Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The disclosures in this note apply to all Registrants unless indicated otherwise.

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs.  These instruments are not marked-to-market.  The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

The book values and fair values of Long-term Debt are summarized in the following table:

	December 31,
	2016						2015
Company	Book Value			Fair Value			Book Value		Fair Value
	(in millions)
AEP	$	20,391.2	(a)	$	22,211.9	(a)	$	19,572.7	$	21,201.3
APCo	4,033.9			4,613.2			3,930.7		4,416.7
I&M	2,471.4			2,661.6			2,000.0		2,193.6
OPCo	1,763.9			2,092.5			2,157.7		2,472.7
PSO	1,286.0			1,419.0			1,286.1		1,402.9
SWEPCo	2,679.1			2,814.3			2,273.5		2,417.2

(a) Amount includes debt related to the Lawrenceburg Plant that has been classified as Liabilities Held for Sale on the balance sheet and has a fair value of $172 million. See “Gavin, Waterford, Darby and Lawrenceburg Plants (Generation & Marketing Segment)” section of Note 7 for additional information.

Fair Value Measurements of Other Temporary Investments (Applies to AEP)

Other Temporary Investments include funds held by trustees primarily for the payment of securitization bonds and securities available for sale, including marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS.  See “Other Temporary Investments” section of Note 1.

The following is a summary of Other Temporary Investments:

	December 31, 2016
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	211.7	$	—	$	—		$	211.7
Fixed Income Securities – Mutual Funds (b)	92.7		—		(1.0		)	91.7
Equity Securities – Mutual Funds	14.4		13.9		—			28.3
Total Other Temporary Investments	$	318.8	$	13.9	$	(1.0	)	$	331.7

	December 31, 2015
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	271.0	$	—	$	—		$	271.0
Fixed Income Securities – Mutual Funds (b)	91.1		—		(0.7		)	90.4
Equity Securities – Mutual Funds	13.7		11.7		—			25.4
Total Other Temporary Investments	$	375.8	$	11.7	$	(0.7	)	$	386.8

(a) Primarily represents amounts held for the repayment of debt.

(b) Primarily short and intermediate maturities which may be sold and do not contain maturity dates.

The following table provides the activity for fixed income and equity securities within Other Temporary Investments:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—
Purchases of Investments	2.3		10.7		1.6
Gross Realized Gains on Investment Sales	—		—		—
Gross Realized Losses on Investment Sales	—		—		—

For details of the reasons for changes in Securities Available for Sale included in Accumulated Other Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014, see Note 3.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)

Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value.  See “Nuclear Trust Funds” section of Note 1.

The following is a summary of nuclear trust fund investments:

	December 31,
	2016							2015
	Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	18.7	$	—	$	—		$	168.3	$	—	$	—
Fixed Income Securities:
United States Government	785.4		27.1		(5.5		)	731.1		35.9		(2.6		)
Corporate Debt	60.9		2.3		(1.4		)	57.9		3.2		(1.1		)
State and Local Government	121.1		0.4		(0.7		)	22.2		1.1		(0.3		)
Subtotal Fixed Income Securities	967.4		29.8		(7.6		)	811.2		40.2		(4.0		)
Equity Securities – Domestic	1,270.1		677.9		(79.6		)	1,126.9		571.6		(79.3		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,256.2	$	707.7	$	(87.2	)	$	2,106.4	$	611.8	$	(83.3	)

The following table provides the securities activity within the decommissioning and SNF trusts:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	2,957.7	$	2,218.4	$	1,031.8
Purchases of Investments	3,000.0		2,272.0		1,086.4
Gross Realized Gains on Investment Sales	46.1		69.1		32.3
Gross Realized Losses on Investment Sales	24.4		53.0		15.4

The base cost of fixed income securities was $938 million and $771 million as of December 31, 2016 and 2015, respectively.  The base cost of equity securities was $592 million and $555 million as of December 31, 2016 and 2015, respectively.

The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2016 was as follows:

	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	229.5
1 year – 5 years	335.3
5 years – 10 years	204.6
After 10 years	198.0
Total	$	967.4

Fair Value Measurements of Financial Assets and Liabilities

For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.

The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis.  As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  There have not been any significant changes in management’s valuation techniques.

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	201.8		$	210.5
Other Temporary Investments
Restricted Cash (a)	173.8		5.1		—		32.8			211.7
Fixed Income Securities – Mutual Funds	91.7		—		—		—			91.7
Equity Securities – Mutual Funds (b)	28.3		—		—		—			28.3
TotalOther Temporary Investments	293.8		5.1		—		32.8			331.7
Risk Management Assets
Risk Management Commodity Contracts (c) (d)	6.0		379.9		192.2		(205.7		)	372.4
Cash Flow Hedges:
Commodity Hedges (c)	—		16.8		1.7		(7.3		)	11.2
Total Risk Management Assets	6.0		396.7		193.9		(213.0		)	383.6
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,585.9	$	1,369.2	$	193.9	$	33.0		$	3,182.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	8.2	$	352.0	$	166.7	$	(205.4	)	$	321.5
Cash Flow Hedges:
Commodity Hedges (c)	—		29.3		24.7		(7.3		)	46.7
Fair Value Hedges	—		1.4		—		—			1.4
Total Risk Management Liabilities	$	8.2	$	382.7	$	191.4	$	(212.7	)	$	369.6

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.9	$	4.3	$	—	$	168.2		$	176.4
Other Temporary Investments
Restricted Cash (a)	230.0		7.7		—		33.3			271.0
Fixed Income Securities – Mutual Funds	90.4		—		—		—			90.4
Equity Securities – Mutual Funds (b)	25.4		—		—		—			25.4
TotalOther Temporary Investments	345.8		7.7		—		33.3			386.8
Risk Management Assets
Risk Management Commodity Contracts (c) (f)	11.5		495.0		219.7		(287.7		)	438.5
Cash Flow Hedges:
Commodity Hedges (c)	—		15.9		1.0		0.7			17.6
Fair Value Hedges	—		—		—		0.1			0.1
Total Risk Management Assets	11.5		510.9		220.7		(286.9		)	456.2
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,648.6	$	1,334.1	$	220.7	$	(77.6	)	$	3,125.8
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)	$	24.1	$	471.5	$	67.3	$	(326.3	)	$	236.6
Cash Flow Hedges:
Commodity Hedges (c)	—		18.9		6.5		0.7			26.1
Interest Rate/Foreign Currency Hedges	—		0.4		—		—			0.4
Fair Value Hedges	—		3.0		—		0.1			3.1
Total Risk Management Liabilities	$	24.1	$	493.8	$	73.8	$	(325.5	)	$	266.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	15.8	$	—	$	—	$	0.1		$	15.9
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	—		20.5		3.9		(21.8		)	2.6
Total Assets	$	15.8	$	20.5	$	3.9	$	(21.7	)	$	18.5
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	20.7	$	2.5	$	(22.0	)	$	1.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	14.8	$	—	$	—	$	0.1		$	14.9
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	0.2		13.9		12.2		(10.6		)	15.7
Total Assets	$	15.0	$	13.9	$	12.2	$	(10.5	)	$	30.6
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.2	$	17.8	$	0.5	$	(13.6	)	$	4.9

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	12.8	$	3.0	$	(12.3	)	$	3.5
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,277.4	$	980.2	$	3.0	$	(0.9	)	$	2,259.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	13.3	$	0.2	$	(12.4	)	$	1.1

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.0	$	6.3	$	(11.1	)	$	12.3
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,287.5	$	828.2	$	6.3	$	(3.3	)	$	2,118.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.5	$	2.0	$	(11.7	)	$	7.9

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.2		$	27.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.4		—		(0.2		)	0.2
Total Assets	$	—	$	0.4	$	—	$	27.0		$	27.4
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	119.0	$	—		$	119.0

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other		Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.7	$	27.7
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		16.0		3.2		19.2
Total Assets	$	—	$	—	$	16.0	$	30.9	$	46.9
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.8	$	0.1	$	2.7	$	3.6

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	0.2	$	0.7	$	(0.1	)	$	0.8

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	0.7	$	(0.1	)	$	0.6
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.5	$	0.1	$	(0.4	)	$	0.2

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	1.6		$	10.3
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.3		0.8		(0.2		)	0.9
Total Assets	$	8.7	$	0.3	$	0.8	$	1.4		$	11.2
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.3	$	0.1	$	(0.1	)	$	0.3

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.6	$	—	$	—	$	1.6		$	5.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		0.9		(0.1		)	0.8
Total Assets	$	3.6	$	—	$	0.9	$	1.5		$	6.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	5.5	$	0.1	$	(0.4	)	$	5.2

(a) Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(d) The December 31, 2016 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $(2) million in 2018-2020; Level 2 matures $20 million in 2017, $4 million in periods 2018-2020, $3 million in periods 2021-2022 and $1 million in periods 2023-2032; Level 3 matures $17 million in 2017, $28 million in periods 2018-2020, $11 million in periods 2021-2022 and $(31) million in periods 2023-2032. Risk management commodity contracts are substantially comprised of power contracts.

(e) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 1 amounts primarily represent investments in money market funds.

(f) The December 31, 2015 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $(9) million in 2016 and $(4) million in periods 2017-2019;  Level 2 matures $2 million in 2016, $18 million in periods 2017-2019 and $4 million in periods 2020-2021;  Level 3 matures $28 million in 2016, $29 million in periods 2017-2019, $19 million in periods 2020-2021 and $76 million in periods 2022-2032.  Risk management commodity contracts are substantially comprised of power contracts.

(g) Substantially comprised of power contracts for the Registrant Subsidiaries.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Year Ended December 31, 2016	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	42.8			25.6			7.1			(3.0		)	(1.0		)	7.7
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	26.1			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(23.0		)	—			—			—			—			—
Settlements	(71.4		)	(37.5		)	(11.1		)	6.2			0.4			(8.4		)
Transfers into Level 3 (d) (e)	13.3			—			—			—			—			—
Transfers out of Level 3 (e)	(2.6		)	0.1			0.1			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(129.6		)	1.5			2.4			(138.1		)	0.7			0.6
Balance as of December 31, 2016	$	2.5		$	1.4		$	2.8		$	(119.0	)	$	0.7		$	0.7

Year Ended December 31, 2015	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	13.5			2.1			0.2			0.5			(0.2		)	9.2
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	53.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(4.9		)	—			—			—			—			—
Settlements	(63.0		)	(17.2		)	(14.2		)	(6.7		)	0.6			(8.7		)
Transfers into Level 3 (d) (e)	28.7			—			—			—			—			—
Transfers out of Level 3 (e)	(18.9		)	1.2			0.8			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(13.0		)	9.8			2.8			(26.3		)	0.5			0.8
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8

Year Ended December 31, 2014	AEP			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2013	$	117.9		$	10.6		$	7.2		$	2.9		$	—		$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	90.0			29.7			18.6			30.8			—			—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	0.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	5.7			—			—			—			—			—
Settlements	(108.7		)	(32.6		)	(20.6		)	(33.7		)	—			—
Transfers into Level 3 (d) (e)	(7.6		)	(3.6		)	(2.5		)	—			—			—
Transfers out of Level 3 (e)	(21.5		)	—			—			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	74.3			11.7			12.0			48.4			(0.3		)	(0.5		)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)

(a) Includes both affiliated and nonaffiliated transactions.

(b) Included in revenues on the statements of income.

