272		1,433
	Long-term Debt	$	14,955	$	15,083

(a) Pursuant to the Nuclear Waste Policy Act of 1982, I&M, a nuclear licensee, has an obligation to the United States Department of Energy for spent nuclear fuel disposal. The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983. Trust fund assets related to this obligation were $308 million as of both September 30, 2012 and December 31, 2011 and are included in Spent Nuclear Fuel and Decommissioning Trusts on our condensed balance sheets.

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2012 are shown in the tables below:

			Principal			Interest
Company	Type of Debt		Amount			Rate	Due Date
Issuances:		(in millions)				(%)
APCo	Senior Unsecured Notes		$	275		Variable	2013
APCo	Pollution Control Bonds			65		2.25	2016
I&M	Notes Payable			110		Variable	2016
I&M	Other Long-term Debt			20	(a)	Variable	2015
PSO	Notes Payable			2		3.00	2027
SWEPCo	Senior Unsecured Notes			275		3.55	2022
SWEPCo	Notes Payable			65		4.58	2032

Non-Registrant:
TCC	Securitization Bonds			312		2.845	2024
TCC	Securitization Bonds			308		0.88	2017
TCC	Securitization Bonds			180		1.976	2020
Total Issuances			$	1,612	(b)

(a) Consists of a $110 million three-year credit facility to be used for general corporate purposes.

(b) Amount indicated on the statement of cash flows of $1.6 billion is net of issuance costs and premium or discount.

				Principal		Interest
Company		Type of Debt		Amount Paid		Rate	Due Date
Retirements and			(in millions)			(%)
	Principal Payments:
APCo		Pollution Control Bonds		$	30	6.05	2024
APCo		Pollution Control Bonds			20	5.00	2021
APCo		Pollution Control Bonds			65	2.00	2012
APCo		Senior Unsecured Notes			250	5.65	2012
I&M		Notes Payable			14	5.44	2013
I&M		Notes Payable			11	4.00	2014
I&M		Notes Payable			15	Variable	2015
I&M		Notes Payable			18	Variable	2016
I&M		Notes Payable			12	2.12	2016
I&M		Notes Payable			8	Variable	2016
OPCo		Pollution Control Bonds			45	4.85	2012
OPCo		Senior Unsecured Notes			150	Variable	2012
SWEPCo		Notes Payable			20	7.03	2012
SWEPCo		Notes Payable			2	4.58	2032

Non-Registrant:
AEP Subsidiaries		Notes Payable			8	Variable	2017
AEP Subsidiaries		Notes Payable			2	7.59-8.03	2026
AEGCo		Senior Unsecured Notes			3	6.33	2037
TCC		Securitization Bonds			108	4.98	2013
TCC		Securitization Bonds			63	5.96	2013
TCC		Pollution Control Bonds			60	1.125	2012
Total Retirements and
	Principal Payments			$	904

In October 2012, I&M retired $29 million of Notes Payable related to DCC Fuel.

In October 2012, AEGCo retired $4 million of 6.33% Senior Unsecured Notes due in 2037.

In October 2012, AEP Transmission Company, LLC issued $250 million of Senior Notes in three tranches. The tranches are $104 million at 3.3% due in 2022, $85 million at 4% due in 2032 and $61 million at 4.73% due in 2042.

As of September 30, 2012, trustees held, on our behalf, $583 million of our reacquired Pollution Control Bonds.

Dividend Restrictions

Parent Restrictions

The holders of our common stock are entitled to receive the dividends declared by our Board of Directors provided funds are legally available for such dividends. Our income derives from our common stock equity in the earnings of our utility subsidiaries.

Pursuant to the leverage restrictions in our credit agreements, we must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. The payment of cash dividends indirectly results in an increase in the percentage of debt to total capitalization of the company distributing the dividend. The method for calculating outstanding debt and capitalization is contractually defined in the credit agreements. None of AEP's retained earnings were restricted for the purpose of the payment of dividends.

We have issued $315 million of Junior Subordinated Debentures. The debentures will mature on March 1, 2063, subject to extensions to no later than March 1, 2068, and are callable at par any time on or after March 1, 2013. We have the option to defer interest payments on the debentures for one or more periods of up to 10 consecutive years per period. During any period in which we defer interest payments, we may not declare or pay any dividends or distributions on, or redeem, repurchase or acquire our common stock. We do not anticipate any deferral of those interest payments in the foreseeable future.

