Business Segments

6 Months Ended

Jun. 30, 2015

Business Segments

BUSINESS SEGMENTS

Our primary business is the generation, transmission and distribution of electricity. Within our Vertically Integrated Utilities segment, we centrally dispatch generation assets and manage our overall utility operations on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight. Intersegment sales and transfers are generally based on underlying contractual arrangements and agreements.

Our reportable segments and their related business activities are outlined below:

Vertically Integrated Utilities

• Generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo.

Transmission and Distribution Utilities

• Transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by OPCo, TCC and TNC.

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

AEP Transmission Holdco

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

Generation & Marketing

• Nonregulated generation in ERCOT and PJM.

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

AEP River Operations

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

The remainder of our activities is presented as Corporate and Other.  While not considered a reportable segment, Corporate and Other primarily includes the purchasing of receivables from certain AEP utility subsidiaries. This segment also includes Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

The tables below present our reportable segment income statement information for the three and six months ended June 30, 2015 and 2014 and reportable segment balance sheet information as of June 30, 2015 and December 31, 2014.  These amounts include certain estimates and allocations where necessary.

	Vertically Integrated Utilities			Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing			AEP River Operations		Corporate and Other (a)			Reconciling Adjustments				Consolidated
	(in millions)
Three Months Ended   June 30, 2015
Revenues from:
External Customers	$	2,159		$	1,008	$	25	$	628		$	115	$	7		$	—		(c)	$	3,942
Other Operating Segments	24			53		74		173			13		17			(354		)		—
Total Revenues	$	2,183		$	1,061	$	99	$	801		$	128	$	24		$	(354	)		$	3,942
Net Income (Loss)	$	208		$	78	$	65	$	82		$	1	$	(3	)	$	—			$	431
	Vertically Integrated Utilities			Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing			AEP River Operations		Corporate and Other (a)			Reconciling Adjustments				Consolidated
	(in millions)
Three Months Ended   June 30, 2014
Revenues from:
External Customers	$	2,236	(b)	$	1,064	$	21	$	573	(b)	$	140	$	10		$	—		(c)	$	4,044
Other Operating Segments	16		(b)	70		36		340		(b)	20		12			(494		)		—
Total Revenues	$	2,252		$	1,134	$	57	$	913		$	160	$	22		$	(494	)		$	4,044
Net Income (Loss)	$	155		$	90	$	47	$	98		$	3	$	(2	)	$	—			$	391

	Vertically Integrated Utilities			Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing			AEP River Operations		Corporate and Other (a)			Reconciling Adjustments				Consolidated
	(in millions)
Six Months Ended   June 30, 2015
Revenues from:
External Customers	$	4,646		$	2,214	$	47	$	1,487		$	243	$	13		$	—		(c)	$	8,650
Other Operating Segments	42			117		110		484			24		37			(814		)		—
Total Revenues	$	4,688		$	2,331	$	157	$	1,971		$	267	$	50		$	(814	)		$	8,650
Net Income (Loss)	$	508		$	175	$	102	$	269		$	12	$	(4	)	$	—			$	1,062
	Vertically Integrated Utilities			Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing			AEP River Operations		Corporate and Other (a)			Reconciling Adjustments				Consolidated
	(in millions)
Six Months Ended   June 30, 2014
Revenues from:
External Customers	$	4,785	(b)	$	2,225	$	33	$	1,394	(b)	$	286	$	20		$	(51	)	(c)	$	8,692
Other Operating Segments	53		(b)	124		52		770		(b)	39		28			(1,066		)		—
Total Revenues	$	4,838		$	2,349	$	85	$	2,164		$	325	$	48		$	(1,117	)		$	8,692
Net Income (Loss)	$	434		$	187	$	71	$	261		$	6	$	(7	)	$	—			$	952

	Vertically Integrated Utilities		Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing		AEP River Operations		Corporate and Other (a)		Reconciling Adjustments				Consolidated
	(in millions)
June 30, 2015
Total Property, Plant and Equipment	$	39,561	$	13,506	$	3,275	$	7,456	$	726	$	357	$	(279	)	(d)	$	64,602
Accumulated Depreciation and Amortization	12,343		3,565		34		3,344		227		181		(105		)	(d)	19,589
Total Property Plant and Equipment - Net	$	27,218	$	9,941	$	3,241	$	4,112	$	499	$	176	$	(174	)	(d)	$	45,013
Total Assets	$	35,316	$	14,351	$	4,036	$	5,668	$	756	$	21,599	$	(20,788	)	(d) (e)	$	60,938
Long-term Debt Due Within One Year:
Affiliated	$	—	$	—	$	—	$	—	$	—	$	—	$	—			$	—
Non-Affiliated	894		678		—		240		3		2		—				1,817
Long-term Debt:
Affiliated	20		—		—		32		—		—		(52		)		—
Non-Affiliated	10,146		4,729		1,315		648		79		844		—				17,761
Total Long-term Debt	$	11,060	$	5,407	$	1,315	$	920	$	82	$	846	$	(52	)		$	19,578
	Vertically Integrated Utilities		Transmission and Distribution Utilities		AEP Transmission Holdco		Generation & Marketing		AEP River Operations		Corporate and Other (a)		Reconciling Adjustments				Consolidated
	(in millions)
December 31, 2014
Total Property, Plant and Equipment	$	39,402	$	13,024	$	2,714	$	8,394	$	700	$	343	$	(272	)	(d)	$	64,305
Accumulated Depreciation and Amortization	12,773		3,481		25		3,603		217		188		(99		)	(d)	20,188
Total Property Plant and Equipment - Net	$	26,629	$	9,543	$	2,689	$	4,791	$	483	$	155	$	(173	)	(d)	$	44,117
Total Assets	$	33,750	$	14,495	$	3,575	$	6,329	$	749	$	21,081	$	(20,346	)	(d) (e)	$	59,633
Long-term Debt Due Within One Year:
Affiliated	$	111	$	—	$	—	$	86	$	—	$	—	$	(197	)		$	—
Non-Affiliated	1,352		405		—		740		3		3		—				2,503
Long-term Debt:
Affiliated	20		—		—		32		—		—		(52		)		—
Non-Affiliated	8,634		5,256		1,153		217		80		841		—				16,181
Total Long-term Debt	$	10,117	$	5,661	$	1,153	$	1,075	$	83	$	844	$	(249	)		$	18,684

(a) Corporate and Other primarily includes the purchasing of receivables from certain AEP utility subsidiaries. This segment also includes Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs.

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

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

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

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

Appalachian Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business that started in 2014.  The Registrant Subsidiaries’ other activities are insignificant.  The Registrant Subsidiaries’ operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Indiana Michigan Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business that started in 2014.  The Registrant Subsidiaries’ other activities are insignificant.  The Registrant Subsidiaries’ operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Ohio Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business that started in 2014.  The Registrant Subsidiaries’ other activities are insignificant.  The Registrant Subsidiaries’ operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Public Service Co Of Oklahoma [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business that started in 2014.  The Registrant Subsidiaries’ other activities are insignificant.  The Registrant Subsidiaries’ operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.

Southwestern Electric Power Co [Member]

Business Segments

BUSINESS SEGMENTS

The Registrant Subsidiaries each have one reportable segment, an integrated electricity generation, transmission and distribution business, except OPCo, an electricity transmission and distribution business that started in 2014.  The Registrant Subsidiaries’ other activities are insignificant.  The Registrant Subsidiaries’ operations are managed on an integrated basis because of the substantial impact of cost-based rates and regulatory oversight on the business process, cost structures and operating results.