(c) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(f) Relates to the net gains (losses) of those contracts that are not reflected on the statements of income.  These net gains (losses) are recorded as regulatory assets/liabilities.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:

Significant Unobservable Inputs

December 31, 2016

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	183.8	$	187.1	Discounted Cash Flow	Forward Market Price (a)	$	6.51		$	86.59	$	39.40
						Counterparty Credit Risk (b)	35			824		391
FTRs	10.1		4.3		Discounted Cash Flow	Forward Market Price (a)	(7.99		)	8.91		0.86
Total	$	193.9	$	191.4

Significant Unobservable Inputs

December 31, 2015

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	212.3	$	70.3	Discounted Cash Flow	Forward Market Price (a)	$	9.69		$	165.36	$	36.35
						Counterparty Credit Risk (c)	670
FTRs	8.4		3.5		Discounted Cash Flow	Forward Market Price (a)	(6.99		)	10.34		1.10
Total	$	220.7	$	73.8

Significant Unobservable Inputs

December 31, 2016

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.4	$	0.4	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	3.5		2.1		Discounted Cash Flow	Forward Market Price	(0.23		)	8.91		2.37
Total	$	3.9	$	2.5

Significant Unobservable Inputs

December 31, 2015

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	7.9	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	4.3		0.3		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	12.2	$	0.5

Significant Unobservable Inputs

December 31, 2016

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.3	$	0.2	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	2.7		—		Discounted Cash Flow	Forward Market Price	(7.90		)	8.91		1.32
Total	$	3.0	$	0.2

Significant Unobservable Inputs

December 31, 2015

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	6.0	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	0.3		1.8		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	6.3	$	2.0

Significant Unobservable Inputs

December 31, 2016

OPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable					Weighted
	Assets		Liabilities		Technique	Input	Low		High		Average
	(in millions)
Energy Contracts	$	—	$	119.0	Discounted Cash Flow	Forward Market Price (a)	$	30.14	$	71.85	$	47.45
						Counterparty Credit Risk (b)	47		340		272
Total	$	—	$	119.0

Significant Unobservable Inputs

December 31, 2015

OPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

Energy Contracts

$

16.0

$

0.1

Discounted Cash Flow

Forward Market Price

$

41.61

$

165.36

$

86.84

Significant Unobservable Inputs

December 31, 2016

PSO

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.7	$	—	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

PSO

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.7

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

Significant Unobservable Inputs

December 31, 2016

SWEPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.8	$	0.1	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

SWEPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.9

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

(a) Represents market prices in dollars per MWh.

(b) Represents prices of credit default swaps used to calculate counterparty credit risk, reported in basis points.

(c) Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

The following table provides sensitivity of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts and FTRs for the Registrants as of December 31, 2016 and 2015:

Sensitivity of Fair Value Measurements

Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)

Appalachian Power Co [Member]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The disclosures in this note apply to all Registrants unless indicated otherwise.

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs.  These instruments are not marked-to-market.  The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

The book values and fair values of Long-term Debt are summarized in the following table:

	December 31,
	2016						2015
Company	Book Value			Fair Value			Book Value		Fair Value
	(in millions)
AEP	$	20,391.2	(a)	$	22,211.9	(a)	$	19,572.7	$	21,201.3
APCo	4,033.9			4,613.2			3,930.7		4,416.7
I&M	2,471.4			2,661.6			2,000.0		2,193.6
OPCo	1,763.9			2,092.5			2,157.7		2,472.7
PSO	1,286.0			1,419.0			1,286.1		1,402.9
SWEPCo	2,679.1			2,814.3			2,273.5		2,417.2

(a) Amount includes debt related to the Lawrenceburg Plant that has been classified as Liabilities Held for Sale on the balance sheet and has a fair value of $172 million. See “Gavin, Waterford, Darby and Lawrenceburg Plants (Generation & Marketing Segment)” section of Note 7 for additional information.

Fair Value Measurements of Other Temporary Investments (Applies to AEP)

Other Temporary Investments include funds held by trustees primarily for the payment of securitization bonds and securities available for sale, including marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS.  See “Other Temporary Investments” section of Note 1.

The following is a summary of Other Temporary Investments:

	December 31, 2016
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	211.7	$	—	$	—		$	211.7
Fixed Income Securities – Mutual Funds (b)	92.7		—		(1.0		)	91.7
Equity Securities – Mutual Funds	14.4		13.9		—			28.3
Total Other Temporary Investments	$	318.8	$	13.9	$	(1.0	)	$	331.7

	December 31, 2015
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	271.0	$	—	$	—		$	271.0
Fixed Income Securities – Mutual Funds (b)	91.1		—		(0.7		)	90.4
Equity Securities – Mutual Funds	13.7		11.7		—			25.4
Total Other Temporary Investments	$	375.8	$	11.7	$	(0.7	)	$	386.8

(a) Primarily represents amounts held for the repayment of debt.

(b) Primarily short and intermediate maturities which may be sold and do not contain maturity dates.

The following table provides the activity for fixed income and equity securities within Other Temporary Investments:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—
Purchases of Investments	2.3		10.7		1.6
Gross Realized Gains on Investment Sales	—		—		—
Gross Realized Losses on Investment Sales	—		—		—

For details of the reasons for changes in Securities Available for Sale included in Accumulated Other Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014, see Note 3.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)

Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value.  See “Nuclear Trust Funds” section of Note 1.

The following is a summary of nuclear trust fund investments:

	December 31,
	2016							2015
	Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	18.7	$	—	$	—		$	168.3	$	—	$	—
Fixed Income Securities:
United States Government	785.4		27.1		(5.5		)	731.1		35.9		(2.6		)
Corporate Debt	60.9		2.3		(1.4		)	57.9		3.2		(1.1		)
State and Local Government	121.1		0.4		(0.7		)	22.2		1.1		(0.3		)
Subtotal Fixed Income Securities	967.4		29.8		(7.6		)	811.2		40.2		(4.0		)
Equity Securities – Domestic	1,270.1		677.9		(79.6		)	1,126.9		571.6		(79.3		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,256.2	$	707.7	$	(87.2	)	$	2,106.4	$	611.8	$	(83.3	)

The following table provides the securities activity within the decommissioning and SNF trusts:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	2,957.7	$	2,218.4	$	1,031.8
Purchases of Investments	3,000.0		2,272.0		1,086.4
Gross Realized Gains on Investment Sales	46.1		69.1		32.3
Gross Realized Losses on Investment Sales	24.4		53.0		15.4

The base cost of fixed income securities was $938 million and $771 million as of December 31, 2016 and 2015, respectively.  The base cost of equity securities was $592 million and $555 million as of December 31, 2016 and 2015, respectively.

The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2016 was as follows:

	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	229.5
1 year – 5 years	335.3
5 years – 10 years	204.6
After 10 years	198.0
Total	$	967.4

Fair Value Measurements of Financial Assets and Liabilities

For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.

The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis.  As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  There have not been any significant changes in management’s valuation techniques.

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	201.8		$	210.5
Other Temporary Investments
Restricted Cash (a)	173.8		5.1		—		32.8			211.7
Fixed Income Securities – Mutual Funds	91.7		—		—		—			91.7
Equity Securities – Mutual Funds (b)	28.3		—		—		—			28.3
TotalOther Temporary Investments	293.8		5.1		—		32.8			331.7
Risk Management Assets
Risk Management Commodity Contracts (c) (d)	6.0		379.9		192.2		(205.7		)	372.4
Cash Flow Hedges:
Commodity Hedges (c)	—		16.8		1.7		(7.3		)	11.2
Total Risk Management Assets	6.0		396.7		193.9		(213.0		)	383.6
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,585.9	$	1,369.2	$	193.9	$	33.0		$	3,182.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	8.2	$	352.0	$	166.7	$	(205.4	)	$	321.5
Cash Flow Hedges:
Commodity Hedges (c)	—		29.3		24.7		(7.3		)	46.7
Fair Value Hedges	—		1.4		—		—			1.4
Total Risk Management Liabilities	$	8.2	$	382.7	$	191.4	$	(212.7	)	$	369.6

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.9	$	4.3	$	—	$	168.2		$	176.4
Other Temporary Investments
Restricted Cash (a)	230.0		7.7		—		33.3			271.0
Fixed Income Securities – Mutual Funds	90.4		—		—		—			90.4
Equity Securities – Mutual Funds (b)	25.4		—		—		—			25.4
TotalOther Temporary Investments	345.8		7.7		—		33.3			386.8
Risk Management Assets
Risk Management Commodity Contracts (c) (f)	11.5		495.0		219.7		(287.7		)	438.5
Cash Flow Hedges:
Commodity Hedges (c)	—		15.9		1.0		0.7			17.6
Fair Value Hedges	—		—		—		0.1			0.1
Total Risk Management Assets	11.5		510.9		220.7		(286.9		)	456.2
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,648.6	$	1,334.1	$	220.7	$	(77.6	)	$	3,125.8
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)	$	24.1	$	471.5	$	67.3	$	(326.3	)	$	236.6
Cash Flow Hedges:
Commodity Hedges (c)	—		18.9		6.5		0.7			26.1
Interest Rate/Foreign Currency Hedges	—		0.4		—		—			0.4
Fair Value Hedges	—		3.0		—		0.1			3.1
Total Risk Management Liabilities	$	24.1	$	493.8	$	73.8	$	(325.5	)	$	266.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	15.8	$	—	$	—	$	0.1		$	15.9
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	—		20.5		3.9		(21.8		)	2.6
Total Assets	$	15.8	$	20.5	$	3.9	$	(21.7	)	$	18.5
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	20.7	$	2.5	$	(22.0	)	$	1.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	14.8	$	—	$	—	$	0.1		$	14.9
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	0.2		13.9		12.2		(10.6		)	15.7
Total Assets	$	15.0	$	13.9	$	12.2	$	(10.5	)	$	30.6
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.2	$	17.8	$	0.5	$	(13.6	)	$	4.9

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	12.8	$	3.0	$	(12.3	)	$	3.5
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,277.4	$	980.2	$	3.0	$	(0.9	)	$	2,259.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	13.3	$	0.2	$	(12.4	)	$	1.1

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.0	$	6.3	$	(11.1	)	$	12.3
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,287.5	$	828.2	$	6.3	$	(3.3	)	$	2,118.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.5	$	2.0	$	(11.7	)	$	7.9

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.2		$	27.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.4		—		(0.2		)	0.2
Total Assets	$	—	$	0.4	$	—	$	27.0		$	27.4
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	119.0	$	—		$	119.0

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other		Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.7	$	27.7
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		16.0		3.2		19.2
Total Assets	$	—	$	—	$	16.0	$	30.9	$	46.9
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.8	$	0.1	$	2.7	$	3.6

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	0.2	$	0.7	$	(0.1	)	$	0.8

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	0.7	$	(0.1	)	$	0.6
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.5	$	0.1	$	(0.4	)	$	0.2

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	1.6		$	10.3
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.3		0.8		(0.2		)	0.9
Total Assets	$	8.7	$	0.3	$	0.8	$	1.4		$	11.2
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.3	$	0.1	$	(0.1	)	$	0.3

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.6	$	—	$	—	$	1.6		$	5.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		0.9		(0.1		)	0.8
Total Assets	$	3.6	$	—	$	0.9	$	1.5		$	6.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	5.5	$	0.1	$	(0.4	)	$	5.2

(a) Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(d) The December 31, 2016 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $(2) million in 2018-2020; Level 2 matures $20 million in 2017, $4 million in periods 2018-2020, $3 million in periods 2021-2022 and $1 million in periods 2023-2032; Level 3 matures $17 million in 2017, $28 million in periods 2018-2020, $11 million in periods 2021-2022 and $(31) million in periods 2023-2032. Risk management commodity contracts are substantially comprised of power contracts.

