Related Party Transactions

12 Months Ended

Dec. 31, 2014

Appalachian Power Co [Member]

Related Party Transactions

RELATED PARTY TRANSACTIONS

For other related party transactions, also see “AEP System Tax Allocation Agreement” section of Note 12 in addition to “Utility Money Pool – AEP System” and “Sale of Receivables – AEP Credit” sections of Note 14.

Interconnection Agreement

In accordance with management’s December 2010 announcement and October 2012 filing with the FERC, the Interconnection Agreement was terminated effective January 1, 2014.  The AEP System Interim Allowance Agreement which provided for, among other things, the transfer of SO₂ emission allowances associated with transactions under the Interconnection Agreement was also terminated.

APCo, I&M, KPCo, OPCo and AEPSC were parties to the Interconnection Agreement which defined the sharing of costs and benefits associated with the respective generation plants.  This sharing was based upon each AEP utility subsidiary’s MLR and was calculated monthly on the basis of each AEP utility subsidiary’s maximum peak demand in relation to the sum of the maximum peak demands of all four AEP utility subsidiaries during the preceding 12 months.

Effective January 1, 2014, the FERC approved the following agreements. See "Corporate Separation" section of Note 1.

• A Power Coordination Agreement among APCo, I&M and KPCo with AEPSC as the agent to coordinate the participants’ respective power supply resources.

• A Bridge Agreement among AGR, APCo, I&M, KPCo and OPCo with AEPSC as the agent to address open commitments related to the termination of the Interconnection Agreement and responsibilities to PJM.

• A Power Supply Agreement between AGR and OPCo for AGR to supply capacity and the energy needs of OPCo's retail load.

AEPSC conducts power, coal, natural gas, interest rate and, to a lesser extent, heating oil, gasoline and other risk management activities on behalf of APCo, I&M, KPCo, PSO and SWEPCo. Effective January 1, 2014, power and natural gas risk management activities for APCo, I&M and KPCo are allocated based on the three member companies’ respective equity positions, while power and natural gas risk management activities for PSO and SWEPCo are allocated based on the Operating Agreement. Prior to January 1, 2014, power and natural gas risk management activities were allocated under the SIA to former members of the Interconnection Agreement, PSO and SWEPCo. Risk management activities primarily include power and natural gas physical transactions, financially-settled swaps and exchange-traded futures.  AEPSC settles the majority of the physical forward contracts by entering into offsetting contracts. Effective January 1, 2014 and with the transfer of OPCo’s generation assets to AGR, AEPSC conducts only gasoline, diesel fuel, energy procurement and FTR price risk management activities on OPCo’s behalf.

Operating Agreement

PSO, SWEPCo and AEPSC are parties to the Operating Agreement which was approved by the FERC.  The Operating Agreement requires PSO and SWEPCo to maintain adequate annual planning reserve margins and requires that capacity in excess of the required margins be made available for sale to other operating companies as capacity commitments. In January 2014, the FERC approved a modification of the Operating Agreement to address changes resulting from an anticipated March 2014 SPP power market change. Subsequently and in March 2014, SPP changed from an energy imbalance service market to a fully integrated power market. In alignment with the new SPP integrated power market and according to the modified Operating Agreement, PSO and SWEPCo operate as standalone entities and offer their respective generation into the SPP power market. SPP then economically dispatches resources. By offering their resources separately, PSO and SWEPCo no longer purchase or sell energy to each other to serve their respective internal load or off-system sales.

System Integration Agreement (SIA)

Under the SIA, AEPSC allocates physical and financial revenues and expenses from transactions with neighboring utilities, power marketers and other power and natural gas risk management activities based upon the location of such activity. Margins resulting from trading and marketing activities originating in PJM and MISO generally accrue to the benefit of APCo, I&M and KPCo, while trading and marketing activities originating in SPP generally accrue to the benefit of PSO and SWEPCo.  Margins resulting from other transactions are allocated among APCo, I&M, KPCo, PSO and SWEPCo based upon the equity positions of these companies.

The SIA was designed to function as an umbrella agreement in addition to the Interconnection Agreement (prior to January 1, 2014) and the Operating Agreement, each of which controlled the distribution of revenues and expenses.

Affiliated Revenues and Purchases

The following tables show the revenues derived from sales under the Interconnection Agreement, direct sales to affiliates, net transmission agreement sales and other revenues for the years ended December 31, 2014, 2013 and 2012:

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Sales under Interconnection Agreement (a)	$	184		$	503	$	1,121	$	—	$	—
Direct Sales to East Affiliates	141,721			—		—		3,765		10,048
Direct Sales to West Affiliates	614			363		—		—		328
Direct Sales to AEPEP	—			—		44,121		—		—
Transmission Agreement and Transmission Coordination Agreement Sales	(1,665		)	1,675		104,052		8		14,119
Other Revenues	3,583			1,657		15,922		3,281		1,783
Total Affiliated Revenues	$	144,437		$	4,198	$	165,216	$	7,054	$	26,278

Related Party Revenues	APCo		I&M			OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Sales under Interconnection Agreement	$	193,651	$	218,164		$	924,313	$	—	$	—
Direct Sales to East Affiliates	129,014		—			152,689		14		1
Direct Sales to West Affiliates	578		391			804		10,761		35,410
Direct Sales to AEPEP	—		—			—		—		(136		)
Transmission Agreement and Transmission Coordination Agreement Sales	461		(681		)	53,405		—		14,715
Other Revenues	23,780		1,525			35,643		3,471		1,822
Total Affiliated Revenues	$	347,484	$	219,399		$	1,166,854	$	14,246	$	51,812

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Sales under Interconnection Agreement	$	166,733		$	265,923	$	643,486	$	—	$	—
Direct Sales to East Affiliates	124,519			—		136,142		34		142
Direct Sales to West Affiliates	314			218		454		18,861		23,695
Direct Sales to AEPEP	—			—		—		—		(583		)
Transmission Agreement and Transmission Coordination Agreement Sales	(1,289		)	758		26,295		8		12,338
Other Revenues	27,922			1,509		40,917		3,700		1,849
Total Affiliated Revenues	$	318,199		$	268,408	$	847,294	$	22,603	$	37,441

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The following tables show the purchased power expenses incurred for purchases under the Interconnection Agreement and from affiliates for the years ended December 31, 2014, 2013 and 2012:

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Purchases under Interconnection Agreement (a)	$	4,661	$	1,635	$	140	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		976		1
Direct Purchases from West Affiliates	—		—		—		10,048		3,765
Direct Purchases from AGR	—		—		1,148,216		—		—
Direct Purchases from AEPEP	—		—		44,344		—		—
Direct Purchases from AEGCo	—		268,337		—		—		—
Total Affiliated Purchases	$	4,661	$	269,972	$	1,192,700	$	11,024	$	3,766

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Purchases under Interconnection Agreement	$	830,954	$	181,688	$	199,283	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		1,481		411
Direct Purchases from West Affiliates	5		3		6		35,410		10,761
Direct Purchases from AEGCo	—		251,518		148,459		—		—
Natural Gas Purchases from AEPES	—		—		1,984		—		—
Total Affiliated Purchases	$	830,959	$	433,209	$	349,732	$	36,891	$	11,172

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Purchases under Interconnection Agreement	$	661,185	$	147,502	$	174,240	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		683		368
Direct Purchases from West Affiliates	53		36		75		23,695		18,861
Direct Purchases from AEGCo	—		238,866		203,583		—		—
Natural Gas Purchases from AEPES	—		—		2,808		—		—
Total Affiliated Purchases	$	661,238	$	386,404	$	380,706	$	24,378	$	19,229

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The above summarized related party revenues and expenses are reported in Sales to AEP Affiliates and Purchased Electricity from AEP Affiliates on the Registrant Subsidiaries’ statements of income.  Since the Registrant Subsidiaries are included in AEP’s consolidated results, the above summarized related party transactions are eliminated in total in AEP’s consolidated revenues and expenses.

System Transmission Integration Agreement (STIA)

AEP’s STIA provided for the integration and coordination of the planning, operation and maintenance of transmission facilities. Since the FERC approved the cancellation of the STIA effective June 1, 2014, the coordinated planning, operation and maintenance of transmission facilities are the responsibility of the RTOs and the STIA is no longer necessary. Similar to the SIA, the STIA functioned as an umbrella agreement in addition to the Transmission Agreement (TA) and the Transmission Coordination Agreement (TCA). The TA and TCA are both still active. The STIA contained two service schedules that governed:

• The allocation of transmission costs and revenues.

• The allocation of third-party transmission costs and revenues and AEP System dispatch costs.

APCo, I&M, KGPCo, KPCo, OPCo and WPCo are parties to the TA, effective November 2010, which defines how transmission costs through PJM OATT are allocated among the AEP East Companies, KGPCo and WPCo on a 12-month average coincident peak basis.

The following table shows the net charges recorded by the Registrant Subsidiaries for the years ended December 31, 2014, 2013 and 2012 related to the TA:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	84,667	$	40,609	$	20,264
I&M	39,707		19,947		5,689
OPCo	16,989		8,946		6,090

The charges shown above are recorded in Other Operation expenses on the statements of income.

PSO, SWEPCo and AEPSC are parties to the TCA, dated January 1, 1997, by and among PSO, SWEPCo and AEPSC, in connection with the operation of the transmission assets of the two AEP utility subsidiaries.  The TCA has been approved by the FERC and establishes a coordinating committee, which is charged with overseeing the coordinated planning of the transmission facilities of the parties to the agreement.  This includes the performance of transmission planning studies, the interaction of such companies with independent system operators (ISO) and other regional bodies interested in transmission planning and compliance with the terms of the OATT filed with the FERC and the rules of the FERC relating to such a tariff.

Under the TCA, the parties to the agreement delegated to AEPSC the responsibility of monitoring the reliability of their transmission systems and administering the OATT on their behalf.  The allocations have been governed by the FERC-approved OATT for the SPP.

The following table shows the net (revenues) expenses allocated among parties to the TCA pursuant to the SPP OATT protocols as described above for the years ended December 31, 2014, 2013 and 2012:

	Years Ended December 31,
Company	2014			2013			2012
	(in thousands)
PSO	$	14,100		$	14,700		$	12,300
SWEPCo	(14,100		)	(14,700		)	(12,300		)

The net (revenues) expenses shown above are recorded in Sales to AEP Affiliates on SWEPCo’s statements of income and Other Operation expenses on PSO’s statements of income.

Unit Power Agreements (UPA)

Lawrenceburg UPA

In March 2007, OPCo and AEGCo entered into a 10-year UPA for the entire output from the Lawrenceburg Generating Station effective with AEGCo’s purchase of the plant in May 2007.  Effective January 1, 2014, the Lawrenceburg UPA was assigned by OPCo to AGR. The UPA has an option for an additional two-year period.  I&M operates the plant under an agreement with AEGCo.  Under the UPA, AGR pays AEGCo for the capacity, depreciation, fuel, operation and maintenance and tax expenses.  These payments are due regardless of whether the plant is operating.  The fuel and operation and maintenance payments are based on actual costs incurred.  All expenses are trued up periodically.

UPA between AEGCo and I&M

A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the power (and the energy associated therewith) available to AEGCo at the Rockport Plant unless it is sold to another utility.  Subsequently, I&M assigns 30% of the power to KPCo.  See the "UPA between AEGCo and KPCo" section below.  I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.  The I&M Power Agreement will continue in effect until the expiration of the lease term of Unit 2 of the Rockport Plant unless extended in specified circumstances.

UPA between AEGCo and KPCo

Pursuant to an assignment between I&M and KPCo and a UPA between KPCo and AEGCo, AEGCo sells KPCo 30% of the power (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant.  KPCo pays to AEGCo in consideration for the right to receive such power the same amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement.  The KPCo UPA ends in December 2022.

Cook Coal Terminal

On August 1, 2013, OPCo transferred ownership of Cook Coal Terminal to AEGCo.  Cook Coal Terminal performs coal transloading and storage services at cost for APCo, I&M and OPCo.  OPCo included revenues for these services in Other Revenues – Affiliated and expenses in Other Operation expenses on the statements of income.  The coal transloading expenses in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
APCo	$	1	$	—
I&M	16,186		6,820
OPCo	—		322

OPCo

	Years Ended December 31,
Company	2013				2012
	(in thousands)
APCo	$	(11	)	(a)	$	942
I&M	15,596			(b)	32,639		(b)

(a) Includes annual true-up of 2012 estimated revenues.

