Business Segments

12 Months Ended

Dec. 31, 2014

Business Segments

BUSINESS SEGMENTS

Our primary business is the generation, transmission and distribution of electricity.  Within our Vertically Integrated Utilities segment, we centrally dispatch generation assets and manage our 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.

Our 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 OPCo, TCC and TNC.

• OPCo purchases energy to serve SSO customers, and provides capacity for all connected load.

AEP Transmission Holdco

• Development, construction and operation of transmission facilities through investments in our wholly-owned transmission only subsidiaries and transmission only joint ventures. These investments have PUCT-approved or FERC-approved returns on equity.

Generation & Marketing

• Nonregulated generation in ERCOT and PJM.

• Marketing, risk management and retail activities in ERCOT, PJM and MISO.

AEP River Operations

• Commercial barging operations that transports liquids, coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers.

The remainder of our activities is 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.  This segment also includes Parent’s guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

The tables below present our reportable segment income statement information for the years ended December 31, 2014, 2013 and 2012and reportable segment balance sheet information as of December 31, 2014 and 2013.  These amounts include certain estimates and allocations where necessary.

	Vertically Integrated Utilities			Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing			AEP River Operations		Corporate and Other(a)		Reconciling Adjustments				Consolidated
	(in millions)
Year Ended December 31, 2014
Revenues from:
External Customers	$	9,397	(b)	$	4,553	$	74	$	2,384	(b)	$	642	$	22	$	(52	)	(c)	$	17,020
Other Operating Segments	87		(b)	261		118		1,466		(b)	58		73		(2,063		)		—
Total Revenues	$	9,484		$	4,814	$	192	$	3,850		$	700	$	95	$	(2,115	)		$	17,020
Depreciation and Amortization	1,033			658		24		227			31		—		(44		)	(d)	1,929
Interest and Investment Income	4			11		—		5			—		7		(20		)		7
Carrying Costs Income	6			27		—		—			—		—		—				33
Interest Expense	526			280		23		46			17		26		(33		)	(d)	885
Income Tax Expense	434			211		63		179			40		15		—				942
Net Income	712			355		151		367			49		4		—				1,638
Gross Property Additions	2,055			1,038		948		165			4		17		(28		)		4,199

	Vertically Integrated Utilities		Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing		AEP River Operations		Corporate and Other(a)			Reconciling Adjustments				Consolidated
	(in millions)
Year Ended December 31, 2013
Revenues from:
External Customers	$	9,347	$	4,279	$	27	$	1,208	$	544	$	32		$	(80	)	(c)	$	15,357
Other Operating Segments	645		199		51		2,457		19		57			(3,428		)		—
Total Revenues	$	9,992	$	4,478	$	78	$	3,665	$	563	$	89		$	(3,508	)		$	15,357
Asset Impairments and Other Related Charges	$	72	$	—	$	—	$	154	$	—	$	—		$	—			$	226
Depreciation and Amortization	941		591		10		236		31		—			(66		)	(d)	1,743
Interest and Investment Income	7		2		—		2		—		69			(22		)		58
Carrying Costs Income	14		16		—		—		—		—			—				30
Interest Expense	540		292		10		55		17		27			(35		)	(d)	906
Income Tax Expense (Credit)	398		198		29		112		7		(60		)	—				684
Net Income	681		358		80		228		12		125			—				1,484
Gross Property Additions	1,822		871		843		185		7		9			(81		)		3,656

	Vertically Integrated Utilities		Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing		AEP River Operations		Corporate and Other(a)			Reconciling Adjustments				Consolidated
	(in millions)
Year Ended December 31, 2012
Revenues from:
External Customers	$	8,785	$	4,659	$	7	$	882	$	647	$	25		$	(60	)	(c)	$	14,945
Other Operating Segments	633		159		17		2,585		20		58			(3,472		)		—
Total Revenues	$	9,418	$	4,818	$	24	$	3,467	$	667	$	83		$	(3,532	)		$	14,945
Asset Impairments and Other Related Charges	$	13	$	—	$	—	$	287	$	—	$	—		$	—			$	300
Depreciation and Amortization	873		561		3		349		29		—			(33		)	(d)	1,782
Interest and Investment Income	5		4		—		1		—		22			(24		)		8
Carrying Costs Income	28		24		1		—		—		—			—				53
Interest Expense	520		291		3		83		17		112			(38		)	(d)	988
Income Tax Expense	345		201		17		15		7		19			—				604
Net Income (Loss)	803		389		43		100		15		(88		)	—				1,262
Gross Property Additions	1,801		664		392		249		31		2			(20		)		3,119