(e) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 1 amounts primarily represent investments in money market funds.

(f) The December 31, 2015 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $(9) million in 2016 and $(4) million in periods 2017-2019;  Level 2 matures $2 million in 2016, $18 million in periods 2017-2019 and $4 million in periods 2020-2021;  Level 3 matures $28 million in 2016, $29 million in periods 2017-2019, $19 million in periods 2020-2021 and $76 million in periods 2022-2032.  Risk management commodity contracts are substantially comprised of power contracts.

(g) Substantially comprised of power contracts for the Registrant Subsidiaries.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Year Ended December 31, 2016	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	42.8			25.6			7.1			(3.0		)	(1.0		)	7.7
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	26.1			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(23.0		)	—			—			—			—			—
Settlements	(71.4		)	(37.5		)	(11.1		)	6.2			0.4			(8.4		)
Transfers into Level 3 (d) (e)	13.3			—			—			—			—			—
Transfers out of Level 3 (e)	(2.6		)	0.1			0.1			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(129.6		)	1.5			2.4			(138.1		)	0.7			0.6
Balance as of December 31, 2016	$	2.5		$	1.4		$	2.8		$	(119.0	)	$	0.7		$	0.7

Year Ended December 31, 2015	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	13.5			2.1			0.2			0.5			(0.2		)	9.2
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	53.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(4.9		)	—			—			—			—			—
Settlements	(63.0		)	(17.2		)	(14.2		)	(6.7		)	0.6			(8.7		)
Transfers into Level 3 (d) (e)	28.7			—			—			—			—			—
Transfers out of Level 3 (e)	(18.9		)	1.2			0.8			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(13.0		)	9.8			2.8			(26.3		)	0.5			0.8
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8

Year Ended December 31, 2014	AEP			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2013	$	117.9		$	10.6		$	7.2		$	2.9		$	—		$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	90.0			29.7			18.6			30.8			—			—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	0.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	5.7			—			—			—			—			—
Settlements	(108.7		)	(32.6		)	(20.6		)	(33.7		)	—			—
Transfers into Level 3 (d) (e)	(7.6		)	(3.6		)	(2.5		)	—			—			—
Transfers out of Level 3 (e)	(21.5		)	—			—			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	74.3			11.7			12.0			48.4			(0.3		)	(0.5		)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)

(a) Includes both affiliated and nonaffiliated transactions.

(b) Included in revenues on the statements of income.

(c) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(f) Relates to the net gains (losses) of those contracts that are not reflected on the statements of income.  These net gains (losses) are recorded as regulatory assets/liabilities.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:

Significant Unobservable Inputs

December 31, 2016

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	183.8	$	187.1	Discounted Cash Flow	Forward Market Price (a)	$	6.51		$	86.59	$	39.40
						Counterparty Credit Risk (b)	35			824		391
FTRs	10.1		4.3		Discounted Cash Flow	Forward Market Price (a)	(7.99		)	8.91		0.86
Total	$	193.9	$	191.4

Significant Unobservable Inputs

December 31, 2015

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	212.3	$	70.3	Discounted Cash Flow	Forward Market Price (a)	$	9.69		$	165.36	$	36.35
						Counterparty Credit Risk (c)	670
FTRs	8.4		3.5		Discounted Cash Flow	Forward Market Price (a)	(6.99		)	10.34		1.10
Total	$	220.7	$	73.8

Significant Unobservable Inputs

December 31, 2016

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.4	$	0.4	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	3.5		2.1		Discounted Cash Flow	Forward Market Price	(0.23		)	8.91		2.37
Total	$	3.9	$	2.5

Significant Unobservable Inputs

December 31, 2015

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	7.9	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	4.3		0.3		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	12.2	$	0.5

Significant Unobservable Inputs

December 31, 2016

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.3	$	0.2	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	2.7		—		Discounted Cash Flow	Forward Market Price	(7.90		)	8.91		1.32
Total	$	3.0	$	0.2

Significant Unobservable Inputs

December 31, 2015

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	6.0	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	0.3		1.8		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	6.3	$	2.0

Significant Unobservable Inputs

December 31, 2016

OPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable					Weighted
	Assets		Liabilities		Technique	Input	Low		High		Average
	(in millions)
Energy Contracts	$	—	$	119.0	Discounted Cash Flow	Forward Market Price (a)	$	30.14	$	71.85	$	47.45
						Counterparty Credit Risk (b)	47		340		272
Total	$	—	$	119.0

Significant Unobservable Inputs

December 31, 2015

OPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

Energy Contracts

$

16.0

$

0.1

Discounted Cash Flow

Forward Market Price

$

41.61

$

165.36

$

86.84

Significant Unobservable Inputs

December 31, 2016

PSO

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.7	$	—	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

PSO

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.7

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

Significant Unobservable Inputs

December 31, 2016

SWEPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.8	$	0.1	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

SWEPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.9

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

(a) Represents market prices in dollars per MWh.

(b) Represents prices of credit default swaps used to calculate counterparty credit risk, reported in basis points.

(c) Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

The following table provides sensitivity of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts and FTRs for the Registrants as of December 31, 2016 and 2015:

Sensitivity of Fair Value Measurements

Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)

Indiana Michigan Power Co [Member]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The disclosures in this note apply to all Registrants unless indicated otherwise.

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs.  These instruments are not marked-to-market.  The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

The book values and fair values of Long-term Debt are summarized in the following table:

	December 31,
	2016						2015
Company	Book Value			Fair Value			Book Value		Fair Value
	(in millions)
AEP	$	20,391.2	(a)	$	22,211.9	(a)	$	19,572.7	$	21,201.3
APCo	4,033.9			4,613.2			3,930.7		4,416.7
I&M	2,471.4			2,661.6			2,000.0		2,193.6
OPCo	1,763.9			2,092.5			2,157.7		2,472.7
PSO	1,286.0			1,419.0			1,286.1		1,402.9
SWEPCo	2,679.1			2,814.3			2,273.5		2,417.2

(a) Amount includes debt related to the Lawrenceburg Plant that has been classified as Liabilities Held for Sale on the balance sheet and has a fair value of $172 million. See “Gavin, Waterford, Darby and Lawrenceburg Plants (Generation & Marketing Segment)” section of Note 7 for additional information.

Fair Value Measurements of Other Temporary Investments (Applies to AEP)

Other Temporary Investments include funds held by trustees primarily for the payment of securitization bonds and securities available for sale, including marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS.  See “Other Temporary Investments” section of Note 1.

The following is a summary of Other Temporary Investments:

	December 31, 2016
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	211.7	$	—	$	—		$	211.7
Fixed Income Securities – Mutual Funds (b)	92.7		—		(1.0		)	91.7
Equity Securities – Mutual Funds	14.4		13.9		—			28.3
Total Other Temporary Investments	$	318.8	$	13.9	$	(1.0	)	$	331.7

	December 31, 2015
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	271.0	$	—	$	—		$	271.0
Fixed Income Securities – Mutual Funds (b)	91.1		—		(0.7		)	90.4
Equity Securities – Mutual Funds	13.7		11.7		—			25.4
Total Other Temporary Investments	$	375.8	$	11.7	$	(0.7	)	$	386.8

(a) Primarily represents amounts held for the repayment of debt.

(b) Primarily short and intermediate maturities which may be sold and do not contain maturity dates.

The following table provides the activity for fixed income and equity securities within Other Temporary Investments:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—
Purchases of Investments	2.3		10.7		1.6
Gross Realized Gains on Investment Sales	—		—		—
Gross Realized Losses on Investment Sales	—		—		—

For details of the reasons for changes in Securities Available for Sale included in Accumulated Other Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014, see Note 3.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)

Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value.  See “Nuclear Trust Funds” section of Note 1.

The following is a summary of nuclear trust fund investments:

	December 31,
	2016							2015
	Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	18.7	$	—	$	—		$	168.3	$	—	$	—
Fixed Income Securities:
United States Government	785.4		27.1		(5.5		)	731.1		35.9		(2.6		)
Corporate Debt	60.9		2.3		(1.4		)	57.9		3.2		(1.1		)
State and Local Government	121.1		0.4		(0.7		)	22.2		1.1		(0.3		)
Subtotal Fixed Income Securities	967.4		29.8		(7.6		)	811.2		40.2		(4.0		)
Equity Securities – Domestic	1,270.1		677.9		(79.6		)	1,126.9		571.6		(79.3		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,256.2	$	707.7	$	(87.2	)	$	2,106.4	$	611.8	$	(83.3	)

The following table provides the securities activity within the decommissioning and SNF trusts:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	2,957.7	$	2,218.4	$	1,031.8
Purchases of Investments	3,000.0		2,272.0		1,086.4
Gross Realized Gains on Investment Sales	46.1		69.1		32.3
Gross Realized Losses on Investment Sales	24.4		53.0		15.4

The base cost of fixed income securities was $938 million and $771 million as of December 31, 2016 and 2015, respectively.  The base cost of equity securities was $592 million and $555 million as of December 31, 2016 and 2015, respectively.

The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2016 was as follows:

	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	229.5
1 year – 5 years	335.3
5 years – 10 years	204.6
After 10 years	198.0
Total	$	967.4

Fair Value Measurements of Financial Assets and Liabilities

For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.

The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis.  As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  There have not been any significant changes in management’s valuation techniques.