(b) Includes $7.3 million and $14.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M and OPCo recorded the cost of transloading services in Fuel on the balance sheet.

Cook Coal Terminal also performs railcar maintenance services at cost for APCo, I&M, PSO and SWEPCo.  Beginning on August 1, 2013, Cook Coal Terminal also performs railcar maintenance services at cost for OPCo.  OPCo included revenues for these services in Sales to AEP Affiliates and expenses in Other Operation expenses on the statements of income.  The railcar maintenance revenues in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
I&M	$	2,497	$	1,073
OPCo	—		41
PSO	310		106
SWEPCo	3,275		1,237

OPCo

	Years Ended December 31,
Company	2013			2012
	(in thousands)
APCo	$	3		$	88
I&M	1,285		(a)	3,343		(a)
PSO	59			281
SWEPCo	1,204			2,102

(a) Includes $608 thousand and $1.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M, OPCo, PSO and SWEPCo recorded the cost of the railcar maintenance services in Fuel on the balance sheets.

SWEPCo Railcar Facility

SWEPCo operates a railcar maintenance facility in Alliance, Nebraska.  The facility performs maintenance on its own railcars as well as railcars belonging to I&M, PSO and third parties.  SWEPCo billed I&M $508 thousand and $873 thousand for railcar services provided in 2014 and 2013, respectively, and billed PSO $496 thousand and $279 thousand in 2014 and 2013, respectively.  These billings for SWEPCo, and costs for I&M and PSO, are recorded in Fuel on the balance sheets.

I&M Barging, Urea Transloading and Other Services

I&M provides barging, urea transloading and other transportation services to affiliates.  Urea is a chemical used to control NO_x emissions at certain generation plants in the AEP System.  I&M recorded revenues from barging, transloading and other services in Other Revenues – Affiliated on the statements of income.  The affiliated companies recorded these costs paid to I&M as fuel expenses or other operation expenses.  The amounts of affiliated expenses were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	22,746	$	19,719	$	19,961
AGR	5,195		—		—
APCo	36,064		30,876		34,725
KPCo	5,031		50		74
OPCo	—		40,562		39,956
AEP River Operations LLC – (Nonutility Subsidiary of AEP)	25,253		22,648		20,917

Services Provided by AEP River Operations LLC

AEP River Operations LLC provides services for barge towing, chartering and general and administrative expenses to I&M.  The costs are recorded by I&M as Other Operation expenses.  For the years ended December 31, 2014, 2013 and 2012, I&M recorded expenses of $24 million, $24 million and $24 million, respectively, for these activities.

Central Machine Shop

APCo operates a facility which repairs and rebuilds specialized components for the generation plants across the AEP System.  APCo defers the cost of performing these services on the balance sheet, then transfers the cost to the affiliate for reimbursement.  The AEP subsidiaries recorded these billings as capital or maintenance expenses depending on the nature of the services received.  These billings are recoverable from customers.  The following table provides the amounts billed by APCo to the following affiliates:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	70	$	26	$	80
AGR	2,842		—		—
I&M	1,704		2,451		1,280
KPCo	1,180		687		277
OPCo	—		4,679		3,838
PSO	321		606		1,198
SWEPCo	72		168		145

Affiliate Railcar Agreement

Certain AEP subsidiaries have an agreement providing for the use of each other’s leased or owned railcars when available.  The agreement specifies that the company using the railcar will be billed, at cost, by the company furnishing the railcar.  The AEP subsidiaries recorded these costs or reimbursements as costs or reduction of costs, respectively, in Fuel on the balance sheets and such costs are recoverable from customers.  The following tables show the net effect of the railcar agreement on the balance sheets:

December 31, 2014
Billing Company
Billed Company		APCo			I&M		PSO		SWEPCo
	(in thousands)
AGR		$	(27	)	$	—	$	—	$	—
I&M		331			—		133		1,078
PSO		56			1,275		—		652
SWEPCo		96			2,159		183		—

December 31, 2013
Billing Company
Billed Company	AGR			APCo		I&M		PSO		SWEPCo
	(in thousands)
AGR	$	—		$	698	$	33	$	2	$	19
APCo	775			—		—		—		—
I&M	(391		)	507		—		195		854
PSO	(90		)	20		595		—		329
SWEPCo	(245		)	140		1,395		43		—

OVEC

AEP, OPCo and several nonaffiliated utility companies jointly own OVEC.  As of December 31, 2014, AEP’s and OPCo’s ownership and investment in OVEC were as follows:

	December 31, 2014
Company	Ownership		Investment
			(in thousands)
AEP	39.17	%	$	3,978
OPCo	4.30	%	430
Total	43.47	%	$	4,408

OVEC’s owners, along with APCo and I&M, are members to an intercompany power agreement.  Participants of this agreement are entitled to receive and obligated to pay for all OVEC generating capacity, approximately 2,200 MWs, in proportion to their respective power participation ratios.  The aggregate power participation ratio of certain AEP utility subsidiaries, including APCo, I&M and OPCo, is 43.47%.  The proceeds from the sale of power by OVEC are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and provide a return on capital.  The intercompany power agreement ends in June 2040.

AEP, OPCo and other nonaffiliated owners authorized environmental investments related to their ownership interests. OVEC financed capital expenditures totaling $1.3 billion in connection with the engineering and construction of FGD projects and the associated waste disposal landfills at its two generation plants.  These environmental projects were funded through debt issuances.  As of December 31, 2014, both generation plants were operating with environmental controls.

Purchased Power from OVEC

The amounts of power purchased by the Registrant Subsidiaries from OVEC for the years ended December 31, 2014, 2013 and 2012 were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	96,905	$	104,396	$	98,417
I&M	48,487		52,230		49,239
OPCo	123,101		132,607		125,013

The amounts shown above are recoverable from customers and are included in Purchased Electricity for Resale on the statements of income.

Sales and Purchases of Property

Certain AEP subsidiaries had affiliated sales and purchases of electric property individually amounting to $100 thousand or more, sales and purchases of meters and transformers, and sales and purchases of transmission property.  There were no gains or losses recorded on the transactions.  The following tables show the sales and purchases, recorded at net book value, for the years ended December 31, 2014, 2013 and 2012:

Sales

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	3,031	$	3,212	$	6,643
I&M	1,256		5,031		3,296
OPCo	532		59,818		4,163
PSO	510		5,651		1,782
SWEPCo	1,216		1,617		1,731

Purchases

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	860	$	5,199	$	2,522
I&M	1,352		964		285
OPCo	1,902		5,311		10,608
PSO	2,079		1,710		1,867
SWEPCo	4,023		8,440		7,266

The amounts above are recorded in Property, Plant and Equipment on the balance sheets.

Intercompany Billings

The Registrant Subsidiaries and other AEP subsidiaries perform certain utility services for each other when necessary or practical.  The costs of these services are billed on a direct-charge basis, whenever possible, or on reasonable basis of proration for services that benefit multiple companies.  The billings for services are made at cost and include no compensation for the use of equity capital.

Indiana Michigan Power Co [Member]

Related Party Transactions

RELATED PARTY TRANSACTIONS

For other related party transactions, also see “AEP System Tax Allocation Agreement” section of Note 12 in addition to “Utility Money Pool – AEP System” and “Sale of Receivables – AEP Credit” sections of Note 14.

Interconnection Agreement

In accordance with management’s December 2010 announcement and October 2012 filing with the FERC, the Interconnection Agreement was terminated effective January 1, 2014.  The AEP System Interim Allowance Agreement which provided for, among other things, the transfer of SO₂ emission allowances associated with transactions under the Interconnection Agreement was also terminated.

APCo, I&M, KPCo, OPCo and AEPSC were parties to the Interconnection Agreement which defined the sharing of costs and benefits associated with the respective generation plants.  This sharing was based upon each AEP utility subsidiary’s MLR and was calculated monthly on the basis of each AEP utility subsidiary’s maximum peak demand in relation to the sum of the maximum peak demands of all four AEP utility subsidiaries during the preceding 12 months.

Effective January 1, 2014, the FERC approved the following agreements. See "Corporate Separation" section of Note 1.

• A Power Coordination Agreement among APCo, I&M and KPCo with AEPSC as the agent to coordinate the participants’ respective power supply resources.

• A Bridge Agreement among AGR, APCo, I&M, KPCo and OPCo with AEPSC as the agent to address open commitments related to the termination of the Interconnection Agreement and responsibilities to PJM.

• A Power Supply Agreement between AGR and OPCo for AGR to supply capacity and the energy needs of OPCo's retail load.

AEPSC conducts power, coal, natural gas, interest rate and, to a lesser extent, heating oil, gasoline and other risk management activities on behalf of APCo, I&M, KPCo, PSO and SWEPCo. Effective January 1, 2014, power and natural gas risk management activities for APCo, I&M and KPCo are allocated based on the three member companies’ respective equity positions, while power and natural gas risk management activities for PSO and SWEPCo are allocated based on the Operating Agreement. Prior to January 1, 2014, power and natural gas risk management activities were allocated under the SIA to former members of the Interconnection Agreement, PSO and SWEPCo. Risk management activities primarily include power and natural gas physical transactions, financially-settled swaps and exchange-traded futures.  AEPSC settles the majority of the physical forward contracts by entering into offsetting contracts. Effective January 1, 2014 and with the transfer of OPCo’s generation assets to AGR, AEPSC conducts only gasoline, diesel fuel, energy procurement and FTR price risk management activities on OPCo’s behalf.

Operating Agreement

PSO, SWEPCo and AEPSC are parties to the Operating Agreement which was approved by the FERC.  The Operating Agreement requires PSO and SWEPCo to maintain adequate annual planning reserve margins and requires that capacity in excess of the required margins be made available for sale to other operating companies as capacity commitments. In January 2014, the FERC approved a modification of the Operating Agreement to address changes resulting from an anticipated March 2014 SPP power market change. Subsequently and in March 2014, SPP changed from an energy imbalance service market to a fully integrated power market. In alignment with the new SPP integrated power market and according to the modified Operating Agreement, PSO and SWEPCo operate as standalone entities and offer their respective generation into the SPP power market. SPP then economically dispatches resources. By offering their resources separately, PSO and SWEPCo no longer purchase or sell energy to each other to serve their respective internal load or off-system sales.

System Integration Agreement (SIA)

Under the SIA, AEPSC allocates physical and financial revenues and expenses from transactions with neighboring utilities, power marketers and other power and natural gas risk management activities based upon the location of such activity. Margins resulting from trading and marketing activities originating in PJM and MISO generally accrue to the benefit of APCo, I&M and KPCo, while trading and marketing activities originating in SPP generally accrue to the benefit of PSO and SWEPCo.  Margins resulting from other transactions are allocated among APCo, I&M, KPCo, PSO and SWEPCo based upon the equity positions of these companies.

The SIA was designed to function as an umbrella agreement in addition to the Interconnection Agreement (prior to January 1, 2014) and the Operating Agreement, each of which controlled the distribution of revenues and expenses.