Utility Subsidiaries' Restrictions

Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of our utility subsidiaries to transfer funds to us in the form of dividends. Specifically, several of our public utility subsidiaries have credit agreements that contain a covenant that limits their debt to capitalization ratio to 67.5%.

The Federal Power Act prohibits the utility subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. Management understands “capital account” to mean the book value of the common stock. This restriction does not limit the ability of the utility subsidiaries to pay dividends out of retained earnings.

Short-term Debt

Our outstanding short-term debt was as follows:

		September 30, 2012				December 31, 2011
		Outstanding		Interest		Outstanding		Interest
	Type of Debt	Amount		Rate (a)		Amount		Rate (a)
		(in millions)				(in millions)
	Securitized Debt for Receivables (b)	$	696	0.24	%	$	666	0.27	%
	Commercial Paper		520	0.45	%		967	0.51	%
	Line of Credit – Sabine (c)		-	-	%		17	1.79	%
	Total Short-term Debt	$	1,216			$	1,650

(a) Weighted average rate.

(b) Amount of securitized debt for receivables as accounted for under the ''Transfers and Servicing'' accounting guidance.

(c) This line of credit does not reduce available liquidity under AEP's credit facilities.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Securitized Accounts Receivable – AEP Credit

AEP Credit has a receivables securitization agreement with bank conduits. Under the securitization agreement, AEP Credit receives financing from the bank conduits for the interest in the receivables AEP Credit acquires from affiliated utility subsidiaries. AEP Credit continues to service the receivables. These securitized transactions allow AEP Credit to repay its outstanding debt obligations, continue to purchase our operating companies' receivables and accelerate AEP Credit's cash collections.

In June 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides commitments of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

Accounts receivable information for AEP Credit is as follows:

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2012			2011			2012			2011
		(dollars in millions)
Effective Interest Rates on Securitization of
	Accounts Receivable		0.26	%		0.23	%		0.26	%		0.27	%
Net Uncollectible Accounts Receivable
	Written Off	$	8		$	11		$	21		$	28

		September 30,		December 31,
		2012		2011
		(in millions)
Accounts Receivable Retained Interest and Pledged as Collateral
	Less Uncollectible Accounts	$	887	$	902
Total Principal Outstanding			696		666
Delinquent Securitized Accounts Receivable			41		38
Bad Debt Reserves Related to Securitization/Sale of Accounts Receivable			22		18
Unbilled Receivables Related to Securitization/Sale of Accounts Receivable			236		370

Customer accounts receivable retained and securitized for our operating companies are managed by AEP Credit. AEP Credit's delinquent customer accounts receivable represents accounts greater than 30 days past due.

Financing Activities

10. FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2012 are shown in the tables below:

		Principal			Interest
Company	Type of Debt	Amount			Rate	Due Date
Issuances:		(in thousands)			(%)
APCo	Senior Unsecured Notes	$	275,000		Variable	2013
APCo	Pollution Control Bonds		65,350		2.25	2016
I&M	Notes Payable		109,500		Variable	2016
I&M	Other Long-term Debt		20,000	(a)	Variable	2015
PSO	Notes Payable		2,395		3.00	2027
SWEPCo	Senior Unsecured Notes		275,000		3.55	2022
SWEPCo	Notes Payable		65,000		4.58	2032

(a) Consists of a $110 million three-year credit facility to be used for general corporate purposes.

			Principal		Interest
Company		Type of Debt	Amount Paid		Rate	Due Date
Retirements and			(in thousands)		(%)
	Principal Payments:
APCo		Pollution Control Bonds	$	30,000	6.05	2024
APCo		Pollution Control Bonds		19,500	5.00	2021
APCo		Pollution Control Bonds		65,350	2.00	2012
APCo		Senior Unsecured Notes		250,000	5.65	2012
APCo		Land Note		18	13.718	2026
I&M		Notes Payable		13,860	5.44	2013
I&M		Notes Payable		10,590	4.00	2014
I&M		Notes Payable		15,353	Variable	2015
I&M		Notes Payable		17,924	Variable	2016
I&M		Notes Payable		12,414	2.12	2016
I&M		Notes Payable		7,552	Variable	2016
I&M		Other Long-term Debt		371	6.00	2025
OPCo		Pollution Control Bonds		44,500	4.85	2012
OPCo		Senior Unsecured Notes		150,000	Variable	2012
PSO		Notes Payable		130	3.00	2027
SWEPCo		Notes Payable		20,000	7.03	2012
SWEPCo		Notes Payable		1,625	4.58	2032