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	201.8		$	210.5
Other Temporary Investments
Restricted Cash (a)	173.8		5.1		—		32.8			211.7
Fixed Income Securities – Mutual Funds	91.7		—		—		—			91.7
Equity Securities – Mutual Funds (b)	28.3		—		—		—			28.3
TotalOther Temporary Investments	293.8		5.1		—		32.8			331.7
Risk Management Assets
Risk Management Commodity Contracts (c) (d)	6.0		379.9		192.2		(205.7		)	372.4
Cash Flow Hedges:
Commodity Hedges (c)	—		16.8		1.7		(7.3		)	11.2
Total Risk Management Assets	6.0		396.7		193.9		(213.0		)	383.6
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,585.9	$	1,369.2	$	193.9	$	33.0		$	3,182.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	8.2	$	352.0	$	166.7	$	(205.4	)	$	321.5
Cash Flow Hedges:
Commodity Hedges (c)	—		29.3		24.7		(7.3		)	46.7
Fair Value Hedges	—		1.4		—		—			1.4
Total Risk Management Liabilities	$	8.2	$	382.7	$	191.4	$	(212.7	)	$	369.6

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.9	$	4.3	$	—	$	168.2		$	176.4
Other Temporary Investments
Restricted Cash (a)	230.0		7.7		—		33.3			271.0
Fixed Income Securities – Mutual Funds	90.4		—		—		—			90.4
Equity Securities – Mutual Funds (b)	25.4		—		—		—			25.4
TotalOther Temporary Investments	345.8		7.7		—		33.3			386.8
Risk Management Assets
Risk Management Commodity Contracts (c) (f)	11.5		495.0		219.7		(287.7		)	438.5
Cash Flow Hedges:
Commodity Hedges (c)	—		15.9		1.0		0.7			17.6
Fair Value Hedges	—		—		—		0.1			0.1
Total Risk Management Assets	11.5		510.9		220.7		(286.9		)	456.2
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,648.6	$	1,334.1	$	220.7	$	(77.6	)	$	3,125.8
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)	$	24.1	$	471.5	$	67.3	$	(326.3	)	$	236.6
Cash Flow Hedges:
Commodity Hedges (c)	—		18.9		6.5		0.7			26.1
Interest Rate/Foreign Currency Hedges	—		0.4		—		—			0.4
Fair Value Hedges	—		3.0		—		0.1			3.1
Total Risk Management Liabilities	$	24.1	$	493.8	$	73.8	$	(325.5	)	$	266.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	15.8	$	—	$	—	$	0.1		$	15.9
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	—		20.5		3.9		(21.8		)	2.6
Total Assets	$	15.8	$	20.5	$	3.9	$	(21.7	)	$	18.5
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	20.7	$	2.5	$	(22.0	)	$	1.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	14.8	$	—	$	—	$	0.1		$	14.9
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	0.2		13.9		12.2		(10.6		)	15.7
Total Assets	$	15.0	$	13.9	$	12.2	$	(10.5	)	$	30.6
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.2	$	17.8	$	0.5	$	(13.6	)	$	4.9

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	12.8	$	3.0	$	(12.3	)	$	3.5
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,277.4	$	980.2	$	3.0	$	(0.9	)	$	2,259.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	13.3	$	0.2	$	(12.4	)	$	1.1

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.0	$	6.3	$	(11.1	)	$	12.3
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,287.5	$	828.2	$	6.3	$	(3.3	)	$	2,118.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.5	$	2.0	$	(11.7	)	$	7.9

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.2		$	27.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.4		—		(0.2		)	0.2
Total Assets	$	—	$	0.4	$	—	$	27.0		$	27.4
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	119.0	$	—		$	119.0

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other		Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.7	$	27.7
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		16.0		3.2		19.2
Total Assets	$	—	$	—	$	16.0	$	30.9	$	46.9
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.8	$	0.1	$	2.7	$	3.6

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	0.2	$	0.7	$	(0.1	)	$	0.8

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	0.7	$	(0.1	)	$	0.6
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.5	$	0.1	$	(0.4	)	$	0.2

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	1.6		$	10.3
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.3		0.8		(0.2		)	0.9
Total Assets	$	8.7	$	0.3	$	0.8	$	1.4		$	11.2
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.3	$	0.1	$	(0.1	)	$	0.3

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.6	$	—	$	—	$	1.6		$	5.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		0.9		(0.1		)	0.8
Total Assets	$	3.6	$	—	$	0.9	$	1.5		$	6.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	5.5	$	0.1	$	(0.4	)	$	5.2

(a) Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(d) The December 31, 2016 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $(2) million in 2018-2020; Level 2 matures $20 million in 2017, $4 million in periods 2018-2020, $3 million in periods 2021-2022 and $1 million in periods 2023-2032; Level 3 matures $17 million in 2017, $28 million in periods 2018-2020, $11 million in periods 2021-2022 and $(31) million in periods 2023-2032. Risk management commodity contracts are substantially comprised of power contracts.

(e) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 1 amounts primarily represent investments in money market funds.

(f) The December 31, 2015 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $(9) million in 2016 and $(4) million in periods 2017-2019;  Level 2 matures $2 million in 2016, $18 million in periods 2017-2019 and $4 million in periods 2020-2021;  Level 3 matures $28 million in 2016, $29 million in periods 2017-2019, $19 million in periods 2020-2021 and $76 million in periods 2022-2032.  Risk management commodity contracts are substantially comprised of power contracts.

(g) Substantially comprised of power contracts for the Registrant Subsidiaries.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Year Ended December 31, 2016	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	42.8			25.6			7.1			(3.0		)	(1.0		)	7.7
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	26.1			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(23.0		)	—			—			—			—			—
Settlements	(71.4		)	(37.5		)	(11.1		)	6.2			0.4			(8.4		)
Transfers into Level 3 (d) (e)	13.3			—			—			—			—			—
Transfers out of Level 3 (e)	(2.6		)	0.1			0.1			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(129.6		)	1.5			2.4			(138.1		)	0.7			0.6
Balance as of December 31, 2016	$	2.5		$	1.4		$	2.8		$	(119.0	)	$	0.7		$	0.7

Year Ended December 31, 2015	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	13.5			2.1			0.2			0.5			(0.2		)	9.2
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	53.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(4.9		)	—			—			—			—			—
Settlements	(63.0		)	(17.2		)	(14.2		)	(6.7		)	0.6			(8.7		)
Transfers into Level 3 (d) (e)	28.7			—			—			—			—			—
Transfers out of Level 3 (e)	(18.9		)	1.2			0.8			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(13.0		)	9.8			2.8			(26.3		)	0.5			0.8
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8

Year Ended December 31, 2014	AEP			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2013	$	117.9		$	10.6		$	7.2		$	2.9		$	—		$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	90.0			29.7			18.6			30.8			—			—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	0.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	5.7			—			—			—			—			—
Settlements	(108.7		)	(32.6		)	(20.6		)	(33.7		)	—			—
Transfers into Level 3 (d) (e)	(7.6		)	(3.6		)	(2.5		)	—			—			—
Transfers out of Level 3 (e)	(21.5		)	—			—			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	74.3			11.7			12.0			48.4			(0.3		)	(0.5		)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)

(a) Includes both affiliated and nonaffiliated transactions.

(b) Included in revenues on the statements of income.

(c) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(f) Relates to the net gains (losses) of those contracts that are not reflected on the statements of income.  These net gains (losses) are recorded as regulatory assets/liabilities.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:

Significant Unobservable Inputs

December 31, 2016

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	183.8	$	187.1	Discounted Cash Flow	Forward Market Price (a)	$	6.51		$	86.59	$	39.40
						Counterparty Credit Risk (b)	35			824		391
FTRs	10.1		4.3		Discounted Cash Flow	Forward Market Price (a)	(7.99		)	8.91		0.86
Total	$	193.9	$	191.4

Significant Unobservable Inputs

December 31, 2015

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	212.3	$	70.3	Discounted Cash Flow	Forward Market Price (a)	$	9.69		$	165.36	$	36.35
						Counterparty Credit Risk (c)	670
FTRs	8.4		3.5		Discounted Cash Flow	Forward Market Price (a)	(6.99		)	10.34		1.10
Total	$	220.7	$	73.8

Significant Unobservable Inputs

December 31, 2016

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.4	$	0.4	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	3.5		2.1		Discounted Cash Flow	Forward Market Price	(0.23		)	8.91		2.37
Total	$	3.9	$	2.5

Significant Unobservable Inputs

December 31, 2015

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	7.9	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	4.3		0.3		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	12.2	$	0.5

Significant Unobservable Inputs

December 31, 2016

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.3	$	0.2	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	2.7		—		Discounted Cash Flow	Forward Market Price	(7.90		)	8.91		1.32
Total	$	3.0	$	0.2

Significant Unobservable Inputs

December 31, 2015

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	6.0	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	0.3		1.8		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	6.3	$	2.0

Significant Unobservable Inputs

December 31, 2016

OPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable					Weighted
	Assets		Liabilities		Technique	Input	Low		High		Average
	(in millions)
Energy Contracts	$	—	$	119.0	Discounted Cash Flow	Forward Market Price (a)	$	30.14	$	71.85	$	47.45
						Counterparty Credit Risk (b)	47		340		272
Total	$	—	$	119.0

Significant Unobservable Inputs

December 31, 2015

OPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

Energy Contracts

$

16.0

$

0.1

Discounted Cash Flow

Forward Market Price

$

41.61

$

165.36

$

86.84

Significant Unobservable Inputs

December 31, 2016

PSO

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.7	$	—	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

PSO

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.7

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

Significant Unobservable Inputs

December 31, 2016

SWEPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.8	$	0.1	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

SWEPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.9

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

(a) Represents market prices in dollars per MWh.

(b) Represents prices of credit default swaps used to calculate counterparty credit risk, reported in basis points.

(c) Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

The following table provides sensitivity of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts and FTRs for the Registrants as of December 31, 2016 and 2015:

Sensitivity of Fair Value Measurements

Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)

Ohio Power Co [Member]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The disclosures in this note apply to all Registrants unless indicated otherwise.

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs.  These instruments are not marked-to-market.  The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

The book values and fair values of Long-term Debt are summarized in the following table:

	December 31,
	2016						2015
Company	Book Value			Fair Value			Book Value		Fair Value
	(in millions)
AEP	$	20,391.2	(a)	$	22,211.9	(a)	$	19,572.7	$	21,201.3
APCo	4,033.9			4,613.2			3,930.7		4,416.7
I&M	2,471.4			2,661.6			2,000.0		2,193.6
OPCo	1,763.9			2,092.5			2,157.7		2,472.7
PSO	1,286.0			1,419.0			1,286.1		1,402.9
SWEPCo	2,679.1			2,814.3			2,273.5		2,417.2

(a) Amount includes debt related to the Lawrenceburg Plant that has been classified as Liabilities Held for Sale on the balance sheet and has a fair value of $172 million. See “Gavin, Waterford, Darby and Lawrenceburg Plants (Generation & Marketing Segment)” section of Note 7 for additional information.

Fair Value Measurements of Other Temporary Investments (Applies to AEP)

Other Temporary Investments include funds held by trustees primarily for the payment of securitization bonds and securities available for sale, including marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS.  See “Other Temporary Investments” section of Note 1.

The following is a summary of Other Temporary Investments:

	December 31, 2016
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	211.7	$	—	$	—		$	211.7
Fixed Income Securities – Mutual Funds (b)	92.7		—		(1.0		)	91.7
Equity Securities – Mutual Funds	14.4		13.9		—			28.3
Total Other Temporary Investments	$	318.8	$	13.9	$	(1.0	)	$	331.7

	December 31, 2015
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	271.0	$	—	$	—		$	271.0
Fixed Income Securities – Mutual Funds (b)	91.1		—		(0.7		)	90.4
Equity Securities – Mutual Funds	13.7		11.7		—			25.4
Total Other Temporary Investments	$	375.8	$	11.7	$	(0.7	)	$	386.8

(a) Primarily represents amounts held for the repayment of debt.

(b) Primarily short and intermediate maturities which may be sold and do not contain maturity dates.

The following table provides the activity for fixed income and equity securities within Other Temporary Investments:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—
Purchases of Investments	2.3		10.7		1.6
Gross Realized Gains on Investment Sales	—		—		—
Gross Realized Losses on Investment Sales	—		—		—

For details of the reasons for changes in Securities Available for Sale included in Accumulated Other Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014, see Note 3.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)

Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value.  See “Nuclear Trust Funds” section of Note 1.