Affiliated Revenues and Purchases

The following tables show the revenues derived from sales under the Interconnection Agreement, direct sales to affiliates, net transmission agreement sales and other revenues for the years ended December 31, 2014, 2013 and 2012:

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Sales under Interconnection Agreement (a)	$	184		$	503	$	1,121	$	—	$	—
Direct Sales to East Affiliates	141,721			—		—		3,765		10,048
Direct Sales to West Affiliates	614			363		—		—		328
Direct Sales to AEPEP	—			—		44,121		—		—
Transmission Agreement and Transmission Coordination Agreement Sales	(1,665		)	1,675		104,052		8		14,119
Other Revenues	3,583			1,657		15,922		3,281		1,783
Total Affiliated Revenues	$	144,437		$	4,198	$	165,216	$	7,054	$	26,278

Related Party Revenues	APCo		I&M			OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Sales under Interconnection Agreement	$	193,651	$	218,164		$	924,313	$	—	$	—
Direct Sales to East Affiliates	129,014		—			152,689		14		1
Direct Sales to West Affiliates	578		391			804		10,761		35,410
Direct Sales to AEPEP	—		—			—		—		(136		)
Transmission Agreement and Transmission Coordination Agreement Sales	461		(681		)	53,405		—		14,715
Other Revenues	23,780		1,525			35,643		3,471		1,822
Total Affiliated Revenues	$	347,484	$	219,399		$	1,166,854	$	14,246	$	51,812

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Sales under Interconnection Agreement	$	166,733		$	265,923	$	643,486	$	—	$	—
Direct Sales to East Affiliates	124,519			—		136,142		34		142
Direct Sales to West Affiliates	314			218		454		18,861		23,695
Direct Sales to AEPEP	—			—		—		—		(583		)
Transmission Agreement and Transmission Coordination Agreement Sales	(1,289		)	758		26,295		8		12,338
Other Revenues	27,922			1,509		40,917		3,700		1,849
Total Affiliated Revenues	$	318,199		$	268,408	$	847,294	$	22,603	$	37,441

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The following tables show the purchased power expenses incurred for purchases under the Interconnection Agreement and from affiliates for the years ended December 31, 2014, 2013 and 2012:

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Purchases under Interconnection Agreement (a)	$	4,661	$	1,635	$	140	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		976		1
Direct Purchases from West Affiliates	—		—		—		10,048		3,765
Direct Purchases from AGR	—		—		1,148,216		—		—
Direct Purchases from AEPEP	—		—		44,344		—		—
Direct Purchases from AEGCo	—		268,337		—		—		—
Total Affiliated Purchases	$	4,661	$	269,972	$	1,192,700	$	11,024	$	3,766

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Purchases under Interconnection Agreement	$	830,954	$	181,688	$	199,283	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		1,481		411
Direct Purchases from West Affiliates	5		3		6		35,410		10,761
Direct Purchases from AEGCo	—		251,518		148,459		—		—
Natural Gas Purchases from AEPES	—		—		1,984		—		—
Total Affiliated Purchases	$	830,959	$	433,209	$	349,732	$	36,891	$	11,172

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Purchases under Interconnection Agreement	$	661,185	$	147,502	$	174,240	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		683		368
Direct Purchases from West Affiliates	53		36		75		23,695		18,861
Direct Purchases from AEGCo	—		238,866		203,583		—		—
Natural Gas Purchases from AEPES	—		—		2,808		—		—
Total Affiliated Purchases	$	661,238	$	386,404	$	380,706	$	24,378	$	19,229

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The above summarized related party revenues and expenses are reported in Sales to AEP Affiliates and Purchased Electricity from AEP Affiliates on the Registrant Subsidiaries’ statements of income.  Since the Registrant Subsidiaries are included in AEP’s consolidated results, the above summarized related party transactions are eliminated in total in AEP’s consolidated revenues and expenses.

System Transmission Integration Agreement (STIA)

AEP’s STIA provided for the integration and coordination of the planning, operation and maintenance of transmission facilities. Since the FERC approved the cancellation of the STIA effective June 1, 2014, the coordinated planning, operation and maintenance of transmission facilities are the responsibility of the RTOs and the STIA is no longer necessary. Similar to the SIA, the STIA functioned as an umbrella agreement in addition to the Transmission Agreement (TA) and the Transmission Coordination Agreement (TCA). The TA and TCA are both still active. The STIA contained two service schedules that governed:

• The allocation of transmission costs and revenues.

• The allocation of third-party transmission costs and revenues and AEP System dispatch costs.

APCo, I&M, KGPCo, KPCo, OPCo and WPCo are parties to the TA, effective November 2010, which defines how transmission costs through PJM OATT are allocated among the AEP East Companies, KGPCo and WPCo on a 12-month average coincident peak basis.

The following table shows the net charges recorded by the Registrant Subsidiaries for the years ended December 31, 2014, 2013 and 2012 related to the TA:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	84,667	$	40,609	$	20,264
I&M	39,707		19,947		5,689
OPCo	16,989		8,946		6,090

The charges shown above are recorded in Other Operation expenses on the statements of income.

PSO, SWEPCo and AEPSC are parties to the TCA, dated January 1, 1997, by and among PSO, SWEPCo and AEPSC, in connection with the operation of the transmission assets of the two AEP utility subsidiaries.  The TCA has been approved by the FERC and establishes a coordinating committee, which is charged with overseeing the coordinated planning of the transmission facilities of the parties to the agreement.  This includes the performance of transmission planning studies, the interaction of such companies with independent system operators (ISO) and other regional bodies interested in transmission planning and compliance with the terms of the OATT filed with the FERC and the rules of the FERC relating to such a tariff.

Under the TCA, the parties to the agreement delegated to AEPSC the responsibility of monitoring the reliability of their transmission systems and administering the OATT on their behalf.  The allocations have been governed by the FERC-approved OATT for the SPP.

The following table shows the net (revenues) expenses allocated among parties to the TCA pursuant to the SPP OATT protocols as described above for the years ended December 31, 2014, 2013 and 2012:

	Years Ended December 31,
Company	2014			2013			2012
	(in thousands)
PSO	$	14,100		$	14,700		$	12,300
SWEPCo	(14,100		)	(14,700		)	(12,300		)

The net (revenues) expenses shown above are recorded in Sales to AEP Affiliates on SWEPCo’s statements of income and Other Operation expenses on PSO’s statements of income.

Unit Power Agreements (UPA)

Lawrenceburg UPA

In March 2007, OPCo and AEGCo entered into a 10-year UPA for the entire output from the Lawrenceburg Generating Station effective with AEGCo’s purchase of the plant in May 2007.  Effective January 1, 2014, the Lawrenceburg UPA was assigned by OPCo to AGR. The UPA has an option for an additional two-year period.  I&M operates the plant under an agreement with AEGCo.  Under the UPA, AGR pays AEGCo for the capacity, depreciation, fuel, operation and maintenance and tax expenses.  These payments are due regardless of whether the plant is operating.  The fuel and operation and maintenance payments are based on actual costs incurred.  All expenses are trued up periodically.

UPA between AEGCo and I&M

A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the power (and the energy associated therewith) available to AEGCo at the Rockport Plant unless it is sold to another utility.  Subsequently, I&M assigns 30% of the power to KPCo.  See the "UPA between AEGCo and KPCo" section below.  I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.  The I&M Power Agreement will continue in effect until the expiration of the lease term of Unit 2 of the Rockport Plant unless extended in specified circumstances.

UPA between AEGCo and KPCo

Pursuant to an assignment between I&M and KPCo and a UPA between KPCo and AEGCo, AEGCo sells KPCo 30% of the power (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant.  KPCo pays to AEGCo in consideration for the right to receive such power the same amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement.  The KPCo UPA ends in December 2022.

Cook Coal Terminal

On August 1, 2013, OPCo transferred ownership of Cook Coal Terminal to AEGCo.  Cook Coal Terminal performs coal transloading and storage services at cost for APCo, I&M and OPCo.  OPCo included revenues for these services in Other Revenues – Affiliated and expenses in Other Operation expenses on the statements of income.  The coal transloading expenses in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
APCo	$	1	$	—
I&M	16,186		6,820
OPCo	—		322

OPCo

	Years Ended December 31,
Company	2013				2012
	(in thousands)
APCo	$	(11	)	(a)	$	942
I&M	15,596			(b)	32,639		(b)

(a) Includes annual true-up of 2012 estimated revenues.

(b) Includes $7.3 million and $14.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M and OPCo recorded the cost of transloading services in Fuel on the balance sheet.

Cook Coal Terminal also performs railcar maintenance services at cost for APCo, I&M, PSO and SWEPCo.  Beginning on August 1, 2013, Cook Coal Terminal also performs railcar maintenance services at cost for OPCo.  OPCo included revenues for these services in Sales to AEP Affiliates and expenses in Other Operation expenses on the statements of income.  The railcar maintenance revenues in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
I&M	$	2,497	$	1,073
OPCo	—		41
PSO	310		106
SWEPCo	3,275		1,237

OPCo

	Years Ended December 31,
Company	2013			2012
	(in thousands)
APCo	$	3		$	88
I&M	1,285		(a)	3,343		(a)
PSO	59			281
SWEPCo	1,204			2,102

(a) Includes $608 thousand and $1.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M, OPCo, PSO and SWEPCo recorded the cost of the railcar maintenance services in Fuel on the balance sheets.

SWEPCo Railcar Facility

SWEPCo operates a railcar maintenance facility in Alliance, Nebraska.  The facility performs maintenance on its own railcars as well as railcars belonging to I&M, PSO and third parties.  SWEPCo billed I&M $508 thousand and $873 thousand for railcar services provided in 2014 and 2013, respectively, and billed PSO $496 thousand and $279 thousand in 2014 and 2013, respectively.  These billings for SWEPCo, and costs for I&M and PSO, are recorded in Fuel on the balance sheets.

I&M Barging, Urea Transloading and Other Services

I&M provides barging, urea transloading and other transportation services to affiliates.  Urea is a chemical used to control NO_x emissions at certain generation plants in the AEP System.  I&M recorded revenues from barging, transloading and other services in Other Revenues – Affiliated on the statements of income.  The affiliated companies recorded these costs paid to I&M as fuel expenses or other operation expenses.  The amounts of affiliated expenses were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	22,746	$	19,719	$	19,961
AGR	5,195		—		—
APCo	36,064		30,876		34,725
KPCo	5,031		50		74
OPCo	—		40,562		39,956
AEP River Operations LLC – (Nonutility Subsidiary of AEP)	25,253		22,648		20,917

Services Provided by AEP River Operations LLC

AEP River Operations LLC provides services for barge towing, chartering and general and administrative expenses to I&M.  The costs are recorded by I&M as Other Operation expenses.  For the years ended December 31, 2014, 2013 and 2012, I&M recorded expenses of $24 million, $24 million and $24 million, respectively, for these activities.

Central Machine Shop

APCo operates a facility which repairs and rebuilds specialized components for the generation plants across the AEP System.  APCo defers the cost of performing these services on the balance sheet, then transfers the cost to the affiliate for reimbursement.  The AEP subsidiaries recorded these billings as capital or maintenance expenses depending on the nature of the services received.  These billings are recoverable from customers.  The following table provides the amounts billed by APCo to the following affiliates:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	70	$	26	$	80
AGR	2,842		—		—
I&M	1,704		2,451		1,280
KPCo	1,180		687		277
OPCo	—		4,679		3,838
PSO	321		606		1,198
SWEPCo	72		168		145

Affiliate Railcar Agreement

Certain AEP subsidiaries have an agreement providing for the use of each other’s leased or owned railcars when available.  The agreement specifies that the company using the railcar will be billed, at cost, by the company furnishing the railcar.  The AEP subsidiaries recorded these costs or reimbursements as costs or reduction of costs, respectively, in Fuel on the balance sheets and such costs are recoverable from customers.  The following tables show the net effect of the railcar agreement on the balance sheets:

December 31, 2014
Billing Company
Billed Company		APCo			I&M		PSO		SWEPCo
	(in thousands)
AGR		$	(27	)	$	—	$	—	$	—
I&M		331			—		133		1,078
PSO		56			1,275		—		652
SWEPCo		96			2,159		183		—

December 31, 2013
Billing Company
Billed Company	AGR			APCo		I&M		PSO		SWEPCo
	(in thousands)
AGR	$	—		$	698	$	33	$	2	$	19
APCo	775			—		—		—		—
I&M	(391		)	507		—		195		854
PSO	(90		)	20		595		—		329
SWEPCo	(245		)	140		1,395		43		—

OVEC

AEP, OPCo and several nonaffiliated utility companies jointly own OVEC.  As of December 31, 2014, AEP’s and OPCo’s ownership and investment in OVEC were as follows:

	December 31, 2014
Company	Ownership		Investment
			(in thousands)
AEP	39.17	%	$	3,978
OPCo	4.30	%	430
Total	43.47	%	$	4,408

OVEC’s owners, along with APCo and I&M, are members to an intercompany power agreement.  Participants of this agreement are entitled to receive and obligated to pay for all OVEC generating capacity, approximately 2,200 MWs, in proportion to their respective power participation ratios.  The aggregate power participation ratio of certain AEP utility subsidiaries, including APCo, I&M and OPCo, is 43.47%.  The proceeds from the sale of power by OVEC are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and provide a return on capital.  The intercompany power agreement ends in June 2040.