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. As applicable, management understands “capital account” to mean the book value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of September 30, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' condensed balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2012 are described in the following table:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		September 30, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,195	$	168,094	$	22,692	$	(94,807)	$	600,000
I&M		-		362,733		-		208,072		284,768		500,000
OPCo		126,975		290,356		47,820		92,517		124,606		600,000
PSO		-		177,778		-		93,219		107,459		300,000
SWEPCo		227,087		128,227		147,338		62,312		128,227		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Nine Months Ended September 30,
	2012		2011
Maximum Interest Rate	0.56	%	0.56	%
Minimum Interest Rate	0.44	%	0.06	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate				Average Interest Rate
	for Funds Borrowed				for Funds Loaned
	from Utility Money Pool for				to Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011

APCo	0.48	%	0.38	%	0.48	%	0.31	%
I&M	-	%	0.39	%	0.47	%	0.31	%
OPCo	0.47	%	0.45	%	0.50	%	0.31	%
PSO	-	%	0.41	%	0.47	%	0.26	%
SWEPCo	0.53	%	0.34	%	0.47	%	0.33	%

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' condensed statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In June 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides commitments of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2012 and December 31, 2011 was as follows:

	September 30,		December 31,
Company	2012		2011
	(in thousands)
APCo	$	131,937	$	121,605
I&M		116,702		121,597
OPCo		322,440		346,695
PSO		127,008		123,172
SWEPCo		160,802		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	1,703	$	2,500	$	5,389	$	7,314
I&M		1,674		1,623		4,738		4,758
OPCo		5,362		5,585		15,900		14,025
PSO		1,990		2,081		5,547		4,798
SWEPCo		1,786		1,850		4,720		4,254

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	351,570	$	307,364	$	993,975	$	958,288
I&M		358,936		350,108		1,018,933		1,016,680
OPCo		790,115		956,909		2,284,749		2,699,782
PSO		342,819		436,339		919,343		1,021,967
SWEPCo		444,461		475,219		1,145,182		1,165,245

Financing Activities

10. FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2012 are shown in the tables below:

		Principal			Interest
Company	Type of Debt	Amount			Rate	Due Date
Issuances:		(in thousands)			(%)
APCo	Senior Unsecured Notes	$	275,000		Variable	2013
APCo	Pollution Control Bonds		65,350		2.25	2016
I&M	Notes Payable		109,500		Variable	2016
I&M	Other Long-term Debt		20,000	(a)	Variable	2015
PSO	Notes Payable		2,395		3.00	2027
SWEPCo	Senior Unsecured Notes		275,000		3.55	2022
SWEPCo	Notes Payable		65,000		4.58	2032

(a) Consists of a $110 million three-year credit facility to be used for general corporate purposes.

			Principal		Interest
Company		Type of Debt	Amount Paid		Rate	Due Date
Retirements and			(in thousands)		(%)
	Principal Payments:
APCo		Pollution Control Bonds	$	30,000	6.05	2024
APCo		Pollution Control Bonds		19,500	5.00	2021
APCo		Pollution Control Bonds		65,350	2.00	2012
APCo		Senior Unsecured Notes		250,000	5.65	2012
APCo		Land Note		18	13.718	2026
I&M		Notes Payable		13,860	5.44	2013
I&M		Notes Payable		10,590	4.00	2014
I&M		Notes Payable		15,353	Variable	2015
I&M		Notes Payable		17,924	Variable	2016
I&M		Notes Payable		12,414	2.12	2016
I&M		Notes Payable		7,552	Variable	2016
I&M		Other Long-term Debt		371	6.00	2025
OPCo		Pollution Control Bonds		44,500	4.85	2012
OPCo		Senior Unsecured Notes		150,000	Variable	2012
PSO		Notes Payable		130	3.00	2027
SWEPCo		Notes Payable		20,000	7.03	2012
SWEPCo		Notes Payable		1,625	4.58	2032

In October 2012, I&M retired $29 million of Notes Payable related to DCC Fuel.