The following is a summary of nuclear trust fund investments:

	December 31,
	2016							2015
	Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	18.7	$	—	$	—		$	168.3	$	—	$	—
Fixed Income Securities:
United States Government	785.4		27.1		(5.5		)	731.1		35.9		(2.6		)
Corporate Debt	60.9		2.3		(1.4		)	57.9		3.2		(1.1		)
State and Local Government	121.1		0.4		(0.7		)	22.2		1.1		(0.3		)
Subtotal Fixed Income Securities	967.4		29.8		(7.6		)	811.2		40.2		(4.0		)
Equity Securities – Domestic	1,270.1		677.9		(79.6		)	1,126.9		571.6		(79.3		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,256.2	$	707.7	$	(87.2	)	$	2,106.4	$	611.8	$	(83.3	)

The following table provides the securities activity within the decommissioning and SNF trusts:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	2,957.7	$	2,218.4	$	1,031.8
Purchases of Investments	3,000.0		2,272.0		1,086.4
Gross Realized Gains on Investment Sales	46.1		69.1		32.3
Gross Realized Losses on Investment Sales	24.4		53.0		15.4

The base cost of fixed income securities was $938 million and $771 million as of December 31, 2016 and 2015, respectively.  The base cost of equity securities was $592 million and $555 million as of December 31, 2016 and 2015, respectively.

The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2016 was as follows:

	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	229.5
1 year – 5 years	335.3
5 years – 10 years	204.6
After 10 years	198.0
Total	$	967.4

Fair Value Measurements of Financial Assets and Liabilities

For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.

The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis.  As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  There have not been any significant changes in management’s valuation techniques.

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	201.8		$	210.5
Other Temporary Investments
Restricted Cash (a)	173.8		5.1		—		32.8			211.7
Fixed Income Securities – Mutual Funds	91.7		—		—		—			91.7
Equity Securities – Mutual Funds (b)	28.3		—		—		—			28.3
TotalOther Temporary Investments	293.8		5.1		—		32.8			331.7
Risk Management Assets
Risk Management Commodity Contracts (c) (d)	6.0		379.9		192.2		(205.7		)	372.4
Cash Flow Hedges:
Commodity Hedges (c)	—		16.8		1.7		(7.3		)	11.2
Total Risk Management Assets	6.0		396.7		193.9		(213.0		)	383.6
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,585.9	$	1,369.2	$	193.9	$	33.0		$	3,182.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	8.2	$	352.0	$	166.7	$	(205.4	)	$	321.5
Cash Flow Hedges:
Commodity Hedges (c)	—		29.3		24.7		(7.3		)	46.7
Fair Value Hedges	—		1.4		—		—			1.4
Total Risk Management Liabilities	$	8.2	$	382.7	$	191.4	$	(212.7	)	$	369.6

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.9	$	4.3	$	—	$	168.2		$	176.4
Other Temporary Investments
Restricted Cash (a)	230.0		7.7		—		33.3			271.0
Fixed Income Securities – Mutual Funds	90.4		—		—		—			90.4
Equity Securities – Mutual Funds (b)	25.4		—		—		—			25.4
TotalOther Temporary Investments	345.8		7.7		—		33.3			386.8
Risk Management Assets
Risk Management Commodity Contracts (c) (f)	11.5		495.0		219.7		(287.7		)	438.5
Cash Flow Hedges:
Commodity Hedges (c)	—		15.9		1.0		0.7			17.6
Fair Value Hedges	—		—		—		0.1			0.1
Total Risk Management Assets	11.5		510.9		220.7		(286.9		)	456.2
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,648.6	$	1,334.1	$	220.7	$	(77.6	)	$	3,125.8
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)	$	24.1	$	471.5	$	67.3	$	(326.3	)	$	236.6
Cash Flow Hedges:
Commodity Hedges (c)	—		18.9		6.5		0.7			26.1
Interest Rate/Foreign Currency Hedges	—		0.4		—		—			0.4
Fair Value Hedges	—		3.0		—		0.1			3.1
Total Risk Management Liabilities	$	24.1	$	493.8	$	73.8	$	(325.5	)	$	266.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	15.8	$	—	$	—	$	0.1		$	15.9
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	—		20.5		3.9		(21.8		)	2.6
Total Assets	$	15.8	$	20.5	$	3.9	$	(21.7	)	$	18.5
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	20.7	$	2.5	$	(22.0	)	$	1.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	14.8	$	—	$	—	$	0.1		$	14.9
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	0.2		13.9		12.2		(10.6		)	15.7
Total Assets	$	15.0	$	13.9	$	12.2	$	(10.5	)	$	30.6
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.2	$	17.8	$	0.5	$	(13.6	)	$	4.9

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	12.8	$	3.0	$	(12.3	)	$	3.5
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,277.4	$	980.2	$	3.0	$	(0.9	)	$	2,259.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	13.3	$	0.2	$	(12.4	)	$	1.1

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.0	$	6.3	$	(11.1	)	$	12.3
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,287.5	$	828.2	$	6.3	$	(3.3	)	$	2,118.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.5	$	2.0	$	(11.7	)	$	7.9

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.2		$	27.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.4		—		(0.2		)	0.2
Total Assets	$	—	$	0.4	$	—	$	27.0		$	27.4
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	119.0	$	—		$	119.0

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other		Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.7	$	27.7
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		16.0		3.2		19.2
Total Assets	$	—	$	—	$	16.0	$	30.9	$	46.9
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.8	$	0.1	$	2.7	$	3.6

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	0.2	$	0.7	$	(0.1	)	$	0.8

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	0.7	$	(0.1	)	$	0.6
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.5	$	0.1	$	(0.4	)	$	0.2

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	1.6		$	10.3
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.3		0.8		(0.2		)	0.9
Total Assets	$	8.7	$	0.3	$	0.8	$	1.4		$	11.2
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.3	$	0.1	$	(0.1	)	$	0.3

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.6	$	—	$	—	$	1.6		$	5.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		0.9		(0.1		)	0.8
Total Assets	$	3.6	$	—	$	0.9	$	1.5		$	6.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	5.5	$	0.1	$	(0.4	)	$	5.2

(a) Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(d) The December 31, 2016 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $(2) million in 2018-2020; Level 2 matures $20 million in 2017, $4 million in periods 2018-2020, $3 million in periods 2021-2022 and $1 million in periods 2023-2032; Level 3 matures $17 million in 2017, $28 million in periods 2018-2020, $11 million in periods 2021-2022 and $(31) million in periods 2023-2032. Risk management commodity contracts are substantially comprised of power contracts.

(e) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 1 amounts primarily represent investments in money market funds.

(f) The December 31, 2015 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $(9) million in 2016 and $(4) million in periods 2017-2019;  Level 2 matures $2 million in 2016, $18 million in periods 2017-2019 and $4 million in periods 2020-2021;  Level 3 matures $28 million in 2016, $29 million in periods 2017-2019, $19 million in periods 2020-2021 and $76 million in periods 2022-2032.  Risk management commodity contracts are substantially comprised of power contracts.

(g) Substantially comprised of power contracts for the Registrant Subsidiaries.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Year Ended December 31, 2016	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	42.8			25.6			7.1			(3.0		)	(1.0		)	7.7
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	26.1			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(23.0		)	—			—			—			—			—
Settlements	(71.4		)	(37.5		)	(11.1		)	6.2			0.4			(8.4		)
Transfers into Level 3 (d) (e)	13.3			—			—			—			—			—
Transfers out of Level 3 (e)	(2.6		)	0.1			0.1			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(129.6		)	1.5			2.4			(138.1		)	0.7			0.6
Balance as of December 31, 2016	$	2.5		$	1.4		$	2.8		$	(119.0	)	$	0.7		$	0.7

Year Ended December 31, 2015	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	13.5			2.1			0.2			0.5			(0.2		)	9.2
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	53.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(4.9		)	—			—			—			—			—
Settlements	(63.0		)	(17.2		)	(14.2		)	(6.7		)	0.6			(8.7		)
Transfers into Level 3 (d) (e)	28.7			—			—			—			—			—
Transfers out of Level 3 (e)	(18.9		)	1.2			0.8			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(13.0		)	9.8			2.8			(26.3		)	0.5			0.8
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8

Year Ended December 31, 2014	AEP			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2013	$	117.9		$	10.6		$	7.2		$	2.9		$	—		$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	90.0			29.7			18.6			30.8			—			—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	0.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	5.7			—			—			—			—			—
Settlements	(108.7		)	(32.6		)	(20.6		)	(33.7		)	—			—
Transfers into Level 3 (d) (e)	(7.6		)	(3.6		)	(2.5		)	—			—			—
Transfers out of Level 3 (e)	(21.5		)	—			—			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	74.3			11.7			12.0			48.4			(0.3		)	(0.5		)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)

(a) Includes both affiliated and nonaffiliated transactions.

(b) Included in revenues on the statements of income.

(c) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(f) Relates to the net gains (losses) of those contracts that are not reflected on the statements of income.  These net gains (losses) are recorded as regulatory assets/liabilities.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:

Significant Unobservable Inputs

December 31, 2016

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	183.8	$	187.1	Discounted Cash Flow	Forward Market Price (a)	$	6.51		$	86.59	$	39.40
						Counterparty Credit Risk (b)	35			824		391
FTRs	10.1		4.3		Discounted Cash Flow	Forward Market Price (a)	(7.99		)	8.91		0.86
Total	$	193.9	$	191.4

Significant Unobservable Inputs

December 31, 2015

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	212.3	$	70.3	Discounted Cash Flow	Forward Market Price (a)	$	9.69		$	165.36	$	36.35
						Counterparty Credit Risk (c)	670
FTRs	8.4		3.5		Discounted Cash Flow	Forward Market Price (a)	(6.99		)	10.34		1.10
Total	$	220.7	$	73.8

Significant Unobservable Inputs

December 31, 2016

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.4	$	0.4	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	3.5		2.1		Discounted Cash Flow	Forward Market Price	(0.23		)	8.91		2.37
Total	$	3.9	$	2.5

Significant Unobservable Inputs

December 31, 2015

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	7.9	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	4.3		0.3		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	12.2	$	0.5

Significant Unobservable Inputs

December 31, 2016

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.3	$	0.2	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	2.7		—		Discounted Cash Flow	Forward Market Price	(7.90		)	8.91		1.32
Total	$	3.0	$	0.2

Significant Unobservable Inputs

December 31, 2015

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	6.0	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	0.3		1.8		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	6.3	$	2.0

Significant Unobservable Inputs

December 31, 2016

OPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable					Weighted
	Assets		Liabilities		Technique	Input	Low		High		Average
	(in millions)
Energy Contracts	$	—	$	119.0	Discounted Cash Flow	Forward Market Price (a)	$	30.14	$	71.85	$	47.45
						Counterparty Credit Risk (b)	47		340		272
Total	$	—	$	119.0

Significant Unobservable Inputs

December 31, 2015

OPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

Energy Contracts

$

16.0

$

0.1

Discounted Cash Flow

Forward Market Price

$

41.61

$

165.36

$

86.84

Significant Unobservable Inputs

December 31, 2016

PSO

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.7	$	—	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

PSO

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.7

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

Significant Unobservable Inputs

December 31, 2016

SWEPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.8	$	0.1	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

SWEPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.9

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

(a) Represents market prices in dollars per MWh.

(b) Represents prices of credit default swaps used to calculate counterparty credit risk, reported in basis points.

(c) Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

The following table provides sensitivity of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts and FTRs for the Registrants as of December 31, 2016 and 2015:

Sensitivity of Fair Value Measurements

Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)

Public Service Co Of Oklahoma [Member]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The disclosures in this note apply to all Registrants unless indicated otherwise.