AEP, OPCo and other nonaffiliated owners authorized environmental investments related to their ownership interests. OVEC financed capital expenditures totaling $1.3 billion in connection with the engineering and construction of FGD projects and the associated waste disposal landfills at its two generation plants.  These environmental projects were funded through debt issuances.  As of December 31, 2014, both generation plants were operating with environmental controls.

Purchased Power from OVEC

The amounts of power purchased by the Registrant Subsidiaries from OVEC for the years ended December 31, 2014, 2013 and 2012 were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	96,905	$	104,396	$	98,417
I&M	48,487		52,230		49,239
OPCo	123,101		132,607		125,013

The amounts shown above are recoverable from customers and are included in Purchased Electricity for Resale on the statements of income.

Sales and Purchases of Property

Certain AEP subsidiaries had affiliated sales and purchases of electric property individually amounting to $100 thousand or more, sales and purchases of meters and transformers, and sales and purchases of transmission property.  There were no gains or losses recorded on the transactions.  The following tables show the sales and purchases, recorded at net book value, for the years ended December 31, 2014, 2013 and 2012:

Sales

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	3,031	$	3,212	$	6,643
I&M	1,256		5,031		3,296
OPCo	532		59,818		4,163
PSO	510		5,651		1,782
SWEPCo	1,216		1,617		1,731

Purchases

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	860	$	5,199	$	2,522
I&M	1,352		964		285
OPCo	1,902		5,311		10,608
PSO	2,079		1,710		1,867
SWEPCo	4,023		8,440		7,266

The amounts above are recorded in Property, Plant and Equipment on the balance sheets.

Intercompany Billings

The Registrant Subsidiaries and other AEP subsidiaries perform certain utility services for each other when necessary or practical.  The costs of these services are billed on a direct-charge basis, whenever possible, or on reasonable basis of proration for services that benefit multiple companies.  The billings for services are made at cost and include no compensation for the use of equity capital.

Ohio Power Co [Member]

Related Party Transactions

RELATED PARTY TRANSACTIONS

For other related party transactions, also see “AEP System Tax Allocation Agreement” section of Note 12 in addition to “Utility Money Pool – AEP System” and “Sale of Receivables – AEP Credit” sections of Note 14.

Interconnection Agreement

In accordance with management’s December 2010 announcement and October 2012 filing with the FERC, the Interconnection Agreement was terminated effective January 1, 2014.  The AEP System Interim Allowance Agreement which provided for, among other things, the transfer of SO₂ emission allowances associated with transactions under the Interconnection Agreement was also terminated.

APCo, I&M, KPCo, OPCo and AEPSC were parties to the Interconnection Agreement which defined the sharing of costs and benefits associated with the respective generation plants.  This sharing was based upon each AEP utility subsidiary’s MLR and was calculated monthly on the basis of each AEP utility subsidiary’s maximum peak demand in relation to the sum of the maximum peak demands of all four AEP utility subsidiaries during the preceding 12 months.

Effective January 1, 2014, the FERC approved the following agreements. See "Corporate Separation" section of Note 1.

• A Power Coordination Agreement among APCo, I&M and KPCo with AEPSC as the agent to coordinate the participants’ respective power supply resources.

• A Bridge Agreement among AGR, APCo, I&M, KPCo and OPCo with AEPSC as the agent to address open commitments related to the termination of the Interconnection Agreement and responsibilities to PJM.

• A Power Supply Agreement between AGR and OPCo for AGR to supply capacity and the energy needs of OPCo's retail load.

AEPSC conducts power, coal, natural gas, interest rate and, to a lesser extent, heating oil, gasoline and other risk management activities on behalf of APCo, I&M, KPCo, PSO and SWEPCo. Effective January 1, 2014, power and natural gas risk management activities for APCo, I&M and KPCo are allocated based on the three member companies’ respective equity positions, while power and natural gas risk management activities for PSO and SWEPCo are allocated based on the Operating Agreement. Prior to January 1, 2014, power and natural gas risk management activities were allocated under the SIA to former members of the Interconnection Agreement, PSO and SWEPCo. Risk management activities primarily include power and natural gas physical transactions, financially-settled swaps and exchange-traded futures.  AEPSC settles the majority of the physical forward contracts by entering into offsetting contracts. Effective January 1, 2014 and with the transfer of OPCo’s generation assets to AGR, AEPSC conducts only gasoline, diesel fuel, energy procurement and FTR price risk management activities on OPCo’s behalf.

Operating Agreement

PSO, SWEPCo and AEPSC are parties to the Operating Agreement which was approved by the FERC.  The Operating Agreement requires PSO and SWEPCo to maintain adequate annual planning reserve margins and requires that capacity in excess of the required margins be made available for sale to other operating companies as capacity commitments. In January 2014, the FERC approved a modification of the Operating Agreement to address changes resulting from an anticipated March 2014 SPP power market change. Subsequently and in March 2014, SPP changed from an energy imbalance service market to a fully integrated power market. In alignment with the new SPP integrated power market and according to the modified Operating Agreement, PSO and SWEPCo operate as standalone entities and offer their respective generation into the SPP power market. SPP then economically dispatches resources. By offering their resources separately, PSO and SWEPCo no longer purchase or sell energy to each other to serve their respective internal load or off-system sales.

System Integration Agreement (SIA)

Under the SIA, AEPSC allocates physical and financial revenues and expenses from transactions with neighboring utilities, power marketers and other power and natural gas risk management activities based upon the location of such activity. Margins resulting from trading and marketing activities originating in PJM and MISO generally accrue to the benefit of APCo, I&M and KPCo, while trading and marketing activities originating in SPP generally accrue to the benefit of PSO and SWEPCo.  Margins resulting from other transactions are allocated among APCo, I&M, KPCo, PSO and SWEPCo based upon the equity positions of these companies.

The SIA was designed to function as an umbrella agreement in addition to the Interconnection Agreement (prior to January 1, 2014) and the Operating Agreement, each of which controlled the distribution of revenues and expenses.

Affiliated Revenues and Purchases

The following tables show the revenues derived from sales under the Interconnection Agreement, direct sales to affiliates, net transmission agreement sales and other revenues for the years ended December 31, 2014, 2013 and 2012:

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Sales under Interconnection Agreement (a)	$	184		$	503	$	1,121	$	—	$	—
Direct Sales to East Affiliates	141,721			—		—		3,765		10,048
Direct Sales to West Affiliates	614			363		—		—		328
Direct Sales to AEPEP	—			—		44,121		—		—
Transmission Agreement and Transmission Coordination Agreement Sales	(1,665		)	1,675		104,052		8		14,119
Other Revenues	3,583			1,657		15,922		3,281		1,783
Total Affiliated Revenues	$	144,437		$	4,198	$	165,216	$	7,054	$	26,278

Related Party Revenues	APCo		I&M			OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Sales under Interconnection Agreement	$	193,651	$	218,164		$	924,313	$	—	$	—
Direct Sales to East Affiliates	129,014		—			152,689		14		1
Direct Sales to West Affiliates	578		391			804		10,761		35,410
Direct Sales to AEPEP	—		—			—		—		(136		)
Transmission Agreement and Transmission Coordination Agreement Sales	461		(681		)	53,405		—		14,715
Other Revenues	23,780		1,525			35,643		3,471		1,822
Total Affiliated Revenues	$	347,484	$	219,399		$	1,166,854	$	14,246	$	51,812

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Sales under Interconnection Agreement	$	166,733		$	265,923	$	643,486	$	—	$	—
Direct Sales to East Affiliates	124,519			—		136,142		34		142
Direct Sales to West Affiliates	314			218		454		18,861		23,695
Direct Sales to AEPEP	—			—		—		—		(583		)
Transmission Agreement and Transmission Coordination Agreement Sales	(1,289		)	758		26,295		8		12,338
Other Revenues	27,922			1,509		40,917		3,700		1,849
Total Affiliated Revenues	$	318,199		$	268,408	$	847,294	$	22,603	$	37,441

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The following tables show the purchased power expenses incurred for purchases under the Interconnection Agreement and from affiliates for the years ended December 31, 2014, 2013 and 2012:

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Purchases under Interconnection Agreement (a)	$	4,661	$	1,635	$	140	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		976		1
Direct Purchases from West Affiliates	—		—		—		10,048		3,765
Direct Purchases from AGR	—		—		1,148,216		—		—
Direct Purchases from AEPEP	—		—		44,344		—		—
Direct Purchases from AEGCo	—		268,337		—		—		—
Total Affiliated Purchases	$	4,661	$	269,972	$	1,192,700	$	11,024	$	3,766

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Purchases under Interconnection Agreement	$	830,954	$	181,688	$	199,283	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		1,481		411
Direct Purchases from West Affiliates	5		3		6		35,410		10,761
Direct Purchases from AEGCo	—		251,518		148,459		—		—
Natural Gas Purchases from AEPES	—		—		1,984		—		—
Total Affiliated Purchases	$	830,959	$	433,209	$	349,732	$	36,891	$	11,172

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Purchases under Interconnection Agreement	$	661,185	$	147,502	$	174,240	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		683		368
Direct Purchases from West Affiliates	53		36		75		23,695		18,861
Direct Purchases from AEGCo	—		238,866		203,583		—		—
Natural Gas Purchases from AEPES	—		—		2,808		—		—
Total Affiliated Purchases	$	661,238	$	386,404	$	380,706	$	24,378	$	19,229

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The above summarized related party revenues and expenses are reported in Sales to AEP Affiliates and Purchased Electricity from AEP Affiliates on the Registrant Subsidiaries’ statements of income.  Since the Registrant Subsidiaries are included in AEP’s consolidated results, the above summarized related party transactions are eliminated in total in AEP’s consolidated revenues and expenses.

System Transmission Integration Agreement (STIA)

AEP’s STIA provided for the integration and coordination of the planning, operation and maintenance of transmission facilities. Since the FERC approved the cancellation of the STIA effective June 1, 2014, the coordinated planning, operation and maintenance of transmission facilities are the responsibility of the RTOs and the STIA is no longer necessary. Similar to the SIA, the STIA functioned as an umbrella agreement in addition to the Transmission Agreement (TA) and the Transmission Coordination Agreement (TCA). The TA and TCA are both still active. The STIA contained two service schedules that governed:

• The allocation of transmission costs and revenues.

• The allocation of third-party transmission costs and revenues and AEP System dispatch costs.

APCo, I&M, KGPCo, KPCo, OPCo and WPCo are parties to the TA, effective November 2010, which defines how transmission costs through PJM OATT are allocated among the AEP East Companies, KGPCo and WPCo on a 12-month average coincident peak basis.

The following table shows the net charges recorded by the Registrant Subsidiaries for the years ended December 31, 2014, 2013 and 2012 related to the TA:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	84,667	$	40,609	$	20,264
I&M	39,707		19,947		5,689
OPCo	16,989		8,946		6,090

The charges shown above are recorded in Other Operation expenses on the statements of income.

PSO, SWEPCo and AEPSC are parties to the TCA, dated January 1, 1997, by and among PSO, SWEPCo and AEPSC, in connection with the operation of the transmission assets of the two AEP utility subsidiaries.  The TCA has been approved by the FERC and establishes a coordinating committee, which is charged with overseeing the coordinated planning of the transmission facilities of the parties to the agreement.  This includes the performance of transmission planning studies, the interaction of such companies with independent system operators (ISO) and other regional bodies interested in transmission planning and compliance with the terms of the OATT filed with the FERC and the rules of the FERC relating to such a tariff.

Under the TCA, the parties to the agreement delegated to AEPSC the responsibility of monitoring the reliability of their transmission systems and administering the OATT on their behalf.  The allocations have been governed by the FERC-approved OATT for the SPP.