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. As applicable, management understands “capital account” to mean the book value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of September 30, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' condensed balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2012 are described in the following table:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		September 30, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,195	$	168,094	$	22,692	$	(94,807)	$	600,000
I&M		-		362,733		-		208,072		284,768		500,000
OPCo		126,975		290,356		47,820		92,517		124,606		600,000
PSO		-		177,778		-		93,219		107,459		300,000
SWEPCo		227,087		128,227		147,338		62,312		128,227		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Nine Months Ended September 30,
	2012		2011
Maximum Interest Rate	0.56	%	0.56	%
Minimum Interest Rate	0.44	%	0.06	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate				Average Interest Rate
	for Funds Borrowed				for Funds Loaned
	from Utility Money Pool for				to Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011

APCo	0.48	%	0.38	%	0.48	%	0.31	%
I&M	-	%	0.39	%	0.47	%	0.31	%
OPCo	0.47	%	0.45	%	0.50	%	0.31	%
PSO	-	%	0.41	%	0.47	%	0.26	%
SWEPCo	0.53	%	0.34	%	0.47	%	0.33	%

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' condensed statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In June 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides commitments of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2012 and December 31, 2011 was as follows:

	September 30,		December 31,
Company	2012		2011
	(in thousands)
APCo	$	131,937	$	121,605
I&M		116,702		121,597
OPCo		322,440		346,695
PSO		127,008		123,172
SWEPCo		160,802		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	1,703	$	2,500	$	5,389	$	7,314
I&M		1,674		1,623		4,738		4,758
OPCo		5,362		5,585		15,900		14,025
PSO		1,990		2,081		5,547		4,798
SWEPCo		1,786		1,850		4,720		4,254

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	351,570	$	307,364	$	993,975	$	958,288
I&M		358,936		350,108		1,018,933		1,016,680
OPCo		790,115		956,909		2,284,749		2,699,782
PSO		342,819		436,339		919,343		1,021,967
SWEPCo		444,461		475,219		1,145,182		1,165,245

Financing Activities

10. FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2012 are shown in the tables below:

			Principal		Interest
Company		Type of Debt	Amount Paid		Rate	Due Date
Retirements and			(in thousands)		(%)
	Principal Payments:
APCo		Pollution Control Bonds	$	30,000	6.05	2024
APCo		Pollution Control Bonds		19,500	5.00	2021
APCo		Pollution Control Bonds		65,350	2.00	2012
APCo		Senior Unsecured Notes		250,000	5.65	2012
APCo		Land Note		18	13.718	2026
I&M		Notes Payable		13,860	5.44	2013
I&M		Notes Payable		10,590	4.00	2014
I&M		Notes Payable		15,353	Variable	2015
I&M		Notes Payable		17,924	Variable	2016
I&M		Notes Payable		12,414	2.12	2016
I&M		Notes Payable		7,552	Variable	2016
I&M		Other Long-term Debt		371	6.00	2025
OPCo		Pollution Control Bonds		44,500	4.85	2012
OPCo		Senior Unsecured Notes		150,000	Variable	2012
PSO		Notes Payable		130	3.00	2027
SWEPCo		Notes Payable		20,000	7.03	2012
SWEPCo		Notes Payable		1,625	4.58	2032

As of September 30, 2012, trustees held, on behalf of OPCo, $463 million of its reacquired Pollution Control Bonds.