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs.  These instruments are not marked-to-market.  The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

The book values and fair values of Long-term Debt are summarized in the following table:

	December 31,
	2016						2015
Company	Book Value			Fair Value			Book Value		Fair Value
	(in millions)
AEP	$	20,391.2	(a)	$	22,211.9	(a)	$	19,572.7	$	21,201.3
APCo	4,033.9			4,613.2			3,930.7		4,416.7
I&M	2,471.4			2,661.6			2,000.0		2,193.6
OPCo	1,763.9			2,092.5			2,157.7		2,472.7
PSO	1,286.0			1,419.0			1,286.1		1,402.9
SWEPCo	2,679.1			2,814.3			2,273.5		2,417.2

(a) Amount includes debt related to the Lawrenceburg Plant that has been classified as Liabilities Held for Sale on the balance sheet and has a fair value of $172 million. See “Gavin, Waterford, Darby and Lawrenceburg Plants (Generation & Marketing Segment)” section of Note 7 for additional information.

Fair Value Measurements of Other Temporary Investments (Applies to AEP)

Other Temporary Investments include funds held by trustees primarily for the payment of securitization bonds and securities available for sale, including marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS.  See “Other Temporary Investments” section of Note 1.

The following is a summary of Other Temporary Investments:

	December 31, 2016
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	211.7	$	—	$	—		$	211.7
Fixed Income Securities – Mutual Funds (b)	92.7		—		(1.0		)	91.7
Equity Securities – Mutual Funds	14.4		13.9		—			28.3
Total Other Temporary Investments	$	318.8	$	13.9	$	(1.0	)	$	331.7

	December 31, 2015
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	271.0	$	—	$	—		$	271.0
Fixed Income Securities – Mutual Funds (b)	91.1		—		(0.7		)	90.4
Equity Securities – Mutual Funds	13.7		11.7		—			25.4
Total Other Temporary Investments	$	375.8	$	11.7	$	(0.7	)	$	386.8

(a) Primarily represents amounts held for the repayment of debt.

(b) Primarily short and intermediate maturities which may be sold and do not contain maturity dates.

The following table provides the activity for fixed income and equity securities within Other Temporary Investments:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—
Purchases of Investments	2.3		10.7		1.6
Gross Realized Gains on Investment Sales	—		—		—
Gross Realized Losses on Investment Sales	—		—		—

For details of the reasons for changes in Securities Available for Sale included in Accumulated Other Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014, see Note 3.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)

Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value.  See “Nuclear Trust Funds” section of Note 1.

The following is a summary of nuclear trust fund investments:

	December 31,
	2016							2015
	Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	18.7	$	—	$	—		$	168.3	$	—	$	—
Fixed Income Securities:
United States Government	785.4		27.1		(5.5		)	731.1		35.9		(2.6		)
Corporate Debt	60.9		2.3		(1.4		)	57.9		3.2		(1.1		)
State and Local Government	121.1		0.4		(0.7		)	22.2		1.1		(0.3		)
Subtotal Fixed Income Securities	967.4		29.8		(7.6		)	811.2		40.2		(4.0		)
Equity Securities – Domestic	1,270.1		677.9		(79.6		)	1,126.9		571.6		(79.3		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,256.2	$	707.7	$	(87.2	)	$	2,106.4	$	611.8	$	(83.3	)

The following table provides the securities activity within the decommissioning and SNF trusts:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	2,957.7	$	2,218.4	$	1,031.8
Purchases of Investments	3,000.0		2,272.0		1,086.4
Gross Realized Gains on Investment Sales	46.1		69.1		32.3
Gross Realized Losses on Investment Sales	24.4		53.0		15.4

The base cost of fixed income securities was $938 million and $771 million as of December 31, 2016 and 2015, respectively.  The base cost of equity securities was $592 million and $555 million as of December 31, 2016 and 2015, respectively.

The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2016 was as follows:

	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	229.5
1 year – 5 years	335.3
5 years – 10 years	204.6
After 10 years	198.0
Total	$	967.4

Fair Value Measurements of Financial Assets and Liabilities

For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.

The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis.  As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  There have not been any significant changes in management’s valuation techniques.

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	201.8		$	210.5
Other Temporary Investments
Restricted Cash (a)	173.8		5.1		—		32.8			211.7
Fixed Income Securities – Mutual Funds	91.7		—		—		—			91.7
Equity Securities – Mutual Funds (b)	28.3		—		—		—			28.3
TotalOther Temporary Investments	293.8		5.1		—		32.8			331.7
Risk Management Assets
Risk Management Commodity Contracts (c) (d)	6.0		379.9		192.2		(205.7		)	372.4
Cash Flow Hedges:
Commodity Hedges (c)	—		16.8		1.7		(7.3		)	11.2
Total Risk Management Assets	6.0		396.7		193.9		(213.0		)	383.6
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,585.9	$	1,369.2	$	193.9	$	33.0		$	3,182.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	8.2	$	352.0	$	166.7	$	(205.4	)	$	321.5
Cash Flow Hedges:
Commodity Hedges (c)	—		29.3		24.7		(7.3		)	46.7
Fair Value Hedges	—		1.4		—		—			1.4
Total Risk Management Liabilities	$	8.2	$	382.7	$	191.4	$	(212.7	)	$	369.6

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.9	$	4.3	$	—	$	168.2		$	176.4
Other Temporary Investments
Restricted Cash (a)	230.0		7.7		—		33.3			271.0
Fixed Income Securities – Mutual Funds	90.4		—		—		—			90.4
Equity Securities – Mutual Funds (b)	25.4		—		—		—			25.4
TotalOther Temporary Investments	345.8		7.7		—		33.3			386.8
Risk Management Assets
Risk Management Commodity Contracts (c) (f)	11.5		495.0		219.7		(287.7		)	438.5
Cash Flow Hedges:
Commodity Hedges (c)	—		15.9		1.0		0.7			17.6
Fair Value Hedges	—		—		—		0.1			0.1
Total Risk Management Assets	11.5		510.9		220.7		(286.9		)	456.2
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,648.6	$	1,334.1	$	220.7	$	(77.6	)	$	3,125.8
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)	$	24.1	$	471.5	$	67.3	$	(326.3	)	$	236.6
Cash Flow Hedges:
Commodity Hedges (c)	—		18.9		6.5		0.7			26.1
Interest Rate/Foreign Currency Hedges	—		0.4		—		—			0.4
Fair Value Hedges	—		3.0		—		0.1			3.1
Total Risk Management Liabilities	$	24.1	$	493.8	$	73.8	$	(325.5	)	$	266.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	15.8	$	—	$	—	$	0.1		$	15.9
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	—		20.5		3.9		(21.8		)	2.6
Total Assets	$	15.8	$	20.5	$	3.9	$	(21.7	)	$	18.5
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	20.7	$	2.5	$	(22.0	)	$	1.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	14.8	$	—	$	—	$	0.1		$	14.9
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	0.2		13.9		12.2		(10.6		)	15.7
Total Assets	$	15.0	$	13.9	$	12.2	$	(10.5	)	$	30.6
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.2	$	17.8	$	0.5	$	(13.6	)	$	4.9

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	12.8	$	3.0	$	(12.3	)	$	3.5
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,277.4	$	980.2	$	3.0	$	(0.9	)	$	2,259.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	13.3	$	0.2	$	(12.4	)	$	1.1

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.0	$	6.3	$	(11.1	)	$	12.3
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,287.5	$	828.2	$	6.3	$	(3.3	)	$	2,118.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.5	$	2.0	$	(11.7	)	$	7.9

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.2		$	27.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.4		—		(0.2		)	0.2
Total Assets	$	—	$	0.4	$	—	$	27.0		$	27.4
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	119.0	$	—		$	119.0

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other		Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.7	$	27.7
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		16.0		3.2		19.2
Total Assets	$	—	$	—	$	16.0	$	30.9	$	46.9
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.8	$	0.1	$	2.7	$	3.6

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	0.2	$	0.7	$	(0.1	)	$	0.8

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	0.7	$	(0.1	)	$	0.6
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.5	$	0.1	$	(0.4	)	$	0.2

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	1.6		$	10.3
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.3		0.8		(0.2		)	0.9
Total Assets	$	8.7	$	0.3	$	0.8	$	1.4		$	11.2
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.3	$	0.1	$	(0.1	)	$	0.3

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.6	$	—	$	—	$	1.6		$	5.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		0.9		(0.1		)	0.8
Total Assets	$	3.6	$	—	$	0.9	$	1.5		$	6.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	5.5	$	0.1	$	(0.4	)	$	5.2

(a) Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(d) The December 31, 2016 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $(2) million in 2018-2020; Level 2 matures $20 million in 2017, $4 million in periods 2018-2020, $3 million in periods 2021-2022 and $1 million in periods 2023-2032; Level 3 matures $17 million in 2017, $28 million in periods 2018-2020, $11 million in periods 2021-2022 and $(31) million in periods 2023-2032. Risk management commodity contracts are substantially comprised of power contracts.

(e) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 1 amounts primarily represent investments in money market funds.

(f) The December 31, 2015 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $(9) million in 2016 and $(4) million in periods 2017-2019;  Level 2 matures $2 million in 2016, $18 million in periods 2017-2019 and $4 million in periods 2020-2021;  Level 3 matures $28 million in 2016, $29 million in periods 2017-2019, $19 million in periods 2020-2021 and $76 million in periods 2022-2032.  Risk management commodity contracts are substantially comprised of power contracts.

(g) Substantially comprised of power contracts for the Registrant Subsidiaries.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Year Ended December 31, 2016	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	42.8			25.6			7.1			(3.0		)	(1.0		)	7.7
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	26.1			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(23.0		)	—			—			—			—			—
Settlements	(71.4		)	(37.5		)	(11.1		)	6.2			0.4			(8.4		)
Transfers into Level 3 (d) (e)	13.3			—			—			—			—			—
Transfers out of Level 3 (e)	(2.6		)	0.1			0.1			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(129.6		)	1.5			2.4			(138.1		)	0.7			0.6
Balance as of December 31, 2016	$	2.5		$	1.4		$	2.8		$	(119.0	)	$	0.7		$	0.7

Year Ended December 31, 2015	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	13.5			2.1			0.2			0.5			(0.2		)	9.2
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	53.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(4.9		)	—			—			—			—			—
Settlements	(63.0		)	(17.2		)	(14.2		)	(6.7		)	0.6			(8.7		)
Transfers into Level 3 (d) (e)	28.7			—			—			—			—			—
Transfers out of Level 3 (e)	(18.9		)	1.2			0.8			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(13.0		)	9.8			2.8			(26.3		)	0.5			0.8
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8

Year Ended December 31, 2014	AEP			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2013	$	117.9		$	10.6		$	7.2		$	2.9		$	—		$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	90.0			29.7			18.6			30.8			—			—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	0.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	5.7			—			—			—			—			—
Settlements	(108.7		)	(32.6		)	(20.6		)	(33.7		)	—			—
Transfers into Level 3 (d) (e)	(7.6		)	(3.6		)	(2.5		)	—			—			—
Transfers out of Level 3 (e)	(21.5		)	—			—			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	74.3			11.7			12.0			48.4			(0.3		)	(0.5		)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)

(a) Includes both affiliated and nonaffiliated transactions.

(b) Included in revenues on the statements of income.