The following table shows the net (revenues) expenses allocated among parties to the TCA pursuant to the SPP OATT protocols as described above for the years ended December 31, 2014, 2013 and 2012:

	Years Ended December 31,
Company	2014			2013			2012
	(in thousands)
PSO	$	14,100		$	14,700		$	12,300
SWEPCo	(14,100		)	(14,700		)	(12,300		)

The net (revenues) expenses shown above are recorded in Sales to AEP Affiliates on SWEPCo’s statements of income and Other Operation expenses on PSO’s statements of income.

Unit Power Agreements (UPA)

Lawrenceburg UPA

In March 2007, OPCo and AEGCo entered into a 10-year UPA for the entire output from the Lawrenceburg Generating Station effective with AEGCo’s purchase of the plant in May 2007.  Effective January 1, 2014, the Lawrenceburg UPA was assigned by OPCo to AGR. The UPA has an option for an additional two-year period.  I&M operates the plant under an agreement with AEGCo.  Under the UPA, AGR pays AEGCo for the capacity, depreciation, fuel, operation and maintenance and tax expenses.  These payments are due regardless of whether the plant is operating.  The fuel and operation and maintenance payments are based on actual costs incurred.  All expenses are trued up periodically.

UPA between AEGCo and I&M

A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the power (and the energy associated therewith) available to AEGCo at the Rockport Plant unless it is sold to another utility.  Subsequently, I&M assigns 30% of the power to KPCo.  See the "UPA between AEGCo and KPCo" section below.  I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.  The I&M Power Agreement will continue in effect until the expiration of the lease term of Unit 2 of the Rockport Plant unless extended in specified circumstances.

UPA between AEGCo and KPCo

Pursuant to an assignment between I&M and KPCo and a UPA between KPCo and AEGCo, AEGCo sells KPCo 30% of the power (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant.  KPCo pays to AEGCo in consideration for the right to receive such power the same amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement.  The KPCo UPA ends in December 2022.

Cook Coal Terminal

On August 1, 2013, OPCo transferred ownership of Cook Coal Terminal to AEGCo.  Cook Coal Terminal performs coal transloading and storage services at cost for APCo, I&M and OPCo.  OPCo included revenues for these services in Other Revenues – Affiliated and expenses in Other Operation expenses on the statements of income.  The coal transloading expenses in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
APCo	$	1	$	—
I&M	16,186		6,820
OPCo	—		322

OPCo

	Years Ended December 31,
Company	2013				2012
	(in thousands)
APCo	$	(11	)	(a)	$	942
I&M	15,596			(b)	32,639		(b)

(a) Includes annual true-up of 2012 estimated revenues.

(b) Includes $7.3 million and $14.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M and OPCo recorded the cost of transloading services in Fuel on the balance sheet.

Cook Coal Terminal also performs railcar maintenance services at cost for APCo, I&M, PSO and SWEPCo.  Beginning on August 1, 2013, Cook Coal Terminal also performs railcar maintenance services at cost for OPCo.  OPCo included revenues for these services in Sales to AEP Affiliates and expenses in Other Operation expenses on the statements of income.  The railcar maintenance revenues in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
I&M	$	2,497	$	1,073
OPCo	—		41
PSO	310		106
SWEPCo	3,275		1,237

OPCo

	Years Ended December 31,
Company	2013			2012
	(in thousands)
APCo	$	3		$	88
I&M	1,285		(a)	3,343		(a)
PSO	59			281
SWEPCo	1,204			2,102

(a) Includes $608 thousand and $1.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M, OPCo, PSO and SWEPCo recorded the cost of the railcar maintenance services in Fuel on the balance sheets.

SWEPCo Railcar Facility

SWEPCo operates a railcar maintenance facility in Alliance, Nebraska.  The facility performs maintenance on its own railcars as well as railcars belonging to I&M, PSO and third parties.  SWEPCo billed I&M $508 thousand and $873 thousand for railcar services provided in 2014 and 2013, respectively, and billed PSO $496 thousand and $279 thousand in 2014 and 2013, respectively.  These billings for SWEPCo, and costs for I&M and PSO, are recorded in Fuel on the balance sheets.

I&M Barging, Urea Transloading and Other Services

I&M provides barging, urea transloading and other transportation services to affiliates.  Urea is a chemical used to control NO_x emissions at certain generation plants in the AEP System.  I&M recorded revenues from barging, transloading and other services in Other Revenues – Affiliated on the statements of income.  The affiliated companies recorded these costs paid to I&M as fuel expenses or other operation expenses.  The amounts of affiliated expenses were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	22,746	$	19,719	$	19,961
AGR	5,195		—		—
APCo	36,064		30,876		34,725
KPCo	5,031		50		74
OPCo	—		40,562		39,956
AEP River Operations LLC – (Nonutility Subsidiary of AEP)	25,253		22,648		20,917

Services Provided by AEP River Operations LLC

AEP River Operations LLC provides services for barge towing, chartering and general and administrative expenses to I&M.  The costs are recorded by I&M as Other Operation expenses.  For the years ended December 31, 2014, 2013 and 2012, I&M recorded expenses of $24 million, $24 million and $24 million, respectively, for these activities.

Central Machine Shop

APCo operates a facility which repairs and rebuilds specialized components for the generation plants across the AEP System.  APCo defers the cost of performing these services on the balance sheet, then transfers the cost to the affiliate for reimbursement.  The AEP subsidiaries recorded these billings as capital or maintenance expenses depending on the nature of the services received.  These billings are recoverable from customers.  The following table provides the amounts billed by APCo to the following affiliates:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	70	$	26	$	80
AGR	2,842		—		—
I&M	1,704		2,451		1,280
KPCo	1,180		687		277
OPCo	—		4,679		3,838
PSO	321		606		1,198
SWEPCo	72		168		145

Affiliate Railcar Agreement

Certain AEP subsidiaries have an agreement providing for the use of each other’s leased or owned railcars when available.  The agreement specifies that the company using the railcar will be billed, at cost, by the company furnishing the railcar.  The AEP subsidiaries recorded these costs or reimbursements as costs or reduction of costs, respectively, in Fuel on the balance sheets and such costs are recoverable from customers.  The following tables show the net effect of the railcar agreement on the balance sheets:

December 31, 2014
Billing Company
Billed Company		APCo			I&M		PSO		SWEPCo
	(in thousands)
AGR		$	(27	)	$	—	$	—	$	—
I&M		331			—		133		1,078
PSO		56			1,275		—		652
SWEPCo		96			2,159		183		—

December 31, 2013
Billing Company
Billed Company	AGR			APCo		I&M		PSO		SWEPCo
	(in thousands)
AGR	$	—		$	698	$	33	$	2	$	19
APCo	775			—		—		—		—
I&M	(391		)	507		—		195		854
PSO	(90		)	20		595		—		329
SWEPCo	(245		)	140		1,395		43		—

OVEC

AEP, OPCo and several nonaffiliated utility companies jointly own OVEC.  As of December 31, 2014, AEP’s and OPCo’s ownership and investment in OVEC were as follows:

	December 31, 2014
Company	Ownership		Investment
			(in thousands)
AEP	39.17	%	$	3,978
OPCo	4.30	%	430
Total	43.47	%	$	4,408

OVEC’s owners, along with APCo and I&M, are members to an intercompany power agreement.  Participants of this agreement are entitled to receive and obligated to pay for all OVEC generating capacity, approximately 2,200 MWs, in proportion to their respective power participation ratios.  The aggregate power participation ratio of certain AEP utility subsidiaries, including APCo, I&M and OPCo, is 43.47%.  The proceeds from the sale of power by OVEC are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and provide a return on capital.  The intercompany power agreement ends in June 2040.

AEP, OPCo and other nonaffiliated owners authorized environmental investments related to their ownership interests. OVEC financed capital expenditures totaling $1.3 billion in connection with the engineering and construction of FGD projects and the associated waste disposal landfills at its two generation plants.  These environmental projects were funded through debt issuances.  As of December 31, 2014, both generation plants were operating with environmental controls.

Purchased Power from OVEC

The amounts of power purchased by the Registrant Subsidiaries from OVEC for the years ended December 31, 2014, 2013 and 2012 were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	96,905	$	104,396	$	98,417
I&M	48,487		52,230		49,239
OPCo	123,101		132,607		125,013

The amounts shown above are recoverable from customers and are included in Purchased Electricity for Resale on the statements of income.

Sales and Purchases of Property

Certain AEP subsidiaries had affiliated sales and purchases of electric property individually amounting to $100 thousand or more, sales and purchases of meters and transformers, and sales and purchases of transmission property.  There were no gains or losses recorded on the transactions.  The following tables show the sales and purchases, recorded at net book value, for the years ended December 31, 2014, 2013 and 2012:

Sales

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	3,031	$	3,212	$	6,643
I&M	1,256		5,031		3,296
OPCo	532		59,818		4,163
PSO	510		5,651		1,782
SWEPCo	1,216		1,617		1,731

Purchases

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	860	$	5,199	$	2,522
I&M	1,352		964		285
OPCo	1,902		5,311		10,608
PSO	2,079		1,710		1,867
SWEPCo	4,023		8,440		7,266

The amounts above are recorded in Property, Plant and Equipment on the balance sheets.

Intercompany Billings

The Registrant Subsidiaries and other AEP subsidiaries perform certain utility services for each other when necessary or practical.  The costs of these services are billed on a direct-charge basis, whenever possible, or on reasonable basis of proration for services that benefit multiple companies.  The billings for services are made at cost and include no compensation for the use of equity capital.

Public Service Co Of Oklahoma [Member]

Related Party Transactions

RELATED PARTY TRANSACTIONS

For other related party transactions, also see “AEP System Tax Allocation Agreement” section of Note 12 in addition to “Utility Money Pool – AEP System” and “Sale of Receivables – AEP Credit” sections of Note 14.

Interconnection Agreement

In accordance with management’s December 2010 announcement and October 2012 filing with the FERC, the Interconnection Agreement was terminated effective January 1, 2014.  The AEP System Interim Allowance Agreement which provided for, among other things, the transfer of SO₂ emission allowances associated with transactions under the Interconnection Agreement was also terminated.

APCo, I&M, KPCo, OPCo and AEPSC were parties to the Interconnection Agreement which defined the sharing of costs and benefits associated with the respective generation plants.  This sharing was based upon each AEP utility subsidiary’s MLR and was calculated monthly on the basis of each AEP utility subsidiary’s maximum peak demand in relation to the sum of the maximum peak demands of all four AEP utility subsidiaries during the preceding 12 months.

Effective January 1, 2014, the FERC approved the following agreements. See "Corporate Separation" section of Note 1.

• A Power Coordination Agreement among APCo, I&M and KPCo with AEPSC as the agent to coordinate the participants’ respective power supply resources.

• A Bridge Agreement among AGR, APCo, I&M, KPCo and OPCo with AEPSC as the agent to address open commitments related to the termination of the Interconnection Agreement and responsibilities to PJM.

• A Power Supply Agreement between AGR and OPCo for AGR to supply capacity and the energy needs of OPCo's retail load.

AEPSC conducts power, coal, natural gas, interest rate and, to a lesser extent, heating oil, gasoline and other risk management activities on behalf of APCo, I&M, KPCo, PSO and SWEPCo. Effective January 1, 2014, power and natural gas risk management activities for APCo, I&M and KPCo are allocated based on the three member companies’ respective equity positions, while power and natural gas risk management activities for PSO and SWEPCo are allocated based on the Operating Agreement. Prior to January 1, 2014, power and natural gas risk management activities were allocated under the SIA to former members of the Interconnection Agreement, PSO and SWEPCo. Risk management activities primarily include power and natural gas physical transactions, financially-settled swaps and exchange-traded futures.  AEPSC settles the majority of the physical forward contracts by entering into offsetting contracts. Effective January 1, 2014 and with the transfer of OPCo’s generation assets to AGR, AEPSC conducts only gasoline, diesel fuel, energy procurement and FTR price risk management activities on OPCo’s behalf.