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. As applicable, management understands “capital account” to mean the book value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of September 30, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' condensed balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2012 are described in the following table:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		September 30, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,195	$	168,094	$	22,692	$	(94,807)	$	600,000
I&M		-		362,733		-		208,072		284,768		500,000
OPCo		126,975		290,356		47,820		92,517		124,606		600,000
PSO		-		177,778		-		93,219		107,459		300,000
SWEPCo		227,087		128,227		147,338		62,312		128,227		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Nine Months Ended September 30,
	2012		2011
Maximum Interest Rate	0.56	%	0.56	%
Minimum Interest Rate	0.44	%	0.06	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate				Average Interest Rate
	for Funds Borrowed				for Funds Loaned
	from Utility Money Pool for				to Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011

APCo	0.48	%	0.38	%	0.48	%	0.31	%
I&M	-	%	0.39	%	0.47	%	0.31	%
OPCo	0.47	%	0.45	%	0.50	%	0.31	%
PSO	-	%	0.41	%	0.47	%	0.26	%
SWEPCo	0.53	%	0.34	%	0.47	%	0.33	%

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' condensed statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In June 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides commitments of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2012 and December 31, 2011 was as follows:

	September 30,		December 31,
Company	2012		2011
	(in thousands)
APCo	$	131,937	$	121,605
I&M		116,702		121,597
OPCo		322,440		346,695
PSO		127,008		123,172
SWEPCo		160,802		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	1,703	$	2,500	$	5,389	$	7,314
I&M		1,674		1,623		4,738		4,758
OPCo		5,362		5,585		15,900		14,025
PSO		1,990		2,081		5,547		4,798
SWEPCo		1,786		1,850		4,720		4,254

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	351,570	$	307,364	$	993,975	$	958,288
I&M		358,936		350,108		1,018,933		1,016,680
OPCo		790,115		956,909		2,284,749		2,699,782
PSO		342,819		436,339		919,343		1,021,967
SWEPCo		444,461		475,219		1,145,182		1,165,245

Financing Activities

10. FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2012 are shown in the tables below:

		Principal			Interest
Company	Type of Debt	Amount			Rate	Due Date
Issuances:		(in thousands)			(%)
APCo	Senior Unsecured Notes	$	275,000		Variable	2013
APCo	Pollution Control Bonds		65,350		2.25	2016
I&M	Notes Payable		109,500		Variable	2016
I&M	Other Long-term Debt		20,000	(a)	Variable	2015
PSO	Notes Payable		2,395		3.00	2027
SWEPCo	Senior Unsecured Notes		275,000		3.55	2022
SWEPCo	Notes Payable		65,000		4.58	2032

(a) Consists of a $110 million three-year credit facility to be used for general corporate purposes.

			Principal		Interest
Company		Type of Debt	Amount Paid		Rate	Due Date
Retirements and			(in thousands)		(%)
	Principal Payments:
APCo		Pollution Control Bonds	$	30,000	6.05	2024
APCo		Pollution Control Bonds		19,500	5.00	2021
APCo		Pollution Control Bonds		65,350	2.00	2012
APCo		Senior Unsecured Notes		250,000	5.65	2012
APCo		Land Note		18	13.718	2026
I&M		Notes Payable		13,860	5.44	2013
I&M		Notes Payable		10,590	4.00	2014
I&M		Notes Payable		15,353	Variable	2015
I&M		Notes Payable		17,924	Variable	2016
I&M		Notes Payable		12,414	2.12	2016
I&M		Notes Payable		7,552	Variable	2016
I&M		Other Long-term Debt		371	6.00	2025
OPCo		Pollution Control Bonds		44,500	4.85	2012
OPCo		Senior Unsecured Notes		150,000	Variable	2012
PSO		Notes Payable		130	3.00	2027
SWEPCo		Notes Payable		20,000	7.03	2012
SWEPCo		Notes Payable		1,625	4.58	2032

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. As applicable, management understands “capital account” to mean the book value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of September 30, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' condensed balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2012 are described in the following table:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		September 30, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,195	$	168,094	$	22,692	$	(94,807)	$	600,000
I&M		-		362,733		-		208,072		284,768		500,000
OPCo		126,975		290,356		47,820		92,517		124,606		600,000
PSO		-		177,778		-		93,219		107,459		300,000
SWEPCo		227,087		128,227		147,338		62,312		128,227		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Nine Months Ended September 30,
	2012		2011
Maximum Interest Rate	0.56	%	0.56	%
Minimum Interest Rate	0.44	%	0.06	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate				Average Interest Rate
	for Funds Borrowed				for Funds Loaned
	from Utility Money Pool for				to Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011