(c) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(f) Relates to the net gains (losses) of those contracts that are not reflected on the statements of income.  These net gains (losses) are recorded as regulatory assets/liabilities.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:

Significant Unobservable Inputs

December 31, 2016

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	183.8	$	187.1	Discounted Cash Flow	Forward Market Price (a)	$	6.51		$	86.59	$	39.40
						Counterparty Credit Risk (b)	35			824		391
FTRs	10.1		4.3		Discounted Cash Flow	Forward Market Price (a)	(7.99		)	8.91		0.86
Total	$	193.9	$	191.4

Significant Unobservable Inputs

December 31, 2015

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	212.3	$	70.3	Discounted Cash Flow	Forward Market Price (a)	$	9.69		$	165.36	$	36.35
						Counterparty Credit Risk (c)	670
FTRs	8.4		3.5		Discounted Cash Flow	Forward Market Price (a)	(6.99		)	10.34		1.10
Total	$	220.7	$	73.8

Significant Unobservable Inputs

December 31, 2016

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.4	$	0.4	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	3.5		2.1		Discounted Cash Flow	Forward Market Price	(0.23		)	8.91		2.37
Total	$	3.9	$	2.5

Significant Unobservable Inputs

December 31, 2015

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	7.9	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	4.3		0.3		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	12.2	$	0.5

Significant Unobservable Inputs

December 31, 2016

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.3	$	0.2	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	2.7		—		Discounted Cash Flow	Forward Market Price	(7.90		)	8.91		1.32
Total	$	3.0	$	0.2

Significant Unobservable Inputs

December 31, 2015

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	6.0	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	0.3		1.8		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	6.3	$	2.0

Significant Unobservable Inputs

December 31, 2016

OPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable					Weighted
	Assets		Liabilities		Technique	Input	Low		High		Average
	(in millions)
Energy Contracts	$	—	$	119.0	Discounted Cash Flow	Forward Market Price (a)	$	30.14	$	71.85	$	47.45
						Counterparty Credit Risk (b)	47		340		272
Total	$	—	$	119.0

Significant Unobservable Inputs

December 31, 2015

OPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

Energy Contracts

$

16.0

$

0.1

Discounted Cash Flow

Forward Market Price

$

41.61

$

165.36

$

86.84

Significant Unobservable Inputs

December 31, 2016

PSO

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.7	$	—	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

PSO

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.7

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

Significant Unobservable Inputs

December 31, 2016

SWEPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.8	$	0.1	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

SWEPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.9

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

(a) Represents market prices in dollars per MWh.

(b) Represents prices of credit default swaps used to calculate counterparty credit risk, reported in basis points.

(c) Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

The following table provides sensitivity of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts and FTRs for the Registrants as of December 31, 2016 and 2015:

Sensitivity of Fair Value Measurements

Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)

Southwestern Electric Power Co [Member]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The disclosures in this note apply to all Registrants unless indicated otherwise.

Fair Value Measurements of Long-term Debt

The fair values of Long-term Debt are based on quoted market prices, without credit enhancements, for the same or similar issues and the current interest rates offered for instruments with similar maturities classified as Level 2 measurement inputs.  These instruments are not marked-to-market.  The estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

The book values and fair values of Long-term Debt are summarized in the following table:

	December 31,
	2016						2015
Company	Book Value			Fair Value			Book Value		Fair Value
	(in millions)
AEP	$	20,391.2	(a)	$	22,211.9	(a)	$	19,572.7	$	21,201.3
APCo	4,033.9			4,613.2			3,930.7		4,416.7
I&M	2,471.4			2,661.6			2,000.0		2,193.6
OPCo	1,763.9			2,092.5			2,157.7		2,472.7
PSO	1,286.0			1,419.0			1,286.1		1,402.9
SWEPCo	2,679.1			2,814.3			2,273.5		2,417.2

(a) Amount includes debt related to the Lawrenceburg Plant that has been classified as Liabilities Held for Sale on the balance sheet and has a fair value of $172 million. See “Gavin, Waterford, Darby and Lawrenceburg Plants (Generation & Marketing Segment)” section of Note 7 for additional information.

Fair Value Measurements of Other Temporary Investments (Applies to AEP)

Other Temporary Investments include funds held by trustees primarily for the payment of securitization bonds and securities available for sale, including marketable securities that management intends to hold for less than one year and investments by AEP’s protected cell of EIS.  See “Other Temporary Investments” section of Note 1.

The following is a summary of Other Temporary Investments:

	December 31, 2016
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	211.7	$	—	$	—		$	211.7
Fixed Income Securities – Mutual Funds (b)	92.7		—		(1.0		)	91.7
Equity Securities – Mutual Funds	14.4		13.9		—			28.3
Total Other Temporary Investments	$	318.8	$	13.9	$	(1.0	)	$	331.7

	December 31, 2015
Other Temporary Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Restricted Cash (a)	$	271.0	$	—	$	—		$	271.0
Fixed Income Securities – Mutual Funds (b)	91.1		—		(0.7		)	90.4
Equity Securities – Mutual Funds	13.7		11.7		—			25.4
Total Other Temporary Investments	$	375.8	$	11.7	$	(0.7	)	$	386.8

(a) Primarily represents amounts held for the repayment of debt.

(b) Primarily short and intermediate maturities which may be sold and do not contain maturity dates.

The following table provides the activity for fixed income and equity securities within Other Temporary Investments:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	—	$	—	$	—
Purchases of Investments	2.3		10.7		1.6
Gross Realized Gains on Investment Sales	—		—		—
Gross Realized Losses on Investment Sales	—		—		—

For details of the reasons for changes in Securities Available for Sale included in Accumulated Other Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014, see Note 3.

Fair Value Measurements of Trust Assets for Decommissioning and SNF Disposal (Applies to AEP and I&M)

Securities held in trust funds for decommissioning nuclear facilities and for the disposal of SNF are recorded at fair value.  See “Nuclear Trust Funds” section of Note 1.

The following is a summary of nuclear trust fund investments:

	December 31,
	2016							2015
	Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments			Fair Value		Gross Unrealized Gains		Other-Than- Temporary Impairments
	(in millions)
Cash and Cash Equivalents	$	18.7	$	—	$	—		$	168.3	$	—	$	—
Fixed Income Securities:
United States Government	785.4		27.1		(5.5		)	731.1		35.9		(2.6		)
Corporate Debt	60.9		2.3		(1.4		)	57.9		3.2		(1.1		)
State and Local Government	121.1		0.4		(0.7		)	22.2		1.1		(0.3		)
Subtotal Fixed Income Securities	967.4		29.8		(7.6		)	811.2		40.2		(4.0		)
Equity Securities – Domestic	1,270.1		677.9		(79.6		)	1,126.9		571.6		(79.3		)
Spent Nuclear Fuel and Decommissioning Trusts	$	2,256.2	$	707.7	$	(87.2	)	$	2,106.4	$	611.8	$	(83.3	)

The following table provides the securities activity within the decommissioning and SNF trusts:

	Years Ended December 31,
	2016		2015		2014
	(in millions)
Proceeds from Investment Sales	$	2,957.7	$	2,218.4	$	1,031.8
Purchases of Investments	3,000.0		2,272.0		1,086.4
Gross Realized Gains on Investment Sales	46.1		69.1		32.3
Gross Realized Losses on Investment Sales	24.4		53.0		15.4

The base cost of fixed income securities was $938 million and $771 million as of December 31, 2016 and 2015, respectively.  The base cost of equity securities was $592 million and $555 million as of December 31, 2016 and 2015, respectively.

The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of December 31, 2016 was as follows:

	Fair Value of Fixed Income Securities
	(in millions)
Within 1 year	$	229.5
1 year – 5 years	335.3
5 years – 10 years	204.6
After 10 years	198.0
Total	$	967.4

Fair Value Measurements of Financial Assets and Liabilities

For a discussion of fair value accounting and the classification of assets and liabilities within the fair value hierarchy, see the “Fair Value Measurements of Assets and Liabilities” section of Note 1.

The following tables set forth, by level within the fair value hierarchy, the Registrants’ financial assets and liabilities that were accounted for at fair value on a recurring basis.  As required by the accounting guidance for “Fair Value Measurements and Disclosures,” financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  There have not been any significant changes in management’s valuation techniques.

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2016
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	201.8		$	210.5
Other Temporary Investments
Restricted Cash (a)	173.8		5.1		—		32.8			211.7
Fixed Income Securities – Mutual Funds	91.7		—		—		—			91.7
Equity Securities – Mutual Funds (b)	28.3		—		—		—			28.3
TotalOther Temporary Investments	293.8		5.1		—		32.8			331.7
Risk Management Assets
Risk Management Commodity Contracts (c) (d)	6.0		379.9		192.2		(205.7		)	372.4
Cash Flow Hedges:
Commodity Hedges (c)	—		16.8		1.7		(7.3		)	11.2
Total Risk Management Assets	6.0		396.7		193.9		(213.0		)	383.6
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,585.9	$	1,369.2	$	193.9	$	33.0		$	3,182.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (d)	$	8.2	$	352.0	$	166.7	$	(205.4	)	$	321.5
Cash Flow Hedges:
Commodity Hedges (c)	—		29.3		24.7		(7.3		)	46.7
Fair Value Hedges	—		1.4		—		—			1.4
Total Risk Management Liabilities	$	8.2	$	382.7	$	191.4	$	(212.7	)	$	369.6

AEP

Assets and Liabilities Measured at Fair Value on a Recurring Basis
December 31, 2015
	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.9	$	4.3	$	—	$	168.2		$	176.4
Other Temporary Investments
Restricted Cash (a)	230.0		7.7		—		33.3			271.0
Fixed Income Securities – Mutual Funds	90.4		—		—		—			90.4
Equity Securities – Mutual Funds (b)	25.4		—		—		—			25.4
TotalOther Temporary Investments	345.8		7.7		—		33.3			386.8
Risk Management Assets
Risk Management Commodity Contracts (c) (f)	11.5		495.0		219.7		(287.7		)	438.5
Cash Flow Hedges:
Commodity Hedges (c)	—		15.9		1.0		0.7			17.6
Fair Value Hedges	—		—		—		0.1			0.1
Total Risk Management Assets	11.5		510.9		220.7		(286.9		)	456.2
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,648.6	$	1,334.1	$	220.7	$	(77.6	)	$	3,125.8
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (f)	$	24.1	$	471.5	$	67.3	$	(326.3	)	$	236.6
Cash Flow Hedges:
Commodity Hedges (c)	—		18.9		6.5		0.7			26.1
Interest Rate/Foreign Currency Hedges	—		0.4		—		—			0.4
Fair Value Hedges	—		3.0		—		0.1			3.1
Total Risk Management Liabilities	$	24.1	$	493.8	$	73.8	$	(325.5	)	$	266.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	15.8	$	—	$	—	$	0.1		$	15.9
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	—		20.5		3.9		(21.8		)	2.6
Total Assets	$	15.8	$	20.5	$	3.9	$	(21.7	)	$	18.5
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	20.7	$	2.5	$	(22.0	)	$	1.2

APCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	14.8	$	—	$	—	$	0.1		$	14.9
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	0.2		13.9		12.2		(10.6		)	15.7
Total Assets	$	15.0	$	13.9	$	12.2	$	(10.5	)	$	30.6
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.2	$	17.8	$	0.5	$	(13.6	)	$	4.9

