Property, Plant and Equipment

9 Months Ended

Sep. 30, 2022

13. PROPERTY, PLANT AND EQUIPMENT

The disclosure in this note applies to AEP, PSO and SWEPCo.

Asset Retirement Obligations

The Registrants record ARO in accordance with the accounting guidance for “Asset Retirement and Environmental Obligations” for legal obligations for asbestos removal and for the retirement of certain ash disposal facilities, wind farms, solar farms and certain coal mining facilities. The discussion below summarizes significant changes to the Registrants ARO recorded in 2022 and should be read in conjunction with the Property, Plant and Equipment note within the 2021 Annual Report.

In March 2022, PSO and SWEPCo acquired respective undivided ownership interests in the entity that owned Traverse during its development and construction. Immediately following the acquisition, PSO and SWEPCo liquidated the entity and simultaneously distributed the Traverse assets in proportion to their undivided ownership interests. Traverse was placed in-service in March 2022. As a result, PSO and SWEPCo incurred additional ARO liabilities of $13 million and $15 million, respectively. See the “North Central Wind Energy Facilities” section of Note 6 for additional information. Additionally, in March 2022, SWEPCo recorded a $13 million revision due to an increase in estimated ash pond closure costs at the Pirkey Plant and the Welsh Plant. In June 2022, SWEPCo recorded a $16 million revision due to an increase in estimated reclamation costs at Sabine. In September 2022, SWEPCo recorded a $14 million revision due to an increase in estimated landfill closure costs at Pirkey Plant.

The following is a reconciliation of the aggregate carrying amounts of ARO for AEP, PSO and SWEPCo:


Company	ARO as of December 31, 2021		Accretion Expense		Liabilities Incurred		Liabilities Settled		Revisions in Cash Flow Estimates		ARO as of September 30, 2022
	(in millions)
AEP (a)(b)(c)(d)(e)	$	2,741.7	$	82.1	$	37.4	$	(29.4)	$	90.9	$	2,922.7


PSO (a)(d)	57.6		3.0		12.8		(0.6)		1.9		74.7
SWEPCo (a)(c)(d)	222.7		8.3		15.4		(16.9)		48.0		277.5

(a)Includes ARO related to ash disposal facilities.

(b)Includes ARO related to nuclear decommissioning costs for the Cook Plant of $1.98 billion and $1.93 billion as of September 30, 2022 and December 31, 2021, respectively.

(c)Includes ARO related to Sabine and DHLC.

(d)Includes ARO related to asbestos removal.

(e)Includes $18 million and $18 million as of September 30, 2022 and December 31, 2021, respectively, of ARO classified as Liabilities Held for Sale on the balance sheets. See “Disposition of KPCo and KTCo” section of Note 6 for additional information.