Operating Agreement

PSO, SWEPCo and AEPSC are parties to the Operating Agreement which was approved by the FERC.  The Operating Agreement requires PSO and SWEPCo to maintain adequate annual planning reserve margins and requires that capacity in excess of the required margins be made available for sale to other operating companies as capacity commitments. In January 2014, the FERC approved a modification of the Operating Agreement to address changes resulting from an anticipated March 2014 SPP power market change. Subsequently and in March 2014, SPP changed from an energy imbalance service market to a fully integrated power market. In alignment with the new SPP integrated power market and according to the modified Operating Agreement, PSO and SWEPCo operate as standalone entities and offer their respective generation into the SPP power market. SPP then economically dispatches resources. By offering their resources separately, PSO and SWEPCo no longer purchase or sell energy to each other to serve their respective internal load or off-system sales.

System Integration Agreement (SIA)

Under the SIA, AEPSC allocates physical and financial revenues and expenses from transactions with neighboring utilities, power marketers and other power and natural gas risk management activities based upon the location of such activity. Margins resulting from trading and marketing activities originating in PJM and MISO generally accrue to the benefit of APCo, I&M and KPCo, while trading and marketing activities originating in SPP generally accrue to the benefit of PSO and SWEPCo.  Margins resulting from other transactions are allocated among APCo, I&M, KPCo, PSO and SWEPCo based upon the equity positions of these companies.

The SIA was designed to function as an umbrella agreement in addition to the Interconnection Agreement (prior to January 1, 2014) and the Operating Agreement, each of which controlled the distribution of revenues and expenses.

Affiliated Revenues and Purchases

The following tables show the revenues derived from sales under the Interconnection Agreement, direct sales to affiliates, net transmission agreement sales and other revenues for the years ended December 31, 2014, 2013 and 2012:

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Sales under Interconnection Agreement (a)	$	184		$	503	$	1,121	$	—	$	—
Direct Sales to East Affiliates	141,721			—		—		3,765		10,048
Direct Sales to West Affiliates	614			363		—		—		328
Direct Sales to AEPEP	—			—		44,121		—		—
Transmission Agreement and Transmission Coordination Agreement Sales	(1,665		)	1,675		104,052		8		14,119
Other Revenues	3,583			1,657		15,922		3,281		1,783
Total Affiliated Revenues	$	144,437		$	4,198	$	165,216	$	7,054	$	26,278

Related Party Revenues	APCo		I&M			OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Sales under Interconnection Agreement	$	193,651	$	218,164		$	924,313	$	—	$	—
Direct Sales to East Affiliates	129,014		—			152,689		14		1
Direct Sales to West Affiliates	578		391			804		10,761		35,410
Direct Sales to AEPEP	—		—			—		—		(136		)
Transmission Agreement and Transmission Coordination Agreement Sales	461		(681		)	53,405		—		14,715
Other Revenues	23,780		1,525			35,643		3,471		1,822
Total Affiliated Revenues	$	347,484	$	219,399		$	1,166,854	$	14,246	$	51,812

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Sales under Interconnection Agreement	$	166,733		$	265,923	$	643,486	$	—	$	—
Direct Sales to East Affiliates	124,519			—		136,142		34		142
Direct Sales to West Affiliates	314			218		454		18,861		23,695
Direct Sales to AEPEP	—			—		—		—		(583		)
Transmission Agreement and Transmission Coordination Agreement Sales	(1,289		)	758		26,295		8		12,338
Other Revenues	27,922			1,509		40,917		3,700		1,849
Total Affiliated Revenues	$	318,199		$	268,408	$	847,294	$	22,603	$	37,441

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The following tables show the purchased power expenses incurred for purchases under the Interconnection Agreement and from affiliates for the years ended December 31, 2014, 2013 and 2012:

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Purchases under Interconnection Agreement (a)	$	4,661	$	1,635	$	140	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		976		1
Direct Purchases from West Affiliates	—		—		—		10,048		3,765
Direct Purchases from AGR	—		—		1,148,216		—		—
Direct Purchases from AEPEP	—		—		44,344		—		—
Direct Purchases from AEGCo	—		268,337		—		—		—
Total Affiliated Purchases	$	4,661	$	269,972	$	1,192,700	$	11,024	$	3,766

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Purchases under Interconnection Agreement	$	830,954	$	181,688	$	199,283	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		1,481		411
Direct Purchases from West Affiliates	5		3		6		35,410		10,761
Direct Purchases from AEGCo	—		251,518		148,459		—		—
Natural Gas Purchases from AEPES	—		—		1,984		—		—
Total Affiliated Purchases	$	830,959	$	433,209	$	349,732	$	36,891	$	11,172

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Purchases under Interconnection Agreement	$	661,185	$	147,502	$	174,240	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		683		368
Direct Purchases from West Affiliates	53		36		75		23,695		18,861
Direct Purchases from AEGCo	—		238,866		203,583		—		—
Natural Gas Purchases from AEPES	—		—		2,808		—		—
Total Affiliated Purchases	$	661,238	$	386,404	$	380,706	$	24,378	$	19,229

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The above summarized related party revenues and expenses are reported in Sales to AEP Affiliates and Purchased Electricity from AEP Affiliates on the Registrant Subsidiaries’ statements of income.  Since the Registrant Subsidiaries are included in AEP’s consolidated results, the above summarized related party transactions are eliminated in total in AEP’s consolidated revenues and expenses.

System Transmission Integration Agreement (STIA)

AEP’s STIA provided for the integration and coordination of the planning, operation and maintenance of transmission facilities. Since the FERC approved the cancellation of the STIA effective June 1, 2014, the coordinated planning, operation and maintenance of transmission facilities are the responsibility of the RTOs and the STIA is no longer necessary. Similar to the SIA, the STIA functioned as an umbrella agreement in addition to the Transmission Agreement (TA) and the Transmission Coordination Agreement (TCA). The TA and TCA are both still active. The STIA contained two service schedules that governed:

• The allocation of transmission costs and revenues.

• The allocation of third-party transmission costs and revenues and AEP System dispatch costs.

APCo, I&M, KGPCo, KPCo, OPCo and WPCo are parties to the TA, effective November 2010, which defines how transmission costs through PJM OATT are allocated among the AEP East Companies, KGPCo and WPCo on a 12-month average coincident peak basis.

The following table shows the net charges recorded by the Registrant Subsidiaries for the years ended December 31, 2014, 2013 and 2012 related to the TA:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	84,667	$	40,609	$	20,264
I&M	39,707		19,947		5,689
OPCo	16,989		8,946		6,090

The charges shown above are recorded in Other Operation expenses on the statements of income.

PSO, SWEPCo and AEPSC are parties to the TCA, dated January 1, 1997, by and among PSO, SWEPCo and AEPSC, in connection with the operation of the transmission assets of the two AEP utility subsidiaries.  The TCA has been approved by the FERC and establishes a coordinating committee, which is charged with overseeing the coordinated planning of the transmission facilities of the parties to the agreement.  This includes the performance of transmission planning studies, the interaction of such companies with independent system operators (ISO) and other regional bodies interested in transmission planning and compliance with the terms of the OATT filed with the FERC and the rules of the FERC relating to such a tariff.

Under the TCA, the parties to the agreement delegated to AEPSC the responsibility of monitoring the reliability of their transmission systems and administering the OATT on their behalf.  The allocations have been governed by the FERC-approved OATT for the SPP.

The following table shows the net (revenues) expenses allocated among parties to the TCA pursuant to the SPP OATT protocols as described above for the years ended December 31, 2014, 2013 and 2012:

	Years Ended December 31,
Company	2014			2013			2012
	(in thousands)
PSO	$	14,100		$	14,700		$	12,300
SWEPCo	(14,100		)	(14,700		)	(12,300		)

The net (revenues) expenses shown above are recorded in Sales to AEP Affiliates on SWEPCo’s statements of income and Other Operation expenses on PSO’s statements of income.

Unit Power Agreements (UPA)

Lawrenceburg UPA

In March 2007, OPCo and AEGCo entered into a 10-year UPA for the entire output from the Lawrenceburg Generating Station effective with AEGCo’s purchase of the plant in May 2007.  Effective January 1, 2014, the Lawrenceburg UPA was assigned by OPCo to AGR. The UPA has an option for an additional two-year period.  I&M operates the plant under an agreement with AEGCo.  Under the UPA, AGR pays AEGCo for the capacity, depreciation, fuel, operation and maintenance and tax expenses.  These payments are due regardless of whether the plant is operating.  The fuel and operation and maintenance payments are based on actual costs incurred.  All expenses are trued up periodically.

UPA between AEGCo and I&M

A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the power (and the energy associated therewith) available to AEGCo at the Rockport Plant unless it is sold to another utility.  Subsequently, I&M assigns 30% of the power to KPCo.  See the "UPA between AEGCo and KPCo" section below.  I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.  The I&M Power Agreement will continue in effect until the expiration of the lease term of Unit 2 of the Rockport Plant unless extended in specified circumstances.

UPA between AEGCo and KPCo

Pursuant to an assignment between I&M and KPCo and a UPA between KPCo and AEGCo, AEGCo sells KPCo 30% of the power (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant.  KPCo pays to AEGCo in consideration for the right to receive such power the same amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement.  The KPCo UPA ends in December 2022.

Cook Coal Terminal

On August 1, 2013, OPCo transferred ownership of Cook Coal Terminal to AEGCo.  Cook Coal Terminal performs coal transloading and storage services at cost for APCo, I&M and OPCo.  OPCo included revenues for these services in Other Revenues – Affiliated and expenses in Other Operation expenses on the statements of income.  The coal transloading expenses in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
APCo	$	1	$	—
I&M	16,186		6,820
OPCo	—		322

OPCo

	Years Ended December 31,
Company	2013				2012
	(in thousands)
APCo	$	(11	)	(a)	$	942
I&M	15,596			(b)	32,639		(b)

(a) Includes annual true-up of 2012 estimated revenues.

(b) Includes $7.3 million and $14.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M and OPCo recorded the cost of transloading services in Fuel on the balance sheet.

Cook Coal Terminal also performs railcar maintenance services at cost for APCo, I&M, PSO and SWEPCo.  Beginning on August 1, 2013, Cook Coal Terminal also performs railcar maintenance services at cost for OPCo.  OPCo included revenues for these services in Sales to AEP Affiliates and expenses in Other Operation expenses on the statements of income.  The railcar maintenance revenues in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
I&M	$	2,497	$	1,073
OPCo	—		41
PSO	310		106
SWEPCo	3,275		1,237

OPCo

	Years Ended December 31,
Company	2013			2012
	(in thousands)
APCo	$	3		$	88
I&M	1,285		(a)	3,343		(a)
PSO	59			281
SWEPCo	1,204			2,102

(a) Includes $608 thousand and $1.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M, OPCo, PSO and SWEPCo recorded the cost of the railcar maintenance services in Fuel on the balance sheets.

SWEPCo Railcar Facility

SWEPCo operates a railcar maintenance facility in Alliance, Nebraska.  The facility performs maintenance on its own railcars as well as railcars belonging to I&M, PSO and third parties.  SWEPCo billed I&M $508 thousand and $873 thousand for railcar services provided in 2014 and 2013, respectively, and billed PSO $496 thousand and $279 thousand in 2014 and 2013, respectively.  These billings for SWEPCo, and costs for I&M and PSO, are recorded in Fuel on the balance sheets.

I&M Barging, Urea Transloading and Other Services

I&M provides barging, urea transloading and other transportation services to affiliates.  Urea is a chemical used to control NO_x emissions at certain generation plants in the AEP System.  I&M recorded revenues from barging, transloading and other services in Other Revenues – Affiliated on the statements of income.  The affiliated companies recorded these costs paid to I&M as fuel expenses or other operation expenses.  The amounts of affiliated expenses were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	22,746	$	19,719	$	19,961
AGR	5,195		—		—
APCo	36,064		30,876		34,725
KPCo	5,031		50		74
OPCo	—		40,562		39,956
AEP River Operations LLC – (Nonutility Subsidiary of AEP)	25,253		22,648		20,917

Services Provided by AEP River Operations LLC

AEP River Operations LLC provides services for barge towing, chartering and general and administrative expenses to I&M.  The costs are recorded by I&M as Other Operation expenses.  For the years ended December 31, 2014, 2013 and 2012, I&M recorded expenses of $24 million, $24 million and $24 million, respectively, for these activities.