	Vertically Integrated Utilities		Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing		AEP River Operations		Corporate and Other(a)		Reconciling Adjustments				Consolidated
	(in millions)
December 31, 2014
Total Property, Plant and Equipment	$	39,402	$	13,024	$	2,714	$	8,394	$	700	$	343	$	(272	)	(d)	$	64,305
Accumulated Depreciation and Amortization	12,773		3,481		25		3,603		217		188		(99		)	(d)	20,188
Total Property, Plant and Equipment – Net	$	26,629	$	9,543	$	2,689	$	4,791	$	483	$	155	$	(173	)	(d)	$	44,117
Total Assets	$	33,750	$	14,495	$	3,575	$	6,329	$	749	$	21,081	$	(20,346	)	(d) (e)	$	59,633
Investments in Equity Method Investees	26		1		548		—		58		15		—				648
Long-term Debt Due Within One Year:
Affiliated	$	111	$	—	$	—	$	86	$	—	$	—	$	(197	)		$	—
Non-Affiliated	1,352		405		—		740		3		3		—				2,503
Long-term Debt:
Affiliated	20		—		—		32		—		—		(52		)		—
Non-Affiliated	8,634		5,256		1,153		217		80		841		—				16,181
Total Long-term Debt	$	10,117	$	5,661	$	1,153	$	1,075	$	83	$	844	$	(249	)		$	18,684

	Vertically Integrated Utilities		Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing		AEP River Operations		Corporate and Other(a)		Reconciling Adjustments				Consolidated
	(in millions)
December 31, 2013
Total Property, Plant and Equipment	$	37,545	$	12,143	$	1,636	$	8,277	$	638	$	315	$	(269	)	(d)	$	60,285
Accumulated Depreciation and Amortization	12,250		3,342		10		3,409		189		173		(85		)	(d)	19,288
Total Property, Plant and Equipment – Net	$	25,295	$	8,801	$	1,626	$	4,868	$	449	$	142	$	(184	)	(d)	$	40,997
Total Assets	$	32,791	$	14,165	$	2,245	$	6,426	$	673	$	19,645	$	(19,531	)	(d) (e)	$	56,414
Investments in Equity Method Investees	24		—		480		—		54		11		—				569
Long-term Debt Due Within One Year:
Affiliated	$	—	$	—	$	—	$	179	$	5	$	—	$	(184	)		$	—
Non-Affiliated	720		697		—		126		2		4		—				1,549
Long-term Debt:
Affiliated	151		—		—		118		10		—		(279		)		—
Non-Affiliated	9,265		5,360		620		664		83		836		—				16,828
Total Long-term Debt	$	10,136	$	6,057	$	620	$	1,087	$	100	$	840	$	(463	)		$	18,377

(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 and interest expense and other nonallocated costs.

(b) Includes the impact of the corporate separation of OPCo's generation assets and liabilities that took effect December 31, 2013, as well as the impact of the termination of the Interconnection Agreement effective January 1, 2014.

(c) Reconciling Adjustments for External Customers primarily include eliminations as a result of corporate separation in Ohio.

(d) Includes eliminations due to an intercompany capital lease.

(e) Reconciling Adjustments for Total Assets primarily include the elimination of intercompany advances to affiliates and intercompany accounts receivable along with the elimination of AEP's investments in subsidiary companies.

Appalachian Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business starting in 2014.  The Registrant Subsidiaries’ 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.

Indiana Michigan Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business starting in 2014.  The Registrant Subsidiaries’ 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.

Ohio Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business starting in 2014.  The Registrant Subsidiaries’ 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.

Public Service Co Of Oklahoma [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business starting in 2014.  The Registrant Subsidiaries’ 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.

Southwestern Electric Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business starting in 2014.  The Registrant Subsidiaries’ 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.