APCo	0.48	%	0.38	%	0.48	%	0.31	%
I&M	-	%	0.39	%	0.47	%	0.31	%
OPCo	0.47	%	0.45	%	0.50	%	0.31	%
PSO	-	%	0.41	%	0.47	%	0.26	%
SWEPCo	0.53	%	0.34	%	0.47	%	0.33	%

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' condensed statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In June 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides commitments of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2012 and December 31, 2011 was as follows:

	September 30,		December 31,
Company	2012		2011
	(in thousands)
APCo	$	131,937	$	121,605
I&M		116,702		121,597
OPCo		322,440		346,695
PSO		127,008		123,172
SWEPCo		160,802		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	1,703	$	2,500	$	5,389	$	7,314
I&M		1,674		1,623		4,738		4,758
OPCo		5,362		5,585		15,900		14,025
PSO		1,990		2,081		5,547		4,798
SWEPCo		1,786		1,850		4,720		4,254

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	351,570	$	307,364	$	993,975	$	958,288
I&M		358,936		350,108		1,018,933		1,016,680
OPCo		790,115		956,909		2,284,749		2,699,782
PSO		342,819		436,339		919,343		1,021,967
SWEPCo		444,461		475,219		1,145,182		1,165,245

Financing Activities

10. FINANCING ACTIVITIES

Long-term Debt

Long-term debt and other securities issued, retired and principal payments made during the first nine months of 2012 are shown in the tables below:

		Principal			Interest
Company	Type of Debt	Amount			Rate	Due Date
Issuances:		(in thousands)			(%)
APCo	Senior Unsecured Notes	$	275,000		Variable	2013
APCo	Pollution Control Bonds		65,350		2.25	2016
I&M	Notes Payable		109,500		Variable	2016
I&M	Other Long-term Debt		20,000	(a)	Variable	2015
PSO	Notes Payable		2,395		3.00	2027
SWEPCo	Senior Unsecured Notes		275,000		3.55	2022
SWEPCo	Notes Payable		65,000		4.58	2032

(a) Consists of a $110 million three-year credit facility to be used for general corporate purposes.

			Principal		Interest
Company		Type of Debt	Amount Paid		Rate	Due Date
Retirements and			(in thousands)		(%)
	Principal Payments:
APCo		Pollution Control Bonds	$	30,000	6.05	2024
APCo		Pollution Control Bonds		19,500	5.00	2021
APCo		Pollution Control Bonds		65,350	2.00	2012
APCo		Senior Unsecured Notes		250,000	5.65	2012
APCo		Land Note		18	13.718	2026
I&M		Notes Payable		13,860	5.44	2013
I&M		Notes Payable		10,590	4.00	2014
I&M		Notes Payable		15,353	Variable	2015
I&M		Notes Payable		17,924	Variable	2016
I&M		Notes Payable		12,414	2.12	2016
I&M		Notes Payable		7,552	Variable	2016
I&M		Other Long-term Debt		371	6.00	2025
OPCo		Pollution Control Bonds		44,500	4.85	2012
OPCo		Senior Unsecured Notes		150,000	Variable	2012
PSO		Notes Payable		130	3.00	2027
SWEPCo		Notes Payable		20,000	7.03	2012
SWEPCo		Notes Payable		1,625	4.58	2032

Dividend Restrictions

The Registrant Subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the Registrant Subsidiaries to transfer funds to Parent in the form of dividends.

Federal Power Act

The Federal Power Act prohibits each of the Registrant Subsidiaries from participating “in the making or paying of any dividends of such public utility from any funds properly included in capital account.” The term “capital account” is not defined in the Federal Power Act or its regulations. As applicable, management understands “capital account” to mean the book value of the common stock.

Additionally, the Federal Power Act creates a reserve on earnings attributable to hydroelectric generating plants. Because of their respective ownership of such plants, this reserve applies to APCo, I&M and OPCo.

None of these restrictions limit the ability of the Registrant Subsidiaries to pay dividends out of retained earnings.

Leverage Restrictions

Pursuant to the credit agreement leverage restrictions, APCo, I&M and OPCo must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%.