Central Machine Shop

APCo operates a facility which repairs and rebuilds specialized components for the generation plants across the AEP System.  APCo defers the cost of performing these services on the balance sheet, then transfers the cost to the affiliate for reimbursement.  The AEP subsidiaries recorded these billings as capital or maintenance expenses depending on the nature of the services received.  These billings are recoverable from customers.  The following table provides the amounts billed by APCo to the following affiliates:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	70	$	26	$	80
AGR	2,842		—		—
I&M	1,704		2,451		1,280
KPCo	1,180		687		277
OPCo	—		4,679		3,838
PSO	321		606		1,198
SWEPCo	72		168		145

Affiliate Railcar Agreement

Certain AEP subsidiaries have an agreement providing for the use of each other’s leased or owned railcars when available.  The agreement specifies that the company using the railcar will be billed, at cost, by the company furnishing the railcar.  The AEP subsidiaries recorded these costs or reimbursements as costs or reduction of costs, respectively, in Fuel on the balance sheets and such costs are recoverable from customers.  The following tables show the net effect of the railcar agreement on the balance sheets:

December 31, 2014
Billing Company
Billed Company		APCo			I&M		PSO		SWEPCo
	(in thousands)
AGR		$	(27	)	$	—	$	—	$	—
I&M		331			—		133		1,078
PSO		56			1,275		—		652
SWEPCo		96			2,159		183		—

December 31, 2013
Billing Company
Billed Company	AGR			APCo		I&M		PSO		SWEPCo
	(in thousands)
AGR	$	—		$	698	$	33	$	2	$	19
APCo	775			—		—		—		—
I&M	(391		)	507		—		195		854
PSO	(90		)	20		595		—		329
SWEPCo	(245		)	140		1,395		43		—

OVEC

AEP, OPCo and several nonaffiliated utility companies jointly own OVEC.  As of December 31, 2014, AEP’s and OPCo’s ownership and investment in OVEC were as follows:

	December 31, 2014
Company	Ownership		Investment
			(in thousands)
AEP	39.17	%	$	3,978
OPCo	4.30	%	430
Total	43.47	%	$	4,408

OVEC’s owners, along with APCo and I&M, are members to an intercompany power agreement.  Participants of this agreement are entitled to receive and obligated to pay for all OVEC generating capacity, approximately 2,200 MWs, in proportion to their respective power participation ratios.  The aggregate power participation ratio of certain AEP utility subsidiaries, including APCo, I&M and OPCo, is 43.47%.  The proceeds from the sale of power by OVEC are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and provide a return on capital.  The intercompany power agreement ends in June 2040.

AEP, OPCo and other nonaffiliated owners authorized environmental investments related to their ownership interests. OVEC financed capital expenditures totaling $1.3 billion in connection with the engineering and construction of FGD projects and the associated waste disposal landfills at its two generation plants.  These environmental projects were funded through debt issuances.  As of December 31, 2014, both generation plants were operating with environmental controls.

Purchased Power from OVEC

The amounts of power purchased by the Registrant Subsidiaries from OVEC for the years ended December 31, 2014, 2013 and 2012 were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	96,905	$	104,396	$	98,417
I&M	48,487		52,230		49,239
OPCo	123,101		132,607		125,013

The amounts shown above are recoverable from customers and are included in Purchased Electricity for Resale on the statements of income.

Sales and Purchases of Property

Certain AEP subsidiaries had affiliated sales and purchases of electric property individually amounting to $100 thousand or more, sales and purchases of meters and transformers, and sales and purchases of transmission property.  There were no gains or losses recorded on the transactions.  The following tables show the sales and purchases, recorded at net book value, for the years ended December 31, 2014, 2013 and 2012:

Sales

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	3,031	$	3,212	$	6,643
I&M	1,256		5,031		3,296
OPCo	532		59,818		4,163
PSO	510		5,651		1,782
SWEPCo	1,216		1,617		1,731

Purchases

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	860	$	5,199	$	2,522
I&M	1,352		964		285
OPCo	1,902		5,311		10,608
PSO	2,079		1,710		1,867
SWEPCo	4,023		8,440		7,266

The amounts above are recorded in Property, Plant and Equipment on the balance sheets.

Intercompany Billings

The Registrant Subsidiaries and other AEP subsidiaries perform certain utility services for each other when necessary or practical.  The costs of these services are billed on a direct-charge basis, whenever possible, or on reasonable basis of proration for services that benefit multiple companies.  The billings for services are made at cost and include no compensation for the use of equity capital.

Southwestern Electric Power Co [Member]

Related Party Transactions

RELATED PARTY TRANSACTIONS

For other related party transactions, also see “AEP System Tax Allocation Agreement” section of Note 12 in addition to “Utility Money Pool – AEP System” and “Sale of Receivables – AEP Credit” sections of Note 14.

Interconnection Agreement

In accordance with management’s December 2010 announcement and October 2012 filing with the FERC, the Interconnection Agreement was terminated effective January 1, 2014.  The AEP System Interim Allowance Agreement which provided for, among other things, the transfer of SO₂ emission allowances associated with transactions under the Interconnection Agreement was also terminated.

APCo, I&M, KPCo, OPCo and AEPSC were parties to the Interconnection Agreement which defined the sharing of costs and benefits associated with the respective generation plants.  This sharing was based upon each AEP utility subsidiary’s MLR and was calculated monthly on the basis of each AEP utility subsidiary’s maximum peak demand in relation to the sum of the maximum peak demands of all four AEP utility subsidiaries during the preceding 12 months.

Effective January 1, 2014, the FERC approved the following agreements. See "Corporate Separation" section of Note 1.

• A Power Coordination Agreement among APCo, I&M and KPCo with AEPSC as the agent to coordinate the participants’ respective power supply resources.

• A Bridge Agreement among AGR, APCo, I&M, KPCo and OPCo with AEPSC as the agent to address open commitments related to the termination of the Interconnection Agreement and responsibilities to PJM.

• A Power Supply Agreement between AGR and OPCo for AGR to supply capacity and the energy needs of OPCo's retail load.

AEPSC conducts power, coal, natural gas, interest rate and, to a lesser extent, heating oil, gasoline and other risk management activities on behalf of APCo, I&M, KPCo, PSO and SWEPCo. Effective January 1, 2014, power and natural gas risk management activities for APCo, I&M and KPCo are allocated based on the three member companies’ respective equity positions, while power and natural gas risk management activities for PSO and SWEPCo are allocated based on the Operating Agreement. Prior to January 1, 2014, power and natural gas risk management activities were allocated under the SIA to former members of the Interconnection Agreement, PSO and SWEPCo. Risk management activities primarily include power and natural gas physical transactions, financially-settled swaps and exchange-traded futures.  AEPSC settles the majority of the physical forward contracts by entering into offsetting contracts. Effective January 1, 2014 and with the transfer of OPCo’s generation assets to AGR, AEPSC conducts only gasoline, diesel fuel, energy procurement and FTR price risk management activities on OPCo’s behalf.

Operating Agreement

PSO, SWEPCo and AEPSC are parties to the Operating Agreement which was approved by the FERC.  The Operating Agreement requires PSO and SWEPCo to maintain adequate annual planning reserve margins and requires that capacity in excess of the required margins be made available for sale to other operating companies as capacity commitments. In January 2014, the FERC approved a modification of the Operating Agreement to address changes resulting from an anticipated March 2014 SPP power market change. Subsequently and in March 2014, SPP changed from an energy imbalance service market to a fully integrated power market. In alignment with the new SPP integrated power market and according to the modified Operating Agreement, PSO and SWEPCo operate as standalone entities and offer their respective generation into the SPP power market. SPP then economically dispatches resources. By offering their resources separately, PSO and SWEPCo no longer purchase or sell energy to each other to serve their respective internal load or off-system sales.

System Integration Agreement (SIA)

Under the SIA, AEPSC allocates physical and financial revenues and expenses from transactions with neighboring utilities, power marketers and other power and natural gas risk management activities based upon the location of such activity. Margins resulting from trading and marketing activities originating in PJM and MISO generally accrue to the benefit of APCo, I&M and KPCo, while trading and marketing activities originating in SPP generally accrue to the benefit of PSO and SWEPCo.  Margins resulting from other transactions are allocated among APCo, I&M, KPCo, PSO and SWEPCo based upon the equity positions of these companies.

The SIA was designed to function as an umbrella agreement in addition to the Interconnection Agreement (prior to January 1, 2014) and the Operating Agreement, each of which controlled the distribution of revenues and expenses.

Affiliated Revenues and Purchases

The following tables show the revenues derived from sales under the Interconnection Agreement, direct sales to affiliates, net transmission agreement sales and other revenues for the years ended December 31, 2014, 2013 and 2012:

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Sales under Interconnection Agreement (a)	$	184		$	503	$	1,121	$	—	$	—
Direct Sales to East Affiliates	141,721			—		—		3,765		10,048
Direct Sales to West Affiliates	614			363		—		—		328
Direct Sales to AEPEP	—			—		44,121		—		—
Transmission Agreement and Transmission Coordination Agreement Sales	(1,665		)	1,675		104,052		8		14,119
Other Revenues	3,583			1,657		15,922		3,281		1,783
Total Affiliated Revenues	$	144,437		$	4,198	$	165,216	$	7,054	$	26,278

Related Party Revenues	APCo		I&M			OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Sales under Interconnection Agreement	$	193,651	$	218,164		$	924,313	$	—	$	—
Direct Sales to East Affiliates	129,014		—			152,689		14		1
Direct Sales to West Affiliates	578		391			804		10,761		35,410
Direct Sales to AEPEP	—		—			—		—		(136		)
Transmission Agreement and Transmission Coordination Agreement Sales	461		(681		)	53,405		—		14,715
Other Revenues	23,780		1,525			35,643		3,471		1,822
Total Affiliated Revenues	$	347,484	$	219,399		$	1,166,854	$	14,246	$	51,812

Related Party Revenues	APCo			I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Sales under Interconnection Agreement	$	166,733		$	265,923	$	643,486	$	—	$	—
Direct Sales to East Affiliates	124,519			—		136,142		34		142
Direct Sales to West Affiliates	314			218		454		18,861		23,695
Direct Sales to AEPEP	—			—		—		—		(583		)
Transmission Agreement and Transmission Coordination Agreement Sales	(1,289		)	758		26,295		8		12,338
Other Revenues	27,922			1,509		40,917		3,700		1,849
Total Affiliated Revenues	$	318,199		$	268,408	$	847,294	$	22,603	$	37,441

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The following tables show the purchased power expenses incurred for purchases under the Interconnection Agreement and from affiliates for the years ended December 31, 2014, 2013 and 2012:

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2014
Purchases under Interconnection Agreement (a)	$	4,661	$	1,635	$	140	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		976		1
Direct Purchases from West Affiliates	—		—		—		10,048		3,765
Direct Purchases from AGR	—		—		1,148,216		—		—
Direct Purchases from AEPEP	—		—		44,344		—		—
Direct Purchases from AEGCo	—		268,337		—		—		—
Total Affiliated Purchases	$	4,661	$	269,972	$	1,192,700	$	11,024	$	3,766

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2013
Purchases under Interconnection Agreement	$	830,954	$	181,688	$	199,283	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		1,481		411
Direct Purchases from West Affiliates	5		3		6		35,410		10,761
Direct Purchases from AEGCo	—		251,518		148,459		—		—
Natural Gas Purchases from AEPES	—		—		1,984		—		—
Total Affiliated Purchases	$	830,959	$	433,209	$	349,732	$	36,891	$	11,172

Related Party Purchases	APCo		I&M		OPCo		PSO		SWEPCo
	(in thousands)
Year Ended December 31, 2012
Purchases under Interconnection Agreement	$	661,185	$	147,502	$	174,240	$	—	$	—
Direct Purchases from East Affiliates	—		—		—		683		368
Direct Purchases from West Affiliates	53		36		75		23,695		18,861
Direct Purchases from AEGCo	—		238,866		203,583		—		—
Natural Gas Purchases from AEPES	—		—		2,808		—		—
Total Affiliated Purchases	$	661,238	$	386,404	$	380,706	$	24,378	$	19,229

(a)    Includes December 2013 true-up activity subsequent to agreement termination.