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	12.8	$	3.0	$	(12.3	)	$	3.5
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	7.3		—		—		11.4			18.7
Fixed Income Securities:
United States Government	—		785.4		—		—			785.4
Corporate Debt	—		60.9		—		—			60.9
State and Local Government	—		121.1		—		—			121.1
Subtotal Fixed Income Securities	—		967.4		—		—			967.4
Equity Securities – Domestic (b)	1,270.1		—		—		—			1,270.1
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,277.4		967.4		—		11.4			2,256.2
Total Assets	$	1,277.4	$	980.2	$	3.0	$	(0.9	)	$	2,259.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	—	$	13.3	$	0.2	$	(12.4	)	$	1.1

I&M

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets – Nonaffiliated and Affiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.0	$	6.3	$	(11.1	)	$	12.3
Spent Nuclear Fuel and Decommissioning Trusts
Cash and Cash Equivalents (e)	160.5		—		—		7.8			168.3
Fixed Income Securities:
United States Government	—		731.1		—		—			731.1
Corporate Debt	—		57.9		—		—			57.9
State and Local Government	—		22.2		—		—			22.2
Subtotal Fixed Income Securities	—		811.2		—		—			811.2
Equity Securities – Domestic (b)	1,126.9		—		—		—			1,126.9
TotalSpent Nuclear Fuel and Decommissioning Trusts	1,287.4		811.2		—		7.8			2,106.4
Total Assets	$	1,287.5	$	828.2	$	6.3	$	(3.3	)	$	2,118.7
Liabilities:
Risk Management Liabilities – Nonaffiliated
Risk Management Commodity Contracts (c) (g)	$	0.1	$	17.5	$	2.0	$	(11.7	)	$	7.9

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.2		$	27.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.4		—		(0.2		)	0.2
Total Assets	$	—	$	0.4	$	—	$	27.0		$	27.4
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	119.0	$	—		$	119.0

OPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other		Total
Assets:	(in millions)
Restricted Cash for Securitized Funding (a)	$	—	$	—	$	—	$	27.7	$	27.7
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		16.0		3.2		19.2
Total Assets	$	—	$	—	$	16.0	$	30.9	$	46.9
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.8	$	0.1	$	2.7	$	3.6

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	0.2	$	0.7	$	(0.1	)	$	0.8

PSO

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	$	—	$	—	$	0.7	$	(0.1	)	$	0.6
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.5	$	0.1	$	(0.4	)	$	0.2

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2016

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	8.7	$	—	$	—	$	1.6		$	10.3
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		0.3		0.8		(0.2		)	0.9
Total Assets	$	8.7	$	0.3	$	0.8	$	1.4		$	11.2
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	0.3	$	0.1	$	(0.1	)	$	0.3

SWEPCo

Assets and Liabilities Measured at Fair Value on a Recurring Basis

December 31, 2015

	Level 1		Level 2		Level 3		Other			Total
Assets:	(in millions)
Cash and Cash Equivalents (a)	$	3.6	$	—	$	—	$	1.6		$	5.2
Risk Management Assets
Risk Management Commodity Contracts (c) (g)	—		—		0.9		(0.1		)	0.8
Total Assets	$	3.6	$	—	$	0.9	$	1.5		$	6.0
Liabilities:
Risk Management Liabilities
Risk Management Commodity Contracts (c) (g)	$	—	$	5.5	$	0.1	$	(0.4	)	$	5.2

(a) Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties. Level 1 and Level 2 amounts primarily represent investments in money market funds.

(b) Amounts represent publicly traded equity securities and equity-based mutual funds.

(c) Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”

(d) The December 31, 2016 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows: Level 1 matures $(2) million in 2018-2020; Level 2 matures $20 million in 2017, $4 million in periods 2018-2020, $3 million in periods 2021-2022 and $1 million in periods 2023-2032; Level 3 matures $17 million in 2017, $28 million in periods 2018-2020, $11 million in periods 2021-2022 and $(31) million in periods 2023-2032. Risk management commodity contracts are substantially comprised of power contracts.

(e) Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 1 amounts primarily represent investments in money market funds.

(f) The December 31, 2015 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $(9) million in 2016 and $(4) million in periods 2017-2019;  Level 2 matures $2 million in 2016, $18 million in periods 2017-2019 and $4 million in periods 2020-2021;  Level 3 matures $28 million in 2016, $29 million in periods 2017-2019, $19 million in periods 2020-2021 and $76 million in periods 2022-2032.  Risk management commodity contracts are substantially comprised of power contracts.

(g) Substantially comprised of power contracts for the Registrant Subsidiaries.

There were no transfers between Level 1 and Level 2 during the years ended December 31, 2016, 2015 and 2014.

The following tables set forth a reconciliation of changes in the fair value of net trading derivatives classified as Level 3 in the fair value hierarchy:

Year Ended December 31, 2016	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	42.8			25.6			7.1			(3.0		)	(1.0		)	7.7
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	26.1			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(23.0		)	—			—			—			—			—
Settlements	(71.4		)	(37.5		)	(11.1		)	6.2			0.4			(8.4		)
Transfers into Level 3 (d) (e)	13.3			—			—			—			—			—
Transfers out of Level 3 (e)	(2.6		)	0.1			0.1			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(129.6		)	1.5			2.4			(138.1		)	0.7			0.6
Balance as of December 31, 2016	$	2.5		$	1.4		$	2.8		$	(119.0	)	$	0.7		$	0.7

Year Ended December 31, 2015	AEP			APCo (a)			I&M (a)			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	13.5			2.1			0.2			0.5			(0.2		)	9.2
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	53.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	(4.9		)	—			—			—			—			—
Settlements	(63.0		)	(17.2		)	(14.2		)	(6.7		)	0.6			(8.7		)
Transfers into Level 3 (d) (e)	28.7			—			—			—			—			—
Transfers out of Level 3 (e)	(18.9		)	1.2			0.8			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	(13.0		)	9.8			2.8			(26.3		)	0.5			0.8
Balance as of December 31, 2015	$	146.9		$	11.7		$	4.3		$	15.9		$	0.6		$	0.8

Year Ended December 31, 2014	AEP			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Balance as of December 31, 2013	$	117.9		$	10.6		$	7.2		$	2.9		$	—		$	—
Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (b) (c)	90.0			29.7			18.6			30.8			—			—
Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (b)	0.7			—			—			—			—			—
Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income	5.7			—			—			—			—			—
Settlements	(108.7		)	(32.6		)	(20.6		)	(33.7		)	—			—
Transfers into Level 3 (d) (e)	(7.6		)	(3.6		)	(2.5		)	—			—			—
Transfers out of Level 3 (e)	(21.5		)	—			—			—			—			—
Changes in Fair Value Allocated to Regulated Jurisdictions (f)	74.3			11.7			12.0			48.4			(0.3		)	(0.5		)
Balance as of December 31, 2014	$	150.8		$	15.8		$	14.7		$	48.4		$	(0.3	)	$	(0.5	)

(a) Includes both affiliated and nonaffiliated transactions.

(b) Included in revenues on the statements of income.

(c) Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.

(d) Represents existing assets or liabilities that were previously categorized as Level 2.

(e) Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.

(f) Relates to the net gains (losses) of those contracts that are not reflected on the statements of income.  These net gains (losses) are recorded as regulatory assets/liabilities.

The following tables quantify the significant unobservable inputs used in developing the fair value of Level 3 positions:

Significant Unobservable Inputs

December 31, 2016

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	183.8	$	187.1	Discounted Cash Flow	Forward Market Price (a)	$	6.51		$	86.59	$	39.40
						Counterparty Credit Risk (b)	35			824		391
FTRs	10.1		4.3		Discounted Cash Flow	Forward Market Price (a)	(7.99		)	8.91		0.86
Total	$	193.9	$	191.4

Significant Unobservable Inputs

December 31, 2015

AEP

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input	Low			High		Average
	(in millions)
Energy Contracts	$	212.3	$	70.3	Discounted Cash Flow	Forward Market Price (a)	$	9.69		$	165.36	$	36.35
						Counterparty Credit Risk (c)	670
FTRs	8.4		3.5		Discounted Cash Flow	Forward Market Price (a)	(6.99		)	10.34		1.10
Total	$	220.7	$	73.8

Significant Unobservable Inputs

December 31, 2016

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.4	$	0.4	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	3.5		2.1		Discounted Cash Flow	Forward Market Price	(0.23		)	8.91		2.37
Total	$	3.9	$	2.5

Significant Unobservable Inputs

December 31, 2015

APCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	7.9	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	4.3		0.3		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	12.2	$	0.5

Significant Unobservable Inputs

December 31, 2016

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	0.3	$	0.2	Discounted Cash Flow	Forward Market Price	$	19.68		$	48.55	$	36.34
FTRs	2.7		—		Discounted Cash Flow	Forward Market Price	(7.90		)	8.91		1.32
Total	$	3.0	$	0.2

Significant Unobservable Inputs

December 31, 2015

I&M

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
Energy Contracts	$	6.0	$	0.2	Discounted Cash Flow	Forward Market Price	$	12.61		$	47.24	$	32.38
FTRs	0.3		1.8		Discounted Cash Flow	Forward Market Price	(6.96		)	8.43		1.34
Total	$	6.3	$	2.0

Significant Unobservable Inputs

December 31, 2016

OPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable					Weighted
	Assets		Liabilities		Technique	Input	Low		High		Average
	(in millions)
Energy Contracts	$	—	$	119.0	Discounted Cash Flow	Forward Market Price (a)	$	30.14	$	71.85	$	47.45
						Counterparty Credit Risk (b)	47		340		272
Total	$	—	$	119.0

Significant Unobservable Inputs

December 31, 2015

OPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

Energy Contracts

$

16.0

$

0.1

Discounted Cash Flow

Forward Market Price

$

41.61

$

165.36

$

86.84

Significant Unobservable Inputs

December 31, 2016

PSO

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.7	$	—	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

PSO

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.7

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

Significant Unobservable Inputs

December 31, 2016

SWEPCo

						Significant	Input/Range
	Fair Value				Valuation	Unobservable						Weighted
	Assets		Liabilities		Technique	Input (a)	Low			High		Average
	(in millions)
FTRs	$	0.8	$	0.1	Discounted Cash Flow	Forward Market Price	$	(7.99	)	$	1.03	$	(0.36	)

Significant Unobservable Inputs

December 31, 2015

SWEPCo

Significant

Input/Range

Fair Value

Valuation

Unobservable

Weighted

Assets

Liabilities

Technique

Input (a)

Low

High

Average

(in millions)

FTRs

$

0.9

$

0.1

Discounted Cash Flow

Forward Market Price

$

(6.96

)

$

8.43

$

1.34

(a) Represents market prices in dollars per MWh.

(b) Represents prices of credit default swaps used to calculate counterparty credit risk, reported in basis points.

(c) Represents average price of credit default swaps used to calculate counterparty credit risk, reported in basis points.

The following table provides sensitivity of fair value measurements to increases (decreases) in significant unobservable inputs related to Energy Contracts and FTRs for the Registrants as of December 31, 2016 and 2015:

Sensitivity of Fair Value Measurements

Significant Unobservable Input	Position	Change in Input	Impact on Fair Value Measurement
Forward Market Price	Buy	Increase (Decrease)	Higher (Lower)
Forward Market Price	Sell	Increase (Decrease)	Lower (Higher)
Counterparty Credit Risk	Loss	Increase (Decrease)	Higher (Lower)
Counterparty Credit Risk	Gain	Increase (Decrease)	Lower (Higher)