Utility Money Pool – AEP System

The AEP System uses a corporate borrowing program to meet the short-term borrowing needs of the subsidiaries. The corporate borrowing program includes a Utility Money Pool, which funds AEP's utility subsidiaries. The AEP System Utility Money Pool operates in accordance with the terms and conditions approved in a regulatory order. The amount of outstanding loans (borrowings) to/from the Utility Money Pool as of September 30, 2012 and December 31, 2011 is included in Advances to/from Affiliates on each of the Registrant Subsidiaries' condensed balance sheets. The Utility Money Pool participants' money pool activity and their corresponding authorized borrowing limits for the nine months ended September 30, 2012 are described in the following table:

									Net
									Loans
	Maximum		Maximum		Average		Average		(Borrowings)		Authorized
	Borrowings		Loans		Borrowings		Loans		to/from Utility		Short-term
	from Utility		to Utility		from Utility		to Utility		Money Pool as of		Borrowing
Company	Money Pool		Money Pool		Money Pool		Money Pool		September 30, 2012		Limit
	(in thousands)
APCo	$	350,153	$	23,195	$	168,094	$	22,692	$	(94,807)	$	600,000
I&M		-		362,733		-		208,072		284,768		500,000
OPCo		126,975		290,356		47,820		92,517		124,606		600,000
PSO		-		177,778		-		93,219		107,459		300,000
SWEPCo		227,087		128,227		147,338		62,312		128,227		350,000

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool were as follows:

	Nine Months Ended September 30,
	2012		2011
Maximum Interest Rate	0.56	%	0.56	%
Minimum Interest Rate	0.44	%	0.06	%

The average interest rates for funds borrowed from and loaned to the Utility Money Pool for the nine months ended September 30, 2012 and 2011 are summarized for all Registrant Subsidiaries in the following table:

	Average Interest Rate				Average Interest Rate
	for Funds Borrowed				for Funds Loaned
	from Utility Money Pool for				to Utility Money Pool for
	Nine Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011

APCo	0.48	%	0.38	%	0.48	%	0.31	%
I&M	-	%	0.39	%	0.47	%	0.31	%
OPCo	0.47	%	0.45	%	0.50	%	0.31	%
PSO	-	%	0.41	%	0.47	%	0.26	%
SWEPCo	0.53	%	0.34	%	0.47	%	0.33	%

Short-term Debt

The Registrant Subsidiaries’ outstanding short-term debt was as follows:

September 30, 2012

December 31, 2011

Outstanding

Interest

Outstanding

Interest

Company

Type of Debt

Amount

Rate (a)

Amount

Rate (a)

(in thousands)

SWEPCo

Line of Credit – Sabine

$

-

%

$

17,016

1.79

%

(a) Weighted average rate.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 3.

Sale of Receivables – AEP Credit

Under a sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit's financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary's receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries' condensed statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable sold.

In June 2012, AEP Credit renewed its receivables securitization agreement. The agreement provides commitments of $700 million from bank conduits to finance receivables from AEP Credit. A commitment of $385 million expires in June 2013 and the remaining commitment of $315 million expires in June 2015.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreement for each Registrant Subsidiary as of September 30, 2012 and December 31, 2011 was as follows:

	September 30,		December 31,
Company	2012		2011
	(in thousands)
APCo	$	131,937	$	121,605
I&M		116,702		121,597
OPCo		322,440		346,695
PSO		127,008		123,172
SWEPCo		160,802		140,440

The fees paid by the Registrant Subsidiaries to AEP Credit for customer accounts receivable sold were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	1,703	$	2,500	$	5,389	$	7,314
I&M		1,674		1,623		4,738		4,758
OPCo		5,362		5,585		15,900		14,025
PSO		1,990		2,081		5,547		4,798
SWEPCo		1,786		1,850		4,720		4,254

The Registrant Subsidiaries' proceeds on the sale of receivables to AEP Credit were:

	Three Months Ended September 30,				Nine Months Ended September 30,
Company	2012		2011		2012		2011
	(in thousands)
APCo	$	351,570	$	307,364	$	993,975	$	958,288
I&M		358,936		350,108		1,018,933		1,016,680
OPCo		790,115		956,909		2,284,749		2,699,782
PSO		342,819		436,339		919,343		1,021,967
SWEPCo		444,461		475,219		1,145,182		1,165,245