The above summarized related party revenues and expenses are reported in Sales to AEP Affiliates and Purchased Electricity from AEP Affiliates on the Registrant Subsidiaries’ statements of income.  Since the Registrant Subsidiaries are included in AEP’s consolidated results, the above summarized related party transactions are eliminated in total in AEP’s consolidated revenues and expenses.

System Transmission Integration Agreement (STIA)

AEP’s STIA provided for the integration and coordination of the planning, operation and maintenance of transmission facilities. Since the FERC approved the cancellation of the STIA effective June 1, 2014, the coordinated planning, operation and maintenance of transmission facilities are the responsibility of the RTOs and the STIA is no longer necessary. Similar to the SIA, the STIA functioned as an umbrella agreement in addition to the Transmission Agreement (TA) and the Transmission Coordination Agreement (TCA). The TA and TCA are both still active. The STIA contained two service schedules that governed:

• The allocation of transmission costs and revenues.

• The allocation of third-party transmission costs and revenues and AEP System dispatch costs.

APCo, I&M, KGPCo, KPCo, OPCo and WPCo are parties to the TA, effective November 2010, which defines how transmission costs through PJM OATT are allocated among the AEP East Companies, KGPCo and WPCo on a 12-month average coincident peak basis.

The following table shows the net charges recorded by the Registrant Subsidiaries for the years ended December 31, 2014, 2013 and 2012 related to the TA:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	84,667	$	40,609	$	20,264
I&M	39,707		19,947		5,689
OPCo	16,989		8,946		6,090

The charges shown above are recorded in Other Operation expenses on the statements of income.

PSO, SWEPCo and AEPSC are parties to the TCA, dated January 1, 1997, by and among PSO, SWEPCo and AEPSC, in connection with the operation of the transmission assets of the two AEP utility subsidiaries.  The TCA has been approved by the FERC and establishes a coordinating committee, which is charged with overseeing the coordinated planning of the transmission facilities of the parties to the agreement.  This includes the performance of transmission planning studies, the interaction of such companies with independent system operators (ISO) and other regional bodies interested in transmission planning and compliance with the terms of the OATT filed with the FERC and the rules of the FERC relating to such a tariff.

Under the TCA, the parties to the agreement delegated to AEPSC the responsibility of monitoring the reliability of their transmission systems and administering the OATT on their behalf.  The allocations have been governed by the FERC-approved OATT for the SPP.

The following table shows the net (revenues) expenses allocated among parties to the TCA pursuant to the SPP OATT protocols as described above for the years ended December 31, 2014, 2013 and 2012:

	Years Ended December 31,
Company	2014			2013			2012
	(in thousands)
PSO	$	14,100		$	14,700		$	12,300
SWEPCo	(14,100		)	(14,700		)	(12,300		)

The net (revenues) expenses shown above are recorded in Sales to AEP Affiliates on SWEPCo’s statements of income and Other Operation expenses on PSO’s statements of income.

Unit Power Agreements (UPA)

Lawrenceburg UPA

In March 2007, OPCo and AEGCo entered into a 10-year UPA for the entire output from the Lawrenceburg Generating Station effective with AEGCo’s purchase of the plant in May 2007.  Effective January 1, 2014, the Lawrenceburg UPA was assigned by OPCo to AGR. The UPA has an option for an additional two-year period.  I&M operates the plant under an agreement with AEGCo.  Under the UPA, AGR pays AEGCo for the capacity, depreciation, fuel, operation and maintenance and tax expenses.  These payments are due regardless of whether the plant is operating.  The fuel and operation and maintenance payments are based on actual costs incurred.  All expenses are trued up periodically.

UPA between AEGCo and I&M

A UPA between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the power (and the energy associated therewith) available to AEGCo at the Rockport Plant unless it is sold to another utility.  Subsequently, I&M assigns 30% of the power to KPCo.  See the "UPA between AEGCo and KPCo" section below.  I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) net of amounts received by AEGCo from any other sources, sufficient to enable AEGCo to pay all its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by the FERC.  The I&M Power Agreement will continue in effect until the expiration of the lease term of Unit 2 of the Rockport Plant unless extended in specified circumstances.

UPA between AEGCo and KPCo

Pursuant to an assignment between I&M and KPCo and a UPA between KPCo and AEGCo, AEGCo sells KPCo 30% of the power (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant.  KPCo pays to AEGCo in consideration for the right to receive such power the same amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement.  The KPCo UPA ends in December 2022.

Cook Coal Terminal

On August 1, 2013, OPCo transferred ownership of Cook Coal Terminal to AEGCo.  Cook Coal Terminal performs coal transloading and storage services at cost for APCo, I&M and OPCo.  OPCo included revenues for these services in Other Revenues – Affiliated and expenses in Other Operation expenses on the statements of income.  The coal transloading expenses in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
APCo	$	1	$	—
I&M	16,186		6,820
OPCo	—		322

OPCo

	Years Ended December 31,
Company	2013				2012
	(in thousands)
APCo	$	(11	)	(a)	$	942
I&M	15,596			(b)	32,639		(b)

(a) Includes annual true-up of 2012 estimated revenues.

(b) Includes $7.3 million and $14.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M and OPCo recorded the cost of transloading services in Fuel on the balance sheet.

Cook Coal Terminal also performs railcar maintenance services at cost for APCo, I&M, PSO and SWEPCo.  Beginning on August 1, 2013, Cook Coal Terminal also performs railcar maintenance services at cost for OPCo.  OPCo included revenues for these services in Sales to AEP Affiliates and expenses in Other Operation expenses on the statements of income.  The railcar maintenance revenues in 2014, 2013 and 2012 were as follows:

AEGCo

	Years Ended December 31,
Company	2014		2013
	(in thousands)
I&M	$	2,497	$	1,073
OPCo	—		41
PSO	310		106
SWEPCo	3,275		1,237

OPCo

	Years Ended December 31,
Company	2013			2012
	(in thousands)
APCo	$	3		$	88
I&M	1,285		(a)	3,343		(a)
PSO	59			281
SWEPCo	1,204			2,102

(a) Includes $608 thousand and $1.5 million in 2013 and 2012, respectively, of amounts purchased by I&M on behalf of AEGCo for Rockport Plant through July 31, 2013.

APCo, I&M, OPCo, PSO and SWEPCo recorded the cost of the railcar maintenance services in Fuel on the balance sheets.

SWEPCo Railcar Facility

SWEPCo operates a railcar maintenance facility in Alliance, Nebraska.  The facility performs maintenance on its own railcars as well as railcars belonging to I&M, PSO and third parties.  SWEPCo billed I&M $508 thousand and $873 thousand for railcar services provided in 2014 and 2013, respectively, and billed PSO $496 thousand and $279 thousand in 2014 and 2013, respectively.  These billings for SWEPCo, and costs for I&M and PSO, are recorded in Fuel on the balance sheets.

I&M Barging, Urea Transloading and Other Services

I&M provides barging, urea transloading and other transportation services to affiliates.  Urea is a chemical used to control NO_x emissions at certain generation plants in the AEP System.  I&M recorded revenues from barging, transloading and other services in Other Revenues – Affiliated on the statements of income.  The affiliated companies recorded these costs paid to I&M as fuel expenses or other operation expenses.  The amounts of affiliated expenses were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	22,746	$	19,719	$	19,961
AGR	5,195		—		—
APCo	36,064		30,876		34,725
KPCo	5,031		50		74
OPCo	—		40,562		39,956
AEP River Operations LLC – (Nonutility Subsidiary of AEP)	25,253		22,648		20,917

Services Provided by AEP River Operations LLC

AEP River Operations LLC provides services for barge towing, chartering and general and administrative expenses to I&M.  The costs are recorded by I&M as Other Operation expenses.  For the years ended December 31, 2014, 2013 and 2012, I&M recorded expenses of $24 million, $24 million and $24 million, respectively, for these activities.

Central Machine Shop

APCo operates a facility which repairs and rebuilds specialized components for the generation plants across the AEP System.  APCo defers the cost of performing these services on the balance sheet, then transfers the cost to the affiliate for reimbursement.  The AEP subsidiaries recorded these billings as capital or maintenance expenses depending on the nature of the services received.  These billings are recoverable from customers.  The following table provides the amounts billed by APCo to the following affiliates:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
AEGCo	$	70	$	26	$	80
AGR	2,842		—		—
I&M	1,704		2,451		1,280
KPCo	1,180		687		277
OPCo	—		4,679		3,838
PSO	321		606		1,198
SWEPCo	72		168		145

Affiliate Railcar Agreement

Certain AEP subsidiaries have an agreement providing for the use of each other’s leased or owned railcars when available.  The agreement specifies that the company using the railcar will be billed, at cost, by the company furnishing the railcar.  The AEP subsidiaries recorded these costs or reimbursements as costs or reduction of costs, respectively, in Fuel on the balance sheets and such costs are recoverable from customers.  The following tables show the net effect of the railcar agreement on the balance sheets:

December 31, 2014
Billing Company
Billed Company		APCo			I&M		PSO		SWEPCo
	(in thousands)
AGR		$	(27	)	$	—	$	—	$	—
I&M		331			—		133		1,078
PSO		56			1,275		—		652
SWEPCo		96			2,159		183		—

December 31, 2013
Billing Company
Billed Company	AGR			APCo		I&M		PSO		SWEPCo
	(in thousands)
AGR	$	—		$	698	$	33	$	2	$	19
APCo	775			—		—		—		—
I&M	(391		)	507		—		195		854
PSO	(90		)	20		595		—		329
SWEPCo	(245		)	140		1,395		43		—

OVEC

AEP, OPCo and several nonaffiliated utility companies jointly own OVEC.  As of December 31, 2014, AEP’s and OPCo’s ownership and investment in OVEC were as follows:

	December 31, 2014
Company	Ownership		Investment
			(in thousands)
AEP	39.17	%	$	3,978
OPCo	4.30	%	430
Total	43.47	%	$	4,408

OVEC’s owners, along with APCo and I&M, are members to an intercompany power agreement.  Participants of this agreement are entitled to receive and obligated to pay for all OVEC generating capacity, approximately 2,200 MWs, in proportion to their respective power participation ratios.  The aggregate power participation ratio of certain AEP utility subsidiaries, including APCo, I&M and OPCo, is 43.47%.  The proceeds from the sale of power by OVEC are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and provide a return on capital.  The intercompany power agreement ends in June 2040.

AEP, OPCo and other nonaffiliated owners authorized environmental investments related to their ownership interests. OVEC financed capital expenditures totaling $1.3 billion in connection with the engineering and construction of FGD projects and the associated waste disposal landfills at its two generation plants.  These environmental projects were funded through debt issuances.  As of December 31, 2014, both generation plants were operating with environmental controls.

Purchased Power from OVEC

The amounts of power purchased by the Registrant Subsidiaries from OVEC for the years ended December 31, 2014, 2013 and 2012 were:

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	96,905	$	104,396	$	98,417
I&M	48,487		52,230		49,239
OPCo	123,101		132,607		125,013

The amounts shown above are recoverable from customers and are included in Purchased Electricity for Resale on the statements of income.

Sales and Purchases of Property

Certain AEP subsidiaries had affiliated sales and purchases of electric property individually amounting to $100 thousand or more, sales and purchases of meters and transformers, and sales and purchases of transmission property.  There were no gains or losses recorded on the transactions.  The following tables show the sales and purchases, recorded at net book value, for the years ended December 31, 2014, 2013 and 2012:

Sales

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	3,031	$	3,212	$	6,643
I&M	1,256		5,031		3,296
OPCo	532		59,818		4,163
PSO	510		5,651		1,782
SWEPCo	1,216		1,617		1,731

Purchases

	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	860	$	5,199	$	2,522
I&M	1,352		964		285
OPCo	1,902		5,311		10,608
PSO	2,079		1,710		1,867
SWEPCo	4,023		8,440		7,266

The amounts above are recorded in Property, Plant and Equipment on the balance sheets.

Intercompany Billings

The Registrant Subsidiaries and other AEP subsidiaries perform certain utility services for each other when necessary or practical.  The costs of these services are billed on a direct-charge basis, whenever possible, or on reasonable basis of proration for services that benefit multiple companies.  The billings for services are made at cost and include no compensation for the use of equity capital.